```
                                                                 
VA Health Care: Changes Needed to Improve Resource Allocation	 
(30-APR-02, GAO-02-685T).					 
                                                                 
The Veterans Equitable Resource Allocation (VERA) system	 
allocated $17.8 billion of its $20.3 billion health care budget  
to 22 regional health care networks in fiscal year 2001. Before  
Vera resources were allocated to facilities on the basis of their
historical expenditures. By aligning resources with workloads	 
VERA shifted about$921 million among VA's networks in fiscal year
2001. VERA's design is reasonable for equitably allocating	 
resources, but improvements could better allocate comparable	 
resources for comparable workloads. VERA's allocations are based 
primarily on network workload, with adjustments made for factors 
beyond the control of network management. These include the	 
health care needs of veterans and some local cost differences.	 
VERA's design also protects patients from the effects of network 
budget shortfalls. However, GAO found that $200 million annually 
that could be reallocated to better align network resources with 
workloads. First, VERA's measurement of network workload is not  
accurate enough to determine each network's allocation because	 
VERA excludes most veterans with higher incomes who do not have  
service-connected disabilities--about one-fifth of VA's workload.
Second, VERA does not accurately adjust for cost differences	 
among networks for differences in patients' health care needs or 
case mix across networks. GAO also found that the Veterans	 
Administration has not analyzed whether the networks' need for	 
supplemental resources--provided through the National Reserve	 
Fund--is the result of potential problems in VERA, network	 
inefficiency, or other factors. Without such information, VA can 
neither ensure the appropriateness of supplemental funding nor	 
take corrective action. 					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-685T					        
    ACCNO:   A03205						        
  TITLE:     VA Health Care: Changes Needed to Improve Resource       
Allocation							 
     DATE:   04/30/2002 
  SUBJECT:   Health care costs					 
	     Health care services				 
	     Veterans benefits					 
	     National Reserve Fund				 
	     Veterans Equitable Resource Allocation		 

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GAO-02-685T
     
A

Test i mony Before the Committee on Veterans' Affairs, House of
Representatives

For Release on Delivery Expected at 10: 00 a. m.

VA HEALTH CARE in Trenton, New Jersey

Tuesday, April 30, 2002 Changes Needed to Improve Resource Allocation

Statement of Cynthia A. Bascetta Director, Health Care- Veterans? Health and
Benefits Issues

GAO- 02- 685T

Mr. Chairman and Members of the Committee: We are pleased to be here today
to discuss the Department of Veterans Affairs? (VA) health care resource
allocation system and how it could be improved. In fiscal year 2001, VA used
the Veterans Equitable Resource Allocation (VERA) system to allocate $17. 8
billion of its $20.3 billion health

care budget to 22 regional health care networks. These networks then
allocate resources to their respective facilities. VERA was intended to
equitably allocate resources by providing comparable resources to networks
with comparable workloads. Before VERA was implemented,

resources were allocated to facilities primarily on the basis of their
historical expenditures. By aligning resources with workloads, VERA shifted
approximately $921 million among VA?s networks in fiscal year 2001 compared
to what the allocations would have been under the previous allocation
system.

In my remarks today, I will briefly discuss our conclusion that VERA?s
design is reasonable and highlight our recommendations for improving its
implementation to better align resources with workload. My comments are
based on a report we issued on February 28, 2002. 1 To examine these

issues, we reviewed VA documents and consultants? reports on VERA?s original
design, proposed VERA changes, and actual VERA changes. We also interviewed
VA management officials in headquarters and eight networks, conducted site
visits in five VA health care networks,

interviewed VA and other public and private sector health care resource
allocation experts and analyzed current literature on health care resource
allocation. We also relied on our more than 10 years of work reviewing VA?s
resource allocation process in addition to other health care financing work.
2 In addition, we analyzed changes that have been made in resources
allocated among the networks since VERA was implemented and the effect of
making adjustments to VERA.

In summary, VERA?s design is reasonable for equitably allocating resources,
but certain improvements to VERA?s implementation could result in a better
allocation of comparable resources for comparable workloads. VERA?s design
is reasonable because allocations are based primarily on 1 U. S. General
Accounting Office, VA Health Care: Allocation Changes Would Better Align

Resources with Workload, GAO- 02- 338 (Washington, D. C.: Feb. 28, 2002). 2
See the Related GAO Products page at the end of this testimony.

network workload and adjustments are made for factors beyond the control of
network management. These include the health care needs of veterans and
certain local cost differences. In addition, VERA?s design protects patients
from the effects of network budget shortfalls. But implementation weaknesses
we identified result in approximately $200

million annually that could be reallocated to better align network resources
with workloads. First, VERA?s measurement of network workload is not as
accurate as it could be to determine each network?s allocation because VERA
excludes most veterans with higher incomes who do not have

service- connected disabilities- about one- fifth of VA?s workload. Second,
VERA does not adjust as accurately as it could for cost differences among
networks that result from differences in patients? health care needs or case
mix across networks. We also found that VA has not analyzed whether the

networks? need for supplemental resources- provided through the National
Reserve Fund- is the result of potential problems in VERA, network
inefficiency, or other factors. Without such information, VA can neither
ensure the appropriateness of supplemental funding nor take corrective
action.

We made recommendations to correct weaknesses in VERA?s workload and case-
mix measures. Although VA concurred with all our recommendations, in
commenting on a draft of our report, VA stated that it planned to wait for
further study before determining how and whether to change VERA for

fiscal year 2003. Given the already extensive study by VA and others of
VERA?s workload and case- mix measures, we believe VA should implement these
changes for fiscal year 2003. In addition, VA?s response to our
recommendation regarding the supplemental funding process is not fully
responsive because it does not provide information on the relative
contributions of specific factors to network shortfalls such as network
inefficiency, imperfections in VERA, and other factors.

Background Before VERA was implemented during fiscal year 1997, VA based its
allocation of resources primarily on facilities? historical expenditures. By
the 1990s, the share of the veteran population in the Northeast and Midwest

declined while the share of the veteran population in the South and West
increased. However, resources continued to be allocated based on historical
expenditures, resulting in inequitable resource allocations to some VA
networks. VERA was intended to correct these regional inequities.

VERA allocates nearly 90 percent of VA?s medical care appropriation. These
allocations are for six categories of expenses: complex patient care, basic
patient care, equipment, nonrecurring maintenance, education support, and
research support. 3 Resources for the first four categories are allocated on
the basis of patient workload and account for approximately 96 percent of
the resources VERA allocates. 4 Allocations for education

support and research support are based on workload measures specific to
those activities within the VA health care system.

As VERA was being implemented, two major changes in VA health care occurred
as a result of the Veterans? Health Care Eligibility Reform Act of 1996.
First, by eliminating certain restrictions preventing VA from treating

some veterans in outpatient care settings, the act allowed VA to begin
delivering care, where appropriate, in outpatient rather than inpatient
settings- a practice consistent with care delivery throughout the health
care industry. Second, VA introduced an enrollment system to manage access
to VA health care in relation to available resources. As required by the
act, VA established seven priority categories for enrollment. Higher
priority for enrollment is given to veterans with service- connected
disabilities, lower incomes, or other statuses such as former prisoners of
war. Priority 7, the lowest priority level, is given to veterans who are

primarily nonservice- connected with higher incomes. VERA?s Design Is a

VERA?s design is a reasonable approach to resource allocation and has
Reasonable Approach helped promote more comparable resource allocations for
comparable workloads in VA. Consistent with the literature and expert views
on

to Resource Allocation resource allocation, VERA allocates resources
primarily on the basis of

network patient workload, attempts to adjust network resources for factors
beyond the control of network management, and provides protection to
patients against network budget shortfalls. As a result, VERA

has shifted substantial resources among regions to better reflect workload.
3 Networks and their facilities also receive resources from the medical care
appropriation not allocated through VERA for such things as prosthetics,
homeless programs, and readjustment counseling. In addition, VA facilities?
budgets include collections for insurance reimbursements, copayments and
deductibles for the care of some veterans. 4 We examined these four
categories in our analysis. We did not examine the education support and
research support categories which constitute approximately 4 percent of
VERA?s allocation.

VERA is a reasonable approach because it allocates resources to networks
primarily based on workload. Each network receives an allocation based on a
predetermined dollar amount per veteran served. This is consistent with how
other federal health care payers, such as the Medicare and Medicaid
programs, allocate resources to managed care plans for their patient
workload. Because VERA uses workload to allocate resources, networks that
have more patients generally receive more resources than networks that have
fewer patients. By receiving funding based on workload, VA?s health care
networks have an incentive to focus on aligning facilities and programs to
attract patients rather than focusing on

maintaining existing operations and infrastructure regardless of the number
of patients served. In addition, VERA adjusts network allocations for cost
differences beyond the networks? control. VERA does this through adjustments
for networks? case mix by classifying patients into one of three categories-
complex care, basic vested care, and basic ?non- vested? care- which are
based on

the level of patient health care need and the costs associated with that
care. Complex care comprises about 4 percent of VA?s workload and includes
patients who generally require significant high- cost inpatient care as an
integral part of their rehabilitation or functional maintenance. Basic
vested care and basic non- vested care patients- which compose 84 percent
and 12 percent of VA?s workload, respectively- include patients whose health
care

needs are more routine and can be met in an outpatient setting. These
patients typically require significantly fewer resources than complex care
patients. However, basic vested care patients rely primarily or completely
on VA for meeting their health care needs, while basic non- vested care
patients receive only part of their care through VA and have not undergone a
comprehensive medical evaluation by a VA practitioner. In fiscal year 2001,
the capitation amount- or dollar amount per patient served- was $42,765 for
complex care, $3, 126 for basic vested care, and $121 for basic non- vested
care. 5 In addition, VERA adjusts for cost differences beyond networks?
control by applying a price adjustment factor to each network?s allocation
to account for uncontrollable geographic price differences. The adjustment
lowers the VERA allocation for networks located in lower cost 5 VERA
allocated about $16. 2 billion in fiscal year 2001 for basic and complex
care and $878 million for equipment and nonrecurring maintenance based on
patient workload. In

addition, VERA allocated about $688 million for research support and
education support based on other workload measures.

areas and increases the allocation for networks located in higher cost
areas.

Also contributing to the reasonableness of VERA?s approach is that it
provides protection to patients against network budget shortfalls. VERA does
this by providing supplemental resources through the National Reserve Fund
to networks that have difficulty operating within their available resources.
These supplemental allocations protect patients from

the risk that a health care network would be unable to provide services if
its expenditures exceed available resources. Since fiscal year 1999,
resources distributed through the National Reserve Fund have supplemented
VERA allocations in six networks and averaged approximately 1 percent of
total VERA allocations. As a result of VERA?s approach, resources have
shifted among regions to better reflect workload.

Consequently, resources moved primarily from networks located in the
Northeast and Midwest to networks located in the South and West. In fiscal
year 2001, VERA shifted approximately $921 million among networks compared
to what the allocations would have been if networks received the same
proportion of funding they received in fiscal year 1996, the year before
VERA was implemented. VERA shifted the most resources in fiscal year 2001 to
Network 8 (Bay Pines)--- approximately $198 million- and the most resources
from Network 3 (Bronx)- approximately $322 million- compared to what
allocations would have been if both networks had received the same
proportion of funding they received in fiscal year 1996.

Implementation Although VERA?s overall design is a reasonable approach to
equitably

Specifics Weaken allocate resources, we identified weaknesses in its
implementation that compromise the achievement of its goal of allocating
comparable VERA

resources for comparable workloads. To correct these weaknesses we made
several recommendations which if implemented would better align
approximately $200 million in resources with workloads in VA?s health care
networks. 6 Specifically, we recommended that VERA improve its workload
calculations to include all veterans served- including Priority 7 veterans,

the most rapidly growing proportion of VA?s workload. We also recommended
that VA improve its adjustment for cost differences beyond network control
by incorporating more categories into VERA?s case- mix

6 We also made several other recommendations to improve VERA?s
implementation. For a complete discussion of our recommendations, see GAO-
02- 338.

adjustment to more accurately account for the differences in networks?
patient health care needs. Finally, we recommended that VA improve its
process to protect patients from network budget shortfalls by determining
the extent to which different factors cause networks to need supplemental
resources in order to take actions to address factors that may cause budget
shortfalls such as inefficiency.

VA Could Better Align To improve its network workload calculation, VERA
should account for all

Resources With Workload veteran workload served- including Priority 7
veterans, who have higher incomes and no service- connected disability. 7 By
excluding most Priority 7 and Network Cost veterans from VERA?s workload
calculation, networks with a higher Differences

proportion of Priority 7 veterans have fewer resources per patient to treat
veterans than networks with a lower proportion of Priority 7 veterans. For
example, in fiscal year 2001, Network 3 (Bronx) had the highest proportion
of Priority 7 veterans, 37 percent, and Network 20 (Portland) had the lowest
proportion, 14 percent. Nationally, VA?s proportion of Priority 7 veterans
was 22 percent of total workload in fiscal year 2001.

When VERA was established, the number of higher income veterans without a
service- connected disability that VA treated was about 4 percent of the
total number of veterans treated in fiscal year 1996. VA decided not to
include most of these Priority 7 veterans in VERA?s basic care workload
calculations because of their small numbers and the expectation that
collections from copayments, deductibles, and third- party insurance would
cover most of their costs. However, Priority 7 veterans accounted for 22
percent of VA?s workload in fiscal year 2001- a substantial increase from
107,520 patients in fiscal year 1996 to an estimated 827,722 patients in
fiscal year 2001. 8 In addition, VA projects that the growth in Priority 7
patients will continue at least through fiscal year 2010. Although VA
initially expected to cover the majority of Priority 7 patient costs through

collections, VA collected only 24 percent of Priority 7 veterans? costs in 7
VA?s Office of Inspector General also recommended that VA include Priority 7
workload in the VERA model. See Office of Inspector General, Department of
Veterans Affairs, Audit of The Availability of Healthcare Services in the
Florida/ Puerto Rico Veterans Integrated Service Network (VISN) 8, Report
Number 99- 00057- 55 (Washington, D. C.: Aug. 13, 2001).

8 VERA does include some Priority 7 veterans in its workload measure. In
fiscal year 2000, about 8 percent of Priority 7 veterans treated were
included in VERA?s workload measure because they were complex care patients
or basic care patients with service- connected conditions.

fiscal year 2000. As a result, networks pay for most of the costs of
Priority 7 services through VERA allocations made for the service- connected
and low- income veteran workloads. Inclusion of Priority 7 veterans in
VERA?s basic vested care workload would increase the comparability of
resources among networks? per patient treated. If VERA were to have funded
Priority 7 basic vested veterans at 50 percent of their costs, as VA had
considered, resources would have moved from networks with smaller
proportions of Priority 7 veterans to networks with larger proportions of
Priority 7 veterans based

on our simulation (see fig. 1). VERA allocations would have increased to
nine networks in the Northeast and Midwest and decreased to 10 networks in
the South and West in the fiscal year 2001 VERA allocation.

Figure 1: Estimated Change in VERA Allocations from Adding Priority 7 Basic
Vested Veterans to VERA Workload at Half Their National Cost, Fiscal Year
2001

Network In dollars

1 (Boston)

928,351

2 (Albany)

2,544,252

3 (Bronx)

10,326,688

4 (Pittsburgh)

4,659,927

5 (Baltimore)

-1,051,028

6 (Durham)

-2,348,346

7 (Atlanta)

269,207

8 (Bay Pines)

-2,449,086

9 (Nashville)

-1,474,387

10 (Cincinnati)

-1,404,498

11 (Ann Arbor)

945,779

12 (Chicago)

1,717,229

13 (Minneapolis)

314,752

14 (Lincoln)

1,021,387

15 (Kansas City)

412,685

16 (Jackson)

-5,495,659

17 (Dallas)

-2,354,313

18 (Phoenix)

-920,077

19 (Denver)

1,235,141

20 (Portland)

-3,550,297

21 (San Francisco)

-1,172,620

22 (Long Beach)

-2,155,086 $0 Note: For this simulation we used VERA fiscal year 2001
workload numbers for basic vested care, which are the total unduplicated
numbers of veterans served for fiscal years 1997, 1998, and 1999.

Source: GAO analysis of VA data.

To improve its adjustment for cost differences beyond networks? control, we
also recommended that VERA use more case- mix categories to adequately
adjust for differences in patients? health care needs across networks. Based
on the results of our simulation, this change to VERA would have the largest
effect on resource allocation. VERA?s three casemix categories- complex,
basic vested, and basic non- vested- are based on 44 patient classes.
Because average costs of patients in the classes within the VERA categories
vary significantly and can be dramatically higher or lower than their
capitation amounts for the three case- mix

categories, VERA?s ability to allocate comparable resources for comparable
workloads is limited. The wide variation in cost between domiciliary care
and ventilator- dependent care- two of the patient classes in complex care-
illustrates this point. The national average cost for domiciliary care in
fiscal year 2000 was about $25,000, roughly $17, 000 less than the $42,153
capitation amount for complex care. In contrast, the average patient cost
for ventilator- dependent care in that year was about $163,000, roughly
$121,000 more than the complex care capitation amount. As a result of VERA?s
having only three case- mix categories, networks with

proportionately more workload in less expensive patient classes, such as
domiciliary care, receive more resources relative to their costs than other
networks. Similarly, networks with more workload in more expensive patient
classes, such as ventilator- dependent care, receive fewer resources
relative to their costs. If VERA were to use VA?s current 44 patient classes
rather than the three

case- mix categories, resources would move from networks having
proportionately fewer patients in expensive patient classes to networks
having proportionately more patients in expensive patient classes. As figure
2 shows, based on our simulation, there would be a significant movement of
resources- an average of 2 percent per network. 9 9 For our simulation we
used the 44 patient classes VA uses to construct the 3 VERA casemix

categories.

Figure 2: Estimated Change in VERA Allocations among Networks as a Result of
Using 44 Case- Mix Categories, by Network, Fiscal Year 2001

Network In dollars

1 (Boston)

40,537,063

2 (Albany)

-11,093,936

3 (Bronx)

32,254,369

4 (Pittsburgh)

31,575,297

5 (Baltimore)

-21,906,515

6 (Durham)

9,258,404

7 (Atlanta)

-14,181,751

8 (Bay Pines)

16,827,649

9 (Nashville)

31,955,011

10 (Cincinnati)

-5,659,975

11 (Ann Arbor)

10,335,432

12 (Chicago)

-7,415,374

13 (Minneapolis)

5,342,154

14 (Lincoln)

3,176,377

15 (Kansas City)

-2,804,687

16 (Jackson)

3,773,183

17 (Dallas)

-10,138,298

18 (Phoenix)

-21,841,759

19 (Denver)

1,108,355

20 (Portland)

-36,471,841

21 (San Francisco)

-21,797,992

22 (Long Beach)

-32,831,165

$0

Note: We used fiscal year 1999 expenditure data for the calculations, the
most recent data available for fiscal year 2001 VERA allocations.

Source: GAO analysis of VA data.

The combined effect of including basic vested Priority 7 veterans in VERA?s
workload and using all 44 VA patient classes in VERA?s case- mix adjustment
would provide additional resources to some northeastern and midwestern

networks and reduce resources for some southern and western networks (see
fig. 3). The allocation change would represent about 2 percent of networks?
budgets but would be more substantial for some networks. Network 1 (Boston)
would get approximately a 5 percent increase and

Network 20 (Portland) approximately a 5 percent decrease.

Figure 3: Estimated Change in VERA Allocations from Incorporating 44 Case-
Mix Categories and Priority 7 Basic Vested Veterans Treated, Fiscal Year
2001 Network

In dollars 1 (Boston)

41,360,897

2 (Albany)

-8,718,416

3 (Bronx)

41,573,159

4 (Pittsburgh)

35,767,167

5 (Baltimore)

-23,395,750

6 (Durham)

6,757,548

7 (Atlanta)

-13,596,270

8 (Bay Pines)

14,540,999

9 (Nashville)

30,637,119

10 (Cincinnati)

-7,454,361

11 (Ann Arbor)

11,133,452

12 (Chicago)

-6,647,790

13 (Minneapolis)

5,335,814

14 (Lincoln)

4,298,150

15 (Kansas City)

-2,041,802

16 (Jackson)

-541,935

17 (Dallas)

-12,456,323

18 (Phoenix)

-21,888,405

19 (Denver)

2,735,082

20 (Portland)

-39,781,854

21 (San Francisco)

-23,159,943

22 (Long Beach)

-$ 34,456,538

$0

Note: We allocated resources for Priority 7 basic vested care veterans at 50
percent ($ 849) of the national average cost based on a policy VA had
considered implementing to minimize possible incentives for networks to
serve more Priority 7 veterans. We used fiscal year 1999 expenditure data
for these calculations. Source: GAO analysis of VA data.

While VA concurred with our recommendations to better align VERA?s measure
of workload with actual workload served and to incorporate more (not
necessarily 44) categories into VERA?s case- mix adjustment, it plans to
wait for further study before making a decision about modifications to VERA
for the fiscal year 2003 allocation. VA and others have conducted

various studies on including all Priority 7 workload in VERA and increasing
the number of VERA case mix categories. 10 Given the extensive studies by VA
and others of VERA?s workload and case- mix measures, we believe that VA
should make needed improvements to VERA for the fiscal year 2003

allocation and further refine VERA as needed in subsequent years.
Identifying Reasons for

To improve its process to protect patients from network budget shortfalls,
Budget Shortfalls Would

we also recommend that VA?s supplemental funding process determine to Help
VA Take More what extent networks need supplemental resources due to such
factors as Appropriate Corrective imperfections in VERA, lack of network
efficiency, or lack of managerial flexibility to close or consolidate
programs or facilities. VA?s supplemental Actions

funding processes have not collected the information necessary to make these
determinations. As a result, VA cannot provide adequate assurance that
supplemental allocations are appropriate or take needed action to correct
problems that cause networks to have budget shortfalls.

VA has focused its process for providing supplemental funding from the
National Reserve Fund almost solely on providing supplemental resources to
networks to get through a fiscal year, but it has not included in this
process an examination of the root causes of networks? needs for

additional resources. Between fiscal years 1999 through 2001, VA used
different approaches for evaluating networks? supplemental funding requests
and distributing a total of approximately $323 million in supplemental
resources to six networks. However, in none of these approaches has VA
collected adequate information for determining the extent to which certain
factors cause budget shortfalls. For example, in

fiscal year 2001, about half of the supplemental resources provided to
networks was for ?inflation and miscellaneous program adjustments.? All
networks experienced inflation, however, and VA did not distinguish 10 For
example, RAND, An Analysis of the Veterans Equitable Resource Allocation
(VERA) System (Santa Monica, California, 2001), pp. 21- 22 discusses the
need for additional casemix adjustment in VERA as does Price Waterhouse LLP
and The Lewin Group, Inc., Veterans Equitable Resource Allocation
Assessment- Final Report, March 27, 1998.

between the level of inflation in networks that requested supplemental
resources and those that did not.

VA concurred with our recommendation to improve the supplemental funding
process. For fiscal year 2002, VA developed a different approach to
providing supplemental resources to networks, one that it indicates will
better identify factors, such as inefficiency, VERA imperfections, or other
factors, that cause networks to require supplemental resources. However, the
actions VA discussed to improve the process do not address our

recommendation to identify the relative contributions of such factors to
network budget shortfalls. Until VA implements our recommendation, it cannot
provide assurance that supplemental resources are appropriate or take needed
actions to reduce the likelihood of network shortfalls in the

future. Concluding VERA?s design is a reasonable approach to resource
allocation and has had Observations

a significant effect on promoting more comparable resource allocations for
comparable workloads in VA. Yet VA needs to correct weaknesses in VERA?s
implementation to better align resources with workload and to adequately
account for important variations in health care needs among networks. Our
analysis shows that doing so would better allocate about $200 million
annually. Although most of the reallocation at this time would

result from better case- mix adjustments in VERA to reflect differences in
health care needs among networks, the importance of including all Priority 7
veterans in VERA workload could increase in the future because the number of
Priority 7 veterans is projected to continue to increase at least through
fiscal year 2010. Making changes to address these weaknesses in VERA will
add some complexity to how VA allocates resources, but

delaying these needed improvements to VERA will perpetuate inequities that
currently exist. In addition, VA has not used the supplemental funding
process to improve VERA allocations and management of VA?s resources. The
amount of resources provided to networks through the supplemental funding
process for the National Reserve Fund has continued to increase, yet VA has
not been able to determine the relative contribution of factors such as
imperfections in VERA, network inefficiency, or lack of managerial
flexibility to close or consolidate programs or facilities to the need for
supplemental resources. Because VA has not identified the relative
contribution of factors that could cause network budget shortfalls, it is
unable to ensure that the supplemental funds provided are appropriate or

take needed action to correct problems that cause networks to have budget
shortfalls. Without knowing the extent to which VERA imperfections or other
factors are responsible for budget shortfalls, stakeholders may lose

confidence in VERA?s ability to allocate resources in an equitable manner.
Mr. Chairman, this concludes my prepared remarks. I will be pleased to
answer any questions you or other members of the committee may have.
Contacts and For further information regarding this testimony, please
contact me at Acknowledgments

(202) 512- 7101 or James Musselwhite, Assistant Director, at (202) 512-
7259. Marcia Mann and Thomas Walke also contributed to this statement.

Related GAO Products

VA Health Care: Allocation Changes Would Better Align Resources with
Workload. GAO- 02- 338. Washington, D. C.: February 28, 2002.

Medicare Managed Care: Better Risk Adjustment Expected to Reduce Excess
Payments Overall While Making Them Fairer to Individual Plans. GAO/ T- HEHS-
99- 72. Washington, D. C.: February 25, 1999.

Medicare Managed Care: Payment Rates, Local Fee- for- Service Spending, and
Other Factors Affect Plans? Benefit Packages. GAO/ HEHS- 99- 9R. Washington,
D. C.: October 9, 1998.

VA Health Care: More Veterans Are Being Served, but Better Oversight Is
Needed. GAO/ HEHS- 98- 226. Washington, D. C.: August 28, 1998.

VA Health Care: Resource Allocation Has Improved, but Better Oversight Is
Needed. GAO/ HEHS- 97- 178. Washington, D. C.: September 17, 1997.

Veteran?s Health Care: Facilities? Resource Allocations Could Be More
Equitable. GAO/ HEHS- 96- 48. Washington, D. C.: February 7, 1996.

VA Health Care: Resource Allocation Methodology Has Had Little Impact on
Medical Centers? Budgets. GAO/ HRD- 89- 93. Washington, D. C.: August 18,
1989.

VA Health Care: Resource Allocation Methodology Should Improve VA?s
Financial Management. GAO/ HRD- 87- 123BR. Washington, D. C.: August 31,
1987.

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