Report to the Ranking Minority

Member, Committee on Governmental

Affairs, U.S. Senate

United States General Accounting Office

GAO

June 2001 HEALTH AND

HUMAN SERVICES

Status of Achieving

Key Outcomes and

Addressing Major

Management

Challenges

GAO-01-748
Page i GAO-01-748 HHS' Status of Achieving Key Outcomes

Letter 1

Appendix I Observations on HHS’ Efforts to Address Its Major

Management Challenges 33

Appendix II Comments From the Department of Health and Human

Services 39

Tables

Table 1: Major Management Challenges 33

Abbreviations

ACF Administration for Children and Families

AoA Administration on Aging

CDC Centers for Disease Control and Prevention

FDA Food and Drug Administration

FFMIA Federal Financial Management Improvement Act

GPRA Government Performance and Results Act of 1993

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HRSA Health Resources and Services Administration

IHS Indian Health Service

NIH National Institutes of Health

OCR Office for Civil Rights

OIG Office of Inspector General

OSCAR On-Line Survey, Certification, and Reporting

PPS prospective payment system

SAMHSA Substance Abuse and Mental Health Services

Administration

TANF Temporary Assistance for Needy Families

Contents Contents
Page 1 GAO-01-748 HHS' Status of Achieving Key Outcomes

June 15, 2001

The Honorable Fred Thompson

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

Dear Senator Thompson:

To assess the progress of the Department of Health and Human Services

(HHS) in achieving selected key outcomes that you identified as important

mission areas, we reviewed HHS’ fiscal year 2000 performance reports and

fiscal year 2002 performance plans required by the Government

Performance and Results Act of 1993 (GPRA).1

 For HHS, these documents

consist of an overall departmental summary and a combined report and

plan from each of 17 operating components and staff offices.2

 Our review

generally covered the same outcomes we addressed in our June 2000

review of HHS’ fiscal year 1999 performance reports and fiscal year 2001

performance plans to provide a baseline by which to measure HHS’

performance from year to year.3

 These selected key outcomes are

• less fraud, waste, and error in Medicare and Medicaid;

• beneficiaries receive high-quality nursing home services;

• poor and disadvantaged families and individuals become self-sufficient;

• improved prevention of infectious diseases, including vaccine-preventable

diseases;

• reduced use of illegal drugs; and

• public has prompt access to safe and effective medical drugs and devices.

 1

This report is one of a series of reports on the 24 Chief Financial Officers Act agencies’

fiscal year 2000 performance reports and fiscal year 2002 performance plans.

2

Our review focused on the reports and plans of the following HHS components:

Administration on Aging, Administration for Children and Families, Centers for Disease

Control and Prevention, Food and Drug Administration, Health Care Financing

Administration, Health Resources and Services Administration, Indian Health Service,

National Institutes of Health, Office for Civil Rights, and Substance Abuse and Mental

Health Services Administration.

3

Observations on the Department of Health and Human Services’ Fiscal Year 1999

Performance Report and Fiscal Year 2001 Performance Plan (GAO/HEHS-00-127R, June 30,

2000).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-748 HHS' Status of Achieving Key Outcomes

As agreed, using the selected key outcomes for HHS as a framework, we

(1) assessed the progress HHS has made in achieving these outcomes and

the strategies it has in place to achieve them and (2) compared HHS’ fiscal

year 2000 performance reports and fiscal year 2002 performance plans

with its prior-year performance reports and plans for these outcomes. We

also agreed to analyze how HHS addressed major management challenges

that we and HHS’ Office of Inspector General (OIG) identified, including

the governmentwide high-risk areas of strategic human capital

management and information security. (App. I provides detailed

information on how HHS addressed these challenges. App. II contains

HHS’ comments on a draft of this report.)

Overall, the reports and plans of HHS components indicated that they had

made mixed progress in achieving their key outcomes. In general, the

components’ strategies for achieving these outcomes appeared to be clear

and reasonable. The following paragraphs summarize our findings:

• Planned outcome: Less fraud, waste, and error in Medicare and Medicaid.

While the Health Care Financing Administration’s (HCFA) performance

report and plan indicate that it is making some progress toward achieving

its Medicare program integrity outcome, tracking progress was difficult

because of continual changes in its goals. HCFA had no program integrity

goal for Medicaid for fiscal year 2000 but has since added a developmental

goal. A major HCFA strategy to tackle the problem of fraud—the addition

of new goals—appears to be reasonable. However, a number of the new

goals outlined the need to establish a process to address problems, and in

some cases, targets to measure progress had not yet been developed.

• Planned outcome: Beneficiaries receive high-quality nursing home

services. HCFA’s performance report and plan indicate that it continues to

make progress toward ensuring that nursing home residents receive highquality care, but its three goals under this outcome are surprisingly narrow

in light of its broader agenda, embodied in about 30 ongoing initiatives to

improve the quality of care in America’s nursing homes. The lack of

recognition of the initiatives is even more surprising in light of

congressional direction that HCFA establish benchmarks and track

Results in Brief

Progress and Strategies
Page 3 GAO-01-748 HHS' Status of Achieving Key Outcomes

progress in implementing each of the initiatives.4 HCFA’s strategies for

achieving this outcome appear to be clear and reasonable.

• Planned outcome: Poor and disadvantaged families and individuals

become self-sufficient. Similar to last year’s review, we could not fully

assess the Administration for Children and Families’ progress in achieving

this outcome because the agency again was unable to provide timely

performance data for many of the related measures. The little data that

were available for fiscal year 2000 portray mixed success, and newly

available fiscal year 1999 data generally indicated a similar picture. Few

Administration for Children and Families’ strategies for achieving this

outcome are directly linked to specific performances that fell below fiscal

year 2000 or 1999 target levels, and the strategies do not address in detail

reporting delays from program partners, as we urged in last year’s review.

• Planned outcome: Improved prevention of infectious diseases, including

vaccine-preventable diseases. The performance reports and plans of HHS

components indicate that they have made mixed progress toward

achieving the 15 infectious disease prevention goals associated with this

outcome, but in some cases data to measure progress were unavailable.

Several agencies acknowledged their problems with data time lags, and

some pointed to trend data to suggest that they are getting closer to their

targets. While the components’ strategies for achieving some goals are

clear and reasonable, they do not always discuss how they plan to attain

unmet goals, and some strategies are not directly tied to goal attainment.

• Planned outcome: Reduced use of illegal drugs. The Substance Abuse and

Mental Health Services Administration’s (SAMHSA) performance report

and plan indicate that it has made some progress in achieving this

outcome. While it continues to have problems collecting data for about

half of its 80 goals, SAMHSA reported that it met or exceeded its target for

nearly 90 percent of the goals for which it had data. Delays in reporting

performance data were attributed to time lags in data collection, analysis,

and reporting by states. It plans to have final data for most performance

goals later in 2001. SAMHSA did not report strategies for achieving several

planned goals. Thus, while it cited measurable targets and time frames for

achieving its prevention and treatment programs, it omitted details about

how these programs will attain their targets.

• Planned outcome: Public has prompt access to safe and effective medical

drugs and devices. The Food and Drug Administration’s (FDA)

performance report and plan indicate that it has made significant progress

 4

HCFA now refers to the nursing home initiatives as the Nursing Home Oversight

Improvement Program.
Page 4 GAO-01-748 HHS' Status of Achieving Key Outcomes

in achieving this outcome. In last year’s assessment, we reported that

performance data were unavailable for the majority of FDA’s goals. In

contrast, the fiscal year 2000 performance report provides outcome data

on nearly all goals, and FDA reported that it met or exceeded most of its

targets. FDA’s strategies for achieving this outcome are clear and

reasonable. When FDA did not meet a goal, it generally provided an

explanation and discussed strategies for improving future performance,

including human capital strategies.

Although the current reports and plans of HHS components were generally

similar to last year’s, some changes have improved their usefulness and

readability. For example, the Centers for Disease Control and Prevention

(CDC) made extensive revisions to more effectively communicate and link

its goals, measures, and targets with the strategies for achieving them. The

Administration for Children and Families and FDA added summaries that

provide a helpful overview, and HCFA generally made its narrative

discussion more concise. Finally, FDA made strong use of graphics this

year, and HCFA introduced graphics into its report and plan. However,

several key weaknesses that we noted last year remain. For example, time

lags in the availability of performance data continue to be a major problem

for the Administration for Children and Families and SAMHSA and affect

some goals for other HHS components such as HCFA, CDC, and FDA.

Although the Administration for Children and Families did not present

specific strategies to overcome these delays, SAMHSA said it is working

with states to improve its performance reporting, as directed by the

Congress. It may not always be realistic to expect the availability of

complete data at the same time annual performance reports and plans are

issued, but trends will become apparent as the number of performance

reports and plans grows with each passing year. CDC and the Health

Resources and Services Administration have made progress in addressing

our past concerns about data verification. However, this issue remains an

unaddressed problem for HCFA’s nursing home-related goals and for

SAMHSA. Finally, tracking HCFA’s reporting of program integrity issues

continues to be problematic, making it difficult to fully report on progress.

HHS does not have departmental performance goals related to two of the

governmentwide management challenges we have identified—human

capital and information security. However, several HHS components have

included these goals and measures in their plans, and some cite progress.

For example, HCFA’s performance report and plan indicated that it is

making progress both in its workforce planning effort and its initiative to

Comparison of Reports

and Plans

Management Challenges
Page 5 GAO-01-748 HHS' Status of Achieving Key Outcomes

update information security policies. In general, HHS could do a better job

of illustrating how it is using human capital strategies to improve

performance. We have identified five other major management challenges

facing HHS, four of which were encompassed in key outcomes discussed

earlier—Medicare program integrity, nursing home quality of care,

economic independence for families, and medical product safety.5

Regarding the fifth challenge—ensuring a well-designed and administered

Medicare program—HCFA is taking steps to reduce the gap between the

current and targeted skill levels of its employees.

HHS reviewed a draft of this report and found it to be an accurate and

complete assessment of the key outcomes and major management

challenges contained in the GPRA reports of its components. We have

addressed its specific comments in the corresponding sections of the

report.

GPRA is intended to shift the focus of government decisionmaking,

management, and accountability from activities and processes to the

results and outcomes achieved by federal programs. New and valuable

information on the plans, goals, and strategies of federal agencies has been

provided since federal agencies began implementing GPRA. Under GPRA,

annual performance plans are to clearly inform the Congress and the

public of (1) the annual performance goals for agencies’ major programs

and activities, (2) the measures that will be used to gauge performance, (3)

the strategies and resources required to achieve the performance goals,

and (4) the procedures that will be used to verify and validate

performance information. These annual plans, issued soon after

transmittal of the president’s budget, provide a direct link between an

agency’s longer-term goals and mission and its day-to-day activities.6

Annual performance reports are to report subsequently on the degree to

which performance goals were met. The issuance of the agencies’

performance reports, due by March 31, represents a new and potentially

more substantive phase in the implementation of GPRA—the opportunity

to assess federal agencies’ actual performance for the prior fiscal year and

 5

Major Management Challenges and Program Risks: Department of Health and Human

Services (GAO-01-247, Jan. 2001).

6

The fiscal year 2002 performance plan is the fourth of these annual plans under GPRA.

Background
Page 6 GAO-01-748 HHS' Status of Achieving Key Outcomes

to consider what steps are needed to improve performance and reduce

costs in the future.7

HHS has a broad and challenging mission that touches the lives of

Americans from every economic stratum: enhancing the health and wellbeing of all Americans by

• providing for effective health and human services, and

• fostering strong, sustained advances in the sciences underlying medicine,

public health, and social services.

With a budget of $376 billion and a direct workforce of 59,000, HHS

administers some 300 health and social programs, including Medicare,

Medicaid, the State Children’s Health Insurance Program, Temporary

Assistance for Needy Families, and food and drug safety. HHS’ programs

often require operating components to coordinate with partners such as

state, local, and tribal governments; grantees; and contractors. For

example, HCFA shares responsibility with states for administering

Medicaid—a program that provides health care to certain low-income

persons. HCFA also monitors the approximately 50 Medicare contractors

that pay claims for the program’s elderly and disabled beneficiaries and

that establish local medical coverage policies. SAMHSA administers a

grant program to states for treatment and prevention services for persons

at risk of or actually abusing alcohol or other drugs. Finally, the

Administration for Children and Families partners with states to provide

support to needy children and transition their parents to work.

 7

The fiscal year 2000 performance report is the second of these annual reports under

GPRA.
Page 7 GAO-01-748 HHS' Status of Achieving Key Outcomes

This section discusses our analysis of HHS’ performance in achieving its

selected key outcomes and the strategies it has in place—including human

capital and information technology—for accomplishing these outcomes.8

We also provide information drawn from our prior work about the

credibility of the agency’s performance information.

While HCFA’s performance report and plan indicate that it is making some

progress toward achieving its Medicare program integrity outcome,

progress is difficult to measure because of continual goal changes that are

sometimes hard to track or that are made with insufficient explanation. Of

the five fiscal year 2000 program integrity goals it discussed, HCFA

reported that three were met, a fourth unmet goal was revised to reflect a

new focus, and performance data for the fifth will not be available until

mid-2001. HCFA plans to discontinue three of these goals. Although the

federal share of Medicaid is projected to be $124 billion in fiscal year 2001,

HCFA had no program integrity goal for Medicaid for fiscal year 2000.

HCFA has since added a developmental goal concerning Medicaid

payment accuracy.

One of HCFA’s key Medicare program integrity goals is to pay claims

properly the first time. Therefore, HCFA has set the performance goal of

reducing improper payments as a priority for Medicare. The central

measure of progress for this goal is the rate of improper fee-for-service

payments, which is now estimated by the HHS OIG. HCFA will assume

responsibility for measuring this error rate in fiscal year 2002. HCFA

reported meeting its fiscal year 2000 error rate target of 7 percent with a

rate of 6.8 percent.

HCFA reported that it did not meet its fiscal year 2000 goal to perform

medical reviews of 100 million claims, and it is difficult to determine

whether its revised goal is being continued.9

 In its narrative, HCFA

 8

Key elements of modern human capital management include strategic human capital

planning and organizational alignment; leadership continuity and succession planning;

acquiring and developing staffs whose size, skills, and deployment meet agency needs; and

creating results-oriented organizational cultures.

9

In fiscal year 2000, its contractors processed about 900 million claims.

Assessment of HHS’

Progress and

Strategies in

Accomplishing

Selected Key

Outcomes

Fraud, Waste, and Error in

Medicare and Medicaid
Page 8 GAO-01-748 HHS' Status of Achieving Key Outcomes

explained that it revised its goal to focus on improving the accuracy and

appropriateness of medical reviews rather than simply to increase the

number of reviews conducted. But later, in a chart describing changes in

GPRA goals, HCFA noted that this goal was subsumed in a fiscal year 2001

goal to improve the effectiveness of program integrity activities through

successful implementation of this and nine other initiatives contained in

the Comprehensive Plan for Program Integrity. The current performance

report and plan only cursorily mention the Comprehensive Plan initiatives

but indicate that the goal will be reached in fiscal year 2001 and therefore

will not be continued.

HCFA discontinued two of its fiscal year 2000 performance goals for

which it reported making progress. Although data will not be available

until mid-2001 on its discontinued goal to decrease the improper payment

rate for home health services, HCFA reported “expected achievement” of

its 10-percent target as justification for dropping the goal. Nevertheless,

this area remains on the HHS OIG’s list of major management challenges.

HCFA also discontinued, with little explanation, the goal of increasing the

ratio of dollars recovered through the audit process to dollars spent on

auditing activities. It reported it dropped the goal because of data source

concerns (which it did not discuss) but also said it is examining other

ways to measure progress on this issue. HCFA nevertheless reported that

it exceeded its fiscal year 2000 target for this goal. In commenting on a

draft of this report, HHS noted that HCFA has discontinued certain goals

because they are ultimately part of the overall error rate measure and do

not reflect the accomplishments of HCFA’s overall program integrity

efforts.

We have previously reported on two general weaknesses that hinder

HCFA’s efforts to ensure proper payments of Medicare claims: outmoded

information systems and weak financial management procedures.10

Without effective systems, HCFA is not well positioned for sound financial

or programmatic management. HCFA has taken steps to modernize its

systems and strengthen its financial management but many challenges

remain. For example, HCFA’s fiscal year 2000 performance report notes

progress made in addressing weaknesses related to its financial

information, such as improvements in controls over Medicare contractor

 10GAO-01-247, Jan 2001.
Page 9 GAO-01-748 HHS' Status of Achieving Key Outcomes

data.11 However, HCFA is still not in compliance with the Federal Financial

Management Improvement Act (FFMIA) and continues to have material

weaknesses related to reliability and documentation of its financial

information.12 HCFA acknowledges that its ability to fully address

underlying financial weaknesses remains impaired because it lacks a fully

integrated financial management system.

Despite repeated instances of noncompliance and the need for an

integrated general ledger system to address major financial management

weaknesses, HCFA’s performance report does not include specific goals

and targets for achieving compliance with FFMIA, a situation we also

noted in prior performance plan reviews. While HCFA’s Chief Financial

Officer Comprehensive Plan for Financial Management includes goals for

developing an integrated general ledger system, this document and the

related costs and resources for implementing the system are not referred

to in HCFA’ s performance report or plan.

HCFA’s strategies for achieving many goals related to minimizing fraud,

waste, and error appear to be clear and reasonable. One important HCFA

strategy is to establish new goals and revise existing goals that will

enhance program integrity efforts. Recognizing limitations in the

usefulness of the national Medicare error rate as a management tool,

HCFA’s strategy is to develop a subnational error rate. Thus, it established

a fiscal year 2001 goal of developing a separate error rate for each

Medicare claims contractor and of implementing a provider compliance

rate. It is also developing a method for estimating a fraud rate among

providers within its contractors’ service areas. Finally, HCFA introduced a

fiscal year 2002 goal intended to improve the provider enrollment process

by ensuring that only qualified and legitimate providers are permitted to

participate in Medicare.13

Because many of the baselines and measures for these new and revised

goals are under development, HCFA’s intended performance regarding

them is unclear. For example, HCFA’s fiscal year 2002 plan contains a

 11HCFA did achieve a “clean” opinion on its fiscal year 2000 financial statement, a Medicare

contractor performance goal.

12Medicare Financial Management: Further Improvements Needed to Establish Adequate

Financial Control and Accountability (GAO/AIMD-00-66, Mar. 15, 2000).

13Medicare: HCFA to Strengthen Medicare Provider Enrollment Significantly, but

Implementation Behind Schedule (GAO-01-114R, Nov. 2, 2000).
Page 10 GAO-01-748 HHS' Status of Achieving Key Outcomes

developmental goal to improve its oversight of Medicare fee-for-service

contractors.14 Its fiscal year 2002 target is to build on progress achieved in

fiscal years 1999, 2000, and 2001. Similarly, HCFA’s fiscal year 2001 and

2002 plans include a developmental goal to help states conduct Medicaid

payment accuracy studies in order to measure and ultimately reduce

Medicaid payment error rates. The fiscal year 2001 target is to establish

the feasibility of conducting pilot projects within states and, for fiscal year

2002, to assess the pilots initiated by two states.15

With respect to one fiscal year 2001 goal, HCFA notes human capital and

information technology limitations but does not discuss strategies for

addressing them. Thus, HCFA reports that because of limited resources

and funding, it only audits a small percentage of providers regarding credit

balance recoveries and that it lacks the database needed to track provider

activity in this area.16

In prior reviews of this key outcome, we noted that HCFA did not

adequately address the need for coordination with other organizations.

While HCFA includes a brief coordination section in the individual goal

narratives, it does not consistently provide details about planned

coordination strategies. For example, one coordination strategy reads:

“We will continue to work with our partners in conducting our everyday

business of ensuring Medicare claims are paid properly.”

HCFA’s performance report and plan indicate that it continues to make

progress toward its outcome of ensuring that nursing home residents

receive high-quality care but its focus on just 3 goals under this outcome is

 14For years, HCFA’s contractor evaluation process lacked the consistency that agency

reviewers needed to make comparable assessments of contractor performance. HCFA

reviewers had few measurable performance standards and little agencywide direction on

monitoring contractors’ payment safeguard activities. HCFA now is refocusing contractor

performance evaluation to achieve a risk-based, consistent national approach to contractor

review. See Medicare Contractors: Despite Its Efforts, HCFA Cannot Ensure Their

Effectiveness or Integrity (GAO/HEHS-99-115, July 14, 1999) and Medicare Contractors:

Further Improvement Needed in Headquarters and Regional Office Oversight

(GAO/HEHS-00-46, Mar. 23, 2000).

15HCFA plans to work with two states to conduct payment accuracy studies to help refine

methodologies and to assess the feasibility of constructing a single methodology that could

be used by all states.

16See Medicare: HCFA Could Do More to Identify and Collect Overpayments

(GAO/HEHS/AIMD-00-304, Sept. 7, 2000).

High-Quality Nursing

Home Services
Page 11 GAO-01-748 HHS' Status of Achieving Key Outcomes

surprisingly narrow, given the broad range of its approximately 30

initiatives to improve the quality of care in America’s nursing homes. The

lack of recognition of the Nursing Home Oversight Improvement Program

initiatives is even more notable because the Senate Committee on Aging

requested that HCFA establish benchmarks and track progress in

implementing each of these initiatives. In commenting on a draft of this

report, HCFA noted that its performance goals are not intended to be a

comprehensive list of its performance measures.

On the basis of interim data, HCFA reported that the prevalence of

restraints used in nursing homes decreased during fiscal year 2000. This

decrease represents the second consecutive year in which the goal of

reducing the use of restraints was surpassed. Final data were expected

after the publication of HCFA’s performance report. Regarding its second

goal, HCFA reported, for the first time, the prevalence of nursing home

residents suffering from pressure sores (bedsores) and established futureyear performance targets for reducing their prevalence.

HCFA reported making progress toward its third goal of modifying the

survey and certification budgeting process to develop national standard

measures and costs. Once developed, these standards can be used to more

effectively price each state’s survey workload and to develop workload

expectations for each state. However, when we compared HCFA’s current

and prior-year plans for implementing this new budget methodology, we

determined that the modification will likely take HCFA longer to

implement than it planned. For instance, although its earlier plan indicated

that its price-based methodology would be complete in fiscal year 2001, its

current-year plan shows that future-year targets for this goal are yet to be

determined. Nevertheless, in fiscal year 2001, HCFA said it will allocate

budget increases to states with unit survey hours that do not exceed 15

percent above the combined national average for nursing home surveys.

HCFA also eventually plans to use the standards for setting state

performance measures to assess the quality of nursing home surveys

performed by each state. As we noted in last year’s report, the critical step

of assessing states’ performance could begin sooner if HCFA used existing

data. For instance, one of HCFA’s regional offices has analyzed data for

several years to help evaluate the performance of state survey agencies in

its region in areas such as whether states vary the timing of surveys to

ensure that nursing homes are unable to predict the date of their next

survey. In a report issued in September 2000, we highlighted HCFA’s

commitment to begin using data currently available to compile periodic
Page 12 GAO-01-748 HHS' Status of Achieving Key Outcomes

reports on state performance and to supplement these reports with on-site

work to assess state performance.17

Data inconsistencies we and the HHS OIG identified raise questions about

the accuracy of HCFA’s information on the prevalence of restraint use and

pressure sores. However, HCFA did not note any concerns about the

reliability of the On-Line Survey and Certification Reporting (OSCAR)

System database, nor did it discuss the concerns about minimum data set

accuracy raised by the HHS OIG. Our prior reports on nursing home

quality have noted the considerable variation across states in the reporting

of nursing home deficiencies in OSCAR—a situation that suggests some

states may be better than others at identifying problems.18 The HHS OIG

recently found several problems related to the use of the minimum data

set, including differences between information on residents contained in

the data set and data maintained in the residents’ medical records.19 We

also noted last year that HCFA recognized the need to be cautious with its

use of data in the minimum data set until it assesses the data set’s

accuracy and completeness.20 HCFA intends to award a contract this year

to begin minimum data set validation work in 2002. In commenting on a

draft of this report, HCFA said it found our discussion of this proposed

validation contract inconsistent with our finding that it had not discussed

concerns about minimum data set accuracy in its GPRA report. We believe

that HCFA’s GPRA report should have acknowledged the proposed

validation contract since it is directly relevant to a discussion of the

reliability of data used to measure progress in achieving goals under the

nursing home quality outcome. HCFA also expressed concern about the

reliability of the HHS OIG’s findings on minimum data set accuracy. The

fact that HCFA has a proposed validation contract suggests that it, too, has

concerns about minimum data set accuracy.

Despite its narrow focus on only three goals, HCFA’s strategies to achieve

them are generally clear and reasonable. For example, to decrease the

 17Areas to be measured include survey timing, deficiency documentation, and complaint

investigations. Nursing Homes: Sustained Efforts Are Essential to Realize Potential of the

Quality Initiatives (GAO/HEHS-00-197, Sept. 28, 2000).

18Nursing Home Care: Enhanced HCFA Oversight of State Programs Would Better Ensure

Quality (GAO/HEHS-00-6, Nov. 4, 1999).

19HHS OIG, Nursing Home Resident Assessment: Resource Utilization Groups, OEI-02-99-

00041 (Washington, D.C.: HHS, Dec. 2000).

20GAO/HEHS-00-127R, June 30, 2000.
Page 13 GAO-01-748 HHS' Status of Achieving Key Outcomes

prevalence of pressure sores, HCFA is working to improve surveyors’

ability to assess residents’ conditions by conducting educational seminars

for surveyors and adding a new investigative protocol to help surveyors

detect pressure sores during a survey. It is also strengthening enforcement

activities against homes that fail to prevent avoidable pressure sores.

However, HCFA’s discussion of its strategy to ensure that nursing home

residents are not unnecessarily restrained is incomplete. It notes that it

relies on the state survey and certification process but does not discuss

the role of outside groups, which also have sponsored a large number of

provider and consumer education projects to demonstrate ways to reduce

restraint use.21

To improve the overall management of the survey and certification

process, HCFA’s strategy has been to conduct studies to identify

significant differences in survey time and resource utilization among state

survey teams. HCFA plans to research these variations, determine which

have the strongest relationship to cost and performance, establish

standard measures of cost and workload, and develop future survey and

certification budgets on the basis of standard prices. HCFA’s new

budgeting approach will address the importance of human capital by

ensuring that states have an appropriate number of qualified surveyors.

Disparities in staffing might have been a contributing factor to deficiencies

in state oversight activities. During our 2000 review of HCFA’s

implementation of the Clinton Administration’s nursing home initiatives,

we noted that a number of states had hired additional surveyors to

promote more timely complaint investigations as well as to ensure that

nursing homes are inspected an average of every 12 months. Furthermore,

although HCFA did not address this in its plan, it has taken steps to

improve its information technology systems to enhance oversight of

nursing home quality of care. For instance, HCFA is in the process of

redesigning its OSCAR database to make it easier to generate analytical

reports.

 21As part of a survey, state or federal surveyors observe each nursing home’s use of

restraints and issue a deficiency citation against a home that restrains a resident without

clear medical reason.
Page 14 GAO-01-748 HHS' Status of Achieving Key Outcomes

Similar to last year, the Administration for Children and Families (ACF)

reported that it lacked fiscal year 2000 performance data for 18 of the 26

measures associated with programs whose performance is critical in

reaching this key outcome.22 As a result, we were unable to fully assess

ACF’s progress. ACF largely attributes missing performance data to the

time lag in receiving and validating data reports from its program partners,

including states and localities. Specifically, no fiscal year 2000

performance data were reported for the Temporary Assistance for Needy

Families (TANF), Child Support Enforcement, Child Care, and Refugee

Resettlement programs.

The limited performance data that were available in ACF’s report and plan

indicate that its progress has been mixed. ACF reported that it achieved its

target for four of the eight measures that had fiscal year 2000 performance

data, including two measures related to the Developmental Disabilities

Employment and Housing programs and measures related to increasing

nondiscriminatory access to and participation in HHS programs. Target

levels that ACF reported not meeting in fiscal year 2000 include two

measures associated with increasing the number of HHS grantees and

providers found to be in compliance with title IV in limited English

proficiency reviews and investigations. For measures without fiscal year

2000 performance data, fiscal year 1999 performance data, which are now

available, showed that 7 of 16 measures met or exceeded their targets and

2 measures came very close to meeting their targets.23

ACF may not be positioned to meet some future target levels, which

appear to be set beyond what it can reasonably expect to achieve. Some

measures, for example, have shown a recent decline and ACF may

continue to not meet its targets for these in the future. These measures

include (1) the earning gains rate and the employment retention rate under

the TANF program; (2) the number of refugees becoming employed, the

 22In addition to ACF, our review also included related goals and performance measures of

HHS’ Office for Civil Rights (OCR). ACF and OCR use the term “measures” to describe

what other HHS components refer to as goals. ACF uses the term “goal” to refer to the

overall outcome of improving self-sufficiency of families and individuals. ACF divides this

goal into four objectives: (1) increase employment, (2) increase independent living, (3)

increase parental responsibility, and (4) increase affordable child care. One of OCR’s goals

is to increase nondiscriminatory access to and participation in HHS programs. OCR divides

this goal into six objectives, two of which we addressed in our review.

23Last year, we reported that HHS met the targets for four of the five measures for which

fiscal year 1999 performance data existed.

Self-Sufficiency for Poor

and Disadvantaged

Families and Individuals
Page 15 GAO-01-748 HHS' Status of Achieving Key Outcomes

number of refugee cash assistance cases closed because the recipient

became employed, and the number of 90-day job retentions under the

Refugee Assistance program; and (3) the cost-effectiveness ratio of the

process to collect medical and financial support under the Child Support

Enforcement Program. Other measures, while showing recent

improvement, may not meet their targets in the future, including the

proportion of states that meet the TANF two-parent work participation

rate of 90 percent and the number of children served by Child Care and

Development Fund subsidies. In commenting on a draft of this report,

ACF suggested that we favored a downward revision of the above targets.

This was not the case. We recognize that ACF officials have encouraged

programs, such as TANF, to intentionally set ambitious targets for some

goals. Our comments were only meant to alert the Congress to the fact

that certain goals may not be achieved in the future, information that ACF

should have provided to assist congressional decisionmaking. For the

examples cited, GAO relied on the multi-year data presented in ACF’s

fiscal year 2002 performance plan, not on a single year’s performance as

suggested by ACF.

Few ACF strategies for achieving this outcome (1) were directly linked to

specific performance that fell below fiscal year 2000 or 1999 target levels

or (2) were aimed at overcoming ACF management challenges identified

by us or the HHS OIG. Because it administers most of its programs in

conjunction with states and/or other entities, ACF involves its partners in

establishment of performance measures to help ensure their achievement.

For example, other ACF strategies include providing technical assistance,

disseminating the results of program evaluations and other research, and

using rewards and penalties to improve performance. Finally, the fiscal

year 2002 plan indicates that ACF will continue its ongoing evaluation of

various aspects of welfare reform; in particular, ACF plans to evaluate

performance measures related to increasing parental responsibility and

increasing affordable child-care.

ACF’s fiscal year 2002 plan offers no concrete strategy to overcome the

time lag in receiving and validating performance data from program

partners, and it generally does not report on the results of data validation

efforts. ACF’s report acknowledges that such time lags make it difficult to

provide a comprehensive summary of fiscal year 2000 performance until

later in fiscal year 2001.24 ACF indicated it would develop a plan with HHS

 24ACF expects that fiscal year 2000 data will be available for the remaining measures with

target levels between April 2001 and December 2001.
Page 16 GAO-01-748 HHS' Status of Achieving Key Outcomes

and the Office of Management and Budget in fiscal year 2001 for reducing

the delay in the availability of state administrative data, where appropriate.

Until this plan is developed and implemented, however, obtaining timely

data for measures pertaining to helping individuals and families become

self-sufficient will continue to impede assessments of ACF’s performance.

In commenting on a draft of this report, ACF cited grant-reporting

timeframes as a constraint in the timely availability of performance data.

The fact remains, however, that ACF offered no concrete strategy to

overcome the reporting time lags. By indicating that it will work with the

Office of Management and Budget to reduce delays in the availability of

administrative data, ACF underscores the need for more timely

information. We do point out in our conclusions, however, that the issue of

data lags may become less critical as trends emerge from data over longer

time periods.

ACF broadly discusses its human capital and information technology

strategies in its fiscal year 2000 report and 2002 plan. ACF reported that it

did not achieve an increase in the manager-to-staff ratio—its one human

capital performance measure in fiscal year 2000—because of limits on

hiring new staff and on reducing the number of managers already on

board. However, ACF did meet its one performance measure related to

information technology in fiscal year 2000 by replacing an outmoded

“audit resolution tracking process” with an updated, integrated system.

The fiscal year 2002 plan says little about how ACF intends to use human

capital and information technologies to achieve this key outcome. In

commenting on a draft of this report, ACF noted the use of human capital

strategies such as training employees in marketing, negotiating, and

consulting; using and improving automated technology, databases, and

electronic communications; and implementing team-based work

procedures. In the report, however, ACF does not tie such strategies to

specific TANF-related measures with targets that might be set too high.

Nor does it indicate how these strategies will help overcome problems,

such as the 26 percent shortfall found in fiscal year 1999 in states that

meet the TANF two parent families work participation rate. Similarly, we

believe that ACF’s reference to its information technology investments

presents a broad discussion of the role of information technology.

We noted in January 2001 that sweeping changes brought about by welfare

reform make better information systems and data collection necessary to

improve program management and to help HHS measure its state partners’
Page 17 GAO-01-748 HHS' Status of Achieving Key Outcomes

performance in this area.25 In particular, we highlighted the importance of

addressing the need for states to have access to information across states

on individuals’ receipt of welfare to enforce the 5-year TANF time limit. 26

Because adequate automated systems are critical to the success of welfare

reform, we recommended that HHS work with other federal agencies,

including the Departments of Agriculture and Labor, to address issues

surrounding state automated data systems. ACF reported that it continues

to work on correcting performance information and strengthening

partnerships with states and grantees and that it gives high priority to

creating mature data collection strategies. ACF also noted that it is

working with other HHS components to assess unmet data needs and is

committed to increasing its investment in data collection and information

systems. The fiscal year 2000 report does not, however, offer targeted

strategies for improving states’ automated systems, including the capacity

to support enforcement of the 5-year TANF time limit. In commenting on a

draft of this report, ACF pointed out that it (1) reported to Congress in

1997 that additional program authority and resources would be required to

implement a tracking system to enforce TANF time limits; (2) developed a

system that potentially will allow states to track the 5-year limit; and (3) is

working with states to identify their automated system needs. The ACF

report, however, did not contain adequate information on these strategies

that would allow us to comment on the extent to which they address our

past concerns.

The performance reports and plans of HHS components indicate that they

have made mixed progress toward achieving the 15 infectious disease

prevention goals associated with this outcome and, in some cases, that

data to measure progress are unavailable.27 The goals, many of which have

multiple targets, include reductions in HIV, AIDS, other sexually

transmitted diseases, and vaccine-preventable diseases. The five HHS

components responsible for implementing infectious disease prevention

goals are the Centers for Disease Control and Prevention (CDC), HCFA,

 25Major Management Challenges and Program Risks: Department of Health and Human

Services (GAO-01-247, Jan. 2001).

26Welfare Reform: Improving State Automated Systems Requires Coordinated Federal

Effort (GAO/HEHS-00-48, April 27, 2000).

27HHS has numerous goals related to the prevention of infectious diseases. We focused on

15 goals that most directly related to this outcome.

Prevention of Infectious

Diseases, Including

Vaccine-Preventable

Diseases
Page 18 GAO-01-748 HHS' Status of Achieving Key Outcomes

the Health Resources and Services Administration (HRSA), the Indian

Health Service (IHS), and the National Institutes of Health (NIH).

Three of these agencies have goals to reduce vaccine-preventable diseases.

Provisional data indicate that, for most targeted diseases, CDC met its goal

of achieving a 90-percent vaccination rate for 2-year-olds. It provided a

reasonable explanation of why the target for the diphtheria, tetanus, and

pertussis vaccine was missed by a few percentage points. IHS also came

close to meeting its children’s immunization completion rate. HCFA’s goal

to increase the rate of fully immunized Medicaid 2-year-olds is statespecific, and measurement methods are still being developed. CDC, HCFA,

and IHS generally did not yet have data to assess their progress in

increasing pneumococcal pneumonia and influenza vaccination rates

among the elderly, but interim progress data were cited.

A data lag impedes the measurement of progress toward reducing the

incidence of HIV and AIDS. Trend data indicate that CDC and HRSA are

making progress in reducing perinatal transmission of HIV. Relying on

process descriptions, NIH reports progress toward achieving its goal of

developing an AIDS vaccine by 2007. CDC reported mixed progress toward

its goals of reducing sexually transmitted diseases. In general, fiscal year

2000 data were not available at the time performance reports were

published, but fiscal year 1999 data indicated in different target

populations more progress toward reducing some sexually-transmitted

diseases (congenital syphilis) than others (chlamydia).

Data lags are common for many prevention goals, and it may be unrealistic

to expect HHS to include complete data at the same time it issues its

annual performance report and plan. As HHS continues to report its

results, we will in turn receive more accumulated trend data to portray its

progress. Data verification and validation remain important issues. The

HHS agencies with infectious disease prevention goals tend to provide

general information on the credibility of their performance measures and

of their methodological approaches. For example, HRSA notes how the

electronic submission of data, starting in fiscal year 2000, will address the

reliability and validity concerns we raised previously. All of these agencies

discuss measurement in the context of specific goals, but they do not

always discuss why particular goals may be poorly measured. However,

CDC’s report broadly discusses the measurement issues relevant to

particular prevention goals, such as an account of HIV surveillance efforts.

Similarly, HCFA describes the surveys it uses for assessing vaccination

rates, including their limitations, and IHS explains the criteria it used to

select its prevention indicators.
Page 19 GAO-01-748 HHS' Status of Achieving Key Outcomes

While the components’ strategies for achieving some goals are clear and

reasonable, they do not always include information about how they plan to

attain unmet goals, and some strategies are not directly tied to goal

attainment. With respect to specific goals or groups of goals, CDC often

includes an informative discussion of its performance strategies. For

example, it summarizes how it plans to eradicate syphilis in the United

States. Furthermore, CDC states some of its goals in terms of the strategy

to attain them, such as using “screening” and “treatment” in the goal

descriptions for sexually transmitted diseases. HCFA includes a detailed

discussion of strategies to foster higher immunization rates among seniors,

including sponsoring outreach projects in health care venues and

implementing routine procedures for providing certain immunizations

without direct physician involvement. Its discussion of the goal of

increasing the percentage of 2-year olds who are fully immunized focuses

primarily on outreach and increasing enrollment as ways to effect the

increases.

The IHS report explains why it did not achieve certain goals but does not

always articulate strategies for overcoming problems that impede

progress. IHS noted, for example, that complex immunization schedules

and incomplete tracking due to multiple sources of health care were a

problem in meeting its goals. IHS’s report does discuss strategies for

meeting its goals for childhood immunizations, but it discusses adult

vaccination levels chiefly in terms of baseline and target rates, not in terms

of vaccinating more people. Rather than identifying ways of vaccinating

more people, however, it discusses establishing the appropriate baseline

and adjusting the targets. Similarly, when CDC does not meet a goal, it

does not always discuss specific strategies for attaining that goal. NIH’s

strategies also are general rather than goal specific. Thus, its report

highlights a number of broad strategies related to its overall mission, such

as providing scientific leadership, facilitating the development of healthrelated products, and collaborating and coordinating with others.

When the issues of human capital, information technology, the

contributions of others, and program evaluations were included in the

GPRA reports and plans of HHS components, their importance in helping

to achieve goals was only discussed in general terms. Thus, while both

HCFA and HRSA discuss human resources, they do not talk about them in

the context of particular infectious disease prevention goals. Furthermore,

IHS simply notes that human resource development is an essential

component of its performance planning and management and provides

some details about its activities in this area. Similarly, CDC, HCFA, and

HRSA acknowledge generally the importance of information technology as
Page 20 GAO-01-748 HHS' Status of Achieving Key Outcomes

it relates to their missions and goals. In contrast, IHS has specific

measures addressing the development of improved automated data

capabilities that are designed, in part, to improve performance

measurement and GPRA compliance. While HHS components discuss the

contributions of others by referring to “partnerships and coordination with

other organizations,” IHS specifically notes its efforts to address HIV and

vaccine-preventable infectious diseases through an agreement with CDC.

Finally, regarding the use of program evaluations prepared by each

component or others, the discussions usually are not related to specific

infectious disease prevention goals.

SAMHSA’s performance plan and report indicates that it has made some

progress in achieving this outcome. While it continues to have problems

collecting data for about half of its 80 goals, SAMHSA reported that it met

or exceeded its target for nearly 90 percent of the goals for which it had

data. Delays in reporting performance data were attributed to time lags in

data collection, analysis, and reporting by states and the relatively large

number of targets being measured. SAMHSA plans to have final data for

most performance goals later in 2001.

SAMHSA reported that it met many of the substance abuse and prevention

treatment goals for which data were available. For example, SAMHSA

indicated that it exceeded its target of increasing the number of states to

19 that voluntarily report critical outcome performance measures in

Substance Abuse Prevention and Treatment Block Grant applications, as

24 states voluntarily reported at least partial outcome data. It also

indicated that the number of states that incorporate needs assessment

data increased from 26 states in fiscal year 1999 to 34 states in fiscal year

2000, meeting its fiscal year 2000 target. The incorporation of needs

assessment data is critical for prevention planning, resource allocation,

and selection of appropriate prevention strategies. Finally, SAMHSA

reported that the percentage of states that use funds in each of six

prevention strategy areas, which track progress in addressing the

substance abuse prevention needs of populations, met the fiscal year 2000

target of 90 percent. SAMHSA gave a credible explanation for not meeting

another goal related to the Substance Abuse Prevention and Treatment

Block Grant program—continuing dialogue over the appropriateness of

the targets—and indicated that the type and form of performance

reporting will be decided by fiscal year 2002.

SAMHSA’s performance report and plan indicate that it was far less

successful in reporting important state-level performance data on the

Use of Illegal Drugs
Page 21 GAO-01-748 HHS' Status of Achieving Key Outcomes

effectiveness of substance abuse treatment services for fiscal year 2000.

States were to voluntarily report the percentage of substance abuse

treatment clients who had reduced substance abuse and criminal

involvement, had a permanent place to live, and were employed. However,

fewer states than SAMHSA anticipated reported this information, and

some states used different data collection methods to report information,

raising questions about the reliability of the data. Consequently, SAMHSA

dropped these goals and will develop new ones jointly with the states.

Although development of goals will continue, client-related outcome data

cannot be collected until SAMHSA complies with statutory requirements

under the Children’s Health Act of 2000. The law requires SAMHSA to

develop a plan, due by fiscal year 2002, that gives states flexibility in

reporting outcome data based on a common set of performance goals,

while preserving accountability. SAMHSA anticipates that the new goals

will be approved in fiscal year 2003 and that collection and outcome

measurement reporting will begin in fiscal year 2004.

SAMHSA’s performance report does not provide assurance that all

information contained in it is credible. Several performance measurements

lack discussions of the specific procedures used to verify and validate data

in the systems. For example, the description of data sources and validity of

data supporting the measurement on treating adult marijuana users notes

that the performance data were collected with standard instruments

administered to clients by trained interviewers. Another measurement to

develop and apply statistical models associated with client retention and

outcomes under the Wrap-Around Services program asserts that project

records documenting progress of statistical work are expected to be

reliable. However, neither performance measurement discusses how and

by whom the validity assessments are performed, the strengths and

weaknesses of the data, or the external factors that may affect data

reliability.

In addition, SAMHSA did not report strategies for achieving several

planned goals. For example, it cites measurable targets and time frames

for achieving goals related to reducing the size of the drug treatment gap;

increasing employment and education, and lowering illegal activity for

graduates of treatment programs; and reversing the trend in marijuana use

among youth. However, it omits details about how its prevention and

treatment programs will attain these goals. Furthermore, SAMHSA

describes the role of human capital management and information

technology strategies but does not tie these activities to specific goals. For

example, SAMHSA expects to complete a workforce plan in August 2001

that includes recommendations on ensuring that staffing levels are
Page 22 GAO-01-748 HHS' Status of Achieving Key Outcomes

sufficient to manage program growth, maintain a well-trained workforce,

and provide a high-quality work life. It also plans to develop benchmarks

for best practices in government and nongovernment human capital

management processes and incorporate them into its workforce plan. The

performance plan also notes that SAMHSA has reorganized numerous

functions and programs to streamline operations and conserve program

management and other resources. SAMSHA also has invested in

information technologies to enhance professional resources. Several

communications and data management system improvements recently

completed or under way include the redesign or conversion of SAMHSA’s

Web site, intranet, and grants management system.

Finally, SAMHSA’s report describes coordination with its partners and

stakeholders, including the states, CDC, the Department of Veterans

Affairs, NIH’s National Institute on Drug Abuse, and the Office of National

Drug Control Policy, to determine priorities and help formulate certain

goals.

FDA’s performance report and plan indicate that it has made significant

progress toward achieving this outcome. While performance data were

unavailable for nearly 60 percent of its fiscal year 1999 goals, FDA

reported results for 17 out of 19 goals in its fiscal year 2000 performance

report. FDA reported that it met or exceeded 14 goals, did not meet 3

goals, and lacked outcome data for 2 goals.

FDA reported making progress in meeting its goals for both the Human

Drug and the Medical Device programs. For the Human Drug program,

FDA noted that it had met several goals by streamlining its adverse drug

event reporting system, providing the public with improved labeling

information on over-the-counter drugs, and initiating collaborations with

the scientific community on assessing product quality and manufacturing

processes through the Product Quality Research Institute. This research

institute is a first-ever partnership between the Human Drug program and

industry scientists to conduct research in various aspects of the

pharmaceutical development process. The objective is to streamline the

drug development and approval process for industry and FDA while

ensuring high product quality. The Human Drug program reported

initiating seven working groups to address key drug regulatory issues,

which surpassed its goal of beginning research on at least three projects

identified by the Product Quality Research Institute. FDA included

updated fiscal year 1999 data in its performance report, which showed that

the Human Drug program exceeded most of its goals with respect to

reviewing drug applications. Final performance data are not yet available

Access to Safe and

Effective Medical Drugs

and Devices
Page 23 GAO-01-748 HHS' Status of Achieving Key Outcomes

for multiple targets under a goal on reviewing standard new drug

submissions and generic drug applications. FDA expects to have these

data by early 2002. According to FDA, late reporting of outcomes generally

occurs because of time lags for reporting final data for premarket review

goals.

Regarding the Medical Device program, FDA reported that it exceeded

targets for several goals on premarket device approval applications and

surpassed a target on inspecting domestic medical device manufacturing

establishments (at least 90 percent conformance with FDA requirements).

Equally important was that at least 97 percent of mammography facilities

met inspection standards, a target met in fiscal year 2000 and the previous

fiscal year. The high percentage of facilities meeting standards is expected

to enhance the quality of images, leading to more accurate interpretation

by physicians and, ultimately, improved early detection of breast cancer.

FDA’s report does not always instill confidence that its performance

information is credible. For example, for the Human Drug program, it did

not discuss the steps taken to verify and validate procedures for tracking

the number of pediatric drug studies FDA requested under the Food and

Drug Administration Modernization Act of 1997 (FDAMA) or inspections

of drug establishments, including medical gas re-packers. Similarly, the

Medical Device program did not discuss procedures used to verify and

validate data in its medical device adverse event reporting system, which,

as we reported in our last assessment, has experienced serious data

management challenges related to the quality of reporting, processing, and

reviewing reports. The report also did not describe procedures that were

used to ensure data integrity for other databases, such as the Center for

Devices and Radiological Health Field Data systems and the Field

Accomplishments Tracking System.

FDA’s strategies for achieving this outcome are clear and reasonable.

When FDA did not meet a goal, it generally explained why and discussed

strategies for improving future performance, including human capital

strategies. For example, the Medical Device program did not achieve its

goal of inspecting 22 percent of manufacturers of class II and III domestic

medical devices in fiscal year 2000. According to FDA, the growth of the

device industry, the complexity of devices, and dwindling resources have

resulted in lower inspection coverage and higher violation rates. Initially

FDA addressed this shortfall by focusing enforcement actions on high-risk

devices. However, FDA now believes that resource limitations have put

inspection coverage below critical mass, so it is requesting an

appropriated funding increase for domestic inspections in fiscal year 2002.
Page 24 GAO-01-748 HHS' Status of Achieving Key Outcomes

Inspection of foreign medical device manufacturers is also reportedly very

low, and FDA is proposing a strategy to address the problem. While FDA

managed to meet its goal of inspecting 9 percent of foreign manufacturers

of class II and III medical devices, it expects the foreign workload to

increase and inspection coverage to decline. The Mutual Recognition

Agreement is one of the major initiatives introduced to assist in reducing

FDA’s workload. However, FDA says it cannot maintain foreign

inspections or successfully implement the agreement with current

resources because it expects European Union assessment bodies will

require extensive training. As a result, for fiscal year 2002, FDA is

requesting budget authority for foreign inspections to cover the cost of

training associated with the Mutual Recognition Agreeement.

While FDA did not explain why the Medical Device program fell

significantly short of its target on developing the Medical Device

Surveillance Network system, it did propose a strategy to achieve its

target. FDA plans to use fiscal year 2001 funding to increase user facility

participation to target levels and extend the program to other types of

facilities, such as ambulatory care surgical centers.

For the selected key outcomes, this section describes major improvements

or remaining weaknesses in HHS’ (1) fiscal year 2000 performance reports

compared with its fiscal year 1999 reports, and (2) fiscal year 2002

performance plans compared with its fiscal year 2001 plans. It also

discusses the degree to which HHS’ fiscal year 2000 reports and fiscal year

2002 plans address concerns and recommendations by the Congress, us,

the HHS OIG, and others.

For fiscal years 2001 and 2002, HCFA issued a single document integrating

the appropriate performance report with the current year’s revised

performance plan and the next year’s plan. With respect to the fraud

outcome, neither HCFA’s fiscal year 1999 report nor its fiscal year 2000

annual performance report provided a comprehensive list of the relevant

year’s performance goals, targets, and actual performance, making it

difficult to fully track goals and measure progress. For example, earlier we

Comparison of HHS’

Fiscal Year 2000

Performance Reports

and Fiscal Year 2002

Performance Plans

With The Prior Year’s

Reports and Plans for

Selected Key

Outcomes

Fraud, Waste, and Error in

Medicare and Medicaid
Page 25 GAO-01-748 HHS' Status of Achieving Key Outcomes

discussed the difficulty in tracking HCFA’s goal on medical review. HCFA

also acknowledged in both reports that timeliness of data is a challenge in

its analysis of performance data. For example, data are incomplete for the

goal of reducing the percentage of improper payments made under the

Medicare fee-for-service program in the fiscal year 1999 report and, as

mentioned earlier, for the goal of reducing the improper payment rate for

home health services in the fiscal year 2000 report.

HCFA has changed some of its performance goals and measures each year,

which makes it difficult to track its progress in reducing fraud, waste, and

error in Medicare and Medicaid. In both the fiscal year 2001 and 2002

annual performance plans, goals are dropped, revised, subsumed into

other goals, and added. Two key weaknesses we identified in prior-year

HCFA performance plans are that goals were not consistently measurable

and that the strategies and resources needed to achieve these goals were

not adequately addressed. These problems continue. In some instances,

HCFA is still developing the baselines and appropriate measures. In

others, HCFA states generally that the accomplishment of a goal is the

target and does not explain in sufficient detail what its strategies are to

ensure goal accomplishment.

An improvement of the fiscal year 2002 plan over the prior plan is that the

goal narratives, which are included, are generally more concise and in

many cases include illustrative charts that indicate targets and previous

performance. Both performance plans reflect HCFA’s efforts to strengthen

coordination with other organizations and to enhance data verification and

validations. In some areas of performance, however, sufficient detail is not

consistently provided on coordination strategies—a problem we also

noted with the prior year’s performance plan. Regarding data issues,

HCFA cites and describes data sources for each goal and includes some of

the particular data concerns or limitations.

HCFA’s fiscal year 1999 and fiscal year 2000 annual performance reports

clearly and consistently identify the results of its goals, targets, and actual

performance with respect to nursing home services. The introduction of

graphics in the fiscal year 2000 report was a positive step. While HCFA’s

reports have a general discussion of data sources, they do not address

known concerns about the validity of data used to measure progress.

HCFA’s current plan addressed a concern we raised about the prior plan—

the lack of measurable targets for two of the three goals. Thus, it

established a baseline and targets for one goal and a fiscal year 2001 target

High-Quality Nursing

Home Services
Page 26 GAO-01-748 HHS' Status of Achieving Key Outcomes

for the other goal. However, as discussed in our June 30, 2000 report and

emphasized earlier in this report, we question whether the goals in HCFA’s

2001 performance plan sufficiently address its overall performance in

implementing about 30 nursing home quality-of-care initiatives that HCFA

has had under way since 1998 under the Nursing Home Oversight

Improvement Program. We noted in last year’s report that HCFA’s 2001

performance plan did not provide information on measuring its

performance on the 30 initiatives. HCFA’s fiscal year 2002 performance

plan is likewise silent on measuring such performance.28

There is little difference between ACF’s fiscal year 1999 and fiscal year

2000 performance reports. Both reports make effective use of tables to list

performance goals, measures, and fiscal year target levels. Changes were

made to the measures themselves, which we characterize below.

While there is little substantive difference between ACF’s fiscal year 2001

and fiscal year 2002 performance plans in terms of strategies, the most

recent plan added an executive summary, which provides a helpful

overview of the document. Moreover, in some instances, the strategies in

the 2002 plan for improving performance and program coordination are

more fully developed. For example, the 2002 plan contains more projects

for helping states produce desired TANF outcomes and strategies to better

utilize human capital and information technology. The plan also discusses

technical assistance to, and partnerships between, ACF’s Housing for the

Developmentally Disabled program and the state Developmental

Disabilities Councils. A strength of the fiscal year 2000 performance report

is the inclusion of an updated performance data chart that was not

available for the fiscal year 1999 performance report. In commenting on a

draft of this report, ACF cited the inclusion of workplans that provide

detailed strategies to achieve its targets in the fiscal year 2000

performance report. While not necessarily referred to as a priority

workplan, the fiscal year 1999 performance report lists many of the same

strategies in identical language.

The number and wording of performance measures between the two ACF

plans is similar. However, where target levels in the 2002 plan differed,

they were generally set at higher levels. In many cases, the targets

represented modest increases. Elsewhere, differences represented a

 28GAO/HEHS-00-127R.

Self–Sufficiency of Poor

and Disadvantaged

Families and Individuals
Page 27 GAO-01-748 HHS' Status of Achieving Key Outcomes

significant change over a 1-year period. For example, the Child Care

program’s goal of increasing the number of children served by Child Care

and Development Fund subsidies rose from 2.1 million in fiscal year 2001

to 2.6 million in fiscal year 2002. The HHS Office for Civil Rights’ fiscal

year 2002 performance plan, however, collapsed several objectives and

measures into a single objective with fewer measures. Some of the new

targets established, however, only provide an indirect indication of

compliance and can actually mask the extent to which compliance is, or is

not, achieved. In commenting on a draft of this report, OCR noted that it

would continue to report tabular information that specifically identifies

each of the outputs that make up the new composite measure. We remain

concerned that the tabular information will be too general to directly

assess compliance.

ACF’s fiscal year 2002 plan continues the refocused human capital strategy

it began in prior years. In light of its shrinking workforce and increasing

workload, ACF refocused its human capital measure (manager-to-staff

ratio) in fiscal year 2001 toward the development of a highly skilled,

strongly motivated, and diversified staff. The single measure for this

reorientation is “each ACF staff member participates in at least one

Distance Learning or other training opportunity directly related to

increasing his/her job skills.” However, the extent to which this measure

captures ACF’s progress toward meeting its human capital goals remains

to be determined. The fiscal year 2002 plan contains an information

technology measure related to ACF’s continued implementation of an

electronic grant-making system. The measure is to develop and implement

a system that will allow ACF to capture and validate grant information

submitted by grantees using the Web. The plan does not specify particular

targets, such as a high percentage of applications validated by the system,

reduced time to process an application, or grant awards made earlier in

the year.

ACF’s fiscal year 2002 plan does not fully respond to concerns we raised in

our HHS GPRA review last year or those identified by the HHS OIG. We

reported last year that ACF did not indicate how it planned to address the

data-reporting lag. Although ACF included a somewhat fuller discussion of

this matter in the fiscal year 2002 plan, we continue to believe that more

specific actions and timelines are warranted. In addition, as discussed in

appendix I, ACF makes little mention of how it intends to respond to

several OIG recommendations and suggestions related to child support

enforcement. In commenting on a draft of this report, ACF said that

neither Office of Management and Budget nor HHS guidance directed

them to respond to concerns expressed by the HHS OIG or GAO. However,
Page 28 GAO-01-748 HHS' Status of Achieving Key Outcomes

our discussions with HHS officials responsible for coordinating the

Department’s comments on our report suggest that HHS does take our

analysis of its GPRA reports into account and attempts to correct

shortcomings we have identified.

For each HHS component reviewed with respect to infectious disease

prevention, the fiscal year 1999 and fiscal year 2000 performance reports

are similar. The agencies employed the same general format to summarize

goals, targets, and actual performance, and in referring to an additional

source of information (typically the budget justifications). This summary is

generally accompanied by informative narrative that expands on the goal

and related performance.

For each of the relevant HHS components, the fiscal year 2001 and fiscal

year 2002 performance plans are similar in content and organization.

However, in both plans, the strategies and resources used to achieve goals

were not always adequately addressed. Some components made revisions

to or increased the number of their infectious disease prevention goals,

and each provided a general discussion of plan changes. When goals or

targets were revised, they generally provided rationales for these changes.

None of the changes substantially strengthened or weakened the product.

CDC, however, improved its fiscal year 2002 performance plan by making

extensive revisions that more effectively communicated and linked its

goals, measures, and targets with the strategies for achieving them. CDC

also addressed most of the data quality concerns expressed by us and the

Congress. As noted earlier, HRSA indicated that the electronic submission

of data addresses reliability and validity concerns we had raised

previously. Despite these specific data-quality improvements, the

components do not always discuss why particular goals may be poorly

measured.

SAMHSA’s fiscal year 2000 performance report demonstrates little

progress in overcoming a major weakness we noted in its previous report.

As in last year’s report, it continues to rely on states to validate the

information they reported in block grant applications for their goal related

to the 20 percent Substance Abuse Prevention and Treatment Block Grant

Prevention Set Aside program. While the current report notes that states

must certify the accuracy of block grant data, SAMHSA does not describe

states’ procedures for this or how SAMHSA project officers verify the

states’ certifications. Another continuing limitation is SAMHSA’s failure to

discuss the findings and recommendations of evaluations or how results

Prevention of Infectious

Diseases, Including

Vaccine-Preventable

Diseases

Use of Illegal Drugs
Page 29 GAO-01-748 HHS' Status of Achieving Key Outcomes

were used to assess performance. Both we and the HHS OIG have

recommended that SAMHSA perform such evaluations.

In its fiscal year 2002 plan, SAMHSA continued its practice of highlighting

changes and improvements over its prior-year plan. Thus, SAMHSA has

adopted a more comprehensive approach to performance management by

reporting on performance goals for all significant programs. Two key

performance goals were added to its 2002 plan to increase SAMHSA’s

ability to assess Substance Abuse and Treatment Prevention Block Grant

customer satisfaction. SAMHSA is also working on initiatives to enhance

the performance reporting process. These initiatives include establishing a

requirement for states to report performance data in SAMHSA grant

funding applications, and developing analysis plans for GPRA assessments

to better manage programs and measure their effectiveness. However, the

2002 plan does not discuss SAMHSA’s efforts to verify the quality of the

performance data reported by states—an observation that we made about

the prior-year plan. We did find that when goals were added or modified

for clarity, SAMHSA described the reasons and the results to be achieved

from the change. In addition, when goals were dropped or modified, the

2002 plan stated that either the goal had been completed or revisions had

been made to better focus the goal on outcomes.

FDA’s performance reports have been consistently well organized, clear

and concise. However, several goals in both the fiscal year 1999 and fiscal

year 2000 performance reports lack adequate descriptions of the benefits

to public safety and health attained by FDA’s performance. For example,

both the Human Drugs and the Medical Device programs established goals

of ensuring that inspections of domestic medical drug and device

manufacturing facilities resulted in timely correction of serious

deficiencies in accordance with FDA requirements. However, neither

program in either report elaborated on the expected benefits beyond

reporting attainment of the statistical goal. In contrast, FDA’s description

of the mammography facility performance goal explained that inspections

were expected to enhance the quality of images leading to the more

accurate and timely detection of breast cancer.

In its most recent plan, FDA has continued to improve its presentation.

FDA made strong use of graphics interspersed with narrative to present its

strategies and also included a helpful program overview. It also discussed

its strategies for accomplishing goals and the consequences of not

achieving them—overcoming a weakness we noted in the fiscal year 2001

plan. FDA’s fiscal year 2002 performance plan added new goals and

Access to Safe and

Effective Medical Drugs

and Devices
Page 30 GAO-01-748 HHS' Status of Achieving Key Outcomes

slightly modified or reiterated others. New goals included increased

inspections of medical device studies, which resulted from a heightened

concern about clinical abuses; stepped up foreign inspections and

expanded import coverage of all medical products to improve the safety of

imported products; and enhanced surveillance of FDA-regulated products

to prevent deaths and injuries related to the use of medical products.

However, these new goals did not include baselines or concrete targets

against which to measure progress. As noted earlier, FDA did not always

address concerns we raised last year about the validity of performance

information.

We have identified two governmentwide high-risk areas: strategic human

capital management and information security. Regarding human capital,

HHS does not have departmental performance goals related to this highrisk area. Although it is engaged in workforce planning, HHS only briefly

outlines this effort. Several HHS components, however, have such goals

and measures in their plans, and some cite progress. Similarly, HHS has no

departmental goals related to information security, but HCFA has

established an aggressive program to address problems in this area.

In addition, we identified five other major management challenges facing

HHS. The performance reports and plans of HHS components included

goals and measures directly related to four of these challenges. We found

that HCFA is making some progress in addressing fraud in Medicare and

Medicaid and that, while its goals are very narrow, it continues to make

progress toward improving nursing home quality. With regard to the

outcome of promoting self-sufficiency among the poor, we could not fully

assess ACF’s progress because most goals lacked the necessary fiscal year

2000 performance data. For those goals with data, results were mixed.

Only FDA’s outcome of ensuring prompt access to safe and effective

medical drugs and devices demonstrated significant progress. For the fifth

challenge—ensuring a well-designed and administered Medicare

program—HCFA has a workforce planning goal to reduce the gap between

the current and the targeted levels of skills and is using outside assistance

to develop a comprehensive database documenting its employee positions,

skills, and functions. On its own, HCFA cannot address other aspects of

the human capital challenges we identified. In summary, we found that the

HHS reports discussed making at least some progress for all seven major

management challenges (including the two high-risk areas). Of the seven

major management challenges identified by GAO, HHS’ performance plans

had (1) goals and measures directly related to six of the challenges, and

(2) goals and measures that indirectly related to one of the challenges.

HHS’ Efforts to

Address Its Major

Management

Challenges Identified

by GAO
Page 31 GAO-01-748 HHS' Status of Achieving Key Outcomes

Appendix I provides detailed information on how HHS addressed these

challenges and high-risk areas as identified by us and the Department’s

OIG.

It is difficult to fully assess HHS’ progress in fiscal year 2000 toward

achieving the outcomes we reviewed because lags in reporting

performance data are common for many of its components such as ACF,

CDC, SAMHSA, and FDA. In some cases, the delays are associated with

the need to obtain performance data from states and local organizations.

Some HHS components are working to improve the timeliness of data

submitted by others and, in some instances, have reported trend data to

show that progress is being made. For example, both ACF and CDC

supplied fiscal year 1999 performance data in their current performance

reports—data that were not available until this year. It is likely that ACF’s

and CDC’s fiscal year 2001 performance reports will include fiscal year

2000 performance data that were not available this year. While it may not

always be realistic to expect the availability of complete data at the same

time annual performance reports and plans are issued, trends will become

apparent as the number of performance reports grows with each passing

year.

The six HHS outcomes that were used as the basis for our review were

identified by the Ranking Minority Member of the Senate Committee on

Governmental Affairs as important mission areas and do not reflect the

outcomes for all of HHS’ programs or activities. Given the outcomes

selected by the Committee and the management challenges we examined,

our review focused on about 150 goals discussed in the reports and plans

of 10 components—Administration on Aging, ACF, CDC, FDA, HCFA,

HRSA, IHS, NIH, OCR, and SAMHSA.29 We also reviewed the overall HHS

summary, which highlights the reports of its operating components. As

agreed, our evaluation was generally based on the requirements of GPRA,

the Reports Consolidation Act of 2000, guidance to agencies from the

Office of Management and Budget (Circular A-11, Part 2) for developing

performance plans and reports, and previous reports and evaluations by us

and others. We also relied on our knowledge of HHS’ operations and

programs, our identification of best practices concerning performance

planning and reporting, and our observations on HHS’ other GPRA-related

 29HHS’ 17 operating components and staff offices have over 950 annual performance goals.

Conclusions

Scope and

Methodology
Page 32 GAO-01-748 HHS' Status of Achieving Key Outcomes

efforts. We discussed our review with HHS officials, including the HHS

OIG. We identified the major management challenges confronting HHS,

including the governmentwide high-risk areas of strategic human capital

management and information security, in our January 2001 performance

and accountability series and high-risk update. The HHS OIG identified

major management challenges confronting HHS in a December 2000 letter

to the Congress. We did not independently verify the information

contained in the performance reports and plans, although we did draw

from our other work in assessing the validity, reliability, and timeliness of

HHS’ performance data. We conducted our review from April 2001 through

June 2001 in accordance with generally accepted government auditing

standards.

In commenting on a draft of this report, HHS said it found our report “fair,

thorough, and comprehensive.” We have addressed specific comments that

HHS suggested would increase the report’s accuracy as well as other

technical comments in the corresponding sections of the report. HHS’

comments are included as appendix II.

As arranged with your office, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after the

date of this letter. At that time, we will send copies to appropriate

congressional committees; the Secretary of Health and Human Services;

and the Director, Office of Management and Budget. Copies will also be

made available on request.

If you or your staff have any questions, please call me at (312) 220-7600.

Key contributors to this report were John Brennan, Bonnie Brown, Kim

Brooks, Brett Fallavollita, Darryl Joyce, Don Keller, Clarita Mrena, Walter

Ochinko, and William Thompson.

Sincerely yours,

Leslie G. Aronovitz

Director, Health Care—Program

 Administration and Integrity Issues

Agency Comments
Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges

Page 33 GAO-01-748 HHS' Status of Achieving Key Outcomes

The following table identifies the major management challenges

confronting HHS, which include the governmentwide high-risk areas of

strategic human capital management and information security. The first

column lists the challenges that we and/or the HHS OIG have identified.

The second column discusses what progress, as identified in its fiscal year

2000 performance reports, HHS components have made in resolving the

challenges. The third column discusses the extent to which the fiscal year

2002 performance plans of the HHS components include performance

goals and measures to address the challenges that we and the HHS OIG

identified. We found that the performance reports of HHS’ components

discussed the progress in resolving some challenges, but did not discuss

progress in resolving the following: abuses in Medicaid payment systems;

Medicare equipment and supplies; Medicare payments for mental health

services; Medicare prescription drugs; oversight of prospective payment

systems; and child support enforcement. Of HHS’ 19 major management

challenges, its performance plans had (1) goals and measures that were

directly related to 10 of the challenges; (2) goals and measures that were

indirectly applicable to 2 of the challenges; and (3) no goals, measures, or

strategies to address 7 of the challenges.

Table 1: Major Management Challenges

Major management challenge

Progress in resolving major

management challenge as discussed in

the fiscal year 2000 performance report

Applicable goals and measures in the

fiscal year 2002 performance plan

GAO-designated governmentwide high-risk areas

Strategic Human Capital Management:

GAO has identified shortcomings at

multiple agencies involving key elements of

modern human capital management,

including strategic human capital planning

and organizational alignment; leadership

continuity and succession planning;

acquiring and developing staffs whose

size, skills, and deployment meet agency

needs; and creating results-oriented

organizational cultures.

HHS reports that it is facing a “human

capital crisis.” Within the next 5 years,

about 27 percent of its current workforce

will be eligible to retire. Although HHS says

that it is engaged in workforce planning, it

only briefly outlines this effort. It asserts

that it will develop a plan to meet future

departmental workforce requirements

through a comparison of current employee

skills/experience and projected needs.

There were some examples of progress.

CDC met its fiscal year 2000 goal of

decreasing the time to refer candidates for

vacancies by 25 percent, and HCFA is

making progress in its workforce planning

effort.

HHS does not have departmental

performance goals related to this

challenge. However, some of its

components have such goals and

measures in their fiscal year 2002 plans. In

general, HHS could do a better job

demonstrating how it is using human

capital strategies to improve performance.

Selected examples follow:

Administration on Aging (AoA): AoA has a

developmental goal to base a high

percentage of its hires on a formal AoA

workforce plan. HHS characterized AoA’s

workforce planning effort as “significant,”

but AoA’s fiscal year 2002 performance

plan provides no further details.

ACF: As part of an overall strategic goal to

build a results-oriented organization, ACF

established an objective of developing and

retaining a highly skilled, strongly

Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges
Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges

Page 34 GAO-01-748 HHS' Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge as discussed in

the fiscal year 2000 performance report

Applicable goals and measures in the

fiscal year 2002 performance plan

motivated staff. ACF reported that it will

develop and begin implementing an action

plan to address any identified gaps in the

staffing needed to complete core

workloads or in employees’ competencies

based on workforce planning started in

fiscal year 2001.

CDC: CDC regards the recruitment and

retention of highly-qualified staff as a top

priority. One of its program support goals is

to decrease the time it takes to refer

candidates for vacancies and the time

entailed in classifying positions and to

maintain this referral reduction.

HCFA: See discussion below under first

GAO management challenge.

SAMHSA: SAMHSA intends to complete a

workforce plan in August 2001 that

includes recommendations on ensuring

that staffing levels are sufficient to manage

program growth, maintain a well-trained

workforce, and provide a high-quality work

life. SAMHSA also plans to benchmark

government and nongovernment best

practice human capital management

processes and incorporate them in its

workforce plan.

Information Security: Our January 2001

high-risk update noted that the agencies’

and governmentwide efforts to strengthen

information security have gained

momentum and expanded. Nevertheless,

recent audits continue to show federal

computer systems are riddled with

weaknesses that make them highly

vulnerable to computer-based attacks and

place a broad range of critical operations

and assets at risk of fraud, misuse, and

disruption.

HHS reports on progress made by HCFA in

addressing information security

weaknesses. HCFA established an

aggressive program involving updated

information security policies and increased

oversight with specific target expectations

and milestone dates for each of its

information security performance goals.

For example, HCFA set out to correct the

two outstanding material weaknesses from

fiscal year 1997. HCFA corrected only one

of the two material weaknesses by the

targeted date—fiscal year 2000.

HHS does not have departmental

performance goals related to this

challenge. However, HCFA has such goals

and measures in its fiscal year 2002 plan.

HCFA established a performance goal to

improve its information systems security

policies and practices enterprisewide.

Specific tasks under this goal included:

• eliminating all material weaknesses

• increasing the percentage of

employees receiving security training

• increasing the proportion of Medicare

contractor sites receiving security

reviews

• evaluating Medicare contractors’

security profiles against a baseline

• applying a baseline to HCFA’s

business partners

These tasks are scheduled for incremental
Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges

Page 35 GAO-01-748 HHS' Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge as discussed in

the fiscal year 2000 performance report

Applicable goals and measures in the

fiscal year 2002 performance plan

completion. For example, the elimination of

all material weaknesses is scheduled to be

achieved in fiscal year 2002 but HCFA

does not expect to complete the evaluation

process for all Medicare contractors for 3 to

4 years.

GAO-designated major management challenges

Provide current and future generations with

a well-designed and administered

Medicare program: GAO has identified a

number of human capital challenges facing

HCFA. First, despite Medicare’s size and

complexity, there is no official whose sole

responsibility is to run that program. In

addition to Medicare, HCFA’s Administrator

and top-level management have oversight

and administrative responsibilities for other

major health-related programs and

initiatives such as Medicaid, the State

Children’s Health Insurance Program, and

nursing homes. Second, frequent changes

in leadership have inhibited the

implementation of long-term Medicare

initiatives and the pursuit of a consistent

management strategy. Third, HCFA’s staff

lack the experience and training to deal

with some of the complex new

responsibilities mandated by the Balanced

Budget Act of 1997. Finally, with one-third

of its staff eligible to retire within the next 5

years, HCFA faces the loss of valuable

institutional knowledge.

HCFA has embarked on the development

of a workforce planning system to help

managers make strategic plans for staffing

and human resources development. To

assess its needs systematically, HCFA’s

workforce planning process has four

phases to identify current and future

competencies needed to carry out its

mission and analyze any gaps. HCFA

initiated this process using outside

assistance to develop a comprehensive

database documenting its employee

positions, skills, and functions.

In its 2002 performance plan, HCFA

established a new performance goal

intended to reduce the gap between its

current and targeted levels of skills and

knowledge. HCFA anticipates having data

in fiscal year 2001 to formally measure skill

and knowledge gaps, which will then be

prioritized on the basis of their breadth,

depth, and criticality for accomplishing

HCFA strategic goals. The gaps will be

closed by strategic activities to recruit,

develop, and redeploy employees. On its

own, HCFA cannot address several of the

human capital challenges we identified,

such as the scope of the tasks facing

HCFA leadership or frequent leadership

changes. Elements of recent Medicare

reform proposals and alternative models

drawn from other federal agencies suggest

ways to address focus, leadership, and

capacity issues. Options proposed include

creating an entity that would administer

Medicare without any non-Medicare

responsibilities; establishing tenure for the

program’s administrator that, at a minimum,

would overlap presidential terms; and

granting the entity administering Medicare

greater operational flexibility.

Improve oversight of nursing homes so that

residents receive quality care

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

Enhance the economic independence and

well-being of children and families

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

Ensure the safety and efficacy of medical

products

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

GAO- and HHS OIG-designated major management challenges

Better safeguard the integrity of the

Medicare program

(Oversight of prospective payment system

implementation: Both GAO and the HHS

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

HCFA reports that it has successfully

implemented several new PPSs. However,

This management challenge is very similar

to an HHS outcome that is discussed in the

letter portion of this report.

HCFA’s fiscal year 2002 plan does not

contain goals and measures to address
Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges

Page 36 GAO-01-748 HHS' Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge as discussed in

the fiscal year 2000 performance report

Applicable goals and measures in the

fiscal year 2002 performance plan

OIG have identified significant risk of

payment exploitation in the new

prospective payment systems (PPS)

mandated by the Balanced Budget Act of

1997. Though PPSs are intended to

encourage the efficient provision of

services, they also give providers a new

opportunity to boost net revenues

inappropriately by skimping on services

and compromising the patient’s quality of

care.)

(Medicare managed care: Both GAO and

the HHS OIG have reported that

Medicare’s managed care component

raises program integrity challenges

involving excessive payments for

enrollees.)

HCFA does not address progress in

responding to the OIG’s and GAO’s

concerns that these payment systems are

subject to exploitation.

HCFA met its fiscal year 2000 goal to begin

making risk-adjusted payments to

managed care plans—a goal that was

mandated by the Balanced Budget Act of

1997. Risk-adjusted payments should help

to reduce overpayments to managed care

plans that attract healthier than average

beneficiaries.

oversight of the PPSs that have been

implemented even though HCFA plans to

award a contract for such oversight later

this year.

HCFA has a continuing goal to complete

the implementation of its risk-adjustment

method. This phased implementation

began in January 2000 and is not

scheduled to be completed until after 2004.

HHS OIG-designated major management challenges

Medicare payment error rate This OIG management challenge is

discussed under the “fraud, waste, and

error” outcome in the letter portion of this

report.

This OIG management challenge is

discussed under the “fraud, waste, and

error” outcome in the letter portion of this

report.

Medicare contractors This OIG management challenge is

discussed under the “fraud, waste, and

error” outcome in the letter portion of this

report.

This OIG management challenge is

discussed under the “fraud, waste, and

error” outcome in the letter portion of this

report.

Home health This OIG management challenge is

discussed under the “fraud, waste, and

error” outcome in the letter portion of this

report.

This OIG management challenge is

discussed under the “fraud, waste, and

error” outcome in the letter portion of this

report.

Abuses in Medicaid Payment Systems:

The OIG reports that several states abused

the Medicaid payment system by making

enhanced payments to city- and countyowned providers or hospitals that were not

based on the actual costs of providing

services to Medicaid beneficiaries.

Although the practice was not illegal, states

enhanced payments to increase the

amount of the federal match for Medicaid

expenditures. In addition, the enhanced

payments were not retained by the facilities

and used to provide services to Medicaid

beneficiaries served by them. Instead,

billions of federal Medicaid dollars were

returned by the providers/hospitals to the

states through intergovernmental transfers.

HCFA’s performance report does not

discuss progress made in resolving this

issue.

Changes in regulations have been

implemented related to limiting the amount

of federal Medicaid dollars available to

states as enhanced payments. However,

the plan does not include a discussion of

these matters.

No goals exist in HCFA’s performance plan

related to this issue.

Medicare equipment and supplies: The

HHS OIG believes that Medicare

HCFA’s performance report does not

discuss progress made in resolving this

HCFA’s performance plan has no goals

related to this management challenge.
Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges

Page 37 GAO-01-748 HHS' Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge as discussed in

the fiscal year 2000 performance report

Applicable goals and measures in the

fiscal year 2002 performance plan

excessively reimburses for some items and

that programmatic reforms are warranted.

It also believes that structural reforms,

such as improving billing practices for

orthotics, revising coding guidelines for

therapeutic footwear, and charging an

application fee for suppliers should be

made. It also recommends improved

medical review in such areas as oxygen

therapy.

challenge.

Medicare payment for mental health

services: Medicare payments for mental

health services in a variety of settings—

including payments to community mental

health centers for partial hospitalization

services—have been an ongoing concern

for the HHS OIG. Although partial

hospitalization consists of an intensive

program of outpatient services for acutely

ill beneficiaries in order to prevent inpatient

hospitalization, OIG and HCFA reviews

have found that Medicare was paying for

services to beneficiaries with no history of

mental illness and for beneficiaries who

suffered from conditions that would

preclude them from benefiting from the

program.

HCFA’s performance report does not

discuss progress in resolving this

challenge.

HCFA’s fiscal year 2002 plan does not

contain goals and measures for this issue.

However, HCFA indicates that a fiscal year

2001 goal to implement the

Comprehensive Plan for Program Integrity

includes an initiative to reduce the

percentage of errors in community mental

health center claims. It reports that this

goal will be completed in fiscal year 2001.

Nursing facilities See our discussion of aspects of the HHS

OIG’s management challenge under the

“High-Quality Nursing Home Services”

section in the letter portion of this report.

Challenges related to the Skilled Nursing

Facility PPS are addressed earlier in this

table under the GAO management

challenge of “better safeguard the integrity

of the Medicare program.”

See our discussion of aspects of the HHS

OIG’s management challenge under the

“High-Quality Nursing Home Services”

section in the letter portion of this report.

Challenges related to the Skilled Nursing

Facility PPS are addressed earlier in this

table under the GAO management

challenge of “better safeguard the integrity

of the Medicare program.”

Medicare prescription drugs: Medicare

coverage for outpatient prescription drugs

is limited primarily to drugs used in dialysis,

organ transplantation, and cancer

treatment. The OIG has reported that

Medicare pays too much for prescription

drugs and has concluded that Medicare’s

payment methodology is fundamentally

flawed.

HCFA’s report does not discuss progress

in resolving this challenge.

No goals exist in HCFA’s plan on this

management challenge.

Medicare managed care: Medicare

beneficiaries have the option of enrolling in

managed care plans, which contract with

HCFA to furnish all medically necessary

services covered under the Medicare

program. OIG concerns in this area center

on Medicare payment rates, on quality-ofIn fiscal year 2000, HCFA established a

goal to improve the effectiveness of

dissemination of Medicare information to

beneficiaries through the National

Medicare Education Program so that by

fiscal year 2004, 57 percent of

beneficiaries will know that most people

HCFA’s fiscal year 2002 plan reports that

HCFA is on track toward meeting the goal

of improving the effectiveness of

dissemination of Medicare information to

beneficiaries by fiscal year 2004. In

addition, the plan has a goal under

development to improve beneficiaries’
Appendix I: Observations on HHS’ Efforts to

Address Its Major Management Challenges

Page 38 GAO-01-748 HHS' Status of Achieving Key Outcomes

Major management challenge

Progress in resolving major

management challenge as discussed in

the fiscal year 2000 performance report

Applicable goals and measures in the

fiscal year 2002 performance plan

care issues, and on how well informed

Medicare beneficiaries are of the choices

available to them.

covered by Medicare can select from

among different health plan options. HCFA

reports limited progress in meeting this

goal because it is currently collecting and

monitoring the Medicare Current

Beneficiary Survey data for final reporting

in fiscal year 2004.

understanding of Medicare’s basic

features.

The fiscal year 2002 plan does not contain

new goals to address concerns over other

aspects of this challenge raised by the OIG

and GAO.

Oversight of prospective payment system

implementation

See previous section under GAO

management challenge of “better

safeguard the integrity of the Medicare

program.”

See previous section under GAO

management challenge of “better

safeguard the integrity of the Medicare

program.”

Child support enforcement: The OIG has

made several recommendations and

suggestions aimed at improving TANF and

Medicaid-only client cooperation with child

support enforcement. The OIG has also

recommended the expansion of

nonhospital settings in helping establish

paternity. Also, the OIG has made several

recommendations to improve the Child

Support Enforcement Program’s annual

report to the Congress.

ACF made little mention of addressing

these OIG recommendations and

suggestions in its fiscal year 2000

performance report. ACF’s report

mentioned technical assistance, better

collaboration, and state staff training, but

these efforts were not tied to the HHS OIGspecific concerns. ACF had a general

statement about “partnering with birth

record agencies, pre-natal clinics and other

entities” as an early intervention in

establishing paternity.

ACF’s fiscal year 2002 performance plan

did not list goals and measures directly

related to the OIG recommendations and

suggestions. However, to the extent that

the OIG’s recommendations are

implemented, they would help ACF achieve

the three goals associated with the Child

Support Enforcement Program: (1) children

have parentage established, (2) children

have financial and medical support orders,

and (3) children receive financial and

medical support from both parents.

Protection of critical infrastructure: As part

of an administration initiative, the HHS OIG

is overseeing HHS’ efforts to improve

critical infrastructure protection.

HHS reported that it has adopted an

organizationwide approach that centralizes

and standardizes controls over its

electronic data processing environment.

HHS also plans to work with its

components to enhance interoperability

within the department, reduce duplication

of equipment and services, and provide for

secure systems during emergencies. Aside

from this general outline of its approach,

HHS does not provide specific examples of

progress.

HHS has no departmental goals involving

protection of critical infrastructure. HHS

noted that the performance plans of its

components contain goals that address

aspects of critical infrastructure protection

and stated that HHS plans to develop

additional goals that will address the issue

more directly.
Appendix II: Comments From the Department

of Health and Human Services

Page 39 GAO-01-748 HHS' Status of Achieving Key Outcomes

Appendix II: Comments From the

Department of Health and Human Services
Appendix II: Comments From the Department

of Health and Human Services

Page 40 GAO-01-748 HHS' Status of Achieving Key Outcomes
Appendix II: Comments From the Department

of Health and Human Services

Page 41 GAO-01-748 HHS' Status of Achieving Key Outcomes
Appendix II: Comments From the Department

of Health and Human Services

Page 42 GAO-01-748 HHS' Status of Achieving Key Outcomes
Appendix II: Comments From the Department

of Health and Human Services

Page 43 GAO-01-748 HHS' Status of Achieving Key Outcomes
Appendix II: Comments From the Department

of Health and Human Services

Page 44 GAO-01-748 HHS' Status of Achieving Key Outcomes (290049)
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