October 2, 1995

Deputy Under Secretary for Health

Transition Work Group Reports - Catalog of Comments and Recommendations

All VA Staff

1\. In late July and early August, 1995, six work group reports which
set forth ideas and recommendations for implementing Dr. Kizer's
**Vision for** **Change** were made available for review by all
interested staff throughout the field and in headquarters. Numerous
comments to these reports were received and cataloged by recommendation
for each work group report. In some instances the comments received
precipitated revisions to the work group's original recommendations.

2\. The attached summary document is one of six catalogs of
recommendations. The recommendations were extracted from the work group
report. The catalog includes each original recommendation followed by a
summary of the comments received, the work group's reaction to the
comments, the rationale for that reaction, and any resulting change to
the recommendation. In some cases, the "comments" section is followed by
"approve" or "disapprove." This is an indication of the work group's
reaction to the comments. It does [not]{.underline} indicate a final
decision by the Under Secretary.

3\. Please keep in mind as you review these documents that they catalog
recommendations of the work groups to Dr. Kizer. Dr. Kizer is in the
process of reviewing the recommendations for final decision and
implementation.

4\. It is also important to remember that the restructuring of VHA will
evolve over time. While some changes began on October 1st, many things
that need to happen are sequenced in time beyond that date. This is the
reason the July reports did not describe the complete closure on many
issues that some reviewers may have expected. The six work group reports
are being summarized and edited to create a new document, **Vision for**
**Change - Implementation**, which should be distributed in November
1995. This will be a companion report to the original **Vision for**
**Change** that was published in March 1995.

5\. Please direct any questions about these documents to Greg Neuner in
Headquarters at 202-273-5823.

Thomas L. Garthwaite, M.D.

Attachments

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Follow the                |   |   |    |    | A |               |
| e | recommendations of the    |   |   |    |    | / |               |
| f | RPM Oversight Committee   |   |   |    |    | D |               |
| N | for Fiscal Year 1996.     |   |   |    |    | / |               |
| o | VISN Directors will have  |   |   |    |    | O |               |
| ] | authority to move funds   |   |   |    |    | ] |               |
| { | within the VISN in Fiscal |   |   |    |    | { |               |
| . | Year 1996.                |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
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| * |                           |   |   |    |    | * |               |
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| 0 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
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|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Develop an implementation | C |   | O  |    |   |               |
| * | plan to transition VHA    | M |   | ng |    |   |               |
| 3 | from RPM to full          | G |   | oi |    |   |               |
| . | capitation by FY 1998     |   |   | ng |    |   |               |
| 0 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Stress importance of      |   |   |    |    |   |               |
| . | legislative change,       |   |   |    |    |   |               |
| 0 | including eligibility,    |   |   |    |    |   |               |
| . | appropriation, HRM, and   |   |   |    |    |   |               |
| 2 | revenue stream reform in  |   |   |    |    |   |               |
|   | developing a full         |   |   |    |    |   |               |
|   | capitation model          |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
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|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The future focus of the   | A | G |    |    |   |               |
| . | work group report and the |   | r |    |    |   |               |
| 0 | lack of attention to      |   | e |    |    |   |               |
| . | transition implementation |   | a |    |    |   |               |
| 1 | leaves serious questions  |   | t |    |    |   |               |
|   | regarding the utility of  |   | e |    |    |   |               |
|   | this document and its     |   | r |    |    |   |               |
|   | immediate application in  |   | d |    |    |   |               |
|   | moving the reorganization |   | e |    |    |   |               |
|   | through its transition    |   | t |    |    |   |               |
|   | stage. Instead, it        |   | a |    |    |   |               |
|   | proposes a future system  |   | i |    |    |   |               |
|   | of resource allocation    |   | l |    |    |   |               |
|   | that is managed and       |   | t |    |    |   |               |
|   | directed by a CMG. The    |   | o |    |    |   |               |
|   | proposed Action Plan      |   | t |    |    |   |               |
|   | associated with the       |   | h |    |    |   |               |
|   | implementation of a       |   | e |    |    |   |               |
|   | capitated budget process  |   | i |    |    |   |               |
|   | only peripherally         |   | m |    |    |   |               |
|   | involves or defines roles |   | p |    |    |   |               |
|   | for the USH and CFO.      |   | l |    |    |   |               |
|   | Despite bringing a new    |   | e |    |    |   |               |
|   | level of financial        |   | m |    |    |   |               |
|   | management to VHA         |   | e |    |    |   |               |
|   | proposed by the           |   | n |    |    |   |               |
|   | capitation model, the     |   | t |    |    |   |               |
|   | report ignores immediate  |   | a |    |    |   |               |
|   | "real world" concerns.    |   | t |    |    |   |               |
|   | The report leaves most of |   | i |    |    |   |               |
|   | the immediate             |   | o |    |    |   |               |
|   | implementation questions  |   | n |    |    |   |               |
|   | and issues unaddressed.   |   | s |    |    |   |               |
|   | (25 comments addressed    |   | t |    |    |   |               |
|   | this issue.)              |   | e |    |    |   |               |
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+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Use proposed revised      |   |   |    |    |   |               |
| . | Action Plan below to      |   |   |    |    |   |               |
| 0 | transition to full        |   |   |    |    |   |               |
| . | capitation by FY 1998     |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Include in executive      |   |   |    |    |   |               |
| . | summary the following     |   |   |    |    |   |               |
| 0 | language to reiterate the |   |   |    |    |   |               |
| . | need for legislative      |   |   |    |    |   |               |
| 1 | change to truly achieve a |   |   |    |    |   |               |
|   | capitation system:        |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | Full capitation, however, |   |   |    |    |   |               |
|   | requires a fundamental    |   |   |    |    |   |               |
|   | shift in current VHA      |   |   |    |    |   |               |
|   | eligibility, financial    |   |   |    |    |   |               |
|   | and business practices.   |   |   |    |    |   |               |
|   | First, capitation         |   |   |    |    |   |               |
|   | requires that members are |   |   |    |    |   |               |
|   | enrolled with a single    |   |   |    |    |   |               |
|   | provider entity that is   |   |   |    |    |   |               |
|   | clinically and            |   |   |    |    |   |               |
|   | financially responsible   |   |   |    |    |   |               |
|   | for coordination of all   |   |   |    |    |   |               |
|   | health care within the    |   |   |    |    |   |               |
|   | plan. VHA must adopt an   |   |   |    |    |   |               |
|   | enrollment system which   |   |   |    |    |   |               |
|   | puts veterans in a single |   |   |    |    |   |               |
|   | VISN responsible for all  |   |   |    |    |   |               |
|   | their care. This          |   |   |    |    |   |               |
|   | necessitates a policy for |   |   |    |    |   |               |
|   | enrollment, a database    |   |   |    |    |   |               |
|   | that allows VISNs to      |   |   |    |    |   |               |
|   | enroll and identify       |   |   |    |    |   |               |
|   | patients, and a transfer  |   |   |    |    |   |               |
|   | pricing methodology to    |   |   |    |    |   |               |
|   | pay for care outside the  |   |   |    |    |   |               |
|   | VISN. In addition to      |   |   |    |    |   |               |
|   | increased cost            |   |   |    |    |   |               |
|   | management, enrollment    |   |   |    |    |   |               |
|   | with a single VISN        |   |   |    |    |   |               |
|   | reduces the fragmentation |   |   |    |    |   |               |
|   | in care and duplication   |   |   |    |    |   |               |
|   | in services to veterans   |   |   |    |    |   |               |
|   | that now exists within    |   |   |    |    |   |               |
|   | VHA.                      |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | Second, capitation        |   |   |    |    |   |               |
|   | requires that all         |   |   |    |    |   |               |
|   | enrollees in the plan     |   |   |    |    |   |               |
|   | receive the same basic    |   |   |    |    |   |               |
|   | benefit for the price.    |   |   |    |    |   |               |
|   | Fundamental eligibility   |   |   |    |    |   |               |
|   | reform is necessary for   |   |   |    |    |   |               |
|   | VHA to be able to provide |   |   |    |    |   |               |
|   | [all]{.underline} veteran |   |   |    |    |   |               |
|   | enrollees with the same   |   |   |    |    |   |               |
|   | access to care.           |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | Third, successful         |   |   |    |    |   |               |
|   | capitation requires an    |   |   |    |    |   |               |
|   | incentive system for      |   |   |    |    |   |               |
|   | providers to provide the  |   |   |    |    |   |               |
|   | highest quality service,  |   |   |    |    |   |               |
|   | defined both clinically   |   |   |    |    |   |               |
|   | and in terms of patient   |   |   |    |    |   |               |
|   | satisfaction, for the     |   |   |    |    |   |               |
|   | lowest possible cost. The |   |   |    |    |   |               |
|   | purely economic           |   |   |    |    |   |               |
|   | incentives in capitation  |   |   |    |    |   |               |
|   | are to under use services |   |   |    |    |   |               |
|   | to maximize "profit."     |   |   |    |    |   |               |
|   | Incentive systems need to |   |   |    |    |   |               |
|   | be established that       |   |   |    |    |   |               |
|   | encourage VISNs to seek   |   |   |    |    |   |               |
|   | the most appropriate care |   |   |    |    |   |               |
|   | in the least costly       |   |   |    |    |   |               |
|   | setting. This will        |   |   |    |    |   |               |
|   | require changes to        |   |   |    |    |   |               |
|   | current personnel         |   |   |    |    |   |               |
|   | practices such as hiring, |   |   |    |    |   |               |
|   | firing, and compensation. |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | Finally, and perhaps most |   |   |    |    |   |               |
|   | importantly, capitation   |   |   |    |    |   |               |
|   | requires that each new    |   |   |    |    |   |               |
|   | enrollee represents a     |   |   |    |    |   |               |
|   | revenue source. That is,  |   |   |    |    |   |               |
|   | as enrollment increases,  |   |   |    |    |   |               |
|   | revenue increases as      |   |   |    |    |   |               |
|   | well. Given the potential |   |   |    |    |   |               |
|   | for flattening            |   |   |    |    |   |               |
|   | appropriations in the     |   |   |    |    |   |               |
|   | foreseeable future, VHA   |   |   |    |    |   |               |
|   | must seek alternative     |   |   |    |    |   |               |
|   | sources of revenue to     |   |   |    |    |   |               |
|   | accompany newly enrolled  |   |   |    |    |   |               |
|   | members. While there are  |   |   |    |    |   |               |
|   | certainly cost            |   |   |    |    |   |               |
|   | containment               |   |   |    |    |   |               |
|   | opportunities, if limited |   |   |    |    |   |               |
|   | to fixed appropriations   |   |   |    |    |   |               |
|   | only, VHA will be         |   |   |    |    |   |               |
|   | eventually forced to      |   |   |    |    |   |               |
|   | curtail future enrollment |   |   |    |    |   |               |
|   | or scale back services.   |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | To achieve full,          |   |   |    |    |   |               |
|   | successful capitation,    |   |   |    |    |   |               |
|   | VHA must pursue the       |   |   |    |    |   |               |
|   | legislative changes       |   |   |    |    |   |               |
|   | proposed in this document |   |   |    |    |   |               |
|   | and adopt the following   |   |   |    |    |   |               |
|   | recommendations. Failure  |   |   |    |    |   |               |
|   | to reform eligibility and |   |   |    |    |   |               |
|   | financing systems will    |   |   |    |    |   |               |
|   | result in an allocation   |   |   |    |    |   |               |
|   | system that simply        |   |   |    |    |   |               |
|   | divides the appropriation |   |   |    |    |   |               |
|   | by the number of enrolled |   |   |    |    |   |               |
|   | veterans, a system which  |   |   |    |    |   |               |
|   | will continue fragmented  |   |   |    |    |   |               |
|   | care and cannot support   |   |   |    |    |   |               |
|   | significant increases in  |   |   |    |    |   |               |
|   | enrollment without a      |   |   |    |    |   |               |
|   | decrease in services.     |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Item**                  | * |   | ** |    |   |               |
|   |                           | * |   | Ta |    |   |               |
|   |                           | R |   | rg |    |   |               |
|   |                           | e |   | et |    |   |               |
|   |                           | s |   | Co |    |   |               |
|   |                           | p |   | mp |    |   |               |
|   |                           | o |   | le |    |   |               |
|   |                           | n |   | te |    |   |               |
|   |                           | s |   | Da |    |   |               |
|   |                           | i |   | te |    |   |               |
|   |                           | b |   | ** |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 1.  Follow the            | * |   | 9/ |    |   |               |
| * |     recommendations of    | * |   | 95 |    |   |               |
|   |     the RPM Oversight     | B |   |    |    |   |               |
|   |     Committee in          | P |   |    |    |   |               |
|   |     allocating the FY 96  | R |   |    |    |   |               |
|   |     budget.               | C |   |    |    |   |               |
|   |                           | ( |   |    |    |   |               |
|   |                           | B |   |    |    |   |               |
|   |                           | u |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | g |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | R |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | v |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | w |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | ) |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 2.  Provide VISN          | * |   | 1  |    |   |               |
| * |     Directors the         | * |   | 0/ |    |   |               |
|   |     authority and systems | C |   | 95 |    |   |               |
|   |     to budget, move       | F |   |    |    |   |               |
|   |     funds, and establish  | O |   |    |    |   |               |
|   |     operational reserves  | , |   |    |    |   |               |
|   |     within the VISN in    | O |   |    |    |   |               |
|   |     Fiscal Year 1996,     | f |   |    |    |   |               |
|   |     including appropriate | f |   |    |    |   |               |
|   |     changes to FMS.       | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | F |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | M |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | g |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | ( |   |    |    |   |               |
|   |                           | 0 |   |    |    |   |               |
|   |                           | 4 |   |    |    |   |               |
|   |                           | 7 |   |    |    |   |               |
|   |                           | ) |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 3.  Establish a           | * |   | 1  |    |   |               |
| * |     field-based           | * |   | 0/ |    |   |               |
|   |     Capitation Management | U |   | 95 |    |   |               |
|   |     Group (CMG) to        | n |   |    |    |   |               |
|   |     provide               | d |   |    |    |   |               |
|   |     administrative        | e |   |    |    |   |               |
|   |     oversight and manage  | r |   |    |    |   |               |
|   |     the development and   | S |   |    |    |   |               |
|   |     maintenance of the    | e |   |    |    |   |               |
|   |     capitated system. The | c |   |    |    |   |               |
|   |     CMG should be         | r |   |    |    |   |               |
|   |     provided sufficient   | e |   |    |    |   |               |
|   |     staff support and a   | t |   |    |    |   |               |
|   |     liaison to HQ. The    | a |   |    |    |   |               |
|   |     CMG should be         | r |   |    |    |   |               |
|   |     comprised of VISN and | y |   |    |    |   |               |
|   |     headquarters          | f |   |    |    |   |               |
|   |     representatives and   | o |   |    |    |   |               |
|   |     have a significant    | r |   |    |    |   |               |
|   |     clinical presence.    | H |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | h |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 4.  Charter a work group  | * |   | 1  |    |   |               |
| * |     to conduct a          | * |   | 0/ |    |   |               |
|   |     literature search of  | U |   | 95 |    |   |               |
|   |     the private sector    | n |   |    |    |   |               |
|   |     and recommend a       | d |   |    |    |   |               |
|   |     methodology to fund   | e |   |    |    |   |               |
|   |     major construction    | r |   |    |    |   |               |
|   |     projects outside the  | S |   |    |    |   |               |
|   |     capitation rate.      | e |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | H |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | h |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 5.  CMG should begin work | * |   | 1  |    |   |               |
| * |     as soon as possible   | * |   | 1/ |    |   |               |
|   |     and as continuously   | C |   | 95 |    |   |               |
|   |     as necessary to       | M |   |    |    |   |               |
|   |     identify issues and   | G |   |    |    |   |               |
|   |     develop the           | * |   |    |    |   |               |
|   |     capitation rate       | * |   |    |    |   |               |
|   |     described in          |   |   |    |    |   |               |
|   |     recommendation 1.     |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 6.  Prioritize and        | * |   | 9/ |    |   |               |
|   |     develop specific      | * |   | 96 |    |   |               |
|   |     legislative language  | C |   |    |    |   |               |
|   |     on the initiatives    | M |   |    |    |   |               |
|   |     listed in Appendix C  | G |   |    |    |   |               |
|   |     during Fiscal         | a |   |    |    |   |               |
|   |     Year 1996. The        | n |   |    |    |   |               |
|   |     General Counsel       | d |   |    |    |   |               |
|   |     should make this a    | G |   |    |    |   |               |
|   |     high priority and     | e |   |    |    |   |               |
|   |     should be afforded    | n |   |    |    |   |               |
|   |     any needed technical  | e |   |    |    |   |               |
|   |     or consulting         | r |   |    |    |   |               |
|   |     assistance.           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | u |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 7.  All earmarked special | * |   | 9/ |    |   |               |
|   |     programs should be    | * |   | 96 |    |   |               |
|   |     reviewed for          | C |   |    |    |   |               |
|   |     potential             | F |   |    |    |   |               |
|   |     incorporation into    | O |   |    |    |   |               |
|   |     the capitation model. | a |   |    |    |   |               |
|   |     This includes         | n |   |    |    |   |               |
|   |     pursuing changes to   | d |   |    |    |   |               |
|   |     remove budget object  | C |   |    |    |   |               |
|   |     classes and           | M |   |    |    |   |               |
|   |     limitations and       | G |   |    |    |   |               |
|   |     proposing changes to  | * |   |    |    |   |               |
|   |     appropriation law.    | * |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 8.  Develop a capitated   |   |   |    |    |   |               |
|   |     rate for those        |   |   |    |    |   |               |
|   |     services more         |   |   |    |    |   |               |
|   |     typically capitated   |   |   |    |    |   |               |
|   |     in managed care       |   |   |    |    |   |               |
|   |     settings in the       |   |   |    |    |   |               |
|   |     private sector, and   |   |   |    |    |   |               |
|   |     phase costly, long    |   |   |    |    |   |               |
|   |     term care patients    |   |   |    |    |   |               |
|   |     into the formula at a |   |   |    |    |   |               |
|   |     later date.           |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 9.  RATIONALE:            |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 10. Gives VHA a learning  |   |   |    |    |   |               |
|   |     curve to gain more    |   |   |    |    |   |               |
|   |     experience in rate    |   |   |    |    |   |               |
|   |     setting, risk         |   |   |    |    |   |               |
|   |     adjustment,           |   |   |    |    |   |               |
|   |     reinsurance, and      |   |   |    |    |   |               |
|   |     other processes       |   |   |    |    |   |               |
|   |     important in managed  |   |   |    |    |   |               |
|   |     care.                 |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 11. Develop a methodology |   |   |    |    |   |               |
|   |     to fund special       |   |   |    |    |   |               |
|   |     program care during   |   |   |    |    |   |               |
|   |     FY 1997 to supplement |   |   |    |    |   |               |
|   |     the capitated funding |   |   |    |    |   |               |
|   |     associated with the   |   |   |    |    |   |               |
|   |     remaining enrollee    |   |   |    |    |   |               |
|   |     population.           |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 12. Fully capitate all    |   |   |    |    |   |               |
|   |     patient populations   |   |   |    |    |   |               |
|   |     (including special    |   |   |    |    |   |               |
|   |     programs) upon        |   |   |    |    |   |               |
|   |     gaining relevant      |   |   |    |    |   |               |
|   |     expertise in risk     |   |   |    |    |   |               |
|   |     adjustment            |   |   |    |    |   |               |
|   |     capitation, etc.      |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 13. The CMG should        | * |   | 6/ |    |   |               |
|   |     appoint work groups,  | * |   | 97 |    |   |               |
|   |     as soon as possible,  | C |   |    |    |   |               |
|   |     to address the risk   | M |   |    |    |   |               |
|   |     adjustment indicator, | G |   |    |    |   |               |
|   |     provider incentive    | / |   |    |    |   |               |
|   |     issues, and the       | U |   |    |    |   |               |
|   |     necessary specific    | S |   |    |    |   |               |
|   |     elements of the       | H |   |    |    |   |               |
|   |     capitation rate as    | * |   |    |    |   |               |
|   |     described in          | * |   |    |    |   |               |
|   |     Appendix D. The       |   |   |    |    |   |               |
|   |     groups should have    |   |   |    |    |   |               |
|   |     representation from   |   |   |    |    |   |               |
|   |     the appropriate       |   |   |    |    |   |               |
|   |     headquarters offices  |   |   |    |    |   |               |
|   |     (i.e. - Office of     |   |   |    |    |   |               |
|   |     Policy Planning, and  |   |   |    |    |   |               |
|   |     Performance, CFO,     |   |   |    |    |   |               |
|   |     Human Resources) and  |   |   |    |    |   |               |
|   |     the USH should give   |   |   |    |    |   |               |
|   |     this task high        |   |   |    |    |   |               |
|   |     priority and          |   |   |    |    |   |               |
|   |     sufficient support.   |   |   |    |    |   |               |
|   |     The work groups       |   |   |    |    |   |               |
|   |     should be under the   |   |   |    |    |   |               |
|   |     oversight of the CMG  |   |   |    |    |   |               |
|   |     to insure continuity. |   |   |    |    |   |               |
|   |     Finished products     |   |   |    |    |   |               |
|   |     should be ready in    |   |   |    |    |   |               |
|   |     time for FY98         |   |   |    |    |   |               |
|   |     implementation.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 14. Develop an RFP for a  | * |   | 1  |    |   |               |
| * |     national contract to  | * |   | 2/ |    |   |               |
|   |     conduct an actuarial  | C |   | 95 |    |   |               |
|   |     analysis at the VISN  | I |   |    |    |   |               |
|   |     level for the         | O |   |    |    |   |               |
|   |     populations served by | , |   |    |    |   |               |
|   |     VHA (including        | C |   |    |    |   |               |
|   |     CHAMPVA, DOD, etc.).  | M |   |    |    |   |               |
|   |                           | G |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 15. Develop a transfer    | * |   | FY |    |   |               |
|   |     pricing methodology   | * |   | 19 |    |   |               |
|   |     to pay for VA care    | C |   | 98 |    |   |               |
|   |     outside of the VISN.  | M |   |    |    |   |               |
|   |     This should include   | G |   |    |    |   |               |
|   |     an evaluation of      | * |   |    |    |   |               |
|   |     transfer pricing      | * |   |    |    |   |               |
|   |     policies used by      |   |   |    |    |   |               |
|   |     private sector        |   |   |    |    |   |               |
|   |     healthcare            |   |   |    |    |   |               |
|   |     organizations to      |   |   |    |    |   |               |
|   |     identify "best        |   |   |    |    |   |               |
|   |     practices." Policy    |   |   |    |    |   |               |
|   |     should be in place in |   |   |    |    |   |               |
|   |     time for              |   |   |    |    |   |               |
|   |     implementation in FY  |   |   |    |    |   |               |
|   |     1998.                 |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 16. Determine an          | * |   | 6/ |    |   |               |
|   |     appropriate           | * |   | 96 |    |   |               |
|   |     allocation model for  | C |   |    |    |   |               |
|   |     FY 1997 as an interim | M |   |    |    |   |               |
|   |     measure while waiting | G |   |    |    |   |               |
|   |     for the development   | * |   |    |    |   |               |
|   |     of Capitation. This   | * |   |    |    |   |               |
|   |     could be an           |   |   |    |    |   |               |
|   |     allocation model,     |   |   |    |    |   |               |
|   |     using only the        |   |   |    |    |   |               |
|   |     appropriation for FY  |   |   |    |    |   |               |
|   |     1997 that adopts      |   |   |    |    |   |               |
|   |     enrollment with one   |   |   |    |    |   |               |
|   |     VISN, risk            |   |   |    |    |   |               |
|   |     adjustment, and a     |   |   |    |    |   |               |
|   |     single national rate  |   |   |    |    |   |               |
|   |     as primary tenets or  |   |   |    |    |   |               |
|   |     can simply be a       |   |   |    |    |   |               |
|   |     modification of RPM   |   |   |    |    |   |               |
|   |     using the blended     |   |   |    |    |   |               |
|   |     rate scenario.        |   |   |    |    |   |               |
|   |     Whatever funds that   |   |   |    |    |   |               |
|   |     can be incorporated   |   |   |    |    |   |               |
|   |     without legislative   |   |   |    |    |   |               |
|   |     change should be      |   |   |    |    |   |               |
|   |     included in the model |   |   |    |    |   |               |
|   |     (i.e. - certain       |   |   |    |    |   |               |
|   |     "fenced" funds). This |   |   |    |    |   |               |
|   |     budget should         |   |   |    |    |   |               |
|   |     identify the specific |   |   |    |    |   |               |
|   |     withholds to the      |   |   |    |    |   |               |
|   |     capitated rate to     |   |   |    |    |   |               |
|   |     fund HQ, SSC, and     |   |   |    |    |   |               |
|   |     VISN management.      |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 17. Develop a "phase in"  |   |   |    |    |   |               |
|   |     strategy for the      |   |   |    |    |   |               |
|   |     implementation of a   |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 18. national capitation   |   |   |    |    |   |               |
|   |     rate which spreads    |   |   |    |    |   |               |
|   |     budget losses over    |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 19. several years.        |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 20. Charter a national    | * |   | 1  |    |   |               |
|   |     commission, including | * |   | 2/ |    |   |               |
|   |     outside stakeholders, | U |   | 96 |    |   |               |
|   |     to develop a national | S |   |    |    |   |               |
|   |     standard benefit      | H |   |    |    |   |               |
|   |     package using the     | * |   |    |    |   |               |
|   |     plan recommended      | * |   |    |    |   |               |
|   |     during the Health     |   |   |    |    |   |               |
|   |     Care Reform debate as |   |   |    |    |   |               |
|   |     a starting point. The |   |   |    |    |   |               |
|   |     finished product      |   |   |    |    |   |               |
|   |     should be available   |   |   |    |    |   |               |
|   |     in time to allocate   |   |   |    |    |   |               |
|   |     FY 1998 budget to     |   |   |    |    |   |               |
|   |     VISNs.                |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 21. Develop a Training    | * |   | O  |    |   |               |
|   |     and Education effort, | * |   | ng |    |   |               |
|   |     concurrent with the   | C |   | oi |    |   |               |
|   |     deliberations of the  | M |   | ng |    |   |               |
|   |     CMG, to educate VHA   | G |   |    |    |   |               |
|   |     employees at all      | , |   |    |    |   |               |
|   |     levels on capitation  | O |   |    |    |   |               |
|   |     management and the    | f |   |    |    |   |               |
|   |     progress of the CMG   | f |   |    |    |   |               |
|   |     to date. Training     | i |   |    |    |   |               |
|   |     should be interactive | c |   |    |    |   |               |
|   |     to allow for maximum  | e |   |    |    |   |               |
|   |     field feedback        | o |   |    |    |   |               |
|   |     (e.g. - satellite     | f |   |    |    |   |               |
|   |     uplinks, newsletters, | A |   |    |    |   |               |
|   |     etc.).                | c |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | A |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 22. Develop an enrollment | * |   | 1  |    |   |               |
|   |     database and          | * |   | 2/ |    |   |               |
|   |     implementation        | C |   | 96 |    |   |               |
|   |     process to enroll     | I |   |    |    |   |               |
|   |     veterans with one     | O |   |    |    |   |               |
|   |     VISN. The finished    | / |   |    |    |   |               |
|   |     product should be     | C |   |    |    |   |               |
|   |     ready for             | M |   |    |    |   |               |
|   |     implementation in FY  | G |   |    |    |   |               |
|   |     1998.                 | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 23. Develop an allocation | * |   | 6/ |    |   |               |
|   |     method to fund        | * |   | 96 |    |   |               |
|   |     overhead for research | C |   |    |    |   |               |
|   |     grants and trainee    | M |   |    |    |   |               |
|   |     slots. Include in the | G |   |    |    |   |               |
|   |     FY 97 allocation      | , |   |    |    |   |               |
|   |     process.              | A |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | A |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | , |   |    |    |   |               |
|   |                           | H |   |    |    |   |               |
|   |                           | S |   |    |    |   |               |
|   |                           | R |   |    |    |   |               |
|   |                           | & |   |    |    |   |               |
|   |                           | D |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | 24. Pursue additional     | * |   | O  |    |   |               |
|   |     revenue streams       | * |   | ng |    |   |               |
|   |     (e.g., MCCR           | U |   | oi |    |   |               |
|   |     collections, billing  | S |   | ng |    |   |               |
|   |     Medicare and          | H |   |    |    |   |               |
|   |     Medicaid, CHAMPUS,    | , |   |    |    |   |               |
|   |     etc.) so patients     | C |   |    |    |   |               |
|   |     bring with them to    | F |   |    |    |   |               |
|   |     VHA whatever          | O |   |    |    |   |               |
|   |     resources they have.  | , |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | M |   |    |    |   |               |
|   |                           | G |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Calculate a VISN-specific |   |   |    |    | A |               |
| e | capitation rate to        |   |   |    |    | / |               |
| f | distribute VHA funding,   |   |   |    |    | D |               |
| N | including all capital     |   |   |    |    | / |               |
| o | funds (e.g., major,       |   |   |    |    | O |               |
| ] | minor, NRM, equipment).   |   |   |    |    | ] |               |
| { | Funding restrictions on   |   |   |    |    | { |               |
| . | special programs should   |   |   |    |    | . |               |
| u | be removed and the funds  |   |   |    |    | u |               |
| n | incorporated into the     |   |   |    |    | n |               |
| d | capitated rate. In order  |   |   |    |    | d |               |
| e | to facilitate capitation  |   |   |    |    | e |               |
| r | financial management, all |   |   |    |    | r |               |
| l | VHA appropriated funds    |   |   |    |    | l |               |
| i | should be contained in    |   |   |    |    | i |               |
| n | the Medical Care          |   |   |    |    | n |               |
| e | Appropriation (i.e.,      |   |   |    |    | e |               |
| } | operating and capital     |   |   |    |    | } |               |
| * | funds). This will bring   |   |   |    |    | * |               |
| * | the full range of         |   |   |    |    | * |               |
|   | capitation cost           |   |   |    |    |   |               |
| 3 | containment incentives to |   |   |    |    |   |               |
| . | all funds used to support |   |   |    |    |   |               |
| 1 | VHA operations. Full      |   |   |    |    |   |               |
|   | capitation should be      |   |   |    |    |   |               |
|   | reached by FY 1998. The   |   |   |    |    |   |               |
|   | VISN-specific capitation  |   |   |    |    |   |               |
|   | rate should be derived    |   |   |    |    |   |               |
|   | from the national         |   |   |    |    |   |               |
|   | capitation rate adjusted  |   |   |    |    |   |               |
|   | for VISN risk, VISN       |   |   |    |    |   |               |
|   | geographic cost variation |   |   |    |    |   |               |
|   | and medical inflation.    |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Establish a field-based   | U |   |    |    |   |               |
| * | Capitation Management     | n |   |    |    |   |               |
| 3 | Group (CMG) in FY 95 to   | d |   |    |    |   |               |
| . | provide administrative    | e |   |    |    |   |               |
| 1 | oversight and manage the  | r |   |    |    |   |               |
| . | development and           | S |   |    |    |   |               |
| 1 | maintenance of the        | e |   |    |    |   |               |
|   | capitated system. The CMG | c |   |    |    |   |               |
|   | should be provided        | r |   |    |    |   |               |
|   | sufficient staff support  | e |   |    |    |   |               |
|   | and a liaison to HQ. The  | t |   |    |    |   |               |
|   | CMG should be comprised   | a |   |    |    |   |               |
|   | of VISN representatives   | r |   |    |    |   |               |
|   | and have a significant    | y |   |    |    |   |               |
|   | clinical presence.        | f |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | H |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | h |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | The CMG should appoint    | C |   |    |    |   |               |
| * | work groups, as soon as   | M |   |    |    |   |               |
| 3 | possible, to address the  | G |   |    |    |   |               |
| . | capitation rate, quality  |   |   |    |    |   |               |
| 1 | performance measurements  |   |   |    |    |   |               |
| . | actuarial and risk        |   |   |    |    |   |               |
| 2 | adjustment and provider   |   |   |    |    |   |               |
|   | incentive issues (see     |   |   |    |    |   |               |
|   | Appendix D).              |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | All earmarked special     | C |   |    |    |   |               |
| . | programs should be        | F |   |    |    |   |               |
| 1 | reviewed for potential    | O |   |    |    |   |               |
| . | incorporation into the    | / |   |    |    |   |               |
| 3 | capitation model. This    | C |   |    |    |   |               |
|   | includes pursuing changes | M |   |    |    |   |               |
|   | to remove budget object   | G |   |    |    |   |               |
|   | classes and limitations   |   |   |    |    |   |               |
|   | and proposing changes to  |   |   |    |    |   |               |
|   | appropriation law during  |   |   |    |    |   |               |
|   | Fiscal Year 1996.         |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | In general, this approach | A | C |    |    |   |               |
| . | will encourage behavior   |   | a |    |    |   |               |
| 1 | that will make VA         |   | p |    |    |   |               |
|   | competitive, responsive,  |   | i |    |    |   |               |
|   | and effective. However,   |   | t |    |    |   |               |
|   | including all VISN        |   | a |    |    |   |               |
|   | funding under capitation  |   | t |    |    |   |               |
|   | does not allow for        |   | i |    |    |   |               |
|   | establishing special      |   | o |    |    |   |               |
|   | services that need to be  |   | n |    |    |   |               |
|   | shared (sold) to other    |   | i |    |    |   |               |
|   | VISNs to achieve          |   | s |    |    |   |               |
|   | break-even volume (e.g,   |   | o |    |    |   |               |
|   | high tech diagnostic or   |   | n |    |    |   |               |
|   | therapeutic procedures)   |   | l |    |    |   |               |
|   | and require seed money to |   | y |    |    |   |               |
|   | get started.              |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | It is unclear whether     | A | E |    |    |   |               |
|   | "covered lives" is        |   | n |    |    |   |               |
|   | registration beyond the   |   | r |    |    |   |               |
|   | service connected and     |   | o |    |    |   |               |
|   | indigent care (i.e.,      |   | l |    |    |   |               |
|   | mandated care). Covered   |   | l |    |    |   |               |
|   | lives in HMOs are         |   | m |    |    |   |               |
|   | typically low user        |   | e |    |    |   |               |
|   | patients. Our workload is |   | n |    |    |   |               |
|   | heavy on the expensive    |   | t |    |    |   |               |
|   | episodic or chronic care. |   | w |    |    |   |               |
|   | This is costly care not   |   | i |    |    |   |               |
|   | provided in "covered      |   | l |    |    |   |               |
|   | lives" organizations. Not |   | l |    |    |   |               |
|   | to mention that our       |   | b |    |    |   |               |
|   | population is aging and   |   | e |    |    |   |               |
|   | that the CMI are annually |   | d |    |    |   |               |
|   | not included or such care |   | e |    |    |   |               |
|   | is not provided.          |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | In several places in this | D | T |    |    |   |               |
|   | document there is         |   | h |    |    |   |               |
|   | reference to adjusting    |   | e |    |    |   |               |
|   | the capitation rate for   |   | C |    |    |   |               |
|   | VISN geographic cost      |   | M |    |    |   |               |
|   | variation. I assume this  |   | G |    |    |   |               |
|   | pertains primarily to     |   | w |    |    |   |               |
|   | wage differential similar |   | i |    |    |   |               |
|   | to the Medicare area wage |   | l |    |    |   |               |
|   | adjustments. While there  |   | l |    |    |   |               |
|   | are other variations in   |   | d |    |    |   |               |
|   | things such as utilities, |   | e |    |    |   |               |
|   | fuel, etc. I believe any  |   | c |    |    |   |               |
|   | effort to adjust for      |   | i |    |    |   |               |
|   | these items would         |   | d |    |    |   |               |
|   | unnecessarily complicate  |   | e |    |    |   |               |
|   | the formula and not       |   | t |    |    |   |               |
|   | improve the accuracy      |   | h |    |    |   |               |
|   | significantly. Our        |   | e |    |    |   |               |
|   | biggest cost is labor and |   | e |    |    |   |               |
|   | adjusting for             |   | x |    |    |   |               |
|   | differentials in wages    |   | t |    |    |   |               |
|   | seems sufficient to me.   |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | j |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Many of the work groups'  | A | S |    |    |   |               |
|   | recommendations (such as  |   | e |    |    |   |               |
|   | capitation) have been     |   | e |    |    |   |               |
|   | successfully implemented  |   | P |    |    |   |               |
|   | (from a cost containment  |   | r |    |    |   |               |
|   | standpoint) in the        |   | o |    |    |   |               |
|   | private sector in the     |   | p |    |    |   |               |
|   | form of HMO's. However,   |   | o |    |    |   |               |
|   | this report ignores VHA's |   | s |    |    |   |               |
|   | organizational            |   | e |    |    |   |               |
|   | environment and           |   | d |    |    |   |               |
|   | significantly downplays   |   | R |    |    |   |               |
|   | the role of Congress,     |   | e |    |    |   |               |
|   | OMB, and the VSO's.       |   | v |    |    |   |               |
|   | Except for Appendix C,    |   | i |    |    |   |               |
|   | which deals with needed   |   | s |    |    |   |               |
|   | legislative changes,      |   | i |    |    |   |               |
|   | Congress, and OMB are not |   | o |    |    |   |               |
|   | taken into account. For   |   | n |    |    |   |               |
|   | instance, it is extremely |   |   |    |    |   |               |
|   | politically naive to      |   |   |    |    |   |               |
|   | suggest that Congress     |   |   |    |    |   |               |
|   | would entertain the       |   |   |    |    |   |               |
|   | notion of reforming the   |   |   |    |    |   |               |
|   | appropriation system and  |   |   |    |    |   |               |
|   | "remove fenced fund       |   |   |    |    |   |               |
|   | restrictions". This       |   |   |    |    |   |               |
|   | reformation would in      |   |   |    |    |   |               |
|   | essence, hand over much   |   |   |    |    |   |               |
|   | of Congress' political    |   |   |    |    |   |               |
|   | capital (such as the      |   |   |    |    |   |               |
|   | location of Major         |   |   |    |    |   |               |
|   | construction projects) to |   |   |    |    |   |               |
|   | VHA's VISN directors.     |   |   |    |    |   |               |
|   | Another administrative    |   |   |    |    |   |               |
|   | and financial concern     |   |   |    |    |   |               |
|   | would be if Major and     |   |   |    |    |   |               |
|   | Minor Construction and    |   |   |    |    |   |               |
|   | NRM appropriations were   |   |   |    |    |   |               |
|   | rolled up into the        |   |   |    |    |   |               |
|   | Medical Care              |   |   |    |    |   |               |
|   | appropriation as part of  |   |   |    |    |   |               |
|   | "a VISN-specific          |   |   |    |    |   |               |
|   | capitation rate", how     |   |   |    |    |   |               |
|   | would VHA ensure that     |   |   |    |    |   |               |
|   | there would be sufficient |   |   |    |    |   |               |
|   | funds available for       |   |   |    |    |   |               |
|   | contractually agreed      |   |   |    |    |   |               |
|   | projects? (5 comments     |   |   |    |    |   |               |
|   | addressing this issue.)   |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | VHA may consider          | A |   |    |    |   |               |
|   | mirroring private sector  |   |   |    |    |   |               |
|   | practices with respect to |   |   |    |    |   |               |
|   | capital expenditures. I   |   |   |    |    |   |               |
|   | suggest that the VISN     |   |   |    |    |   |               |
|   | business plans could      |   |   |    |    |   |               |
|   | contain specific          |   |   |    |    |   |               |
|   | proposals to guide major  |   |   |    |    |   |               |
|   | capital acquisitions, and |   |   |    |    |   |               |
|   | fund capital and          |   |   |    |    |   |               |
|   | operating expenses        |   |   |    |    |   |               |
|   | separately.               |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The single capitation     |   |   |    |    |   |               |
|   | rate model proposed for   |   |   |    |    |   |               |
|   | the seriously mentally    |   |   |    |    |   |               |
|   | ill would pose a          |   |   |    |    |   |               |
|   | substantial risk and will |   |   |    |    |   |               |
|   | result in a severe        |   |   |    |    |   |               |
|   | curtailment of services   |   |   |    |    |   |               |
|   | to this very              |   |   |    |    |   |               |
|   | disadvantaged population. |   |   |    |    |   |               |
|   | It is noted that          |   |   |    |    |   |               |
|   | decapitated programs such |   |   |    |    |   |               |
|   | as managed care and other |   |   |    |    |   |               |
|   | insurance plans severely  |   |   |    |    |   |               |
|   | limit both in-patient and |   |   |    |    |   |               |
|   | outpatient mental health  |   |   |    |    |   |               |
|   | services. The unique      |   |   |    |    |   |               |
|   | mission of the VA has     |   |   |    |    |   |               |
|   | been noted to provide     |   |   |    |    |   |               |
|   | comprehensive care to     |   |   |    |    |   |               |
|   | veterans of our country   |   |   |    |    |   |               |
|   | particularly in the area  |   |   |    |    |   |               |
|   | of the seriously mentally |   |   |    |    |   |               |
|   | ill. The effect of the    |   |   |    |    |   |               |
|   | single capitation model   |   |   |    |    |   |               |
|   | would be to decrease the  |   |   |    |    |   |               |
|   | level of care able to be  |   |   |    |    |   |               |
|   | provided and interfere    |   |   |    |    |   |               |
|   | with the comprehensive    |   |   |    |    |   |               |
|   | health care services      |   |   |    |    |   |               |
|   | currently in existence.   |   |   |    |    |   |               |
|   | The single capitation     |   |   |    |    |   |               |
|   | model could be expected   |   |   |    |    |   |               |
|   | to increase morbidity,    |   |   |    |    |   |               |
|   | increase recidivism,      |   |   |    |    |   |               |
|   | increase homelessness and |   |   |    |    |   |               |
|   | it is noted that the      |   |   |    |    |   |               |
|   | required support systems  |   |   |    |    |   |               |
|   | in the community areas    |   |   |    |    |   |               |
|   | are not sufficient for an |   |   |    |    |   |               |
|   | influx of the seriously   |   |   |    |    |   |               |
|   | mentally ill (There were  |   |   |    |    |   |               |
|   | 17 instances of comments  |   |   |    |    |   |               |
|   | on this topic.)           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | How will the capitation   | D | A |    |    |   |               |
|   | model be implemented in   |   | c |    |    |   |               |
|   | academic medical centers  |   | a |    |    |   |               |
|   | where costs are           |   | d |    |    |   |               |
|   | different?                |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | p |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | With consideration of a   | A | T |    |    |   |               |
|   | national capitation       |   | h |    |    |   |               |
|   | system, will there be     |   | e |    |    |   |               |
|   | clearly understood and    |   | i |    |    |   |               |
|   | transparent incentives    |   | n |    |    |   |               |
|   | for care providers,       |   | c |    |    |   |               |
|   | health care managers, and |   | e |    |    |   |               |
|   | VAMC's? Under a           |   | n |    |    |   |               |
|   | traditional capitated     |   | t |    |    |   |               |
|   | plan, if a medical group  |   | i |    |    |   |               |
|   | enrolls a population into |   | v |    |    |   |               |
|   | their health plan, then   |   | e |    |    |   |               |
|   | that medical group will   |   | s |    |    |   |               |
|   | work to minimize the      |   | s |    |    |   |               |
|   | inappropriate utilization |   | h |    |    |   |               |
|   | of services. In fact, for |   | o |    |    |   |               |
|   | the healthy subset of the |   | u |    |    |   |               |
|   | enrolled population,      |   | l |    |    |   |               |
|   | there is no incentive for |   | d |    |    |   |               |
|   | an inpatient admission.   |   | p |    |    |   |               |
|   | We would hope that the    |   | r |    |    |   |               |
|   | financial reimbursement   |   | o |    |    |   |               |
|   | /payment efforts of the   |   | m |    |    |   |               |
|   | VA would recognize this,  |   | o |    |    |   |               |
|   | and not penalize          |   | t |    |    |   |               |
|   | financially those VAMCs   |   | e |    |    |   |               |
|   | that have declining       |   | h |    |    |   |               |
|   | inpatient stays while     |   | e |    |    |   |               |
|   | still maintaining the     |   | a |    |    |   |               |
|   | health of the enrolled    |   | l |    |    |   |               |
|   | populations.              |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
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|   |                           |   | p |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
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|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The recommendations of    | D | V |    |    |   |               |
|   | this work group that are  |   | I |    |    |   |               |
|   | cause for concern are:    |   | S |    |    |   |               |
|   | 1 - Removing funding      |   | N |    |    |   |               |
|   | restrictions on Special   |   | d |    |    |   |               |
|   | Programs and incorporate  |   | i |    |    |   |               |
|   | them into a single        |   | r |    |    |   |               |
|   | capitation rate and 2 -   |   | e |    |    |   |               |
|   | Provide educational       |   | c |    |    |   |               |
|   | funding for trainee       |   | t |    |    |   |               |
|   | salaries directly to the  |   | o |    |    |   |               |
|   | training facilities from  |   | r |    |    |   |               |
|   | HQ or the VISNs. Approval |   | s |    |    |   |               |
|   | of these recommendations  |   | m |    |    |   |               |
|   | would eliminate           |   | u |    |    |   |               |
|   | Prosthetics Centralized   |   | s |    |    |   |               |
|   | Funding, Prosthetics      |   | t |    |    |   |               |
|   | Improvement               |   | b |    |    |   |               |
|   | Implementation Plan       |   | e |    |    |   |               |
|   | (PIIP) Objective 12, and  |   | r |    |    |   |               |
|   | limit Program involvement |   | e |    |    |   |               |
|   | with the Prosthetics      |   | s |    |    |   |               |
|   | Representative Management |   | p |    |    |   |               |
|   | Training Program (PIIP    |   | o |    |    |   |               |
|   | Objective 7). PSAS        |   | n |    |    |   |               |
|   | received centralized      |   | s |    |    |   |               |
|   | funding in FY 1991        |   | i |    |    |   |               |
|   | because field Directors   |   | b |    |    |   |               |
|   | were unable to manage     |   | l |    |    |   |               |
|   | their limited resources   |   | e |    |    |   |               |
|   | well enough to meet       |   | a |    |    |   |               |
|   | Prosthetic needs of the   |   | n |    |    |   |               |
|   | disabled veteran          |   | d |    |    |   |               |
|   | population. Shortage of   |   | a |    |    |   |               |
|   | funding is still a        |   | c |    |    |   |               |
|   | problem and will probably |   | c |    |    |   |               |
|   | get worse. Therefore, if  |   | o |    |    |   |               |
|   | centralized funding for   |   | u |    |    |   |               |
|   | PSAS is eliminated in     |   | n |    |    |   |               |
|   | favor of a resource       |   | t |    |    |   |               |
|   | system directed entirely  |   | a |    |    |   |               |
|   | by the VISN, it stands to |   | b |    |    |   |               |
|   | reason that the problem   |   | l |    |    |   |               |
|   | will return. VISN         |   | e |    |    |   |               |
|   | directors will be unable  |   | f |    |    |   |               |
|   | to manage their limited   |   | o |    |    |   |               |
|   | resources well enough to  |   | r |    |    |   |               |
|   | meet Prosthetic needs of  |   | m |    |    |   |               |
|   | the disabled veteran      |   | a |    |    |   |               |
|   | population. In fact, this |   | n |    |    |   |               |
|   | problem is already        |   | a |    |    |   |               |
|   | occurring. Delayed orders |   | g |    |    |   |               |
|   | for PSAS because of       |   | i |    |    |   |               |
|   | funding problems are      |   | n |    |    |   |               |
|   | sharply rising as         |   | g |    |    |   |               |
|   | directors anticipate the  |   | a |    |    |   |               |
|   | ending of centralized     |   | l |    |    |   |               |
|   | funding and the end of    |   | l |    |    |   |               |
|   | reimbursement for funds   |   | t |    |    |   |               |
|   | advanced. (Three comments |   | h |    |    |   |               |
|   | addressing this issue).   |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Extended care currently   | A | C |    |    |   |               |
|   | presents a curious        |   | N |    |    |   |               |
|   | situation in that VAMCs   |   | H |    |    |   |               |
|   | have an incentive to move |   | f |    |    |   |               |
|   | patients out of their     |   | u |    |    |   |               |
|   | VAMCs and onto the        |   | n |    |    |   |               |
|   | community nursing home    |   | d |    |    |   |               |
|   | (CNH) roles. By doing so, |   | s |    |    |   |               |
|   | a VAMC is able to tap     |   | a |    |    |   |               |
|   | into a separate revenue   |   | r |    |    |   |               |
|   | stream of CNH dollars,    |   | e |    |    |   |               |
|   | thereby effectively       |   | r |    |    |   |               |
|   | reducing the draw on      |   | e |    |    |   |               |
|   | medical care dollars,     |   | c |    |    |   |               |
|   | while providing the same  |   | o |    |    |   |               |
|   | treatment, only in a      |   | m |    |    |   |               |
|   | different modality        |   | m |    |    |   |               |
|   | (community vs. in-house). |   | e |    |    |   |               |
|   | Is a change in the actual |   | n |    |    |   |               |
|   | allocation of these funds |   | d |    |    |   |               |
|   | worth considering,        |   | e |    |    |   |               |
|   | whereby CNH funds would   |   | d |    |    |   |               |
|   | be allocated for use at   |   | t |    |    |   |               |
|   | the VISN and VAMC level   |   | o |    |    |   |               |
|   | without the current       |   | b |    |    |   |               |
|   | programmatic controls?    |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 1\. Develop a capitated   | * |   | FY |    |   |               |
| * | rate for those services   | * |   | 19 |    |   |               |
|   | more typically capitated  | C |   | 97 |    |   |               |
|   | in managed care settings  | M |   |    |    |   |               |
|   | in the private sector,    | G |   | FY |    |   |               |
|   | and phase costly, long    | * |   | 19 |    |   |               |
|   | term care patients into   | * |   | 97 |    |   |               |
|   | the formula at a later    |   |   |    |    |   |               |
|   | date.                     | * |   | FY |    |   |               |
|   |                           | * |   | 19 |    |   |               |
|   | RATIONALE:                | C |   | 98 |    |   |               |
|   |                           | M |   |    |    |   |               |
|   | -   Gives VHA a learning  | G |   |    |    |   |               |
|   |     curve to gain more    | * |   |    |    |   |               |
|   |     experience in rate    | * |   |    |    |   |               |
|   |     setting, risk         |   |   |    |    |   |               |
|   |     adjustment,           | * |   |    |    |   |               |
|   |     reinsurance, and      | * |   |    |    |   |               |
|   |     other processes       | C |   |    |    |   |               |
|   |     important in managed  | M |   |    |    |   |               |
|   |     care.                 | G |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   | 2\. Develop a methodology | * |   |    |    |   |               |
|   | to fund special program   |   |   |    |    |   |               |
|   | care during FY 1997 to    |   |   |    |    |   |               |
|   | supplement the capitated  |   |   |    |    |   |               |
|   | funding associated with   |   |   |    |    |   |               |
|   | the remaining enrollee    |   |   |    |    |   |               |
|   | population.               |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | 3\. Fully capitate all    |   |   |    |    |   |               |
|   | patient populations       |   |   |    |    |   |               |
|   | (including special        |   |   |    |    |   |               |
|   | programs) upon gaining    |   |   |    |    |   |               |
|   | relevant expertise in     |   |   |    |    |   |               |
|   | risk adjustment           |   |   |    |    |   |               |
|   | capitation, etc.          |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Charter a work group to   | * |   | 1  |    |   |               |
| * | research the "best        | * |   | 0/ |    |   |               |
|   | practices" in the private | U |   | 95 |    |   |               |
|   | sector and recommend a    | n |   |    |    |   |               |
|   | methodology to fund Major | d |   |    |    |   |               |
|   | construction projects     | e |   |    |    |   |               |
|   | outside the capitation    | r |   |    |    |   |               |
|   | rate.                     | S |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | H |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | h |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Adopt a distribution of   |   |   |    |    | A |               |
| e | funds from Headquarters   |   |   |    |    | / |               |
| f | to VISNs as described in  |   |   |    |    | D |               |
| N | the example presented in  |   |   |    |    | / |               |
| o | Appendix B.               |   |   |    |    | O |               |
| ] |                           |   |   |    |    | ] |               |
| { | A.  The VISN-specific     |   |   |    |    | { |               |
| . |     capitation rate would |   |   |    |    | . |               |
| u |     contain withholds to  |   |   |    |    | u |               |
| n |     fund Headquarters,    |   |   |    |    | n |               |
| d |     VISN management,      |   |   |    |    | d |               |
| e |     certain overhead      |   |   |    |    | e |               |
| r |     costs, basic          |   |   |    |    | r |               |
| l |     operating funds for   |   |   |    |    | l |               |
| i |     other corporate       |   |   |    |    | i |               |
| n |     activities and create |   |   |    |    | n |               |
| e |     risk and reserve      |   |   |    |    | e |               |
| } |     pools.                |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * | B.  Re-allocate regional  |   |   |    |    | * |               |
|   |     reserves to VISN      |   |   |    |    |   |               |
| 3 |     Directors for FY 96.  |   |   |    |    |   |               |
| . |     In subsequent years,  |   |   |    |    |   |               |
| 2 |     each VISN Director    |   |   |    |    |   |               |
|   |     will determine        |   |   |    |    |   |               |
|   |     reserve needs.        |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | C.  VISN Directors should |   |   |    |    |   |               |
|   |     be authorized to      |   |   |    |    |   |               |
|   |     conduct market        |   |   |    |    |   |               |
|   |     research and          |   |   |    |    |   |               |
|   |     actuarial studies.    |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | D.  VISN Directors should |   |   |    |    |   |               |
|   |     be authorized to      |   |   |    |    |   |               |
|   |     transfer funds        |   |   |    |    |   |               |
|   |     between VAMCs         |   |   |    |    |   |               |
|   |     (including authority  |   |   |    |    |   |               |
|   |     to initiate TDAs -    |   |   |    |    |   |               |
|   |     Transfers of          |   |   |    |    |   |               |
|   |     Disbursement          |   |   |    |    |   |               |
|   |     Authority).           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Provide authority for     | * |   |    |    |   |               |
| . | VISN Directors to         | * |   |    |    |   |               |
| 2 | establish operational     | B |   |    |    |   |               |
| . | reserves for FY 96 and    | P |   |    |    |   |               |
| 1 | ability to transfer funds | R |   |    |    |   |               |
|   | between VAMCs.            | C |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | F |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Appendix B (page 36) is   | A | C |    |    |   |               |
| . | an attention getter!      |   | M |    |    |   |               |
| 2 | While the percentages     | D | G |    |    |   |               |
| . | listed are for            |   | s |    |    |   |               |
| 1 | "demonstration purposes   |   | h |    |    |   |               |
|   | only," it is not clear    |   | o |    |    |   |               |
|   | how such percentages will |   | u |    |    |   |               |
|   | be obtained. If they are  |   | l |    |    |   |               |
|   | data driven by past cost  |   | d |    |    |   |               |
|   | experience, I would feel  |   | d |    |    |   |               |
|   | safer, but if they will   |   | e |    |    |   |               |
|   | represent the personal    |   | c |    |    |   |               |
|   | opinion of some CMG (page |   | i |    |    |   |               |
|   | 15), we may be in for     |   | d |    |    |   |               |
|   | trouble. Spell out the    |   | e |    |    |   |               |
|   | process, please.          |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   | Language describing the   |   | w |    |    |   |               |
|   | funding of VISNs and HQ   |   | i |    |    |   |               |
|   | differs from the funding  |   | t |    |    |   |               |
|   | distribution illustrated  |   | h |    |    |   |               |
|   | in the diagram found in   |   | h |    |    |   |               |
|   | Appendix B, pg. 36 The    |   | o |    |    |   |               |
|   | verbal description states |   | l |    |    |   |               |
|   | that "VISN -specific      |   | d |    |    |   |               |
|   | capitation rate would     |   | s |    |    |   |               |
|   | contain withholds to fund |   | a |    |    |   |               |
|   | HQ, VISN management,      |   | d |    |    |   |               |
|   | certain overhead costs,   |   | j |    |    |   |               |
|   | basic operating funds for |   | u |    |    |   |               |
|   | other corporate           |   | s |    |    |   |               |
|   | activities and create     |   | t |    |    |   |               |
|   | risk and reserve pools."  |   | m |    |    |   |               |
|   | The diagram on the other  |   | e |    |    |   |               |
|   | hand illustrates that the |   | n |    |    |   |               |
|   | withhold for              |   | t |    |    |   |               |
|   | "Administration, SSC,     |   | s |    |    |   |               |
|   | PGM, Research" occurs     |   |   |    |    |   |               |
|   | prior to VISN funding. It |   | W |    |    |   |               |
|   | also describes a withhold |   | i |    |    |   |               |
|   | at the VISN level for     |   | t |    |    |   |               |
|   | "Administration, etc."    |   | h |    |    |   |               |
|   | Suggest that language be  |   | h |    |    |   |               |
|   | revised to reflect        |   | o |    |    |   |               |
|   | withholds at each level.  |   | l |    |    |   |               |
|   | Administration funding of |   | d |    |    |   |               |
|   | VISN management should    |   | s |    |    |   |               |
|   | not occur by means of     |   | f |    |    |   |               |
|   | withhold at HQ and VISNs. |   | r |    |    |   |               |
|   | (6 comments on this       |   | o |    |    |   |               |
|   | topic.)                   |   | m |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | H |    |    |   |               |
|   |                           |   | Q |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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+---+---------------------------+---+---+----+----+---+---------------+
|   | This document could serve | D | T |    |    |   |               |
|   | as a good starting point  |   | h |    |    |   |               |
|   | for a private healthcare  |   | e |    |    |   |               |
|   | system and portions of it |   | p |    |    |   |               |
|   | may be successfully       |   | e |    |    |   |               |
|   | utilized by VHA in the    |   | r |    |    |   |               |
|   | future. However, this     |   | f |    |    |   |               |
|   | report is flawed, as it   |   | o |    |    |   |               |
|   | ignores VHA's             |   | r |    |    |   |               |
|   | organizational            |   | m |    |    |   |               |
|   | environment and assumes   |   | a |    |    |   |               |
|   | VHA and the VISN          |   | n |    |    |   |               |
|   | directors will be         |   | c |    |    |   |               |
|   | operating in a vacuum.    |   | e |    |    |   |               |
|   | Many of the               |   | m |    |    |   |               |
|   | recommendations in this   |   | o |    |    |   |               |
|   | report, place far too     |   | n |    |    |   |               |
|   | much authority in the     |   | i |    |    |   |               |
|   | hands of the VISNs to the |   | t |    |    |   |               |
|   | point of where it becomes |   | o |    |    |   |               |
|   | overkill. One example of  |   | r |    |    |   |               |
|   | this is the               |   | i |    |    |   |               |
|   | recommendation to have HQ |   | n |    |    |   |               |
|   | initially fund VISNs, who |   | g |    |    |   |               |
|   | in turn would keep a      |   | s |    |    |   |               |
|   | reserve on hand to fund   |   | y |    |    |   |               |
|   | HQ. This is reinventing   |   | s |    |    |   |               |
|   | government? (3 comments   |   | t |    |    |   |               |
|   | addressed this issue).    |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | b |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | I feel that the resource  | A | T |    |    |   |               |
|   | allocation work group     |   | h |    |    |   |               |
|   | paper is good in concept. |   | i |    |    |   |               |
|   | The only difficulty might |   | s |    |    |   |               |
|   | be in the fair and        |   | i |    |    |   |               |
|   | equitable resource        |   | s |    |    |   |               |
|   | sharing between larger    |   | V |    |    |   |               |
|   | and smaller VAMCs.        |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The idea of one rate is   | A | T |    |    |   |               |
|   | problematic for places    |   | h |    |    |   |               |
|   | like Hines from a         |   | i |    |    |   |               |
|   | facility's perspective.   |   | s |    |    |   |               |
|   | With 17 tenant            |   | i |    |    |   |               |
|   | organizations, with       |   | s |    |    |   |               |
|   | millions of dollars of    |   | V |    |    |   |               |
|   | support required, these   |   | I |    |    |   |               |
|   | types of situations are   |   | S |    |    |   |               |
|   | routinely overlooked. If  |   | N |    |    |   |               |
|   | such factors are not      |   | D |    |    |   |               |
|   | considered, VISN          |   | i |    |    |   |               |
|   | directors need full       |   | r |    |    |   |               |
|   | flexibility to eliminate  |   | e |    |    |   |               |
|   | tenant organizations,     |   | c |    |    |   |               |
|   | since they compete for    |   | t |    |    |   |               |
|   | funding from patient care |   | o |    |    |   |               |
|   | activities, and provide   |   | r |    |    |   |               |
|   | little value-added to the |   | s |    |    |   |               |
|   | organization at the local |   | ' |    |    |   |               |
|   | level.                    |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The third general area of | A | P |    |    |   |               |
|   | concern is the            |   | a |    |    |   |               |
|   | distribution of financial |   | p |    |    |   |               |
|   | risk, or more succinctly, |   | e |    |    |   |               |
|   | the lack of risk sharing. |   | r |    |    |   |               |
|   | The group proposes        |   | r |    |    |   |               |
|   | distributing funds to     |   | e |    |    |   |               |
|   | each VISN on the basis of |   | c |    |    |   |               |
|   | its COSTS (adjusted for   |   | o |    |    |   |               |
|   | inflation), geography,    |   | m |    |    |   |               |
|   | and a "VISN Risk Rate"    |   | m |    |    |   |               |
|   | which remains undefined   |   | e |    |    |   |               |
|   | in the report. The Work   |   | n |    |    |   |               |
|   | Group Report also further |   | d |    |    |   |               |
|   | mitigates VISN risk by    |   | s |    |    |   |               |
|   | defining unfunded mandate |   | a |    |    |   |               |
|   | for care (p. 35) to       |   | r |    |    |   |               |
|   | account for differences   |   | i |    |    |   |               |
|   | between VISN defined      |   | s |    |    |   |               |
|   | costs and the             |   | k |    |    |   |               |
|   | congressional             |   | a |    |    |   |               |
|   | appropriation. The USH    |   | d |    |    |   |               |
|   | should set prices for     |   | j |    |    |   |               |
|   | various product lines (or |   | u |    |    |   |               |
|   | benefit packages) with    |   | s |    |    |   |               |
|   | risk adjustment for       |   | t |    |    |   |               |
|   | inflation and geographic  |   | m |    |    |   |               |
|   | salary variation. The     |   | e |    |    |   |               |
|   | price of a benefits       |   | n |    |    |   |               |
|   | package should include:   |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   | 1\. A VISN-specific       |   | n |    |    |   |               |
|   | patient utilization based |   | d |    |    |   |               |
|   | risk adjustment similar   |   | i |    |    |   |               |
|   | to that already developed |   | c |    |    |   |               |
|   | by the BDC and proposed   |   | a |    |    |   |               |
|   | for use in FY 97          |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   | 2\. A certain proportion  |   | r |    |    |   |               |
|   | withheld as a risk pool   |   | , |    |    |   |               |
|   | to offset (co-insure) the |   | t |    |    |   |               |
|   | possibility that there    |   | h |    |    |   |               |
|   | will be a few patients    |   | e |    |    |   |               |
|   | whose expenditures will   |   | d |    |    |   |               |
|   | vastly exceed the         |   | e |    |    |   |               |
|   | capitation price norms.   |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
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|   |                           |   | I |    |    |   |               |
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|   |                           |   | p |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
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|   |                           |   | w |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | A serious issue of        | D | U |    |    |   |               |
|   | governance must also be   |   | S |    |    |   |               |
|   | addressed. The work group |   | H |    |    |   |               |
|   | proposes establishment of |   | s |    |    |   |               |
|   | a field based Capitation  |   | h |    |    |   |               |
|   | Management Group to       |   | o |    |    |   |               |
|   | "\...provide              |   | u |    |    |   |               |
|   | administrative oversight  |   | l |    |    |   |               |
|   | and manage the            |   | d |    |    |   |               |
|   | development and           |   | d |    |    |   |               |
|   | maintenance of the        |   | e |    |    |   |               |
|   | capitation system." Our   |   | t |    |    |   |               |
|   | experience with over 15   |   | e |    |    |   |               |
|   | years of resource system  |   | r |    |    |   |               |
|   | development and           |   | m |    |    |   |               |
|   | management has shown that |   | i |    |    |   |               |
|   | without having corporate  |   | n |    |    |   |               |
|   | leadership and            |   | e |    |    |   |               |
|   | accountability, these     |   | a |    |    |   |               |
|   | systems tend to become    |   | p |    |    |   |               |
|   | tinker toys for field     |   | p |    |    |   |               |
|   | managers. While field     |   | r |    |    |   |               |
|   | input to the development  |   | o |    |    |   |               |
|   | and management of the     |   | p |    |    |   |               |
|   | capitation system is      |   | r |    |    |   |               |
|   | essential, we believe     |   | i |    |    |   |               |
|   | that administrative       |   | a |    |    |   |               |
|   | oversight and management  |   | t |    |    |   |               |
|   | authority should          |   | e |    |    |   |               |
|   | ultimately reside with    |   | o |    |    |   |               |
|   | the USH and that field    |   | r |    |    |   |               |
|   | input in this area should |   | g |    |    |   |               |
|   | be advisory. In our view, |   | a |    |    |   |               |
|   | the work group's proposal |   | n |    |    |   |               |
|   | appears to create a case  |   | i |    |    |   |               |
|   | of the "fox guarding the  |   | z |    |    |   |               |
|   | henhouse" and will lead   |   | a |    |    |   |               |
|   | to business-as-usual with |   | t |    |    |   |               |
|   | respect to improving      |   | i |    |    |   |               |
|   | efficiency of health care |   | o |    |    |   |               |
|   | processes.                |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | While we are in basic     | A | T |    |    |   |               |
|   | agreement with the        |   | h |    |    |   |               |
|   | concept of a capitated    |   | e |    |    |   |               |
|   | rate within the context   |   | r |    |    |   |               |
|   | of our global             |   | e |    |    |   |               |
|   | appropriation, we have    |   | s |    |    |   |               |
|   | concerns about the        |   | h |    |    |   |               |
|   | potential for political   |   | o |    |    |   |               |
|   | intervention to rescue    |   | u |    |    |   |               |
|   | inefficient providers.    |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
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|   |                           |   | w |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
|   |                           |   | j |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Include an adjustment for |   |   |    |    | A |               |
| e | risk and geographic       |   |   |    |    | / |               |
| f | variation in cost in the  |   |   |    |    | D |               |
| N | VISN-specific capitation  |   |   |    |    | / |               |
| o | rate.                     |   |   |    |    | O |               |
| ] |                           |   |   |    |    | ] |               |
| { |                           |   |   |    |    | { |               |
| . |                           |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Actuarial assessment of   | D | R |    |    |   |               |
| . | the type called for here  |   | i |    |    |   |               |
| 3 | is very difficult and VHA |   | s |    |    |   |               |
|   | has never done it before. |   | k |    |    |   |               |
|   | The focus of private      |   | A |    |    |   |               |
|   | sector actuaries is on    |   | d |    |    |   |               |
|   | how to avoid risk.        |   | j |    |    |   |               |
|   | Avoiding risk, or cream   |   | u |    |    |   |               |
|   | skimming, involves        |   | s |    |    |   |               |
|   | avoiding caring for the   |   | t |    |    |   |               |
|   | veterans who are least    |   | m |    |    |   |               |
|   | predictable under the     |   | e |    |    |   |               |
|   | risk adjustment scheme.   |   | n |    |    |   |               |
|   | Risk adjustment schemes   |   | t |    |    |   |               |
|   | are always incomplete. It |   | v |    |    |   |               |
|   | is unclear how these      |   | a |    |    |   |               |
|   | concepts merge with the   |   | l |    |    |   |               |
|   | idea of caring for        |   | u |    |    |   |               |
|   | veterans who need our     |   | e |    |    |   |               |
|   | services. On the Medicare |   | n |    |    |   |               |
|   | side, the capitation      |   | e |    |    |   |               |
|   | structures that they are  |   | e |    |    |   |               |
|   | considering look much     |   | d |    |    |   |               |
|   | more like RPM than not.   |   | s |    |    |   |               |
|   | (2 comments on this       |   | t |    |    |   |               |
|   | topic.)                   |   | o |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | In this recommendation    | A | R |    |    |   |               |
|   | and throughout the paper  |   | i |    |    |   |               |
|   | there is reference to     |   | s |    |    |   |               |
|   | adjusting the capitation  |   | k |    |    |   |               |
|   | for risk. If I read the   |   | a |    |    |   |               |
|   | paper correctly, this     |   | d |    |    |   |               |
|   | risk will be assessed     |   | j |    |    |   |               |
|   | based on the demographic  |   | u |    |    |   |               |
|   | mix of the population and |   | s |    |    |   |               |
|   | not on historic           |   | t |    |    |   |               |
|   | utilization rates of      |   | m |    |    |   |               |
|   | veterans in different     |   | e |    |    |   |               |
|   | parts of the country. My  |   | n |    |    |   |               |
|   | only concern is that we   |   | t |    |    |   |               |
|   | not assume that historic  |   | f |    |    |   |               |
|   | utilization rates, or the |   | a |    |    |   |               |
|   | costs associated          |   | c |    |    |   |               |
|   | therewith, are reflective |   | t |    |    |   |               |
|   | of anything that would    |   | o |    |    |   |               |
|   | occur in a managed care   |   | r |    |    |   |               |
|   | system. Assumptions such  |   | w |    |    |   |               |
|   | as this have been major   |   | i |    |    |   |               |
|   | drawbacks to the RPM      |   | l |    |    |   |               |
|   | system, and I would not   |   | l |    |    |   |               |
|   | like to see this          |   | a |    |    |   |               |
|   | repeated. In fact I was   |   | c |    |    |   |               |
|   | pleased to see on page 4  |   | c |    |    |   |               |
|   | that RPM will be phased   |   | o |    |    |   |               |
|   | out in the near future.   |   | m |    |    |   |               |
|   | (6 comments on this       |   | m |    |    |   |               |
|   | issue)                    |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The inclusion of risk     | A | S |    |    |   |               |
|   | adjustment for risk and   |   | e |    |    |   |               |
|   | geographic variation      |   | e |    |    |   |               |
|   | would be tied to          |   | P |    |    |   |               |
|   | actuarial assessments     |   | r |    |    |   |               |
|   | noted in recommendation   |   | o |    |    |   |               |
|   | 5. Consideration should   |   | p |    |    |   |               |
|   | be given to having risk   |   | o |    |    |   |               |
|   | adjustments for more than |   | s |    |    |   |               |
|   | the traditional veterans  |   | e |    |    |   |               |
|   | groups. Actuarial studies |   | d |    |    |   |               |
|   | should also include       |   | r |    |    |   |               |
|   | CHAMPUS, CHAMPVA, and     |   | e |    |    |   |               |
|   | active duty DOD since     |   | v |    |    |   |               |
|   | these are all proposed    |   | i |    |    |   |               |
|   | market groups which       |   | s |    |    |   |               |
|   | individual facilities or  |   | i |    |    |   |               |
|   | VISNs may serve.          |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | If the Devil is in the    | D | T |    |    |   |               |
|   | details, then here is the |   | h |    |    |   |               |
|   | Devil's workshop.         |   | e |    |    |   |               |
|   | Currently we add up the   |   | s |    |    |   |               |
|   | actual costs of each      |   | p |    |    |   |               |
|   | veteran served by a       |   | e |    |    |   |               |
|   | medical center, adjust up |   | c |    |    |   |               |
|   | for inflation and new     |   | i |    |    |   |               |
|   | initiatives, down for a   |   | f |    |    |   |               |
|   | variety of special costs, |   | i |    |    |   |               |
|   | adjust for outlier        |   | c |    |    |   |               |
|   | status, blend in other    |   | s |    |    |   |               |
|   | factors and undefinables, |   | o |    |    |   |               |
|   | and eventually come up    |   | f |    |    |   |               |
|   | with a budget for a       |   | t |    |    |   |               |
|   | medical center. The       |   | h |    |    |   |               |
|   | calculations are too      |   | e |    |    |   |               |
|   | complex to duplicate      |   | r |    |    |   |               |
|   | outside of the BDC, and   |   | i |    |    |   |               |
|   | are universally           |   | s |    |    |   |               |
|   | distrusted. We ain't seen |   | k |    |    |   |               |
|   | nothing yet. For each     |   | a |    |    |   |               |
|   | "enrollee," we propose to |   | d |    |    |   |               |
|   | adjust the "one"          |   | j |    |    |   |               |
|   | capitation rate by 1)     |   | u |    |    |   |               |
|   | diagnostic codes (a la    |   | s |    |    |   |               |
|   | DRG's or current          |   | t |    |    |   |               |
|   | capitation groups, plus   |   | m |    |    |   |               |
|   | self reported health      |   | e |    |    |   |               |
|   | status, plus functional   |   | n |    |    |   |               |
|   | status, prior utilization |   | t |    |    |   |               |
|   | and costs (which we now   |   | h |    |    |   |               |
|   | do), lifestyle (!) and    |   | a |    |    |   |               |
|   | various combinations.     |   | v |    |    |   |               |
|   | Even the BDC would be     |   | e |    |    |   |               |
|   | hard put to make it more  |   | y |    |    |   |               |
|   | complicated. And they     |   | e |    |    |   |               |
|   | want our trust?           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | i |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Why would a special work  | D | T |    |    |   |               |
|   | group focusing on risk    |   | h |    |    |   |               |
|   | adjustment be established |   | e |    |    |   |               |
|   | to report to the CMG,     |   | p |    |    |   |               |
|   | when expertise in VA is   |   | u |    |    |   |               |
|   | limited and a number of   |   | r |    |    |   |               |
|   | highly qualified firms    |   | p |    |    |   |               |
|   | offer such services       |   | o |    |    |   |               |
|   | through contracting       |   | s |    |    |   |               |
|   | vehicles?                 |   | e |    |    |   |               |
|   |                           |   | o |    |    |   |               |
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|   |                           |   | T |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | x |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 1.  Develop an RFP for a  | * |   | 1  |    |   |               |
| * |     national contract to  | * |   | 2/ |    |   |               |
| 3 |     conduct an actuarial  | C |   | 95 |    |   |               |
| . |     analysis at the VISN  | I |   |    |    |   |               |
| 3 |     level for the         | O |   |    |    |   |               |
|   |     populations served by | , |   |    |    |   |               |
|   |     VHA (including        | C |   |    |    |   |               |
|   |     CHAMPVA, DOD, etc.).  | M |   |    |    |   |               |
|   |                           | G |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 2.  The CMG should        | * |   | 1  |    |   |               |
| * |     appoint work groups,  | * |   | 2/ |    |   |               |
|   |     as soon as possible,  | C |   | 95 |    |   |               |
|   |     to address the risk   | M |   |    |    |   |               |
|   |     adjustment indicator, | G |   |    |    |   |               |
|   |     provider incentive    | / |   |    |    |   |               |
|   |     issues, and the       | U |   |    |    |   |               |
|   |     necessary specific    | S |   |    |    |   |               |
|   |     elements of the       | H |   |    |    |   |               |
|   |     capitation rate as    | * |   |    |    |   |               |
|   |     described in          | * |   |    |    |   |               |
|   |     Appendix D. The       |   |   |    |    |   |               |
|   |     groups should have    |   |   |    |    |   |               |
|   |     representation from   |   |   |    |    |   |               |
|   |     the appropriate       |   |   |    |    |   |               |
|   |     headquarters offices  |   |   |    |    |   |               |
|   |     (i.e. - Office of     |   |   |    |    |   |               |
|   |     Policy Planning, and  |   |   |    |    |   |               |
|   |     Performance, CFO,     |   |   |    |    |   |               |
|   |     Human Resources) and  |   |   |    |    |   |               |
|   |     the USH should give   |   |   |    |    |   |               |
|   |     this task high        |   |   |    |    |   |               |
|   |     priority and          |   |   |    |    |   |               |
|   |     sufficient support.   |   |   |    |    |   |               |
|   |     The work groups       |   |   |    |    |   |               |
|   |     should be under the   |   |   |    |    |   |               |
|   |     oversight of the CMG  |   |   |    |    |   |               |
|   |     for continuity.       |   |   |    |    |   |               |
|   |     Finished products     |   |   |    |    |   |               |
|   |     should be ready in    |   |   |    |    |   |               |
|   |     time for FY98         |   |   |    |    |   |               |
|   |     implementation.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  Separate research and |   |   |    |    | A |               |
| e |     education funding     |   |   |    |    | / |               |
| f |     from the capitated    |   |   |    |    | D |               |
| N |     rate.                 |   |   |    |    | / |               |
| o |                           |   |   |    |    | O |               |
| ] | B.  Provide education     |   |   |    |    | ] |               |
| { |     funding for trainee   |   |   |    |    | { |               |
| . |     salaries directly to  |   |   |    |    | . |               |
| u |     the training          |   |   |    |    | u |               |
| n |     facilities from       |   |   |    |    | n |               |
| d |     Headquarters or the   |   |   |    |    | d |               |
| e |     VISN. Affix each      |   |   |    |    | e |               |
| r |     approved training     |   |   |    |    | r |               |
| l |     position with a       |   |   |    |    | l |               |
| i |     nationally determined |   |   |    |    | i |               |
| n |     fixed amount of       |   |   |    |    | n |               |
| e |     dollars to cover the  |   |   |    |    | e |               |
| } |     cost of               |   |   |    |    | } |               |
| * |     administrative        |   |   |    |    | * |               |
| * |     overhead and support  |   |   |    |    | * |               |
|   |     which will be         |   |   |    |    |   |               |
| 3 |     differentiated        |   |   |    |    |   |               |
| . |     between direct and    |   |   |    |    |   |               |
| 4 |     allied health         |   |   |    |    |   |               |
|   |     trainees. Facilities  |   |   |    |    |   |               |
|   |     will be able to       |   |   |    |    |   |               |
|   |     create additional     |   |   |    |    |   |               |
|   |     trainee slots from    |   |   |    |    |   |               |
|   |     their own resources.  |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | C.  Research projects     |   |   |    |    |   |               |
|   |     should continue to be |   |   |    |    |   |               |
|   |     funded through the    |   |   |    |    |   |               |
|   |     merit review approval |   |   |    |    |   |               |
|   |     process. On a project |   |   |    |    |   |               |
|   |     by project basis,     |   |   |    |    |   |               |
|   |     allocate research     |   |   |    |    |   |               |
|   |     support funding       |   |   |    |    |   |               |
|   |     through the VISN to   |   |   |    |    |   |               |
|   |     the VAMC on a         |   |   |    |    |   |               |
|   |     pre-established       |   |   |    |    |   |               |
|   |     percentage (or fixed  |   |   |    |    |   |               |
|   |     rate) formula,        |   |   |    |    |   |               |
|   |     relative to the       |   |   |    |    |   |               |
|   |     number, nature, and   |   |   |    |    |   |               |
|   |     amount (or whatever   |   |   |    |    |   |               |
|   |     other criteria are    |   |   |    |    |   |               |
|   |     appropriate) of       |   |   |    |    |   |               |
|   |     research grants       |   |   |    |    |   |               |
|   |     approved.             |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | In 1992, VHA's fourth     | A | E |    |    |   |               |
| . | mission of backup to DOD  |   | M |    |    |   |               |
| 4 | "during and immediately   |   | P |    |    |   |               |
|   | following a war or a      |   | O |    |    |   |               |
|   | period of national        |   | s |    |    |   |               |
|   | emergency" was augmented  |   | h |    |    |   |               |
|   | by the provisions of the  |   | o |    |    |   |               |
|   | Federal Response Plan,    |   | u |    |    |   |               |
|   | developed to implement    |   | l |    |    |   |               |
|   | Public Law 93-288 as      |   | d |    |    |   |               |
|   | amended by Public Law     |   | b |    |    |   |               |
|   | 100-707, the Robert T.    |   | e |    |    |   |               |
|   | Stafford Disaster Relief  |   | r |    |    |   |               |
|   | and Emergency Assistance  |   | e |    |    |   |               |
|   | Act, to provide response  |   | m |    |    |   |               |
|   | assistance during natural |   | o |    |    |   |               |
|   | disasters or other        |   | v |    |    |   |               |
|   | incidents requiring       |   | e |    |    |   |               |
|   | federal assistance in     |   | d |    |    |   |               |
|   | order to save lives and   |   | f |    |    |   |               |
|   | protect public health,    |   | r |    |    |   |               |
|   | safety, and property.     |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Will there be additional  | A | C |    |    |   |               |
|   | or any funding for        |   | o |    |    |   |               |
|   | medical teaching          |   | m |    |    |   |               |
|   | programs. The academic    |   | m |    |    |   |               |
|   | programs are essential to |   | i |    |    |   |               |
|   | provide quality health    |   | t |    |    |   |               |
|   | care in America. Will     |   | t |    |    |   |               |
|   | there be resources to     |   | e |    |    |   |               |
|   | support these programs?   |   | e |    |    |   |               |
|   | Will cost of trainee      |   | h |    |    |   |               |
|   | salaries alone support    |   | a |    |    |   |               |
|   | the cost of academic      |   | s |    |    |   |               |
|   | programs?                 |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | ( |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | ) |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | I suggest that some type  | D | T |    |    |   |               |
|   | of ceiling be established |   | h |    |    |   |               |
|   | on the numbers and types  |   | e |    |    |   |               |
|   | of residents and fellows  |   | m |    |    |   |               |
|   | at each facility, based   |   | e |    |    |   |               |
|   | on the projected          |   | t |    |    |   |               |
|   | workloads for that        |   | h |    |    |   |               |
|   | facility. If this does    |   | o |    |    |   |               |
|   | not occur we may have too |   | d |    |    |   |               |
|   | little clinical training  |   | o |    |    |   |               |
|   | material for too many     |   | l |    |    |   |               |
|   | trainees, resulting in a  |   | o |    |    |   |               |
|   | perverse incentive to     |   | g |    |    |   |               |
|   | provide more care and do  |   | y |    |    |   |               |
|   | more procedures to merely |   | f |    |    |   |               |
|   | meet the training needs   |   | o |    |    |   |               |
|   | of the residents. It is   |   | r |    |    |   |               |
|   | also true that when there |   | f |    |    |   |               |
|   | is an abundant number of  |   | u |    |    |   |               |
|   | residents and fellows,    |   | n |    |    |   |               |
|   | the VA paid faculty staff |   | d |    |    |   |               |
|   | provide very little, if   |   | i |    |    |   |               |
|   | any, hands on direct      |   | n |    |    |   |               |
|   | patient care. I do not    |   | g |    |    |   |               |
|   | believe we can afford to  |   | r |    |    |   |               |
|   | continue supporting this  |   | e |    |    |   |               |
|   | significant overhead.     |   | s |    |    |   |               |
|   | There should be a happy   |   | i |    |    |   |               |
|   | medium where excellent    |   | d |    |    |   |               |
|   | training is provided and  |   | e |    |    |   |               |
|   | everyone is optimally     |   | n |    |    |   |               |
|   | employed.                 |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Research projects should  | D | F |    |    |   |               |
|   | continue to be funded     |   | u |    |    |   |               |
|   | through the merit review  |   | n |    |    |   |               |
|   | process, with the funds   |   | d |    |    |   |               |
|   | in direct support of      |   | i |    |    |   |               |
|   | research "passed through" |   | n |    |    |   |               |
|   | the VISN to the medical   |   | g |    |    |   |               |
|   | center for the support of |   | f |    |    |   |               |
|   | the approved projects.    |   | o |    |    |   |               |
|   | Funds for "indirect       |   | r |    |    |   |               |
|   | costs" including those    |   | r |    |    |   |               |
|   | associated with           |   | e |    |    |   |               |
|   | administrative support    |   | s |    |    |   |               |
|   | provided by the medical   |   | e |    |    |   |               |
|   | care facilities (e.g.,    |   | a |    |    |   |               |
|   | radiation safety,         |   | r |    |    |   |               |
|   | infection control,        |   | c |    |    |   |               |
|   | library, supply,          |   | h |    |    |   |               |
|   | personnel management,     |   | i |    |    |   |               |
|   | fiscal, facility          |   | s |    |    |   |               |
|   | engineering, EMS,         |   | e |    |    |   |               |
|   | utilities) should be      |   | x |    |    |   |               |
|   | based on a formula,       |   | c |    |    |   |               |
|   | relative to the number,   |   | l |    |    |   |               |
|   | nature, and amount (or    |   | u |    |    |   |               |
|   | any other criteria as     |   | d |    |    |   |               |
|   | appropriate) of the       |   | e |    |    |   |               |
|   | research awards made. The |   | d |    |    |   |               |
|   | formula should also       |   | f |    |    |   |               |
|   | include an offset for the |   | r |    |    |   |               |
|   | salary support of funded  |   | o |    |    |   |               |
|   | investigators.            |   | m |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | D.  Develop an allocation | * |   | 6/ |    |   |               |
| . |     method to fund        | * |   | 96 |    |   |               |
| 4 |     overhead for research | C |   |    |    |   |               |
|   |     grants and trainee    | M |   |    |    |   |               |
|   |     slots. Include in the | G |   |    |    |   |               |
|   |     FY 97 allocation      | , |   |    |    |   |               |
|   |     process.              | A |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | A |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | , |   |    |    |   |               |
|   |                           | H |   |    |    |   |               |
|   |                           | S |   |    |    |   |               |
|   |                           | R |   |    |    |   |               |
|   |                           | & |   |    |    |   |               |
|   |                           | D |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  Identify target       |   |   |    |    | A |               |
| e |     populations and       |   |   |    |    | / |               |
| f |     gather demographic,   |   |   |    |    | D |               |
| N |     clinical, and         |   |   |    |    | / |               |
| o |     marketing             |   |   |    |    | O |               |
| ] |     information.          |   |   |    |    | ] |               |
| { |                           |   |   |    |    | { |               |
| . | B.  Determine if data     |   |   |    |    | . |               |
| u |     should be produced by |   |   |    |    | u |               |
| n |     VA resources or       |   |   |    |    | n |               |
| d |     outsourced.           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r | C.  Conduct actuarial     |   |   |    |    | r |               |
| l |     assessments and risk  |   |   |    |    | l |               |
| i |     analyses of the       |   |   |    |    | i |               |
| n |     veteran population to |   |   |    |    | n |               |
| e |     determine expected    |   |   |    |    | e |               |
| } |     levels of risk,       |   |   |    |    | } |               |
| * |     utilization rates and |   |   |    |    | * |               |
| * |     costs of care.        |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 5 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Actuarial assessments and | A |   |    |    |   |               |
| . | risk analysis of the      |   |   |    |    |   |               |
| 5 | veteran population need   |   |   |    |    |   |               |
|   | to be conducted to        |   |   |    |    |   |               |
|   | determine expected levels |   |   |    |    |   |               |
|   | of risk, utilization      |   |   |    |    |   |               |
|   | rates and costs of care.  |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Although not stated       | D | T |    |    |   |               |
|   | explicitly in the         |   | h |    |    |   |               |
|   | recommendation, the       |   | e |    |    |   |               |
|   | proposed actuarial/market |   | c |    |    |   |               |
|   | analysis should be the    |   | o |    |    |   |               |
|   | prerogative and           |   | m |    |    |   |               |
|   | responsibility of the     |   | m |    |    |   |               |
|   | VISN Director. This       |   | i |    |    |   |               |
|   | should be stated clearly  |   | t |    |    |   |               |
|   | so as not to imply that   |   | t |    |    |   |               |
|   | such analysis will be     |   | e |    |    |   |               |
|   | centrally directed or     |   | e |    |    |   |               |
|   | funded.                   |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | R |    |    |   |               |
|   |                           |   | F |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | D.  Develop an RFP for a  | * |   | 1  |    |   |               |
| . |     national contract to  | * |   | 2/ |    |   |               |
| 5 |     conduct an actuarial  | C |   | 95 |    |   |               |
|   |     analysis at the VISN  | I |   |    |    |   |               |
|   |     level for the         | O |   |    |    |   |               |
|   |     populations served by | , |   |    |    |   |               |
|   |     VHA (including        | C |   |    |    |   |               |
|   |     CHAMPVA, DOD, etc.).  | M |   |    |    |   |               |
|   |                           | G |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  Develop and implement |   |   |    |    | A |               |
| e |     a strategy to enroll  |   |   |    |    | / |               |
| f |     veteran patients in a |   |   |    |    | D |               |
| N |     VISN-level health     |   |   |    |    | / |               |
| o |     plan.                 |   |   |    |    | O |               |
| ] |                           |   |   |    |    | ] |               |
| { | B.  Determine whether     |   |   |    |    | { |               |
| . |     enrollment in the     |   |   |    |    | . |               |
| u |     health plan should be |   |   |    |    | u |               |
| n |     open and continuous,  |   |   |    |    | n |               |
| d |     or limited to a       |   |   |    |    | d |               |
| e |     defined open season.  |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 6 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Develop an enrollment     | C |   |    |    |   |               |
| * | database and              | I |   |    |    |   |               |
| 3 | implementation process    | O |   |    |    |   |               |
| . | during FY 1997.           | / |   |    |    |   |               |
| 6 |                           | C |   |    |    |   |               |
| . |                           | M |   |    |    |   |               |
| 1 |                           | G |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | It is not reasonable to   | D | E |    |    |   |               |
|   | expect all veterans will  |   | n |    |    |   |               |
|   | enroll in one VISN for    |   | r |    |    |   |               |
|   | primary care. How will    |   | o |    |    |   |               |
|   | the capitation model work |   | l |    |    |   |               |
|   | if the veteran only       |   | l |    |    |   |               |
|   | receives medications from |   | m |    |    |   |               |
|   | the VA and is not treated |   | e |    |    |   |               |
|   | for a continuum of health |   | n |    |    |   |               |
|   | care issues?              |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
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|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | A concern has to be with  | A |   |    |    |   |               |
|   | building the capitation   |   |   |    |    |   |               |
|   | rate on an enrolled       |   |   |    |    |   |               |
|   | population. In any        |   |   |    |    |   |               |
|   | typical commercial health |   |   |    |    |   |               |
|   | plan, the enrolled        |   |   |    |    |   |               |
|   | population, in exchange   |   |   |    |    |   |               |
|   | for the cost of their     |   |   |    |    |   |               |
|   | enrollment, is limited to |   |   |    |    |   |               |
|   | seeking services in that  |   |   |    |    |   |               |
|   | plan. Veterans would not  |   |   |    |    |   |               |
|   | be outlaying any funds    |   |   |    |    |   |               |
|   | for their enrollment, nor |   |   |    |    |   |               |
|   | would they be utilizing   |   |   |    |    |   |               |
|   | services in the VA.       |   |   |    |    |   |               |
|   | Therefore, enrollment     |   |   |    |    |   |               |
|   | would not have the same   |   |   |    |    |   |               |
|   | meaning, perimeters, and  |   |   |    |    |   |               |
|   | boundaries as is commonly |   |   |    |    |   |               |
|   | understood elsewhere in   |   |   |    |    |   |               |
|   | health care. Certain      |   |   |    |    |   |               |
|   | populations of veterans,  |   |   |    |    |   |               |
|   | who are well represented  |   |   |    |    |   |               |
|   | in our system (such as    |   |   |    |    |   |               |
|   | the homeless, severely    |   |   |    |    |   |               |
|   | mentally ill, etc.) would |   |   |    |    |   |               |
|   | not be inclined to seek   |   |   |    |    |   |               |
|   | enrollment until the need |   |   |    |    |   |               |
|   | for the services          |   |   |    |    |   |               |
|   | presented itself. An      |   |   |    |    |   |               |
|   | enrollment system without |   |   |    |    |   |               |
|   | any limitations or        |   |   |    |    |   |               |
|   | expectations of the VA    |   |   |    |    |   |               |
|   | being the sole health     |   |   |    |    |   |               |
|   | care provider could lead  |   |   |    |    |   |               |
|   | to attempts by some       |   |   |    |    |   |               |
|   | facilities to enroll      |   |   |    |    |   |               |
|   | large numbers of veterans |   |   |    |    |   |               |
|   | solely for the purpose of |   |   |    |    |   |               |
|   | annual screening exams,   |   |   |    |    |   |               |
|   | rather than as a true     |   |   |    |    |   |               |
|   | provider of services.     |   |   |    |    |   |               |
|   | Such gaming unfortunately |   |   |    |    |   |               |
|   | has occurred under RAM,   |   |   |    |    |   |               |
|   | and unless precluded by   |   |   |    |    |   |               |
|   | an enrollment process     |   |   |    |    |   |               |
|   | could lead to severely    |   |   |    |    |   |               |
|   | compromised information   |   |   |    |    |   |               |
|   | about the funding needs   |   |   |    |    |   |               |
|   | of a specific health      |   |   |    |    |   |               |
|   | center. If an enrollment  |   |   |    |    |   |               |
|   | system is to be the basis |   |   |    |    |   |               |
|   | of capitation, then it    |   |   |    |    |   |               |
|   | needs to be linked to     |   |   |    |    |   |               |
|   | actual utilization. (4    |   |   |    |    |   |               |
|   | instances of this issue)  |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The assumptions that      | D | T |    |    |   |               |
|   | patients will "enroll"    |   | h |    |    |   |               |
|   | with one VISN, that they  |   | e |    |    |   |               |
|   | will somehow always elect |   | c |    |    |   |               |
|   | to use VA for all their   |   | o |    |    |   |               |
|   | health care needs, that   |   | m |    |    |   |               |
|   | VISNs can use utilization |   | m |    |    |   |               |
|   | of services provided per  |   | i |    |    |   |               |
|   | member as a form of       |   | t |    |    |   |               |
|   | comparative financial     |   | t |    |    |   |               |
|   | measure ignore the        |   | e |    |    |   |               |
|   | reality of VA's health    |   | e |    |    |   |               |
|   | care operations for       |   | r |    |    |   |               |
|   | foreseeable future. These |   | e |    |    |   |               |
|   | assumptions ignore that   |   | c |    |    |   |               |
|   | present eligibility rules |   | o |    |    |   |               |
|   | require the VA to provide |   | m |    |    |   |               |
|   | care to certain veterans  |   | m |    |    |   |               |
|   | whether or not they have  |   | e |    |    |   |               |
|   | enrolled. These           |   | n |    |    |   |               |
|   | assumptions ignore the    |   | d |    |    |   |               |
|   | fact that much of the     |   | s |    |    |   |               |
|   | care we currently provide |   | t |    |    |   |               |
|   | to service connected      |   | h |    |    |   |               |
|   | veterans is limited       |   | e |    |    |   |               |
|   | solely to their service   |   | d |    |    |   |               |
|   | connected disability.     |   | e |    |    |   |               |
|   | These same veterans       |   | v |    |    |   |               |
|   | utilize private           |   | e |    |    |   |               |
|   | physicians and providers  |   | l |    |    |   |               |
|   | for their other health    |   | o |    |    |   |               |
|   | needs. In the present     |   | p |    |    |   |               |
|   | environment the term      |   | m |    |    |   |               |
|   | enrollment has no         |   | e |    |    |   |               |
|   | meaning. Every "enrolled" |   | n |    |    |   |               |
|   | member is a member        |   | t |    |    |   |               |
|   | treated, thus             |   | o |    |    |   |               |
|   | measurements such as      |   | f |    |    |   |               |
|   | "discharges per 1000      |   | a |    |    |   |               |
|   | members per year" have    |   | n |    |    |   |               |
|   | little comparative        |   | e |    |    |   |               |
|   | meaning with similar      |   | n |    |    |   |               |
|   | private sector measures.  |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | I do not believe we can   | D | E |    |    |   |               |
|   | enroll any veterans who   |   | n |    |    |   |               |
|   | will be basically healthy |   | r |    |    |   |               |
|   | and need few inexpensive  |   | o |    |    |   |               |
|   | services. (3 comments on  |   | l |    |    |   |               |
|   | this subject)             |   | l |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
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|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Adopt an internal         |   |   |    |    | A |               |
| e | transfer pricing          |   |   |    |    | / |               |
| f | methodology to pay for VA |   |   |    |    | D |               |
| N | care outside the VISN     |   |   |    |    | / |               |
| o | (e.g., determine if there |   |   |    |    | O |               |
| ] | should be a VISN-level    |   |   |    |    | ] |               |
| { | fee schedule or if        |   |   |    |    | { |               |
| . | payment should be on a    |   |   |    |    | . |               |
| u | prospective basis).       |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 7 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The issue of transfer     | D | S |    |    |   |               |
| . | pricing between VISNs (as |   | p |    |    |   |               |
| 7 | well as the practical     |   | e |    |    |   |               |
|   | application of funding    |   | c |    |    |   |               |
|   | care between facilities   |   | i |    |    |   |               |
|   | within the same VISN)     |   | f |    |    |   |               |
|   | needs to be addressed     |   | i |    |    |   |               |
|   | under the capitation      |   | c |    |    |   |               |
|   | model that will be        |   | c |    |    |   |               |
|   | introduced in FY 1998.    |   | a |    |    |   |               |
|   | The assumption that this  |   | p |    |    |   |               |
|   | capitation model will     |   | i |    |    |   |               |
|   | include enrollment and    |   | t |    |    |   |               |
|   | will incorporate          |   | a |    |    |   |               |
|   | pre-certification given   |   | t |    |    |   |               |
|   | existing eligibility      |   | i |    |    |   |               |
|   | legislation is            |   | o |    |    |   |               |
|   | impractical. Transfer     |   | n |    |    |   |               |
|   | pricing is considered an  |   | r |    |    |   |               |
|   | extremely difficult       |   | a |    |    |   |               |
|   | problem by all private    |   | t |    |    |   |               |
|   | sector firms that employ  |   | e |    |    |   |               |
|   | it - more difficult than  |   | d |    |    |   |               |
|   | any other pricing         |   | e |    |    |   |               |
|   | problem. Before           |   | v |    |    |   |               |
|   | considering it as a       |   | e |    |    |   |               |
|   | solution, its purpose     |   | l |    |    |   |               |
|   | should be explained       |   | o |    |    |   |               |
|   | clearly. (3 comments on   |   | p |    |    |   |               |
|   | this topic)               |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
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|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
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|   |                           |   | N |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | g |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | This is the only          | A |   |    |    |   |               |
|   | reference I found to      |   |   |    |    |   |               |
|   | transfer pricing. This    |   |   |    |    |   |               |
|   | will be an extremely      |   |   |    |    |   |               |
|   | important portion of the  |   |   |    |    |   |               |
|   | resource allocation       |   |   |    |    |   |               |
|   | process if the national   |   |   |    |    |   |               |
|   | centers scattered around  |   |   |    |    |   |               |
|   | the country are to        |   |   |    |    |   |               |
|   | survive in a capitated    |   |   |    |    |   |               |
|   | environment. At Palo Alto |   |   |    |    |   |               |
|   | alone, we draw from a     |   |   |    |    |   |               |
|   | large catchment area for  |   |   |    |    |   |               |
|   | several programs          |   |   |    |    |   |               |
|   | including Blind Rehab,    |   |   |    |    |   |               |
|   | SCI, TBI, PTSD, Acute     |   |   |    |    |   |               |
|   | Psych, and Open Heart     |   |   |    |    |   |               |
|   | Surgery. If these         |   |   |    |    |   |               |
|   | programs are to survive   |   |   |    |    |   |               |
|   | by collecting fees from   |   |   |    |    |   |               |
|   | capitated providers, the  |   |   |    |    |   |               |
|   | mechanisms must be        |   |   |    |    |   |               |
|   | developed and in place    |   |   |    |    |   |               |
|   | prior to implementation   |   |   |    |    |   |               |
|   | of the capitation model.  |   |   |    |    |   |               |
|   | (2 comments addressing    |   |   |    |    |   |               |
|   | this issue)               |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Transfer Pricing briefly  | A | S |    |    |   |               |
|   | discusses the             |   | t |    |    |   |               |
|   | consideration of a        |   | a |    |    |   |               |
|   | pre-approval or           |   | k |    |    |   |               |
|   | pre-certification         |   | e |    |    |   |               |
|   | mechanism. If this        |   | h |    |    |   |               |
|   | implies that a mobile     |   | o |    |    |   |               |
|   | veteran must receive      |   | l |    |    |   |               |
|   | approval before receiving |   | d |    |    |   |               |
|   | care within another VISN, |   | e |    |    |   |               |
|   | further discussion with   |   | r |    |    |   |               |
|   | the veteran stakeholders  |   | s |    |    |   |               |
|   | should be considered.     |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Develop an education and  |   |   |    |    | A |               |
| e | training program, to      |   |   |    |    | / |               |
| f | begin as soon as          |   |   |    |    | D |               |
| N | possible, for providers   |   |   |    |    | / |               |
| o | and VISN and medical      |   |   |    |    | O |               |
| ] | center management on the  |   |   |    |    | ] |               |
| { | mechanics of capitation   |   |   |    |    | { |               |
| . | and risk assessment,      |   |   |    |    | . |               |
| u | additional revenue        |   |   |    |    | u |               |
| n | streams, managed care,    |   |   |    |    | n |               |
| d | and managing for quality  |   |   |    |    | d |               |
| e | in a capitated            |   |   |    |    | e |               |
| r | environment.              |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 8 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | With the changes in the   | A |   |    |    |   |               |
| . | RPM and allocation system |   |   |    |    |   |               |
| 8 | occurring at tremendous   |   |   |    |    |   |               |
|   | rates, emphasis on        |   |   |    |    |   |               |
|   | education needs to occur. |   |   |    |    |   |               |
|   | There are different needs |   |   |    |    |   |               |
|   | for Directors, Associate  |   |   |    |    |   |               |
|   | Directors, Chiefs of      |   |   |    |    |   |               |
|   | Staff, and Fiscal         |   |   |    |    |   |               |
|   | Officer. All should be    |   |   |    |    |   |               |
|   | addressed and encompassed |   |   |    |    |   |               |
|   | in a training effort,     |   |   |    |    |   |               |
|   | with different products   |   |   |    |    |   |               |
|   | and different approaches  |   |   |    |    |   |               |
|   | geared toward the varying |   |   |    |    |   |               |
|   | needs.                    |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | The director and AD want  |   |   |    |    |   |               |
|   | to understand the         |   |   |    |    |   |               |
|   | macro-level financial     |   |   |    |    |   |               |
|   | implications and overall  |   |   |    |    |   |               |
|   | philosophy and            |   |   |    |    |   |               |
|   | incentives. The Chief of  |   |   |    |    |   |               |
|   | Staff may also want to    |   |   |    |    |   |               |
|   | understand the            |   |   |    |    |   |               |
|   | differentiation among     |   |   |    |    |   |               |
|   | patient classifications   |   |   |    |    |   |               |
|   | and effect from costly or |   |   |    |    |   |               |
|   | cost-effective care and   |   |   |    |    |   |               |
|   | explore clinical aspects  |   |   |    |    |   |               |
|   | of the system. The Fiscal |   |   |    |    |   |               |
|   | Officer and RPM expert    |   |   |    |    |   |               |
|   | need to understand the    |   |   |    |    |   |               |
|   | sources of data, the      |   |   |    |    |   |               |
|   | manipulation of data, and |   |   |    |    |   |               |
|   | existing tools for        |   |   |    |    |   |               |
|   | analysis. As the          |   |   |    |    |   |               |
|   | allocation system         |   |   |    |    |   |               |
|   | changes, the leaders,     |   |   |    |    |   |               |
|   | care providers, and       |   |   |    |    |   |               |
|   | resource managers must    |   |   |    |    |   |               |
|   | understand the changes    |   |   |    |    |   |               |
|   | and incentives, or the    |   |   |    |    |   |               |
|   | desired outcomes may not  |   |   |    |    |   |               |
|   | be achieved.              |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Extensive training,       | A | E |    |    |   |               |
|   | actuarial studies, market |   | d |    |    |   |               |
|   | studies, capitation       |   | u |    |    |   |               |
|   | studies, the creation of  |   | c |    |    |   |               |
|   | business plans, provider  |   | a |    |    |   |               |
|   | contracting, and the      |   | t |    |    |   |               |
|   | acquisition of            |   | i |    |    |   |               |
|   | information management    |   | o |    |    |   |               |
|   | systems would be needed   |   | n |    |    |   |               |
|   | to implement the changes  |   | a |    |    |   |               |
|   | which the reports         |   | n |    |    |   |               |
|   | recommend. The reports,   |   | d |    |    |   |               |
|   | however, neither          |   | T |    |    |   |               |
|   | emphasize contracting     |   | r |    |    |   |               |
|   | issues nor fully explore  |   | a |    |    |   |               |
|   | them. It is not clear,    |   | i |    |    |   |               |
|   | for example, if actuarial |   | n |    |    |   |               |
|   | studies and business      |   | i |    |    |   |               |
|   | plans would be performed  |   | n |    |    |   |               |
|   | in-house or contracted    |   | g |    |    |   |               |
|   | out. In addition, it is   |   | i |    |    |   |               |
|   | not clear how much of the |   | s |    |    |   |               |
|   | training will be          |   | c |    |    |   |               |
|   | contracted out or whether |   | r |    |    |   |               |
|   | appropriate emphasis will |   | i |    |    |   |               |
|   | be placed on training     |   | t |    |    |   |               |
|   | personnel responsible for |   | i |    |    |   |               |
|   | provider contracting. The |   | c |    |    |   |               |
|   | reports also do not       |   | a |    |    |   |               |
|   | establish specific action |   | l |    |    |   |               |
|   | plans and recommendations |   | . |    |    |   |               |
|   | for accomplishing         |   | S |    |    |   |               |
|   | contracting tasks.        |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | E |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | ( |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | R |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | ) |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | This recommendation is a  | A |   |    |    |   |               |
|   | MUST for any of these     |   |   |    |    |   |               |
|   | proposals to work.        |   |   |    |    |   |               |
|   | Supervisors, managers,    |   |   |    |    |   |               |
|   | and physicians at all     |   |   |    |    |   |               |
|   | levels must be trained    |   |   |    |    |   |               |
|   | according to the needs of |   |   |    |    |   |               |
|   | the position they fill.   |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | 1.  Develop a Training    | * |   | O  |    |   |               |
| * |     and Education effort, | * |   | ng |    |   |               |
| 3 |     concurrent with the   | C |   | oi |    |   |               |
| . |     deliberations of the  | M |   | ng |    |   |               |
| 8 |     CMG, to educate VHA   | G |   |    |    |   |               |
|   |     employees at all      | , |   |    |    |   |               |
|   |     levels on capitation  | O |   |    |    |   |               |
|   |     management and the    | f |   |    |    |   |               |
|   |     progress of the CMG   | f |   |    |    |   |               |
|   |     to date. Training     | i |   |    |    |   |               |
|   |     should be interactive | c |   |    |    |   |               |
|   |     to allow for maximum  | e |   |    |    |   |               |
|   |     field feedback        | o |   |    |    |   |               |
|   |     (e.g. - satellite     | f |   |    |    |   |               |
|   |     uplinks, newsletters, | A |   |    |    |   |               |
|   |     etc.).                | c |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | A |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  Change HRM practices  |   |   |    |    | A |               |
| e |     to the extent         |   |   |    |    | / |               |
| f |     allowable under       |   |   |    |    | D |               |
| N |     current regulations   |   |   |    |    | / |               |
| o |     to create provider    |   |   |    |    | O |               |
| ] |     incentives for cost   |   |   |    |    | ] |               |
| { |     effective resource    |   |   |    |    | { |               |
| . |     utilization.          |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n | B.  Develop               |   |   |    |    | n |               |
| d |     bonus/incentive       |   |   |    |    | d |               |
| e |     strategies for        |   |   |    |    | e |               |
| r |     primary care and      |   |   |    |    | r |               |
| l |     other providers.      |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 9 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | "\...create appropriate   | D | W |    |    |   |               |
| . | risks and rewards for     |   | h |    |    |   |               |
| 9 | providers to control      |   | i |    |    |   |               |
|   | utilization and provide   |   | l |    |    |   |               |
|   | cost effective, high      |   | e |    |    |   |               |
|   | quality care." The        |   | w |    |    |   |               |
|   | approach of managed care  |   | e |    |    |   |               |
|   | companies in the 1980's   |   | a |    |    |   |               |
|   | to identify and punish    |   | g |    |    |   |               |
|   | high-cost doctors, to     |   | r |    |    |   |               |
|   | impose utilization        |   | e |    |    |   |               |
|   | limits, pre-admission     |   | e |    |    |   |               |
|   | approvals, and the like   |   | w |    |    |   |               |
|   | are on their way out,     |   | i |    |    |   |               |
|   | according to some         |   | t |    |    |   |               |
|   | informed managed care     |   | h |    |    |   |               |
|   | opinions and literature.  |   | t |    |    |   |               |
|   | What is working now is    |   | h |    |    |   |               |
|   | provider-controlled       |   | e |    |    |   |               |
|   | management companies      |   | n |    |    |   |               |
|   | which satisfy patients    |   | e |    |    |   |               |
|   | and their employers by    |   | e |    |    |   |               |
|   | providing good care       |   | d |    |    |   |               |
|   | [first]{.underline}, and  |   | t |    |    |   |               |
|   | then finding              |   | o |    |    |   |               |
|   | process-oriented ways of  |   | p |    |    |   |               |
|   | controlling costs. Like   |   | r |    |    |   |               |
|   | TQM. Recommendation 9 is  |   | o |    |    |   |               |
|   | not TQM. Let's not force  |   | v |    |    |   |               |
|   | VHA to evolve through the |   | i |    |    |   |               |
|   | early mistakes of private |   | d |    |    |   |               |
|   | managed care before       |   | e |    |    |   |               |
|   | rediscovering the need to |   | t |    |    |   |               |
|   | inform and empower        |   | h |    |    |   |               |
|   | providers, not punish     |   | e |    |    |   |               |
|   | them.                     |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | w |    |    |   |               |
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|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
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|   |                           |   | , |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | q |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | On page 12, the first     | A | Q |    |    |   |               |
|   | bullet under              |   | u |    |    |   |               |
|   | recommendation 9 suggests |   | a |    |    |   |               |
|   | that HRM practices be     |   | l |    |    |   |               |
|   | changed to create         |   | i |    |    |   |               |
|   | provider incentives for   |   | t |    |    |   |               |
|   | cost effective resource   |   | y |    |    |   |               |
|   | utilization. IT would     |   | o |    |    |   |               |
|   | seem that if we are       |   | u |    |    |   |               |
|   | setting up a managed care |   | t |    |    |   |               |
|   | system that will have     |   | c |    |    |   |               |
|   | primary care              |   | o |    |    |   |               |
|   | practitioners acting as   |   | m |    |    |   |               |
|   | gatekeepers and or will   |   | e |    |    |   |               |
|   | reward for utilization    |   | s |    |    |   |               |
|   | efficiencies an increased |   | s |    |    |   |               |
|   | risk arises to the        |   | h |    |    |   |               |
|   | quality of care that is   |   | o |    |    |   |               |
|   | provided. Therefore, it   |   | u |    |    |   |               |
|   | would seem that any       |   | l |    |    |   |               |
|   | incentive system should   |   | d |    |    |   |               |
|   | reward utilization        |   | b |    |    |   |               |
|   | efficiencies only in the  |   | e |    |    |   |               |
|   | face of good quality      |   | s |    |    |   |               |
|   | performance. Consider     |   | p |    |    |   |               |
|   | re-phrasing the           |   | e |    |    |   |               |
|   | recommendation to         |   | c |    |    |   |               |
|   | read\..."to create        |   | i |    |    |   |               |
|   | provider incentives for   |   | f |    |    |   |               |
|   | cost effective resource   |   | i |    |    |   |               |
|   | utilization when quality  |   | c |    |    |   |               |
|   | outcomes are also good."  |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | We are unsure why the     | D | P |    |    |   |               |
|   | issue of HRM policies and |   | r |    |    |   |               |
|   | procedures is covered     |   | o |    |    |   |               |
|   | under this team's area of |   | v |    |    |   |               |
|   | responsibility. We        |   | i |    |    |   |               |
|   | believe these issues      |   | d |    |    |   |               |
|   | should be tasked to the   |   | e |    |    |   |               |
|   | Management and            |   | r |    |    |   |               |
|   | Administration Support    |   | i |    |    |   |               |
|   | Office (page 56) under    |   | n |    |    |   |               |
|   | the Headquarters          |   | c |    |    |   |               |
|   | Restructuring Work Group  |   | e |    |    |   |               |
|   | Report                    |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | z |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Change Recommendation 9   |   |   |    |    |   |               |
| . | to read:                  |   |   |    |    |   |               |
| 9 |                           |   |   |    |    |   |               |
|   | C.  Change HRM practices  |   |   |    |    |   |               |
|   |     to the extent         |   |   |    |    |   |               |
|   |     allowable under       |   |   |    |    |   |               |
|   |     current regulations   |   |   |    |    |   |               |
|   |     to create provider    |   |   |    |    |   |               |
|   |     incentives for cost   |   |   |    |    |   |               |
|   |     effective, high       |   |   |    |    |   |               |
|   |     quality resource      |   |   |    |    |   |               |
|   |     utilization.          |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Develop and propose the   |   |   |    |    | A |               |
| e | legislative changes       |   |   |    |    | / |               |
| f | listed in Appendix C.     |   |   |    |    | D |               |
| N |                           |   |   |    |    | / |               |
| o |                           |   |   |    |    | O |               |
| ] |                           |   |   |    |    | ] |               |
| { |                           |   |   |    |    | { |               |
| . |                           |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 0 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Develop specific          | C |   |    |    |   |               |
| * | legislative language on   | M |   |    |    |   |               |
| 3 | the initiatives listed in | G |   |    |    |   |               |
| . | Appendix C during Fiscal  |   |   |    |    |   |               |
| 1 | Year 1996. The General    |   |   |    |    |   |               |
| 0 | Counsel should make this  |   |   |    |    |   |               |
| . | a high priority and       |   |   |    |    |   |               |
| 1 | should be afforded any    |   |   |    |    |   |               |
|   | needed technical or       |   |   |    |    |   |               |
|   | consulting assistance.    |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Eligibility reform in a   | A | R |    |    |   |               |
| . | no-growth budget era will |   | a |    |    |   |               |
| 1 | demand reassessment of    |   | t |    |    |   |               |
| 0 | patient care priorities.  |   | h |    |    |   |               |
|   | Current dental staffing,  |   | e |    |    |   |               |
|   | especially dental         |   | r |    |    |   |               |
|   | auxiliary staff, will not |   | t |    |    |   |               |
|   | be able to assimilate an  |   | h |    |    |   |               |
|   | influx of new patients.   |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
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|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | x |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | I disagree that           | A | T |    |    |   |               |
|   | successful capitation     |   | h |    |    |   |               |
|   | requires an ability to    |   | e |    |    |   |               |
|   | seek additional enrollees |   | c |    |    |   |               |
|   | and believe this is a     |   | o |    |    |   |               |
|   | separate and significant  |   | m |    |    |   |               |
|   | political issue in the    |   | m |    |    |   |               |
|   | current budget climate. I |   | i |    |    |   |               |
|   | would suggest that        |   | t |    |    |   |               |
|   | inherent in a capitation  |   | t |    |    |   |               |
|   | approach is a competitive |   | e |    |    |   |               |
|   | incentive that could be   |   | e |    |    |   |               |
|   | neutralized by assigning  |   | r |    |    |   |               |
|   | enrollment levels. Such   |   | e |    |    |   |               |
|   | an approach, at the       |   | c |    |    |   |               |
|   | outset, might help reduce |   | o |    |    |   |               |
|   | the anxiety regarding VA  |   | m |    |    |   |               |
|   | competitive position.     |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Multi Year appropriations | A |   |    |    |   |               |
|   | would definitely enable   |   |   |    |    |   |               |
|   | VHA to operate more       |   |   |    |    |   |               |
|   | efficiently, and          |   |   |    |    |   |               |
|   | eliminate year-end        |   |   |    |    |   |               |
|   | "pushes" to purchase.     |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The proposed calculation  | D | A |    |    |   |               |
|   | of the VISN specific      |   | s |    |    |   |               |
|   | capitation rate           |   | i |    |    |   |               |
|   | commingles funds that     |   | n |    |    |   |               |
|   | currently belong to       |   | g |    |    |   |               |
|   | different appropriations. |   | l |    |    |   |               |
|   | While this may be         |   | e |    |    |   |               |
|   | appropriate at some       |   | c |    |    |   |               |
|   | future time when Congress |   | a |    |    |   |               |
|   | provides VA with a single |   | p |    |    |   |               |
|   | appropriation, it does    |   | i |    |    |   |               |
|   | not offer a workable      |   | t |    |    |   |               |
|   | solution for the          |   | a |    |    |   |               |
|   | immediate situation.      |   | t |    |    |   |               |
|   | Implementing a capitated  |   | e |    |    |   |               |
|   | budget by FY 1998 does    |   | d |    |    |   |               |
|   | not prescribe a single    |   | r |    |    |   |               |
|   | method for doing so. (2   |   | a |    |    |   |               |
|   | comments addressing this  |   | t |    |    |   |               |
|   | issue)                    |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Of the 22 legislative     | D | V |    |    |   |               |
|   | changes needed to make    |   | H |    |    |   |               |
|   | this plan work. (Appendix |   | A |    |    |   |               |
|   | C, pg. 36), I count 14 as |   | m |    |    |   |               |
|   | highly improbable this    |   | u |    |    |   |               |
|   | year or next. Without a   |   | s |    |    |   |               |
|   | major effort to address   |   | t |    |    |   |               |
|   | Congressional attitudes,  |   | p |    |    |   |               |
|   | in addition to getting    |   | u |    |    |   |               |
|   | Administration support,   |   | r |    |    |   |               |
|   | we are not in business,   |   | s |    |    |   |               |
|   | or at least this new      |   | u |    |    |   |               |
|   | business.                 |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
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|   |                           |   | g |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
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|   |                           |   | c |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | v |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The assumption that       | D | V |    |    |   |               |
|   | "VISNs will determine     |   | H |    |    |   |               |
|   | appropriate allocations   |   | A |    |    |   |               |
|   | to purchase care from     |   | n |    |    |   |               |
|   | primary care practice     |   | e |    |    |   |               |
|   | plans\...and contract     |   | e |    |    |   |               |
|   | providers" ignores the    |   | d |    |    |   |               |
|   | legislative limitations   |   | s |    |    |   |               |
|   | currently restricting     |   | t |    |    |   |               |
|   | such practice.            |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Another issue surrounds   | A | M |    |    |   |               |
|   | the Work Group's          |   | o |    |    |   |               |
|   | contention that as many   |   | v |    |    |   |               |
|   | as 22 legislative changes |   | e |    |    |   |               |
|   | are "\...necessary to     |   | m |    |    |   |               |
|   | accomplish a true         |   | e |    |    |   |               |
|   | capitation system." While |   | n |    |    |   |               |
|   | we enthusiastically       |   | t |    |    |   |               |
|   | support all of these      |   | t |    |    |   |               |
|   | proposed changes, some of |   | o |    |    |   |               |
|   | them should not be        |   | w |    |    |   |               |
|   | considered barriers to    |   | a |    |    |   |               |
|   | capitation. For example,  |   | r |    |    |   |               |
|   | allowing additional       |   | d |    |    |   |               |
|   | revenue streams (e.g.,    |   | c |    |    |   |               |
|   | enrollee premiums, and    |   | a |    |    |   |               |
|   | MCCR funds) can be        |   | p |    |    |   |               |
|   | important to VISN and     |   | i |    |    |   |               |
|   | VAMC management, but the  |   | t |    |    |   |               |
|   | absence of these new      |   | a |    |    |   |               |
|   | revenues does not prevent |   | t |    |    |   |               |
|   | VHA from making           |   | i |    |    |   |               |
|   | substantial progress in   |   | o |    |    |   |               |
|   | implementing managed      |   | n |    |    |   |               |
|   | care. Even the "fenced    |   | s |    |    |   |               |
|   | fund" issue deserves      |   | h |    |    |   |               |
|   | closer inspection. If     |   | o |    |    |   |               |
|   | fenced funds make         |   | u |    |    |   |               |
|   | realistic business sense, |   | l |    |    |   |               |
|   | then the "fencing         |   | d |    |    |   |               |
|   | authority" can be viewed  |   | c |    |    |   |               |
|   | as a customer with        |   | o |    |    |   |               |
|   | specific needs (and money |   | n |    |    |   |               |
|   | to pay for having those   |   | t |    |    |   |               |
|   | needs met). These are     |   | i |    |    |   |               |
|   | only a few of the         |   | n |    |    |   |               |
|   | legislative change        |   | u |    |    |   |               |
|   | proposals in the report   |   | e |    |    |   |               |
|   | that we believe do not    |   | w |    |    |   |               |
|   | present realistic         |   | h |    |    |   |               |
|   | barriers to formulating   |   | i |    |    |   |               |
|   | or implementing managed   |   | l |    |    |   |               |
|   | care. (2 comments         |   | e |    |    |   |               |
|   | addressing this issue.)   |   | V |    |    |   |               |
|   |                           |   | H |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | z |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | l |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | Many of the changes       | A |   |    |    |   |               |
|   | proposed will involve     |   |   |    |    |   |               |
|   | legislative financial     |   |   |    |    |   |               |
|   | proposals. The Office of  |   |   |    |    |   |               |
|   | Financial Management      |   |   |    |    |   |               |
|   | should be assigned to     |   |   |    |    |   |               |
|   | work closely with VHA     |   |   |    |    |   |               |
|   | reps to ensure these      |   |   |    |    |   |               |
|   | proposals are consistent  |   |   |    |    |   |               |
|   | with appropriate          |   |   |    |    |   |               |
|   | governtmentwide standards |   |   |    |    |   |               |
|   | for cost accounting.      |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | OMB Circular A-19         | A |   |    |    |   |               |
|   | requires that before VA   |   |   |    |    |   |               |
|   | makes available to        |   |   |    |    |   |               |
|   | Congress or the public    |   |   |    |    |   |               |
|   | any proposal for or       |   |   |    |    |   |               |
|   | endorsement of Federal    |   |   |    |    |   |               |
|   | legislation, the proposal |   |   |    |    |   |               |
|   | or endorsement must be    |   |   |    |    |   |               |
|   | submitted to OMB for      |   |   |    |    |   |               |
|   | coordination or           |   |   |    |    |   |               |
|   | clearance. This report    |   |   |    |    |   |               |
|   | calls for legislation to  |   |   |    |    |   |               |
|   | accomplish a "true        |   |   |    |    |   |               |
|   | capitated system." This   |   |   |    |    |   |               |
|   | report would thus need to |   |   |    |    |   |               |
|   | be cleared by OMB before  |   |   |    |    |   |               |
|   | it is released to         |   |   |    |    |   |               |
|   | Congress or the public.   |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Define a national         |   |   |    |    | A |               |
| e | standard benefits package |   |   |    |    | / |               |
| f | to be offered to all      |   |   |    |    | D |               |
| N | enrollees. This package   |   |   |    |    | / |               |
| o | should be competitive     |   |   |    |    | O |               |
| ] | with private health plans |   |   |    |    | ] |               |
| { | offered across the        |   |   |    |    | { |               |
| . | country.                  |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Define a recommended      | A |   |    |    |   |               |
| * | national standard         | d |   |    |    |   |               |
| 3 | benefits package          | h |   |    |    |   |               |
| . | available to all          | o |   |    |    |   |               |
| 1 | enrollees. Recommend      | c |   |    |    |   |               |
| 1 | benefits limitations,     | C |   |    |    |   |               |
| . | co-pays and deductibles.  | l |   |    |    |   |               |
| 1 |                           | i |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | F |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | p |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | p |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | g |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | M |   |    |    |   |               |
|   |                           | G |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Recommendation 11 defines | D | B |    |    |   |               |
| . | a national standard       |   | a |    |    |   |               |
| 1 | benefits package to be    |   | s |    |    |   |               |
| 1 | offered to all enrollees  |   | i |    |    |   |               |
|   | which "should be the same |   | c |    |    |   |               |
|   | for all VISNs and be      |   | b |    |    |   |               |
|   | competitive with private  |   | e |    |    |   |               |
|   | health plans offered      |   | n |    |    |   |               |
|   | across the country. It    |   | e |    |    |   |               |
|   | should be assumed that    |   | f |    |    |   |               |
|   | these plans will vary     |   | i |    |    |   |               |
|   | greatly from VISN to      |   | t |    |    |   |               |
|   | VISN. When one considers  |   | s |    |    |   |               |
|   | the movement of veterans  |   | s |    |    |   |               |
|   | from one geographic       |   | h |    |    |   |               |
|   | location to another the   |   | o |    |    |   |               |
|   | veteran may find          |   | u |    |    |   |               |
|   | different coverage in a   |   | l |    |    |   |               |
|   | new location.             |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | z |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | There is internal         | A | I |    |    |   |               |
|   | inconsistency between the |   | n |    |    |   |               |
|   | group's proposed          |   | a |    |    |   |               |
|   | "national standard        |   | d |    |    |   |               |
|   | benefits package" and     |   | d |    |    |   |               |
|   | continuing the current VA |   | i |    |    |   |               |
|   | statutory mission for     |   | t |    |    |   |               |
|   | patient care. We believe  |   | i |    |    |   |               |
|   | that by offering a range  |   | o |    |    |   |               |
|   | of benefits packages      |   | n |    |    |   |               |
|   | (rather than a single     |   | t |    |    |   |               |
|   | package) that encompasses |   | o |    |    |   |               |
|   | statutory commitments to  |   | t |    |    |   |               |
|   | veterans, this            |   | h |    |    |   |               |
|   | inconsistency will be     |   | e |    |    |   |               |
|   | removed and allow VISNs   |   | n |    |    |   |               |
|   | and medical centers to    |   | a |    |    |   |               |
|   | immediately move into a   |   | t |    |    |   |               |
|   | capitated mode of managed |   | i |    |    |   |               |
|   | care with effective tools |   | o |    |    |   |               |
|   | for risk management. In   |   | n |    |    |   |               |
|   | fact, BDC has taken       |   | a |    |    |   |               |
|   | significant steps toward  |   | l |    |    |   |               |
|   | demonstrating the         |   | b |    |    |   |               |
|   | feasibility of such an    |   | a |    |    |   |               |
|   | approach.                 |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
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|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The report describes a    | A | T |    |    |   |               |
|   | plan which seems geared   |   | h |    |    |   |               |
|   | toward an HMO mentality   |   | e |    |    |   |               |
|   | and does not describe     |   | s |    |    |   |               |
|   | what a "comprehensive     |   | t |    |    |   |               |
|   | benefits package" would   |   | a |    |    |   |               |
|   | be for enrolled veterans. |   | n |    |    |   |               |
|   | Knowledge of the private  |   | d |    |    |   |               |
|   | sector shows that         |   | a |    |    |   |               |
|   | chronically, or seriously |   | r |    |    |   |               |
|   | mentally ill individuals  |   | d |    |    |   |               |
|   | are not sought out by     |   | b |    |    |   |               |
|   | private insurers and when |   | e |    |    |   |               |
|   | they are enrolled, there  |   | n |    |    |   |               |
|   | are limits to their       |   | e |    |    |   |               |
|   | mental health coverage.   |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | L |    |    |   |               |
|   |                           |   | L |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | T |    |    |   |               |
|   |                           |   | h |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | m |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | "\...competitive with     | D | T |    |    |   |               |
|   | private health plans\..." |   | h |    |    |   |               |
|   | This is a dream. Let's    |   | e |    |    |   |               |
|   | compete with the private  |   | c |    |    |   |               |
|   | health plans. But maybe   |   | o |    |    |   |               |
|   | we should wake up. VA     |   | m |    |    |   |               |
|   | serves a sicker, comorbid |   | m |    |    |   |               |
|   | older, less employable,   |   | i |    |    |   |               |
|   | longer term, poorer       |   | t |    |    |   |               |
|   | population than the       |   | t |    |    |   |               |
|   | private sector. When the  |   | e |    |    |   |               |
|   | insurance runs out, they  |   | e |    |    |   |               |
|   | send them to VA. When the |   | i |    |    |   |               |
|   | state hospital closes,    |   | s |    |    |   |               |
|   | they send them to VA.     |   | n |    |    |   |               |
|   | When they have no         |   | o |    |    |   |               |
|   | insurance, they send them |   | t |    |    |   |               |
|   | to VA. The idea that VA   |   | a |    |    |   |               |
|   | should abandon our        |   | d |    |    |   |               |
|   | current 2.2 million       |   | v |    |    |   |               |
|   | veteran patients and go   |   | o |    |    |   |               |
|   | after the 20 million      |   | c |    |    |   |               |
|   | insured middle class      |   | a |    |    |   |               |
|   | veterans who already have |   | t |    |    |   |               |
|   | insurance is just a bad   |   | i |    |    |   |               |
|   | idea.                     |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
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|   |                           |   | i |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | National standard benefit | A |   |    |    |   |               |
|   | package is critical if    |   |   |    |    |   |               |
|   | funds are to be           |   |   |    |    |   |               |
|   | distributed to VISNs.     |   |   |    |    |   |               |
|   | Otherwise the funds       |   |   |    |    |   |               |
|   | distribution system is at |   |   |    |    |   |               |
|   | risk of becoming like     |   |   |    |    |   |               |
|   | state block grants -      |   |   |    |    |   |               |
|   | funds will not be         |   |   |    |    |   |               |
|   | distributed equitably. (3 |   |   |    |    |   |               |
|   | comments address this     |   |   |    |    |   |               |
|   | topic)                    |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | At the request of Dr.     | A | C |    |    |   |               |
|   | Kizer, Pharmacy Service   |   | M |    |    |   |               |
|   | has submitted a decision  |   | G |    |    |   |               |
|   | paper on the formation of |   | s |    |    |   |               |
|   | a pharmacy benefits       |   | h |    |    |   |               |
|   | management product line.  |   | o |    |    |   |               |
|   | VA should decide to       |   | u |    |    |   |               |
|   | implement the PBM         |   | l |    |    |   |               |
|   | proposal early in the     |   | d |    |    |   |               |
|   | transition phase to begin |   | i |    |    |   |               |
|   | the implementation of a   |   | d |    |    |   |               |
|   | national standard         |   | e |    |    |   |               |
|   | benefits package.         |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | x |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | 1.  Charter a national    | * |   | 1  |    |   |               |
| . |     commission, including | * |   | 2/ |    |   |               |
| 1 |     outside stakeholders, | U |   | 96 |    |   |               |
| 1 |     to develop a national | S |   |    |    |   |               |
|   |     standard benefit      | H |   |    |    |   |               |
|   |     package using the     | * |   |    |    |   |               |
|   |     plan recommended      | * |   |    |    |   |               |
|   |     during the Health     |   |   |    |    |   |               |
|   |     Care Reform debate as |   |   |    |    |   |               |
|   |     a starting point. The |   |   |    |    |   |               |
|   |     finished product      |   |   |    |    |   |               |
|   |     should be available   |   |   |    |    |   |               |
|   |     in time to allocate   |   |   |    |    |   |               |
|   |     FY 1998 budget to     |   |   |    |    |   |               |
|   |     VISNs.                |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  Develop additional    |   |   |    |    | A |               |
| e |     revenue streams to    |   |   |    |    | / |               |
| f |     supplement            |   |   |    |    | D |               |
| N |     appropriated funds,   |   |   |    |    | / |               |
| o |     develop new markets,  |   |   |    |    | O |               |
| ] |     expand services in    |   |   |    |    | ] |               |
| { |     existing markets, and |   |   |    |    | { |               |
| . |     reduce financial      |   |   |    |    | . |               |
| u |     risk. Specifically,   |   |   |    |    | u |               |
| n |     VHA should propose    |   |   |    |    | n |               |
| d |     legislation allowing  |   |   |    |    | d |               |
| e |     VISNs to bill and     |   |   |    |    | e |               |
| r |     keep funds collected  |   |   |    |    | r |               |
| l |     from Medicare,        |   |   |    |    | l |               |
| i |     Medicaid, other       |   |   |    |    | i |               |
| n |     governmental          |   |   |    |    | n |               |
| e |     entities, and private |   |   |    |    | e |               |
| } |     insurers.             |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * | B.  VISNs should be       |   |   |    |    | * |               |
|   |     permitted to enter    |   |   |    |    |   |               |
| 3 |     into collaborative    |   |   |    |    |   |               |
| . |     agreements with       |   |   |    |    |   |               |
| 1 |     managed-care          |   |   |    |    |   |               |
| 2 |     providers, and        |   |   |    |    |   |               |
|   |     develop necessary     |   |   |    |    |   |               |
|   |     joint ventures with   |   |   |    |    |   |               |
|   |     private health care   |   |   |    |    |   |               |
|   |     providers to expand   |   |   |    |    |   |               |
|   |     services and markets. |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Many of the changes       | A | A |    |    |   |               |
| . | advanced in the Vision    |   | s |    |    |   |               |
| 1 | for Change will depend    |   | i |    |    |   |               |
| 2 | realistically on new      |   | g |    |    |   |               |
|   | funds. Therefore, the     |   | n |    |    |   |               |
|   | development of additional |   | i |    |    |   |               |
|   | revenue streams is        |   | f |    |    |   |               |
|   | imperative. It is equally |   | i |    |    |   |               |
|   | important that a          |   | c |    |    |   |               |
|   | significant percentage of |   | a |    |    |   |               |
|   | the new funds stay with   |   | n |    |    |   |               |
|   | the hospital clinical     |   | t |    |    |   |               |
|   | service which generates   |   | p |    |    |   |               |
|   | the funds. (4 comments    |   | o |    |    |   |               |
|   | address this issue)       |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
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|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
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|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | ' |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | When VHA proposes         | D | V |    |    |   |               |
|   | additional revenue        |   | e |    |    |   |               |
|   | streams, the concept of   |   | t |    |    |   |               |
|   | enrollees should be       |   | e |    |    |   |               |
|   | considered carefully.     |   | r |    |    |   |               |
|   | Multiple enrollment       |   | a |    |    |   |               |
|   | should not be allowed, so |   | n |    |    |   |               |
|   | that if an elderly        |   | s |    |    |   |               |
|   | veteran enrolls in        |   | s |    |    |   |               |
|   | Medicare, then they       |   | h |    |    |   |               |
|   | should not enroll with    |   | o |    |    |   |               |
|   | VHA and vice versa. Once  |   | u |    |    |   |               |
|   | the managed care enrollee |   | l |    |    |   |               |
|   | financing system is in    |   | d |    |    |   |               |
|   | place, there should be no |   | b |    |    |   |               |
|   | more additional; revenue  |   | e |    |    |   |               |
|   | to gain. In general,      |   | a |    |    |   |               |
|   | enrollees are discouraged |   | b |    |    |   |               |
|   | from out of plan          |   | l |    |    |   |               |
|   | utilization.              |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | v |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | A |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | VA needs to consider the  | A | S |    |    |   |               |
|   | possibility that          |   | h |    |    |   |               |
|   | authority to bill         |   | o |    |    |   |               |
|   | Medicare is not likely to |   | u |    |    |   |               |
|   | produce a great deal of   |   | l |    |    |   |               |
|   | revenue. Congress has the |   | d |    |    |   |               |
|   | Medicare program under    |   | b |    |    |   |               |
|   | detailed scrutiny, is     |   | e |    |    |   |               |
|   | cutting resources and     |   | e |    |    |   |               |
|   | reducing the Medicare     |   | x |    |    |   |               |
|   | budget along with other   |   | p |    |    |   |               |
|   | Federally funded          |   | l |    |    |   |               |
|   | programs. MCCR should not |   | o |    |    |   |               |
|   | visualize Medicare as a   |   | r |    |    |   |               |
|   | viable source unless VA   |   | e |    |    |   |               |
|   | is able to provide care   |   | d |    |    |   |               |
|   | at rates lower than other |   | b |    |    |   |               |
|   | providers. It is also     |   | y |    |    |   |               |
|   | important to understand   |   | V |    |    |   |               |
|   | that a Federal entity     |   | H |    |    |   |               |
|   | billing a Federal entity  |   | A |    |    |   |               |
|   | increase Federal          |   | a |    |    |   |               |
|   | administrative costs.     |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | , |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | The report does not       | A | P |    |    |   |               |
|   | provide for the financial |   | a |    |    |   |               |
|   | incentives which would    |   | p |    |    |   |               |
|   | enable a proactive        |   | e |    |    |   |               |
|   | medical center to retain  |   | r |    |    |   |               |
|   | at least a portion of     |   | a |    |    |   |               |
|   | revenue they produce from |   | d |    |    |   |               |
|   | DOD sharing, etc.         |   | v |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  The VISN business     |   |   |    |    | A |               |
| e |     plan should describe  |   |   |    |    | / |               |
| f |     the VISN health plan  |   |   |    |    | D |               |
| N |     services and how they |   |   |    |    | / |               |
| o |     will be provided, the |   |   |    |    | O |               |
| ] |     demand for the        |   |   |    |    | ] |               |
| { |     services, marketing   |   |   |    |    | { |               |
| . |     and cost, and the     |   |   |    |    | . |               |
| u |     organizational        |   |   |    |    | u |               |
| n |     management system.    |   |   |    |    | n |               |
| d |     The business plan     |   |   |    |    | d |               |
| e |     should include        |   |   |    |    | e |               |
| r |     supporting data from  |   |   |    |    | r |               |
| l |     predecessor VA plans, |   |   |    |    | l |               |
| i |     such as Facility      |   |   |    |    | i |               |
| n |     Development Plan      |   |   |    |    | n |               |
| e |     (FDP), five year      |   |   |    |    | e |               |
| } |     plans, medical center |   |   |    |    | } |               |
| * |     specific construction |   |   |    |    | * |               |
| * |     plans, etc.           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 | B.  Adopt the VISN        |   |   |    |    |   |               |
| . |     business plan format  |   |   |    |    |   |               |
| 1 |     and timetable         |   |   |    |    |   |               |
| 3 |     reflected in          |   |   |    |    |   |               |
|   |     Appendices E and G.   |   |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   | C.  Provide flexibility   |   |   |    |    |   |               |
|   |     in the design of the  |   |   |    |    |   |               |
|   |     business plan to      |   |   |    |    |   |               |
|   |     allow for differences |   |   |    |    |   |               |
|   |     between VISNs.        |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **See Recommendation      | * |   | 1  |    |   |               |
|   | 3.15**                    | * |   | 0- |    |   |               |
|   |                           | C |   | 1- |    |   |               |
|   |                           | N |   | 95 |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | / |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The business plan does    | A | H |    |    |   |               |
| . | not include how VHA's     |   | Q |    |    |   |               |
| 1 | would sell its, new       |   | W |    |    |   |               |
| 3 | emphasis on capitation    |   | o |    |    |   |               |
|   | and cost containment to   |   | r |    |    |   |               |
|   | Congress, OMB or more     |   | k |    |    |   |               |
|   | importantly the VSO,s and |   | G |    |    |   |               |
|   | the veteran. Nor does it  |   | r |    |    |   |               |
|   | state how these changes   |   | o |    |    |   |               |
|   | will improve the amount   |   | u |    |    |   |               |
|   | and quality of medical    |   | p |    |    |   |               |
|   | care for veterans.        |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | B |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | M |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | W |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Business Planning process | D | P |    |    |   |               |
| . | does not address any      |   | a |    |    |   |               |
| 1 | patient outcomes.         |   | t |    |    |   |               |
| 3 |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
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|   |                           |   | e |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | P |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The VISN Business Plan    | A | T |    |    |   |               |
| . | Submission format appears |   | h |    |    |   |               |
| 1 | to be very comprehensive  |   | e |    |    |   |               |
| 3 | and incorporates elements |   | b |    |    |   |               |
|   | from strategic planning,  |   | u |    |    |   |               |
|   | financial management and  |   | s |    |    |   |               |
|   | performance measurement   |   | i |    |    |   |               |
|   | to provide a 5 year       |   | n |    |    |   |               |
|   | financial forecast (2     |   | e |    |    |   |               |
|   | comments address this     |   | s |    |    |   |               |
|   | issue).                   |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | c |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | c |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Some degree of            | A | E |    |    |   |               |
| . | flexibility should be     |   | x |    |    |   |               |
| 1 | allowed in deleting       |   | c |    |    |   |               |
| 3 | elements of the business  |   | e |    |    |   |               |
|   | plan contingent upon the  |   | p |    |    |   |               |
|   | special circumstances of  |   | t |    |    |   |               |
|   | each VISN.                |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | / |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The length of the         | D | T |    |    |   |               |
| . | business plan should be   |   | h |    |    |   |               |
| 1 | limited.                  |   | e |    |    |   |               |
| 3 |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
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|   |                           |   | v |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | c |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
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|   |                           |   | b |    |    |   |               |
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|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | h |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | e |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
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|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The elements of the VISN  | D | T |    |    |   |               |
| . | Health Plan are vague.    |   | h |    |    |   |               |
| 1 | The health plan format    |   | e |    |    |   |               |
| 3 | does not adjust for VHA   |   | e |    |    |   |               |
|   | today without major       |   | l |    |    |   |               |
|   | health care reform (2     |   | e |    |    |   |               |
|   | comments address this     |   | m |    |    |   |               |
|   | issue).                   |   | e |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
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+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Indicators to measure the | D | T |    |    |   |               |
| . | effectiveness of the VISN |   | h |    |    |   |               |
| 1 | are not in the business   |   | e |    |    |   |               |
| 3 | plan format.              |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Would make sense to have  | A | T |    |    |   |               |
| * | actuarial studies         |   | h |    |    |   |               |
| 3 | (CHAMPVA & CHAMPUS) and   |   | e |    |    |   |               |
| . | market research           |   | a |    |    |   |               |
| 1 | coordinated at the        |   | c |    |    |   |               |
| 3 | headquarters level to     |   | t |    |    |   |               |
|   | provide for the purchase  |   | u |    |    |   |               |
|   | of one consultant on a VA |   | a |    |    |   |               |
|   | contractual agreement (2  |   | r |    |    |   |               |
|   | comments address this     |   | i |    |    |   |               |
|   | issue).                   |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Insert deviation and/or   | C |   | 1  |    |   |               |
| . | exceptions approval       | N |   | 0- |    |   |               |
| 1 | process by CNO/COO in     | O |   | 1- |    |   |               |
| 3 | business plan directive.  | / |   | 95 |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Provide for contractual   | C |   | 1  |    |   |               |
| * | funding at HQ for VISN    | F |   | 0- |    |   |               |
| 3 | actuarial studies and     | O |   | 1- |    |   |               |
| . | market research.          | - |   | 95 |    |   |               |
| 1 |                           | a |   |    |    |   |               |
| 3 |                           | c |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | u |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | - |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | k |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | t |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | h |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Endorse the timetable for |   |   |    |    | A |               |
| e | VISN business plan        |   |   |    |    | / |               |
| f | submission. A recommended |   |   |    |    | D |               |
| N | timetable for business    |   |   |    |    | / |               |
| o | plan submission is found  |   |   |    |    | O |               |
| ] | in Appendix G.            |   |   |    |    | ] |               |
| { |                           |   |   |    |    | { |               |
| . |                           |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 4 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **See Recommendation      | * |   | 1  |    |   |               |
|   | 3.15**                    | * |   | 0- |    |   |               |
|   |                           | C |   | 1- |    |   |               |
|   |                           | N |   | 95 |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | / |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Recommend that timetable  | A | I |    |    |   |               |
| . | be accelerated to March   |   | t |    |    |   |               |
| 1 | 31 for the Business Plan  |   | i |    |    |   |               |
| 4 | submission (2 comments    |   | s |    |    |   |               |
|   | address this issue).      |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Timetable needs to be     | C |   | 1  |    |   |               |
| . | adjusted to produce an    | N |   | 0- |    |   |               |
| 1 | interim business plan     | O |   | 1- |    |   |               |
| 4 | budget to meet the FY1998 | / |   | 95 |    |   |               |
|   | budget cycle. Business    | C |   |    |    |   |               |
|   | plan budget needs to be   | O |   |    |    |   |               |
|   | reduced in scope and the  | O |   |    |    |   |               |
|   | submission date should be |   |   |    |    |   |               |
|   | delayed until May 1. It   |   |   |    |    |   |               |
|   | will take time for the    |   |   |    |    |   |               |
|   | VISN to hire staff. This  |   |   |    |    |   |               |
|   | will delay any earlier    |   |   |    |    |   |               |
|   | submission of interim     |   |   |    |    |   |               |
|   | business plan and will    |   |   |    |    |   |               |
|   | delay a complete business |   |   |    |    |   |               |
|   | plan in time for the      |   |   |    |    |   |               |
|   | FY1998 budget cycle.      |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  Issue directive for   |   |   |    |    | A |               |
| e |     VHA business planning |   |   |    |    | / |               |
| f |     (see Appendix F for a |   |   |    |    | D |               |
| N |     draft directive).     |   |   |    |    | / |               |
| o |                           |   |   |    |    | O |               |
| ] | B.  Develop criteria and  |   |   |    |    | ] |               |
| { |     the process for the   |   |   |    |    | { |               |
| . |     Chief Network         |   |   |    |    | . |               |
| u |     Officer's review and  |   |   |    |    | u |               |
| n |     approval of business  |   |   |    |    | n |               |
| d |     plans.                |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 5 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| * | Issue a VHA directive for | C |   | 1  |    |   |               |
| * | the development of VISN   | N |   | 0- |    |   |               |
| \ | business planning         | O |   | 1- |    |   |               |
| * | including format and      |   |   | 95 |    |   |               |
| * | timetable for submission. |   |   |    |    |   |               |
| * |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 5 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Information systems are   | D | I |    |    |   |               |
| . | not adequately addressed  |   | n |    |    |   |               |
| 1 | throughout the business   |   | f |    |    |   |               |
| 5 | plan document, financial  |   | o |    |    |   |               |
| . | document and strategic    |   | r |    |    |   |               |
| 1 | planning process.         |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | W |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | G |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | REFER TO PROPOSED         | C |   | 1  |    |   |               |
|   | REVISION 3.13 & 3.14      | N |   | 0- |    |   |               |
|   |                           | O |   | 1- |    |   |               |
|   |                           | / |   | 95 |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Endorse commercial        |   |   |    |    | A |               |
| e | software for use in       |   |   |    |    | / |               |
| f | business planning. Adapt  |   |   |    |    | D |               |
| N | the software acquired by  |   |   |    |    | / |               |
| o | the VA business plan      |   |   |    |    | O |               |
| ] | prototypes (Minnesota and |   |   |    |    | ] |               |
| { | Washington) for use in    |   |   |    |    | { |               |
| . | the VISN business plan    |   |   |    |    | . |               |
| u | financial forecasting     |   |   |    |    | u |               |
| n | section.                  |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 6 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Appoint a team            | C |   | 1  |    |   |               |
| * | responsible for modifying | F |   | 0- |    |   |               |
| 3 | existing business plan    | O |   | 1- |    |   |               |
| . | financial software to be  | / |   | 95 |    |   |               |
| 1 | used for the VISN         | C |   |    |    |   |               |
| 6 | business planning         | I |   |    |    |   |               |
| . | process. Software should  | O |   |    |    |   |               |
| 1 | include revenue and       |   |   |    |    |   |               |
|   | expense statements,       |   |   |    |    |   |               |
|   | balance sheets, cash flow |   |   |    |    |   |               |
|   | statements and financial  |   |   |    |    |   |               |
|   | projection worksheets     |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The financial plan        | A | I |    |    |   |               |
| . | section of the business   |   | n |    |    |   |               |
| 1 | plan does not include     |   | c |    |    |   |               |
| 6 | projections for treatment |   | l |    |    |   |               |
| . | of other customer groups  |   | u |    |    |   |               |
| 1 | (DOD and CHAMPVA          |   | d |    |    |   |               |
|   | patients).                |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The plan needs to include | D | T |    |    |   |               |
| . | a section describing how  |   | i |    |    |   |               |
| 1 | budget execution and      |   | m |    |    |   |               |
| 6 | operational adjustments   |   | e |    |    |   |               |
| . | in the appropriated       |   | t |    |    |   |               |
| 1 | funding are incorporated. |   | a |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | c |    |    |   |               |
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|   |                           |   | w |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | ( |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | 4 |    |    |   |               |
|   |                           |   | 8 |    |    |   |               |
|   |                           |   | ) |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The business plan         | D | A |    |    |   |               |
| . | software should include a |   | g |    |    |   |               |
| 1 | useful and useable        |   | o |    |    |   |               |
| 6 | billing package.          |   | o |    |    |   |               |
| . |                           |   | d |    |    |   |               |
| 1 |                           |   | b |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Business plan should      | D | T |    |    |   |               |
| . | allow for specific        |   | h |    |    |   |               |
| 1 | proposals to guide major  |   | e |    |    |   |               |
| 6 | capital acquisition, and  |   | f |    |    |   |               |
| . | fund capital and          |   | i |    |    |   |               |
| 1 | operating expenses        |   | n |    |    |   |               |
|   | separately.               |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
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|   |                           |   | x |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | q |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Financial software should | C |   | 1  |    |   |               |
| * | include other customer    | F |   | 0- |    |   |               |
| 3 | groups such as DOD and    | O |   | 1- |    |   |               |
| . | CHAMPVA and capital       | / |   | 95 |    |   |               |
| 1 | acquisition.              | C |   |    |    |   |               |
| 6 |                           | I |   |    |    |   |               |
| . |                           | O |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Develop policy for        |   |   |    |    | A |               |
| e | business, strategic,      |   |   |    |    | / |               |
| f | quality improvement and   |   |   |    |    | D |               |
| N | resource planning,        |   |   |    |    | / |               |
| o | identifying specific      |   |   |    |    | O |               |
| ] | linkage points*.*         |   |   |    |    | ] |               |
| { |                           |   |   |    |    | { |               |
| . |                           |   |   |    |    | . |               |
| u |                           |   |   |    |    | u |               |
| n |                           |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e |                           |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 7 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Develop policy            | O |   | 1  |    |   |               |
| * | identifying specific      | f |   | 0- |    |   |               |
| 3 | linkage points between    | f |   | 1- |    |   |               |
| . | strategic, resource and   | i |   | 95 |    |   |               |
| 1 | quality improvement       | c |   |    |    |   |               |
| 7 | planning.                 | e |   |    |    |   |               |
| . |                           | o |   |    |    |   |               |
| 1 |                           | f |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | , |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | g |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           |   |   |    |    |   |               |
|   |                           | / |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | N |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | There appears to be       | A | T |    |    |   |               |
| . | lacking a concept of how  |   | h |    |    |   |               |
| 1 | needed linkages will      |   | e |    |    |   |               |
| 7 | occur, e.g., between      |   | V |    |    |   |               |
| . | financial performance     |   | H |    |    |   |               |
| 1 | measures, business plans  |   | A |    |    |   |               |
|   | and other performance     |   | S |    |    |   |               |
|   | measures. Strategic       |   | t |    |    |   |               |
|   | orientation should be     |   | r |    |    |   |               |
|   | developed under Policy,   |   | a |    |    |   |               |
|   | Planning, Performance     |   | t |    |    |   |               |
|   | Measurement Off ice and   |   | e |    |    |   |               |
|   | established through the   |   | g |    |    |   |               |
|   | strategic planning        |   | i |    |    |   |               |
|   | office. Business planning |   | c |    |    |   |               |
|   | process should include    |   | P |    |    |   |               |
|   | performance planning.     |   | l |    |    |   |               |
|   | Business plan process     |   | a |    |    |   |               |
|   | does not adequately link  |   | n |    |    |   |               |
|   | the strategic plan and    |   | s |    |    |   |               |
|   | performance measurement.  |   | h |    |    |   |               |
|   | The process needs to be   |   | o |    |    |   |               |
|   | further delineated for HQ |   | u |    |    |   |               |
|   | business plan approval (7 |   | l |    |    |   |               |
|   | comments address this     |   | d |    |    |   |               |
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|   |                           |   | y |    |    |   |               |
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|   |                           |   | 1 |    |    |   |               |
|   |                           |   | , |    |    |   |               |
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|   |                           |   | 9 |    |    |   |               |
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|   |                           |   | 5 |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Business Planning and the | A | T |    |    |   |               |
| . | Congressional Budget      |   | h |    |    |   |               |
| 1 | Formulation Process needs |   | e |    |    |   |               |
| 7 | to be further tied        |   | w |    |    |   |               |
| . | together.                 |   | o |    |    |   |               |
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|   |                           |   | h |    |    |   |               |
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|   |                           |   | O |    |    |   |               |
|   |                           |   | O |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | CNO/COO by October 1 will | C |   | 1  |    |   |               |
| * | define the HQ approval    | N |   | 0- |    |   |               |
| 3 | process for business plan | O |   | 1- |    |   |               |
| . | .                         | / |   | 95 |    |   |               |
| 1 |                           | C |   |    |    |   |               |
| 7 |                           | O |   |    |    |   |               |
| . |                           | O |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | A clear understanding of  | C |   | 1  |    |   |               |
| * | the entire process        | O |   | 0- |    |   |               |
| 3 | starting from HQ and      | O |   | 1- |    |   |               |
| . | progressing to the VISN   |   |   | 95 |    |   |               |
| 1 | needs to be described.    |   |   |    |    |   |               |
| 7 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | DSS implementation should |   |   |    |    | A |               |
| e | continue to be a high     |   |   |    |    | / |               |
| f | priority, with a plan to  |   |   |    |    | D |               |
| N | fully support VISN-level  |   |   |    |    | / |               |
| o | information needs. In the |   |   |    |    | O |               |
| ] | interim, continue for     |   |   |    |    | ] |               |
| { | VISN financial managers   |   |   |    |    | { |               |
| . | the financial data        |   |   |    |    | . |               |
| u | support provided to       |   |   |    |    | u |               |
| n | region financial managers |   |   |    |    | n |               |
| d | by the current Southern   |   |   |    |    | d |               |
| e | Region, including access  |   |   |    |    | e |               |
| r | to all financial data     |   |   |    |    | r |               |
| l | bases. This support also  |   |   |    |    | l |               |
| i | includes obligation, cost |   |   |    |    | i |               |
| n | and workload data (RD     |   |   |    |    | n |               |
| e | 285) and support for the  |   |   |    |    | e |               |
| } | existing Executive        |   |   |    |    | } |               |
| * | Information System (EIS), |   |   |    |    | * |               |
| * | resident in Ann Arbor.    |   |   |    |    | * |               |
|   | The EIS is expected to    |   |   |    |    |   |               |
| 3 | continue as a valuable    |   |   |    |    |   |               |
| . | resource for the VISNs.   |   |   |    |    |   |               |
| 1 | It can serve as a means   |   |   |    |    |   |               |
| 8 | to develop a data         |   |   |    |    |   |               |
|   | aggregation tool for      |   |   |    |    |   |               |
|   | nationally mandated       |   |   |    |    |   |               |
|   | information \"roll-ups\". |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| \ | Chief Network Officer     | C |   |    |    |   |               |
| * | should oversee the        | N |   |    |    |   |               |
| 3 | transfer of the regional  | O |   |    |    |   |               |
| . | financial support to the  |   |   |    |    |   |               |
| 1 | VISNs (e.g., RD285, EIS). |   |   |    |    |   |               |
| 8 | VAMC IRM and financial    |   |   |    |    |   |               |
| . | experts shall be made     |   |   |    |    |   |               |
| 1 | available to assist in    |   |   |    |    |   |               |
|   | the building of VISN      |   |   |    |    |   |               |
|   | financial information     |   |   |    |    |   |               |
|   | capabilities.             |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | National data aggregation | C |   |    |    |   |               |
| . | ("roll-ups") shall be the | F |   |    |    |   |               |
| 1 | responsibility of the     | O |   |    |    |   |               |
| 8 | requesting organizations  | / |   |    |    |   |               |
| . | in Headquarters. This     | C |   |    |    |   |               |
| 2 | ensures cost efficient    | N |   |    |    |   |               |
|   | use of the necessary data | O |   |    |    |   |               |
|   | gathering resources. This |   |   |    |    |   |               |
|   | function typically        |   |   |    |    |   |               |
|   | resides with the          |   |   |    |    |   |               |
|   | organizations reporting   |   |   |    |    |   |               |
|   | to the CFO and CNO.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Agree that financial data | D | V |    |    |   |               |
| . | support will be needed    |   | I |    |    |   |               |
| 1 | for VISN financial        |   | S |    |    |   |               |
| 8 | managers; recommend       |   | N |    |    |   |               |
|   | making corresponding      |   | D |    |    |   |               |
|   | staffing needs explicit.  |   | i |    |    |   |               |
|   | Disagree that DSS is a    |   | r |    |    |   |               |
|   | resource allocation tool  |   | e |    |    |   |               |
|   | (it can analyze patient   |   | c |    |    |   |               |
|   | encounters, not           |   | t |    |    |   |               |
|   | facility-level nor VISN   |   | o |    |    |   |               |
|   | level workload and cost). |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | C |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | After DSS is fully        | A |   |    |    |   |               |
| . | implemented, there will   |   |   |    |    |   |               |
| 1 | still be a need for       |   |   |    |    |   |               |
| 8 | financial data support    |   |   |    |    |   |               |
|   | using existing or other   |   |   |    |    |   |               |
|   | new tools.                |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Role of CFO in the        | D | T |    |    |   |               |
| . | transfer of financial     |   | h |    |    |   |               |
| 1 | operations requires       |   | e |    |    |   |               |
| 8 | definition.               |   | C |    |    |   |               |
| . |                           |   | N |    |    |   |               |
| 1 |                           |   | O |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | R |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Does national data        | D | N |    |    |   |               |
| . | aggregation, as a         |   | o |    |    |   |               |
| 1 | responsibility of         |   | c |    |    |   |               |
| 8 | requesting organizations  |   | h |    |    |   |               |
| . | in Headquarters, imply    |   | a |    |    |   |               |
| 2 | the introduction of a     |   | r |    |    |   |               |
|   | charge back or similar    |   | g |    |    |   |               |
|   | system?                   |   | e |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Add to the                |   |   |    |    |   |               |
| . | recommendation: Financial |   |   |    |    |   |               |
| 1 | information systems       |   |   |    |    |   |               |
| 8 | should continue to be     |   |   |    |    |   |               |
|   | refined/developed as      |   |   |    |    |   |               |
|   | necessary to support      |   |   |    |    |   |               |
|   | managed care operations.  |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | Intensify preliminary     |   |   |    |    | A |               |
| e | work on managed-care      |   |   |    |    | / |               |
| f | information systems and   |   |   |    |    | D |               |
| N | conduct a high priority,  |   |   |    |    | / |               |
| o | coordinated effort to     |   |   |    |    | O |               |
| ] | evaluate and select an    |   |   |    |    | ] |               |
| { | existing, proven system.  |   |   |    |    | { |               |
| . | The system should be      |   |   |    |    | . |               |
| u | tested during FY 97,      |   |   |    |    | u |               |
| n | before full               |   |   |    |    | n |               |
| d | implementation in FY 98   |   |   |    |    | d |               |
| e | at all VISNs.             |   |   |    |    | e |               |
| r |                           |   |   |    |    | r |               |
| l |                           |   |   |    |    | l |               |
| i |                           |   |   |    |    | i |               |
| n |                           |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } |                           |   |   |    |    | } |               |
| * |                           |   |   |    |    | * |               |
| * |                           |   |   |    |    | * |               |
|   |                           |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
| 9 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| * | The evaluation and        | C |   |    |    |   |               |
| * | selection process for a   | I |   |    |    |   |               |
| \ | managed-care information  | O |   |    |    |   |               |
| * | system vendor can begin   |   |   |    |    |   |               |
| * | immediately through an    |   |   |    |    |   |               |
| * | acceleration of the       |   |   |    |    |   |               |
| 3 | current studies with      |   |   |    |    |   |               |
| . | implementation testing in |   |   |    |    |   |               |
| 1 | FY 97 and full            |   |   |    |    |   |               |
| 9 | implementation in FY 98.  |   |   |    |    |   |               |
| . | Quarterly reports on      |   |   |    |    |   |               |
| 1 | progress should be made   |   |   |    |    |   |               |
|   | to the Under Secretary    |   |   |    |    |   |               |
|   | for Health. Stakeholders  |   |   |    |    |   |               |
|   | such as the membership of |   |   |    |    |   |               |
|   | the Information Resources |   |   |    |    |   |               |
|   | Advisory Committee (IRAC) |   |   |    |    |   |               |
|   | and Management and        |   |   |    |    |   |               |
|   | Clinical Applications     |   |   |    |    |   |               |
|   | Resource Groups (CARG and |   |   |    |    |   |               |
|   | MARG) should be kept      |   |   |    |    |   |               |
|   | informed.                 |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Responsibility for the    | C |   |    |    |   |               |
| . | evaluation and selection  | I |   |    |    |   |               |
| 1 | of a managed-care         | O |   |    |    |   |               |
| 9 | information system should |   |   |    |    |   |               |
| . | be assigned to a specific |   |   |    |    |   |               |
| 2 | individual.               |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The CFO and CNO           | C |   |    |    |   |               |
| . | (representing VISN        | N |   |    |    |   |               |
| 1 | Directors) should serve   | O |   |    |    |   |               |
| 9 | as internal VHA oversight | / |   |    |    |   |               |
| . | officials at key          | C |   |    |    |   |               |
| 3 | development points.       | F |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Agree that managed care   | A |   |    |    |   |               |
| . | software will be needed;  |   |   |    |    |   |               |
| 1 | suggest cost-benefit of   |   |   |    |    |   |               |
| 9 | buy-versus-build before   |   |   |    |    |   |               |
|   | deciding. If the system   |   |   |    |    |   |               |
|   | is to hold actuarial      |   |   |    |    |   |               |
|   | tables and cost           |   |   |    |    |   |               |
|   | assessment for patient    |   |   |    |    |   |               |
|   | encounters, it should be  |   |   |    |    |   |               |
|   | part of the VA corporate  |   |   |    |    |   |               |
|   | datasets and available    |   |   |    |    |   |               |
|   | for public use.           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The document does not     | D | W |    |    |   |               |
| . | address the likely scale  |   | h |    |    |   |               |
| 1 | of resources required to  |   | i |    |    |   |               |
| 9 | support managed care and  |   | l |    |    |   |               |
|   | does not acknowledge      |   | e |    |    |   |               |
|   | medical informatics as an |   | r |    |    |   |               |
|   | essential component of    |   | e |    |    |   |               |
|   | VISN business and managed |   | s |    |    |   |               |
|   | care. The work group      |   | o |    |    |   |               |
|   | placed a low level of     |   | u |    |    |   |               |
|   | importance on information |   | r |    |    |   |               |
|   | technology. BDC           |   | c |    |    |   |               |
|   | recommends the creation   |   | e |    |    |   |               |
|   | of an Executive Work      |   | s |    |    |   |               |
|   | Group to focus on the     |   | t |    |    |   |               |
|   | missing VACO part of the  |   | o |    |    |   |               |
|   | report including          |   | s |    |    |   |               |
|   | Information               |   | u |    |    |   |               |
|   | Substrate\--critical      |   | p |    |    |   |               |
|   | management variables that |   | p |    |    |   |               |
|   | are tied to business      |   | o |    |    |   |               |
|   | goals and objectives;     |   | r |    |    |   |               |
|   | existing information      |   | t |    |    |   |               |
|   | supports for these        |   | m |    |    |   |               |
|   | critical variables;       |   | a |    |    |   |               |
|   | transition plans; and     |   | n |    |    |   |               |
|   | operational management    |   | a |    |    |   |               |
|   | and administration.       |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
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|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | k |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | r |    |    |   |               |
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|   |                           |   | u |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The recommendation and    | D | T |    |    |   |               |
| . | action plan item 1 are    |   | h |    |    |   |               |
| 1 | silent regarding the role |   | e |    |    |   |               |
| 9 | and involvement of the    |   | C |    |    |   |               |
|   | CFO organization.         |   | I |    |    |   |               |
| 3 |                           |   | O |    |    |   |               |
| . |                           |   | i |    |    |   |               |
| 1 |                           |   | s |    |    |   |               |
| 9 |                           |   | r |    |    |   |               |
| . |                           |   | e |    |    |   |               |
| 1 |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
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|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | b |    |    |   |               |
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|   |                           |   | f |    |    |   |               |
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|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Although the managed care | D | T |    |    |   |               |
| . | system is basically an    |   | h |    |    |   |               |
| 1 | information system, the   |   | e |    |    |   |               |
| 9 | users of the system       |   | C |    |    |   |               |
| . | should have               |   | I |    |    |   |               |
| 2 | responsibility for        |   | O |    |    |   |               |
|   | evaluation and selection, |   | i |    |    |   |               |
|   | not the CIO.              |   | s |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | v |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The stakeholders          | A |   |    |    |   |               |
| . | identified in the item    |   |   |    |    |   |               |
| 1 | are limited to those      |   |   |    |    |   |               |
| 9 | supporting the CIO effort |   |   |    |    |   |               |
| . | and are not               |   |   |    |    |   |               |
| 1 | representative of the     |   |   |    |    |   |               |
|   | full range of             |   |   |    |    |   |               |
|   | stakeholders who should   |   |   |    |    |   |               |
|   | be involved.              |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | VHA should consider       | A |   |    |    |   |               |
| . | enhancing DHCP because    |   |   |    |    |   |               |
| 1 | track record with         |   |   |    |    |   |               |
| 9 | commercial software has   |   |   |    |    |   |               |
|   | been less than optimal.   |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The Automated Information | A |   |    |    |   |               |
| . | Collections System (AICS) |   |   |    |    |   |               |
| 1 | proposed by MCCR will     |   |   |    |    |   |               |
| 9 | allow direct point of     |   |   |    |    |   |               |
|   | service outpatient        |   |   |    |    |   |               |
|   | encounter into DHCP. The  |   |   |    |    |   |               |
|   | benefits of this system   |   |   |    |    |   |               |
|   | should be explored.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The TSI DSS product being | D | F |    |    |   |               |
| . | introduced across the     |   | u |    |    |   |               |
| 1 | system includes the basic |   | r |    |    |   |               |
| 9 | data and functions        |   | t |    |    |   |               |
|   | necessary to support a    |   | h |    |    |   |               |
|   | managed care process in   |   | e |    |    |   |               |
|   | VHA.                      |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | f |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | . |    |    |   |               |
|   |                           |   | , |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Other stakeholders should |   |   |    |    |   |               |
| . | be consulted as           |   |   |    |    |   |               |
| 1 | necessary, e.g. CFO.      |   |   |    |    |   |               |
| 9 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | A.  VISNs must have       |   |   |    |    | A |               |
| e |     access to various VA  |   |   |    |    | / |               |
| f |     data and planning     |   |   |    |    | D |               |
| N |     systems for current   |   |   |    |    | / |               |
| o |     veteran users,        |   |   |    |    | O |               |
| ] |     demographics, staff   |   |   |    |    | ] |               |
| { |     and financial         |   |   |    |    | { |               |
| . |     information at        |   |   |    |    | . |               |
| u |     facility and VISN     |   |   |    |    | u |               |
| n |     levels.               |   |   |    |    | n |               |
| d |                           |   |   |    |    | d |               |
| e | B.  VISNs should contract |   |   |    |    | e |               |
| r |     for an actuarial      |   |   |    |    | r |               |
| l |     assessment of VHA     |   |   |    |    | l |               |
| i |     health care costs and |   |   |    |    | i |               |
| n |     services.             |   |   |    |    | n |               |
| e |                           |   |   |    |    | e |               |
| } | C.  VISNs should pursue   |   |   |    |    | } |               |
| * |     access to VBA data    |   |   |    |    | * |               |
| * |     sets to gain access   |   |   |    |    | * |               |
|   |     to demographic        |   |   |    |    |   |               |
| 3 |     information for all   |   |   |    |    |   |               |
| . |     veterans who may or   |   |   |    |    |   |               |
| 2 |     may not have used VHA |   |   |    |    |   |               |
| 0 |     services.             |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Headquarters should take  | C |   |    |    |   |               |
| . | the lead to ensure VISN   | I |   |    |    |   |               |
| 2 | access and training on    | O |   |    |    |   |               |
| 0 | all pertinent planning    |   |   |    |    |   |               |
| . | databases referenced in   |   |   |    |    |   |               |
| 1 | the recommendations.      |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The pre-existing          | H |   |    |    |   |               |
| . | Headquarters market       | e |   |    |    |   |               |
| 2 | research and business     | a |   |    |    |   |               |
| 0 | planning information      | l |   |    |    |   |               |
| . | should be distributed to  | t |   |    |    |   |               |
| 2 | all VISNs.                | h |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | R |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | r |   |    |    |   |               |
|   |                           | m |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | / |   |    |    |   |               |
|   |                           | P |   |    |    |   |               |
|   |                           | o |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | A |   |    |    |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | a |   |    |    |   |               |
|   |                           | l |   |    |    |   |               |
|   |                           | y |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | s |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Office of Policy,         | A | D |    |    |   |               |
| . | Planning and Performance  |   | a |    |    |   |               |
| 2 | should provide VBA data   |   | t |    |    |   |               |
| 0 | sets and planning models  |   | a |    |    |   |               |
| . | to VISNs.                 |   | a |    |    |   |               |
| 1 |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
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|   |                           |   | o |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | b |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | V |    |    |   |               |
|   |                           |   | I |    |    |   |               |
|   |                           |   | S |    |    |   |               |
|   |                           |   | N |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | u |    |    |   |               |
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|   |                           |   | b |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | l |    |    |   |               |
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|   |                           |   | t |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | o |    |    |   |               |
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|   |                           |   | d |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
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|   |                           |   | e |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | w |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | h |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | i |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | H |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | d |    |    |   |               |
|   |                           |   | q |    |    |   |               |
|   |                           |   | u |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | t |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | p |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | o |    |    |   |               |
|   |                           |   | g |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Agree that VISNs should   | A |   |    |    |   |               |
| . | build information         |   |   |    |    |   |               |
| 2 | resources in cooperation  |   |   |    |    |   |               |
| 0 | with states, HCFA and     |   |   |    |    |   |               |
|   | private sector. Other     |   |   |    |    |   |               |
|   | sources to consider:      |   |   |    |    |   |               |
|   | Survey of Veterans        |   |   |    |    |   |               |
|   | (SOVIII), Healthcare Cost |   |   |    |    |   |               |
|   | and Utilization Project   |   |   |    |    |   |               |
|   | (HCUP-3), Medicare        |   |   |    |    |   |               |
|   | Current Beneficiary       |   |   |    |    |   |               |
|   | Survey (MCBS). Recommend  |   |   |    |    |   |               |
|   | identification of         |   |   |    |    |   |               |
|   | qualified staff and       |   |   |    |    |   |               |
|   | corresponding allocation  |   |   |    |    |   |               |
|   | of FTEE to VISNs, VSSCs   |   |   |    |    |   |               |
|   | or a central location.    |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Add OPPP as Action        | O |   |    |    |   |               |
| . | Office.                   | P |   |    |    |   |               |
| 2 |                           | P |   |    |    |   |               |
| 0 |                           | P |   |    |    |   |               |
| . |                           | / |   |    |    |   |               |
| 1 |                           | C |   |    |    |   |               |
|   |                           | I |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

+---+---------------------------+---+---+----+----+---+---------------+
| * | **[Recom                  |   |   |    |    | * | **[R          |
| * | mendation:]{.underline}** |   |   |    |    | * | emarks]{.unde |
| [ |                           |   |   |    |    | [ | rline}-K^2^** |
| R | VHA should adopt those    |   |   |    |    | A |               |
| e | private sector health     |   |   |    |    | / |               |
| f | plan performance          |   |   |    |    | D |               |
| N | indicators (such as       |   |   |    |    | / |               |
| o | HEDIS) most pertinent to  |   |   |    |    | O |               |
| ] | VHA and generate a        |   |   |    |    | ] |               |
| { | VA-specific financial     |   |   |    |    | { |               |
| . | report card. While        |   |   |    |    | . |               |
| u | several private sector    |   |   |    |    | u |               |
| n | financial indicators will |   |   |    |    | n |               |
| d | be difficult to adapt to  |   |   |    |    | d |               |
| e | VA, the general theme of  |   |   |    |    | e |               |
| r | managing enrollee costs   |   |   |    |    | r |               |
| l | based on outcome measures |   |   |    |    | l |               |
| i | is clearly consistent     |   |   |    |    | i |               |
| n | with the Vision for       |   |   |    |    | n |               |
| e | Change. Some VA data are  |   |   |    |    | e |               |
| } | currently available and   |   |   |    |    | } |               |
| * | could be adapted to meet  |   |   |    |    | * |               |
| * | the requirements of a     |   |   |    |    | * |               |
|   | financial report card.    |   |   |    |    |   |               |
| 3 |                           |   |   |    |    |   |               |
| . |                           |   |   |    |    |   |               |
| 2 |                           |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Action Required**       | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Adapt private sector      | C |   |    |    |   |               |
| . | financial performance     | N |   |    |    |   |               |
| 2 | measures including HEDIS  | O |   |    |    |   |               |
| 1 | factors for VHA use by    | , |   |    |    |   |               |
| . | Headquarters, VISNs and   | C |   |    |    |   |               |
| 1 | VAMCs. This work should   | I |   |    |    |   |               |
|   | be performed by a field   | O |   |    |    |   |               |
|   | based multi-disciplinary  | a |   |    |    |   |               |
|   | task force.               | n |   |    |    |   |               |
|   |                           | d |   |    |    |   |               |
|   |                           | C |   |    |    |   |               |
|   |                           | F |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Comments**              | * | * |    |    |   |               |
|   |                           | * | * |    |    |   |               |
|   |                           | A | R |    |    |   |               |
|   |                           | / | a |    |    |   |               |
|   |                           | D | t |    |    |   |               |
|   |                           | * | i |    |    |   |               |
|   |                           | * | o |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | l |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | * |    |    |   |               |
|   |                           |   | * |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Agree that a new          | A |   |    |    |   |               |
| . | financial database will   |   |   |    |    |   |               |
| 2 | be needed to asses per    |   |   |    |    |   |               |
| 1 | patient costs for         |   |   |    |    |   |               |
|   | capitation. None of the   |   |   |    |    |   |               |
|   | existing utilities        |   |   |    |    |   |               |
|   | (DSS/FMS/RPM/DHCP) are    |   |   |    |    |   |               |
|   | designed to meet this     |   |   |    |    |   |               |
|   | goal.                     |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Without legislation,      | A |   |    |    |   |               |
| . | HEDIS indicators using    |   |   |    |    |   |               |
| 2 | members vs. patients      |   |   |    |    |   |               |
| 1 | receiving care do not     |   |   |    |    |   |               |
|   | offer reliable            |   |   |    |    |   |               |
|   | comparisons to non VA     |   |   |    |    |   |               |
|   | providers/insurers.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The reference to CPT-4    | A |   |    |    |   |               |
| . | coding for all outpatient |   |   |    |    |   |               |
| 2 | episodes of care fails to |   |   |    |    |   |               |
| 1 | acknowledge Dr. Kizer's   |   |   |    |    |   |               |
| . | mandate for the capture   |   |   |    |    |   |               |
| 3 | of all ICD-9 and CPT-4    |   |   |    |    |   |               |
|   | codes related to          |   |   |    |    |   |               |
|   | ambulatory care visits    |   |   |    |    |   |               |
|   | beginning October 1996    |   |   |    |    |   |               |
|   | and the effort to         |   |   |    |    |   |               |
|   | introduce ambulatory care |   |   |    |    |   |               |
|   | data capture being        |   |   |    |    |   |               |
|   | introduced by MCCR.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Any financial report card | A |   |    |    |   |               |
| . | or adoption of HEDIS      |   |   |    |    |   |               |
| 2 | measures should be        |   |   |    |    |   |               |
| 1 | coordinated with the      |   |   |    |    |   |               |
|   | Office of Policy,         |   |   |    |    |   |               |
|   | Planning and Performance. |   |   |    |    |   |               |
|   | Document does not support |   |   |    |    |   |               |
|   | the blanket adoption of   |   |   |    |    |   |               |
|   | HEDIS but only selected,  |   |   |    |    |   |               |
|   | validated measures. The   |   |   |    |    |   |               |
|   | recommendations probably  |   |   |    |    |   |               |
|   | should be qualified, e.g. |   |   |    |    |   |               |
|   | "selected measures from   |   |   |    |    |   |               |
|   | HEDIS."                   |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | HEDIS has only            | A |   |    |    |   |               |
| . | established risk          |   |   |    |    |   |               |
| 2 | adjustments for one       |   |   |    |    |   |               |
| 1 | mental illness\--major    |   |   |    |    |   |               |
|   | depression. Because the   |   |   |    |    |   |               |
|   | criteria are flawed,      |   |   |    |    |   |               |
|   | HEDIS is reworking them   |   |   |    |    |   |               |
|   | and is not attempting to  |   |   |    |    |   |               |
|   | develop outcome measures  |   |   |    |    |   |               |
|   | or criteria for any other |   |   |    |    |   |               |
|   | psychiatric illness.      |   |   |    |    |   |               |
|   | HEDIS recognizes          |   |   |    |    |   |               |
|   | psychiatric illnesses are |   |   |    |    |   |               |
|   | expensive to treat.       |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | HEDIS may result in       | A |   |    |    |   |               |
| . | inappropriately           |   |   |    |    |   |               |
| 2 | generalizing from         |   |   |    |    |   |               |
| 1 | specific results of a     |   |   |    |    |   |               |
|   | small number of           |   |   |    |    |   |               |
|   | indicators to application |   |   |    |    |   |               |
|   | at overall institution.al |   |   |    |    |   |               |
|   | level.                    |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | HEDIS seems to be a good  | A |   |    |    |   |               |
| . | idea but it would be      |   |   |    |    |   |               |
| 2 | helpful to ensure that    |   |   |    |    |   |               |
| 1 | the measures can be       |   |   |    |    |   |               |
|   | analyzed in more than one |   |   |    |    |   |               |
|   | way, such as linking      |   |   |    |    |   |               |
|   | financial, quality and    |   |   |    |    |   |               |
|   | customer data. Also       |   |   |    |    |   |               |
|   | reviewing disease         |   |   |    |    |   |               |
|   | specific measures as well |   |   |    |    |   |               |
|   | as program (medicine,     |   |   |    |    |   |               |
|   | surgery, psych, LTC).     |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | HEDIS measures appear     | A |   |    |    |   |               |
| . | inadequate for Long Term  |   |   |    |    |   |               |
| 2 | Care.                     |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Implementation of the     | A |   |    |    |   |               |
| . | HEDIS program ill be      |   |   |    |    |   |               |
| 2 | costly and complex. The   |   |   |    |    |   |               |
| 1 | adoption process will     |   |   |    |    |   |               |
|   | likely take years and     |   |   |    |    |   |               |
|   | does not fit within the   |   |   |    |    |   |               |
|   | three year plan.          |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | The recommendation is     | A | T |    |    |   |               |
| . | silent with respect to    |   | h |    |    |   |               |
| 2 | the role and              |   | e |    |    |   |               |
| 1 | responsibility of the CFO |   | O |    |    |   |               |
| . | organization.             |   | f |    |    |   |               |
| 1 |                           |   | f |    |    |   |               |
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|   |                           |   | a |    |    |   |               |
|   |                           |   | m |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | n |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | c |    |    |   |               |
|   |                           |   | e |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | s |    |    |   |               |
|   |                           |   | a |    |    |   |               |
|   |                           |   | r |    |    |   |               |
|   |                           |   | y |    |    |   |               |
|   |                           |   | . |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | VA should consider        | A |   |    |    |   |               |
| . | linking with NCQA in the  |   |   |    |    |   |               |
| 2 | development of HEDIS.     |   |   |    |    |   |               |
| 1 |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Health status measure     | A |   |    |    |   |               |
| . | will provide the most     |   |   |    |    |   |               |
| 2 | direct measure of VHA's   |   |   |    |    |   |               |
| 1 | ultimate product          |   |   |    |    |   |               |
|   | (improvement of aggregate |   |   |    |    |   |               |
|   | veteran health over       |   |   |    |    |   |               |
|   | time). The SF36, a        |   |   |    |    |   |               |
|   | computerized              |   |   |    |    |   |               |
|   | self-administered health  |   |   |    |    |   |               |
|   | assessment, illustrates   |   |   |    |    |   |               |
|   | one of many such measures |   |   |    |    |   |               |
|   | that have been validated  |   |   |    |    |   |               |
|   | and reliability tested.   |   |   |    |    |   |               |
|   | The University of Utah    |   |   |    |    |   |               |
|   | developed the assessment. |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   | **Proposed Revision**     | * |   | ** | ** |   |               |
|   |                           | * |   | Ta | Ac |   |               |
|   |                           | A |   | rg | tu |   |               |
|   |                           | c |   | et | al |   |               |
|   |                           | t |   | Da | Da |   |               |
|   |                           | i |   | te | te |   |               |
|   |                           | o |   | ** | ** |   |               |
|   |                           | n |   |    |    |   |               |
|   |                           | O |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | f |   |    |    |   |               |
|   |                           | i |   |    |    |   |               |
|   |                           | c |   |    |    |   |               |
|   |                           | e |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
|   |                           | * |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
| 3 | Revise the first sentence |   |   |    |    |   |               |
| . | of the recommendation as  |   |   |    |    |   |               |
| 2 | follows: VHA should adopt |   |   |    |    |   |               |
| 1 | *selected aspects of*     |   |   |    |    |   |               |
|   | private sector health     |   |   |    |    |   |               |
|   | plan performance          |   |   |    |    |   |               |
|   | indicators (such as       |   |   |    |    |   |               |
|   | HEDIS) most pertinent to  |   |   |    |    |   |               |
|   | VHA and generate a        |   |   |    |    |   |               |
|   | VA-specific financial     |   |   |    |    |   |               |
|   | report card.              |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+
|   |                           |   |   |    |    |   |               |
+---+---------------------------+---+---+----+----+---+---------------+

**[CAPITATION AS AN ALTERNATIVE FINANCING SYSTEM FOR VHA]{.underline}**

Due to revolutionary changes in the health care industry, the climate of
budgetary constraints and continually rising health care costs, VHA is
restructuring to improve the access to and quality of veterans' health
care. The restructuring will challenge VHA management to develop a new
financing system for VISNs consistent with the strategic direction of
the industry. Capitation is the preferred means of financing VHA and
VISNs and is the only proven health care financing method for cost
containment.

**What is Capitation?**

In a capitation system, a flat fee is paid in advance for each member
enrolled in the health plan to take care of all health care needs during
a defined period of time, according to an agreed upon benefit package.
All covered health services are provided for the capitated amount,
regardless of actual utilization. Capitated reimbursement thus removes
financial incentives for providers to render more services than
necessary to patients.

In most capitated systems, the primary care providers serve as
\"gatekeepers\" for specialist referral, hospitalization and outpatient
testing, and assume some financial risk for provided services. Primary
care providers have a financial incentive to control utilization and
cost of medical treatments, because payments are based on enrollees
(\"covered lives\") rather than on services rendered. Unlike the current
funding system (RPM), capitation naturally promotes a cost and quality
conscious approach of providing the most appropriate care in the most
appropriate setting because of the inherent financial incentives. It
also promotes coordination of all health care within the plan by
assigning capitated amounts to a single provider entity (i.e., VISN)
that is responsible for the clinical and financial management of the
enrolled members. A capitated system benefits VHA patients because
enrollment with a single VISN reduces the fragmentation in care and
duplication in services to veterans that now exists within VHA.

**Why is capitation the best funding methodology?**

Capitation provides financial incentives for providers to limit
referrals for unnecessary specialist care, ancillary testing and
expensive hospitalization, insuring optimal rather than maximal care. A
capitation system contains incentives to contain costs, encourage
innovation in spending and market development (e.g. - new revenue
streams,) and manage the enrolled patients' total health care needs.

The current Resource Planning and Management (RPM) funding methodology
is inadequate to support VHA's restructuring efforts for the following
reasons. First, it is not easily understood and is unable to adequately
measure performance, quality and efficiency. Second, RPM contains no
clear incentives for delivering high quality, appropriate care in the
most appropriate settings. Also, there are no incentives to coordinate a
patient's care outside the medical center and promote health
maintenance. Finally, it does not adequately reward those medical
centers that are most cost effective or providing high quality care in
least cost settings.

Alternatives to RPM include traditional Fee For Service (FFS), or some
form of prospective payment, like DRG's or capitation. FFS systems have
obvious inflationary incentives for providers to maximize utilization.
There is also an inability under FFS to accurately predict and control
system costs. A DRG system, while arguably less inflationary than FFS,
is still utilization based and can encourage over utilization. It is
also difficult to predict total system cost under DRG's and such systems
provide no incentive to shift to lower cost modalities of care.

Capitation combines incentives for physicians to monitor cost and
quality of care with the capability to accurately predict total
spending. Payers, in this case Congress, VHA and VISNs, gain budgetary
control over service costs.

**Why is capitation the best alternative for veterans?**

Unlike other funding systems where units of service are the focal point,
or RPM where reimbursement is based on past episodic care, capitation
makes the patient the focal point in providing care. Capitation focuses
prospectively on individual enrollees and their health care needs, on
providing only necessary care in appropriate settings, reducing
duplication, and promoting health maintenance. Veterans benefit under a
capitation system because for the first time, there would be incentives
for providers to coordinate care across the entire VA system. A
capitation system gives veterans a single, recognizable access point for
care, a single, primary provider, and promotes health maintenance rather
than the treatment of episodic illness.

The budgetary control over the total cost of veterans' health care and
the cost containment and quality conscious incentives inherent in a
capitation system can free up needed resources to expand services and
quality and increase the health status of the veteran population VHA
serves.

**RESOURCE ALLOCATION BUDGETING AND BUSINESS PLANNING WORKGROUP: SUMMARY
OF COMMENTS**

**CAPITATION**

We received significant comments concerning the capitation methodology
for financing Veteran's healthcare. The majority of comments related to
the method of financing specialized services, inclusion of construction
dollars in the capitated rate, the definition of a standard benefits
package, the transition period between our current budgeting process and
implementation of full capitation, the concept of "enrollment " of
veterans in a healthcare plan, and the complexities associated with risk
adjustment.

SPECIALIZED SERVICES: The concept of a single capitation rate which
would include not only the provision of primary care services but also
expensive specialized services such as mental health, long term care,
spinal cord injury, blind rehab, PTSD, Gero-psych, CMI, etc. , is a
difficult one to conceptualize. Most respondents felt a single
capitation rate would severely curtail services to a very disadvantaged
population. Alternatives to address the financing of specialized
services included a two-tiered capitation rate, a three-year contract
concept for special programs, gradual phase out over 5-7 years, and
monitors written into the performance measurement system which would
identify any drastic reduction in services. The work group recommended
phasing in capitation for these special programs over two years to allow
VHA to gain experience in capitation rate setting and risk adjustment.

CONSTRUCTION FINANCING: Our proposal to include all construction,
national program(e.g. transplant) and capital financing dollars in a
single VISN specific capitation rate received comments from a number of
respondents- especially respondents from Headquarters (CFO, 04). The
general consensus from HQ was that capital should be funded similar to
private sector capital investments- separate from operating expenses.
Specific proposals to guide major capital acquisitions could be included
in VISN Business Plans. Additionally, HQ staff believe that including
capital investments in the capitation rate will not address
infrastructure needs of facilities; will dilute capital expenditures and
make them difficult to track; and will reduce visibility of construction
dollars and lessen chances of attaining needed resources. It was pointed
out that construction dollars support VBA, NCS and staff offices.
Comments from the field suggested that long term care and psychiatric
facilities would not receive equal consideration if funded out of the
capitated rate and decided at the VISN level. The work group modified
its original recommendation to exclude Major construction funding from
the capitation model.

ENROLLMENT PERIOD: The recommendation that veterans enroll in one plan
resulted in comments regarding our inability to require enrollment,
inability to enroll healthy veterans, and our mandate to treat service
connected/Category A veterans whenever they appear at our door. There
were comments for and against multi-enrollment of veterans
(Medicare/Medicaid). We feel strongly that an enrollment mechanism of
some type is absolutely essential to the success of the capitation
system.

TRANSITION IMPLEMENTATION: Many concerns were expressed about the
difficulties of going from our current budget process to a fully
functional capitation system. A phased approach was suggested by many
respondents- especially those at the HQ level. Our recommendation time
frames do not allow for full implementation of DSS or for passage of
needed legislation. An interim system is needed which provides a risk
reserve to assure that veterans are not denied care if resources are
unavailable at the VISN level. A number of respondents suggested that we
underestimated the number of legislative changes required even in the
initial phases of capitation. The work group has expanded its Action
Plan to include the development of an interim allocation model for FY
1997 that can be adopted without legislative change.

RISK ADJUSTMENT: There is some skepticism about the possibility of
developing a risk adjustment methodology which will not result in
discriminating against veteran patients with unique (and expensive)
needs. There was concern and disagreement that historical factors would
be used in development of a risk adjustment system. The work group
continues to support the development of an appropriate risk adjustment
methodology, including continued funding for such studies already
underway.

ACCOUNTABILITY/AUTHORITY OF VISN DIRECTORS: There was concern expressed
that VISN Directors would not have the authority to make difficult
decisions regarding mission changes and facility closure. There was also
concern that VISN Directors would not be held accountable for their
actions. The work group expects the performance agreement to insure VISN
director accountability.

STANDARD BENEFITS PACKAGE: Concerns were expressed regarding the
mechanics of the benefit package- especially in the implementation
phase. Issues related to one benefits package vs. the need for a
customized package for service connected veterans, the ability to
purchase supplemental benefits, and the ability of a standard benefits
package to address the special needs of our veterans, i.e., mental
health. The work group continues to support the development of an
appropriate standard benefit package and eligibility reform.

CAPITATION MANAGEMENT GROUP: Concerns were expressed about the
responsibility and accountability of this group, its relationship to the
CFO, Budget Office and the Under Secretary for Health. The work group
suggests that the USH identify the most appropriate oversight for the
CMG.

**BUSINESS PLANNING**

The comments on Business Planning were related to revision of the VISN
Business Plan timetable, interface of organizational linkages and
responsibilities, improved plan format and inclusion of performance
measurements.

TIMETABLE: Suggestions were made and accepted to accelerate the business
planning timetable to provide for interim VISN financial plans aligned
with the Fiscal Year 1998 budget cycle.

LINKAGES: Comments recommending well defined linkages between business
planning, Headquarters budget formulation , strategic planning and
performance measurements were accepted.

FORMAT: Comments recommending changes in elements of the business plan
and emphasizing the need for a comprehensive, concise document were
endorsed. Comments that suggest that capital and operating expenses
should be funded separately were disapproved.

PERFORMANCE MEASUREMENT: Comments focused on the need to incorporate
patient outcomes and measures of VISN effectiveness in the Business
Plan. It was identified that the appropriate places for these are in the
Strategic Plan and the VISN Director's Performance Contracts,
respectively.

**INFORMATION SYSTEMS**

MANAGED CARE INFORMATION SYSTEMS: Reviewers suggested that
decision-makers weigh the cost-benefits of buying versus building
information systems, consider enhancing DHCP, explore MCCR information
systems, add actuarial tables and cost assessment for patient encounters
as component of the VA corporate data base available for system-wide
use, and continue to develop and refine other financial tools once DSS
is fully implemented. We concurred.

The BDC pointed out that the Work Group: 1) had not identified the
resources to support managed care information systems, 2) did not
acknowledge medical informatics as an essential component of VISN
business and managed care and 3) placed a low level of importance on
information technology. They recommended that an Executive Work Group
address the critical management variables for business goals and
objectives, existing information supports, transition plans, operational
management and administration. We disagreed with these comments. The
Work Group devoted an entire chapter to information systems and tasked
the CNO, CFO and CIO to take action on the various aspects of
implementing a managed care information system. These individuals should
form work groups as needed.

HEDIS CRITERIA: Many comments were received on using the HEDIS criteria,
mostly words of caution in applying the criteria to the VA health care
system. These important cautionary points should be referred to the
Office of Planning, Policy and Performance which will ultimately decide
which financial and utilization criteria will be selected and
implemented to measure the financial performance of the VISNs.

APPROPRIATE ACTION OFFICER: The Work Group assigned various actions for
managing, selecting and evaluating information systems to Headquarters
officials, primarily the CIO or the CNO. Several comments were received
from other Headquarters staff (CFO and Office of Program, Planning and
Policy) requesting changes/additions to the assigned party. Changes were
made when appropriate, but the work group continued to support the
original decision that one person should have primary responsibility.
Other affected offices and information users should be tapped as
resources when necessary.