Background

As part of a uniform set of benefits provided to all veterans who enroll in  its health care system, VA, through PSAS, provides prosthetic items to  veterans. PSAS has budget and management responsibilities for VA’s  provision of prosthetic items, including allocating funding for prosthetic  items to VISNs and VAMCs and ensuring veterans receive prescribed  prosthetic items in a timely manner. According to PSAS officials, several  factors—including expansions in the types of items VA defines as  prosthetic items—contributed to an increased demand for prosthetic items  between fiscal years 2005 and 2009.

		Prosthetic Items Provided to Veterans

VA, through VHA, operates one of the nation’s largest health care  systems.  VA provides a range of services to veterans who are enrolled in  its health care system, such as preventive and primary health care, a full  range of outpatient and inpatient services, and prescription drugs. VA’s  outpatient care includes providing prosthetic items to those veterans  disabled as a result of amputation or permanent impairment of a body part  or function. VA classifies a variety of medical devices and equipment as  prosthetic items, including artificial arms and legs, eyeglasses, hearing  aids, hearing aid batteries, home dialysis equipment and supplies, home  respiratory aids, hospital beds, orthoses (orthotic braces, supports, and  footwear), pacemakers, telehealth equipment, and wheelchairs. These  items range in price, including a cane tip that costs about $2 as well as a  microprocessor-controlled knee which can cost more than $100,000. In  addition, while the vast majority of prosthetic items are purchased from  outside vendors, VA fabricated nearly 4 percent of the artificial limbs and  orthoses provided to veterans in fiscal year 2009.
Table 1 shows the types of prosthetic items VA provides and specific  examples of each type.
In fiscal year 2009, the type of prosthetic items for which VA spent the  largest amount was surgical implants, which accounted for 27 percent of  the more than $1.6 billion VA spent for prosthetic items that year. (See   fig. 1.) See appendix I for information on the total costs of and number of  prosthetic items provided to veterans in fiscal years 2005 through 2009.

		VA’s Process for Estimating and Allocating Funding for Prosthetic Items

The funding VA uses to procure prosthetic items for veterans is made  available as part of the appropriations process for VA’s health care  services. Each year, VA formulates its annual health care budget by  developing estimates of its likely spending for all of its health care  services, including prosthetic items. We have previously noted that the  formulation of VA’s budget is challenging, as it is based on assumptions  and imperfect information on the health services VA expects to provide.  For example, VA is responsible for anticipating the service needs of very  different veteran populations—including an aging veteran population and  a growing number of veterans returning from military operations in  Afghanistan and Iraq—and for calculating future costs associated with  providing health care services to these populations. VA uses an actuarial  model to develop its budget estimates for most of its health care services,  including estimates for prosthetic items, and incorporates these estimates  in the department’s annual congressional budget justification to the  appropriations subcommittees. Rather than receiving an appropriation  for each individual health care service it provides, VA receives an  appropriation for all its health care services—the Medical Services  appropriation. As a result, VA has considerable discretion in how it  allocates appropriated funding among its various health care services.
VA allocates the Medical Services appropriation either as specific purpose  funding or general purpose funding. Where specific purpose funding is  restricted to the purposes of individual health care services, such as organ  transplant services or readjustment counseling, general purpose funding  may be used to cover costs related to any health care service, including  services for which specific purpose funding may be insufficient. While  most of the funding from the Medical Services appropriation is distributed  among the VISNs and ultimately to the VAMCs, according to VA officials,  VA also maintains a national reserve to provide additional funding, when  needed, to VISNs and VAMCs, as well as for those health care services for  which VA allocates specific purpose funds. In addition, during the course  of a fiscal year, VA may reallocate funding—that is, adjust how the  department allocates its funding—to match spending needs, including  redesignating specific purpose funds as general purpose funds or vice  versa.
Citing significant decreases in the level of care and timely delivery of  prosthetic items, VA designated funding for prosthetic items as specific  purpose funding in 2001. In general, VA allocates specific purpose funds  to PSAS, which in turn allocates them to VISNs; VISNs then allocate funds  to VAMCs. These specific purpose funds are for the procurement of  prosthetic items as well as the procurement of various components for VA- fabricated or VA-repaired prostheses and orthoses. According to VA  officials, these funds do not cover administrative and clinical costs, such  as the salaries and benefits of PSAS personnel or labor costs associated  with VA fabrication of prosthetic items. Typically, these administrative and  clinical costs are covered by a VISN’s or VAMC’s general purpose funds. In  addition, VISNs and VAMCs may use their general purpose funds for  prosthetic items if spending needs exceed the amount available in specific  purpose funds.

		PSAS Roles and Responsibilities

After physicians and other clinicians at VA medical facilities determine the  prosthetic needs of veterans and prescribe specific prosthetic items to  meet those needs, PSAS is responsible for processing the prescriptions  and providing the prescribed prosthetic items to individual veterans.  According to PSAS officials, purchasing agents, generally located at  VAMCs, perform administrative actions to process prescriptions for  prosthetic items. These administrative actions include activities such as  requesting and obtaining additional information from a prescribing  clinician, obtaining a price quote from a contractor, and creating a  purchase order to authorize the procurement and shipment of an over-the- counter item or the fabrication of a custom-ordered item. PSAS officials  stated that the processing of the prescription is considered complete when  a prosthetic item has been issued to the veteran from PSAS’s inventory or  a purchase order is created for the item. PSAS also has some clinical  staff—prosthetists and orthotists—who provide clinical services related to  the provision of artificial limbs and orthoses, including participating in the  evaluations of prosthetic needs for amputees and, subsequently, designing,  fabricating, fitting, and adjusting artificial limbs and custom orthoses.  PSAS officials reported that they provide varying levels of services related  to the design, fabrication, fitting, and delivery of artificial limbs and  orthoses at 77 locations.
PSAS officials are also responsible for the overall administration of VA’s  provision of prosthetic items. Specifically, PSAS officials in VA’s central  office establish national policies and procedures on VA’s provision of  prosthetic items; allocate VA specific purpose funding for prosthetic items  among the 21 VISNs; monitor the spending of this specific purpose funding  and, if appropriate, facilitate the reallocation of funding among the VISNs;  and establish and monitor mechanisms, such as performance measures  and goals, to evaluate VA’s performance in providing prosthetic items.  VISN prosthetic representatives (VPR), located within each of VA’s 21  VISNs, further allocate specific purpose funding among their VAMCs and,  with the assistance of local prosthetics chiefs, support central office  efforts to monitor VA’s spending for prosthetic items and VA’s  performance in providing prosthetic items.

		Factors Contributing to the Increased Demand for Prosthetic Items

Between fiscal years 2005 and 2009, the annual number of veterans who  received prosthetic items through PSAS increased about 50 percent and  the total amount VA spent on those items grew by about 60 percent.  According to VA officials, a number of factors have contributed to this  growth and may contribute to expected increases in the future. These  factors include the following:    VA has expanded the medical devices and equipment it classifies as  prosthetic items. For example, during fiscal year 2008, VA classified  biological implants, such as bone and tissue grafts, as prosthetic items. In  fiscal year 2009, VA spent about $21 million on biological implants.
New technologies in prosthetic items available to veterans may increase  costs. For example, in the fall of 2010, PSAS plans to begin providing the  X2 microprocessor knee—the latest generation of components for  prosthetic legs—to some veterans. According to PSAS officials, this  component is expected to add about $40,000 to the cost of each prosthesis  using this technology.
VA guidance clarifying veteran eligibility for certain prosthetic items  expanded the number of veterans receiving prosthetic items. For example,  in October 2008, VA released a directive restating the department’s policy  on veteran eligibility for eyeglasses. As result, the number of eyeglasses  VA provided to veterans increased by nearly 22 percent, from about  830,000 pairs in fiscal year 2008 to more than 1 million pairs in fiscal year  2009.
In addition, VA expanded eligibility for enrollment in its health care  system. In 2009, VA raised the income thresholds that define certain  veterans’ eligibility for VA health care services, resulting in approximately  260,000 additional veterans gaining eligibility. This may also have  increased the number of prosthetic items provided.

	In Fiscal Years 2005 through 2009, Actual Spending Needs for Prosthetic Items Differed from Estimates, Resulting in the Reallocation of Funding Available for Prosthetic Items

In each of fiscal years 2005 through 2009, VA’s actual spending needs for  prosthetic items differed from the estimates VA reported in its  congressional budget justifications for those years, on which the initial  allocation to PSAS for prosthetic items was based. As shown in figure 2,  VA spent less for prosthetic items than it had estimated in its justifications  for fiscal years 2006 and 2007. These differences—about $82 million in  fiscal year 2006 and about $150 million in fiscal year 2007—represented 7  and 12 percent, respectively, of VA’s actual spending for prosthetic items  during those fiscal years. In fiscal years 2005, 2008, and 2009, VA spent  about $91 million, $83 million, and $183 million more, respectively, than  originally estimated (9, 6, and 11 percent, respectively, of VA’s spending  for prosthetic items in those fiscal years).
VA officials from the VHA Office of Finance and PSAS central office said  that they did not perform analysis to determine the specific reasons for the  differences between VA’s budget estimates and its actual spending for  prosthetic items in a given fiscal year. PSAS officials reported that they do  perform some analysis to identify new trends in VA’s spending for  prosthetic items, which are taken into account when allocating specific  purpose funding for prosthetic items. According to officials, to develop the  budget estimates, VHA’s Office of Finance uses the most recently available  spending and utilization data in its actuarial model. They noted, however,  that these data are 3 years old at the time VA begins to develop budget  estimates for a new fiscal year—for example, the actuarial model in VA’s  2010 budget estimate used spending and utilization data from fiscal year  2007. This, coupled with the increased demand for prosthetic items, makes  it more difficult to accurately estimate year-to-year PSAS funding needs,  according to VA officials.
PSAS central office officials reported that they depend upon staff at the  VISNs and VAMCs to identify local factors, such as a new surgical service,  that could increase demand for prosthetic items, in order to develop more  up-to-date estimates for the purpose of allocating specific purpose funding  for prosthetic items to VISNs and VAMCs. PSAS officials at each of the 13  VAMCs in our sample identified numerous local factors that can affect  spending for prosthetic items during a particular fiscal year. For example,  at one VAMC, the prosthetics chief said that the hiring of a new surgeon  was expected to increase local spending for certain surgical implants, such  as pacemakers, by more than $300,000. This same prosthetics chief also  noted that recent increases in the diagnosis and treatment of sleep apnea  resulted in an increase of nearly $380,000 in local spending for prosthetic  items.
In 4 of the 5 fiscal years we reviewed, VA reallocated the funding available  for prosthetic items—that is, adjusted the amount of the specific purpose  funding for these items—in an effort to better match specific purpose  funds for prosthetic items with actual spending needs. Specifically, in  fiscal years 2006, 2007, and 2009, VA reduced the amount of specific  purpose funding for prosthetic items. During fiscal year 2008, VA  allocated an additional $56 million in specific purpose funds from the  department’s national reserve in order to meet a request from PSAS for  additional funding. (See table 2.) VA based these reallocations on  projections of annual spending for prosthetic items developed throughout  each fiscal year using year-to-date information on spending. Each year  during the third quarter of the fiscal year, for example, VA uses the amount  spent on prosthetic items through the first two quarters of the fiscal year  to project spending for the rest of the fiscal year and reallocates funding to  adjust the amount of specific purpose funding available for prosthetic  items accordingly.
In addition to the efforts VA made at the national level to reallocate funds  to better match specific purpose funding for prosthetic items with actual  spending needs, for 3 of the 5 fiscal years we reviewed, some VISNs and  VAMCs used general purpose funds for prosthetic items. VA policy  requires that VISNs provide additional funding to PSAS, when necessary,  from general purpose funding to ensure the provision of prosthetic items  is not delayed for lack of funding. In fiscal years 2005, 2007, and 2008,  VISNs and VAMCs provided $91 million, $5 million, and $27 million,  respectively, from their general purpose funds to address the difference  between allocated specific purpose funding and actual spending needs for  prosthetic items. (See fig. 3.) While VHA and PSAS officials acknowledge  the use of general purpose funds for prosthetic items reduced the funding  available for other purposes, they emphasized that this use did not  compromise any veteran’s medical care.

	PSAS Uses Administrative Data and Veteran Feedback Mechanisms to Monitor Its Performance in Processing and Providing Prosthetic Items to Veterans

PSAS has performance measures that monitor the timeliness of its  processing of prosthetic prescriptions and a number of veteran feedback  mechanisms to identify problems in how it provides prosthetic items to  veterans. In fiscal year 2009, PSAS’s performance measures showed that  nearly all of its prescriptions for prosthetic items met its performance  goals. While in many cases, PSAS’s performance measures serve as a  reasonable proxy for monitoring the timeliness of veterans’ receipt of their  prosthetic items, they may miss some instances in which veterans  experience long wait times. Recognizing this shortcoming, PSAS officials  rely on a number of other mechanisms—such as feedback submitted  through telephone calls from veterans and receipt of veteran evaluation  cards—to obtain information on veteran satisfaction that may alert them  of timeliness or other problems not reflected in its performance measures.

		Performance Measures Assess Timeliness of Administrative Actions, but Do Not Always Reflect Veterans’ Actual Receipt of Prosthetic Items

During fiscal years 2005 through 2009, PSAS had in place and monitored  two performance measures that assessed the timeliness of administrative  actions related to processing prosthetic prescriptions.
The first measure, called “delayed orders,” assessed the percentage of  prosthetic prescriptions for which the first administrative action related to  the prescription, such as researching the cost of the prosthetic item from  different commercial vendors, occurred more than 5 business days after  the clinical provider submitted it. PSAS’s performance goal related to this  measure was to have no more than 2 percent of orders categorized as  delayed orders.
The second measure, called “consults pending,” assessed the percentage  of prosthetic prescriptions that took more than 45 business days to  complete the administrative process associated with ordering the  prosthetic item; that is, from the time the first administrative action was  taken to the time PSAS determined that the order was complete. PSAS’s  related performance goal was to have no consults pending; that is, to  administratively process all prescriptions within 45 business days.
For fiscal year 2009, PSAS basically met both of its goals related to the  delayed orders and consults pending performance measures. PSAS  calculated its performance relative to these performance measures for  processing all prosthetic prescriptions submitted at each of its VAMCs and  VISNs during the year. Based on its calculations, PSAS met its delayed  order goal of no more than 2 percent delayed orders, and slightly missed  its goal of having no consults pending by about 0.3 percent.
According to VA, the delayed order and consults pending measures in  many cases accurately reflected the timeliness of processing of prosthetic  items. However, because of a weakness in PSAS’s consults pending  measure, some prescriptions that took longer than 45 business days to  process were not detected by the measure. Specifically, PSAS officials  found that prescriptions could be cancelled and reentered, effectively  resetting the clock on their processing time. In one VAMC we visited, for  example, the prosthetics chief noted that the VAMC was receiving a  number of complaints from veterans on the timely receipt of their  prosthetic items. Upon further investigation, she identified more than  3,000 unprocessed prosthetic prescriptions that were not reflected in the  VAMC’s consults pending measure because the computer system used to  process prescriptions allowed purchasing agents to cancel and reenter the  prescriptions that were not meeting the 45 business day goal. According to  PSAS officials, there are a number of legitimate reasons why processing  the prescription for prosthetic items can take longer than 45 days to  complete. However, this prosthetics chief told us that, due to high  purchasing agent workloads, some of the delays she identified most likely  represented orders for prosthetic items that fell through the cracks, and  veterans may not have received their prosthetic items until 5 or 6 months  after their prescriptions were submitted.
Recognizing the limitation in its consults pending measure, PSAS started— at the beginning of fiscal year 2010—to use a new measure, called the  “timeliness monitor,” which according to PSAS officials was designed to  better assess the timeliness of the complete administrative process of  providing a prosthetic item to a veteran and provide better assurance that  a prosthetic item was provided in a timely manner. Specifically, PSAS  officials said that the timeliness monitor assesses whether both the goals  for the delayed order and consults pending measures were met, and  whether the prescription was completed by either issuing a prosthetic item  directly to the veteran from PSAS’s inventory, or generating a purchase  order for the item. PSAS’s goal related to the new timeliness monitor is to  have 95 percent of prosthetic prescriptions meet the timeliness monitor  performance measure, according to PSAS officials.
In the first quarter of fiscal year 2010, PSAS’s timeliness monitor showed  that less than 83 percent of prescriptions for prosthetic items met the time  frames in the timeliness monitor performance measure. According to  PSAS officials at two VISNs, one factor that played a significant role in  PSAS not meeting its goal for the timeliness monitor was that the new  measure may recognize some prescriptions as incomplete when actually  they have been completely processed by PSAS staff. For example, if a  veteran does not return to the VAMC to pick up a custom-fit item, such as  a pair of orthopedic shoes, the item would not be recorded on the  veteran’s prosthetic record even though PSAS staff had completed the  administrative process related to the item and it was available for pick up.  PSAS officials told us that they are updating their system to allow  purchasing agents to close prescriptions that were processed by PSAS but  not recorded in a veteran’s record for legitimate reasons, effectively  excluding these prescriptions from being considered in the timeliness  monitor. According to PSAS officials, once the system is updated, PSAS’s  timeliness monitor scores should improve considerably.
An additional weakness of VA’s performance measures—both with the  new “timeliness monitor” and the former “consults pending” measure—is  that these measures do not always identify cases in which a veteran waits  a long time to receive an item. In many cases, the administrative actions  related to prosthetic prescriptions do serve as a reasonable proxy for  monitoring the timeliness of when veterans received their prosthetic  items. For example, when a veteran receives an item out of inventory at a  VAMC, the time the prescription is recorded as complete reflects the time  that the veteran received their prosthetic item. However, the completion of  processing of a prescription does not always correspond with the time at  which the veteran receives the item. In particular, delays that occur for  items that must be fabricated for the veteran or are back-ordered by a  vendor are not reflected in VA’s performance measures. For example,  according to the prosthetics chief at one VAMC we visited, veterans  routinely waited 10 to 12 weeks to receive eyeglasses because of  manufacturing delays at the facility that produced the eyeglasses—even  though PSAS processed the eyeglass prescriptions in a timely manner.  That is, once the purchase order was sent to the facility to manufacture  the eyeglasses, VA’s system considered the processing of the prescription  to be complete. Officials reported that the VA optical laboratory could not  meet the unexpected increase in demand that followed guidance that VA  issued in October 2008. This guidance restated the department’s policy  that veterans whose vision impairment interferes with their participation  in their own medical treatment are eligible to receive eyeglasses. The  prosthetics chief at the VAMC explained that through feedback from  veterans, they became aware of these delays. The VA optical laboratory  has since taken steps to improve wait times, including authorizing  overtime and using commercial vendors. Further, officials told us that they  are planning a renovation of the optical laboratory to improve its  operations.
PSAS officials stated that they recognize their performance measures have  limitations and that they rely on a number of feedback mechanisms— described below—to alert them of timeliness or other problems not  reflected in PSAS’s performance measures.

		PSAS Obtains Information on Veteran Satisfaction from a Number of Feedback Mechanisms

At a national level, PSAS uses additional mechanisms to identify timeliness  or other problems which are not captured by its performance measures.  These include the following:    Comments or complaints on VA’s Web site. When VA receives  comments, complaints, or other inquiries related to prosthetics through its  Web site, the department directs the information to PSAS’s central office,  according to PSAS officials. PSAS’s central office either handles the  inquiry directly, or routes it to the relevant location or service, such as a  VISN or VAMC, to resolve. As of July 2010, PSAS central office officials  reported that they have responded to and closed more than 2,085 inquiries  received through VA’s Web site.
Direct contact with PSAS staff. PSAS central office, VISNs, and VAMCs  receive letters, in-person visits, and telephone calls from veterans about  complaints or problems with prosthetic items, according to VA officials we  spoke with. If these complaints come in through contacts with PSAS staff  at the central office, VISN, or VAMC leadership, the complaints or  problems are generally passed on to PSAS staff at the VAMC level for  direct action. PSAS officials told us that it is PSAS’s policy to handle  complaints and problems in the most direct manner. For example, in one  VAMC we visited, officials said that when they receive a complaint, they  pass it on to the PSAS purchasing agent responsible for ordering the  prosthetic item. The purchasing agent is then responsible for contacting  the patient to resolve the complaint or problem. PSAS central office  officials reported that while individual VISNs and VAMCs may, to varying  degrees, track patient complaints made in person or by letter or telephone,  PSAS central office does not systematically track these complaints.
In addition to efforts initiated nationally, some VISNs and VAMCs we  visited reported that they have developed local mechanisms to further  monitor veteran satisfaction with VA’s processing and providing prosthetic  items:    VISN-sponsored surveys. One VISN we visited conducts patient  satisfaction surveys of veterans who receive prosthetic items from the  VAMCs in the VISN. On a quarterly basis, PSAS personnel at the VISN send  these surveys directly to a sample of veterans who have received  prosthetic items requesting veterans to rate aspects of PSAS’s  performance such as the quality of the prosthetic items they received, the  instructions they received, the courtesy and knowledge of the prosthetic  staff that they came in contact with, and the time it took to deliver the  prosthetic items. The patients return the surveys to the VISN, where PSAS  staff summarize the results of the surveys and provide quarterly reports to  the prosthetics chiefs and leadership in each of the VAMCs. The VISN  requires prosthetics chiefs at VAMCs with a patient satisfaction score  below the VISN’s established goal to develop improvement plans. VISN  PSAS staff told us that the surveys have enabled them to identify problems  and make improvements in how PSAS staff at the VAMCs interact with  veterans, how PSAS staff process prosthetic prescriptions, and in the  timeliness and quality of the services provided by vendors, such as home  oxygen suppliers.
Vendor evaluation cards. PSAS officials at one VISN reported that their  VISN required some of their vendors—such as vendors for home oxygen  and durable medical equipment—to include a patient comment card with  the delivery of the prosthetic items. Veterans return these comment cards  to the VISN where VISN PSAS officials review the comments and forward  relevant information to VAMC prosthetics offices on at least a quarterly  basis.
VAMC comment cards. Several VAMCs in our sample provided their own  comment cards. Typically, these cards are or will be made available at the  PSAS counter and waiting area. PSAS officials at these VAMCs told us that  they collect and review the comment cards they receive and address the  comments veterans make concerning VA’s processing and providing of  prosthetic items on a case-by-case basis.
Letters informing veterans to expect delivery of prosthetic items.
Officials at two of the five VISNs we visited told us that they use a feature  in PSAS’s system for processing prescriptions to generate and send a letter  to a veteran each time a prescription is processed. These letters provide  information such as the date the prosthetic item was ordered from a  vendor, the date the veteran can expect to receive the prosthetic item, and  contact information for the PSAS staff responsible for monitoring the  order.
PSAS officials expressed confidence that, together, the mechanisms they  have in place would alert them of serious timeliness and veteran  satisfaction issues.

	VA Is Making Local, Regional, and National Efforts to Improve PSAS’s Performance

Officials at PSAS’s central office, the VISNs, and the VAMCs in our sample  told us about a number of local, regional, and national efforts to enhance  management effectiveness and efficiency and improve prosthetic services  for veterans.

		PSAS Staff at Some VA Medical Facilities Have Made Local Improvements to Enhance Performance

PSAS staff at the 13 VAMCs in our sample reported that they had  undertaken local efforts to improve performance. For example, PSAS  personnel at one VAMC were working to obtain funding from VA’s Office  of Rural Health to place orthotic fitters—technicians who fit orthoses—at  community-based outpatient clinics. By placing fitters in these clinics,  PSAS officials hope to improve access for veterans—for example, to  eliminate the need for veterans to travel for several hours to a VAMC to be  fitted for and obtain their orthotic shoes—as well as to relieve the  workload of prosthetists and orthotists at the VAMCs in this VISN. In  addition, 6 of the 13 VAMCs in our sample had recently completed  renovations, were in the process of renovating, or were planning  renovations of their laboratories and clinical space. PSAS officials  explained that the purpose of these renovations was to provide greater  patient privacy or increase their capacity to fabricate artificial limbs within  the VAMCs. Some officials further explained that increasing the capacity  of their prosthetic laboratories would allow more veterans to receive their  prosthetic limbs directly from the VA rather than from outside vendors,  which could increase convenience for veterans and reduce costs for VA.

		Some VISNs Have Centralized Management of PSAS at the VISN Level

At the regional level, according to PSAS central officials, 7 of VA’s 21  VISNs have chosen to centralize the management of PSAS within the VISN.  Under a centralized PSAS management structure, the VPR is in charge of  managing all aspects of the provision of prosthetic items in the VAMCs  within their VISN, including the hiring and firing of PSAS personnel such  as prosthetics chiefs and purchasing agents, and resolving veterans’  complaints. PSAS’s central office has recommended that VISNs adopt  this management structure for PSAS for more than a decade, but as part of  VA’s overall decentralized management structure, each VISN’s leadership  has the authority to determine how PSAS is managed in its region.
Although PSAS’s central office has not collected performance data  conclusively showing the benefits of centralized management, officials we  spoke with identified several potential benefits. PSAS central office  officials stated that a centralized management structure allows for  resource sharing within the VISN—for example, PSAS purchasing agents  at one VAMC performing duties for other VAMCs within the VISN—and  helps ensure greater uniformity of supervision and services. PSAS and  VISN officials at three VISNs we visited that had centralized management  noted that because centralization shifts costs and decisions related to  PSAS personnel from the VAMCs to the VISN, PSAS avoids competing  with other health care services within VAMCs for staff resources. Officials  in two of these VISNs also stressed that centralization not only improved  efficiency by facilitating the development and implementation of  standardized procedures for processing prosthetic prescriptions across  the VISN, but also enhanced veteran care by moving some of the day-to- day administrative tasks up to the VISN, thus freeing PSAS staff at the  VAMCs to devote more time to meeting veterans’ needs.
While in general, the officials we spoke with—both at PSAS’s central  office and at VISNs that had adopted a centralized approach to managing  PSAS—supported centralization, a few VAMC officials in some centralized  VISNs expressed some concerns. For example, VAMC officials at two  VAMCs we visited said that although PSAS was currently meeting the  needs of veterans at their facilities, they were concerned that under a  centralized management structure local leadership might not have the  authority to take appropriate action if the performance of local PSAS staff  was not satisfactory. In addition, one of these officials noted that under a  prior director, centralization had contributed to a lack of communication  between PSAS personnel and VAMC leadership. Specifically, it was their  understanding that, since PSAS staff reported directly to the VISN rather  than the leadership at that VAMC, the previous VAMC leadership had at  times not included PSAS staff in management meetings and decisions that  affected PSAS.

		National Efforts Undertaken by PSAS Have Focused on Improving Consistency of Prosthetic Services across VA

PSAS has a number of national efforts to improve the delivery of  prosthetic items across VA. These efforts include developing national  contracts, conducting site visits to poorly performing VAMCs, providing  clinical practice recommendations for physicians who prescribe prosthetic  items, obtaining accreditation and certification for prosthetic laboratories  and staff, and training new management staff.
National contracts. PSAS uses national contracts that, according to  PSAS officials, provide prosthetic items to veterans across the country in a  more consistent, timely, and cost-efficient manner. PSAS first used  national contracts to purchase prosthetic items in fiscal year 2002, and in  fiscal year 2009, PSAS had 49 national contracts for prosthetic items  ranging from orthopedic shoes and diabetic socks to implantable joints  and cardiac pacemakers. According to PSAS officials, national contracts  can improve efficiency and timeliness because the specifications, price,  and shipping requirements for prosthetic items are determined by the  contract rather than by individual purchasing agents. These contracts also  help ensure that the quality of the prosthetic items provided to veterans is  consistent across the country. According to PSAS officials, PSAS’s use of  national contracts has resulted in substantial cost savings since fiscal year  2002.
Site visits. Officials from PSAS central office told us that they have begun  to conduct site visits to review PSAS operations in a number of VAMCs.  Specifically, PSAS officials told us that they are conducting site visits to  identify staffing or other problems that lead to poor performance and to  make recommendations that should lead to faster and more consistent  prosthetic services for veterans at these facilities. For the initial visits,  PSAS selected VAMCs and VISNs that performed poorly on PSAS’s  performance measures, such as its consults pending measure. As of June  2010, PSAS staff had conducted 42 site visits, and PSAS officials said they  plan to conduct reviews in all 153 VAMCs.
Clinical practice recommendations. PSAS has developed 40 clinical  practice recommendations, which are guidance documents to help VA  clinical staff make appropriate decisions about prosthetic prescriptions.  These include prescribing recommendations for orthotic devices, home  oxygen equipment, pacemakers, and hip and knee joint replacements.  According to PSAS officials, these recommendations help ensure that  prosthetic items are provided to veterans in a more consistent manner  across the country.
Accreditation and certification. PSAS has implemented an initiative to  provide additional assurance that VA is providing high-quality prosthetic  services and to develop the technical and management skills of PSAS staff.  In fiscal year 2007, PSAS established a policy to obtain accreditation for its  orthotic and prosthetic laboratories, and certification for all clinical  personnel. According to PSAS officials, as of September 2010, PSAS had  obtained accreditation, or the accreditation was pending, for nearly all of  its 77 orthotic and prosthetic service locations, and certification for 165 of  its 172 orthotists, prosthetists, and fitters.
Management training. PSAS created a technical intern program to train  prospective managers on the operations of PSAS at the VAMC level.  According to VA officials, this program is important because a large  number of the prosthetics chiefs are nearing retirement and in many cases  there are few experienced staff who could replace them.

	Agency Comments

We provided a draft of this report to VA for review. We received technical  comments from VA, which we incorporated as appropriate.
We are sending copies of this report to the Secretary of Veterans Affairs,  appropriate congressional committees, and other interested parties. In  addition, the report will be available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-7114 or williamsonr@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix II.

Appendix I: The Total Costs and Number of Prosthetic Items VA Provided to Veterans in Fiscal Years 2005 through 2009

This appendix provides the results of our analysis of data from the  National Prosthetic Patient Database (NPPD)—an internal database used  by the Department of Veterans Affairs (VA) to administer its provision of  prosthetic items that contains information on prosthetic items furnished to  veterans. This appendix presents the total costs and number of prosthetic  items provided to veterans in fiscal years 2005 through 2009.
Table 3 shows the total costs and number of prosthetic items provided to  veterans by type of prosthetic item. For fiscal year 2009, the total cost for  various types of prosthetic items ranged from about $93 million for  orthoses to about $439 million for surgical implants.
Table 4 shows the total costs and number of prosthetic items provided to  veterans by Veterans Integrated Service Network (VISN). For fiscal year  2009, the total costs for prosthetic items for VISNs ranged from about $34  million in VISN 5 (Capitol Health Care Network) to about $164 million in  VISN 8 (VA Sunshine Healthcare Network).
Table 5 shows the total costs and number of prosthetic items provided to  veterans by VA station. For fiscal year 2009, the total costs of prosthetic  items at individual stations that provided any prosthetic items ranged from  less than $1 million at Pittsburgh HCS-Highland Dr., Chattanooga, and  several other stations to about $39 million at the San Antonio VAMC.

Appendix II: GAO Contact and Staff Acknowledgments

	Acknowledgments

In addition to the contact named above, Kim Yamane, Assistant Director;  Susannah Bloch; Matthew Byer; Aaron Holling; Lisa Motley; Daniel Ries;  and Said Sariolghalam made key contributions to this report.

Summary:
Why GAO Did This Study

In fiscal year 2009, the Department of Veterans Affairs (VA) provided more than 59 million prosthetic items to more than 2 million veterans. After VA physicians and other clinicians prescribe prosthetic items, VA's Prosthetic and Sensory Aids Service (PSAS) is responsible for processing prescriptions and providing prosthetic items to veterans. PSAS is also responsible for managing VA's spending for prosthetic items--more than $1.6 billion in fiscal year 2009. In fiscal year 2008, this spending exceeded VA's budget estimates. Each year, VA makes an initial funding allocation for prosthetic items, and may reallocate by increasing or decreasing the funding available for prosthetic items during the fiscal year. GAO was asked to examine (1) how, for fiscal years 2005 through 2009, VA's spending for prosthetic items compared to budget estimates, and the extent to which VA reallocated funding for prosthetic items; (2) how PSAS monitors its performance in processing and providing prosthetic items to veterans; and (3) the efforts VA has undertaken to improve PSAS's performance. GAO reviewed VA's spending and funding allocation data for fiscal years 2005 through 2009. GAO also reviewed documents and interviewed VA officials at headquarters, 5 of VA's 21 regional health care networks, called VISNs, and 13 VA medical centers (VAMC).

What GAO Found

VA spending for prosthetic items for each of fiscal years 2005 through 2009 differed from budget estimates, varying in amounts--both under and over budget estimates--ranging from 6 to 12 percent of VA's overall spending for prosthetic items during the 5 fiscal years. In fiscal years 2005, 2008, and 2009, VA spent about $91 million, $83 million, and $183 million more, respectively, than VA originally estimated for its congressional budget justification. Conversely, in fiscal years 2006 and 2007, VA spent about $82 million and about $150 million less, respectively, for prosthetic items than estimated. VA officials reported that they did not perform analysis to determine the specific causes of these differences, but that new trends are taken into account when allocating funding to be used for prosthetic items. In an effort to more closely match funds available for prosthetic items to actual spending needs, VA reallocated the funding available to PSAS and relied on VISNs and VAMCs to address the need for additional funding for prosthetic items at specific VA locations. For example, in fiscal year 2008, when an additional $83 million in funding was required for prosthetic items, VA reallocated $56 million to PSAS and VISNs and VAMCs covered $27 million in spending for prosthetic items. PSAS has performance measures that monitor the timeliness of its processing of prosthetic prescriptions and a number of veteran feedback mechanisms to identify problems in how it provides prosthetic items to veterans. In fiscal year 2009, PSAS's performance measures showed that nearly all of its prescriptions for prosthetic items met its performance goals. While in many cases, PSAS's performance measures serve as a reasonable proxy for monitoring the timeliness of veterans' receipt of their prosthetic items, they may miss some instances in which veterans experience long wait times. Recognizing this shortcoming, PSAS officials rely on a number of other mechanisms--such as telephone calls from veterans and receipt of veteran evaluation cards--to obtain information on veteran satisfaction that may alert them to timeliness or other problems not reflected in their performance measures. VA is making a number of efforts at various levels to improve its performance in providing prosthetic items to veterans. For example, in 7 of VA's 21 VISNs, PSAS personnel at the VISN level centrally manage the provision of prosthetic items at all of the VAMCs in their region. According to VA officials in several VISNs that have adopted this centralized management structure, giving VISN-level PSAS personnel more authority has allowed local PSAS personnel at the VAMCs to devote more time to meeting veterans' needs, and in some cases, has enhanced management effectiveness and efficiency. At the national level, in fiscal year 2009, PSAS had 49 national contracts for prosthetic items, which, according to PSAS officials, help ensure that the quality of prosthetic items provided to veterans is consistent across the country. VA provided technical comments that GAO incorporated as appropriate.