VA HEALTH CARE

Actions Needed to 

Ensure Medical 

Facility Controlled 

Substance Inspection 

Programs Meet 

Agency Requirements

Report to the Chairman, Committee on 

Veterans' Affairs, House of 

Representatives

February 2017

GAO-17-242

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-242, a report to the 

Chairman, Committee on Veterans’ Affairs, 

House of Representatives

February 2017

VA HEALTH CARE

Actions Needed to Ensure Medical Facility 

Controlled Substance Inspection Programs 

Meet Agency Requirements

What GAO Found

GAO found weaknesses in the way four selected Department of Veterans Affairs 

(VA) medical facilities were implementing their controlled substance inspection 

programs. Two of the four did not conduct monthly inspections of controlled 

substances as required by the Veterans Health Administration (VHA). For 

example, one facility missed 43 percent of monthly inspections in critical patient 

care areas and the pharmacy for the period GAO reviewed—January 2015 to 

February 2016. Further, inspections that three of the four facilities performed did 

not include or follow three or more of the nine VHA requirements GAO reviewed.

At two of the three facilities, for example, inspectors did not properly verify that 

controlled substances had been transferred from VA pharmacies to patient care 

areas; nor did inspectors ensure that all controlled substances on hold for 

destruction were properly documented. The VA Office of the Inspector General 

identified similar inspection program weaknesses at other VA facilities in 2009 

and again in 2014.

GAO found that several factors contributed to nonadherence to VHA policy at 

selected facilities. First, the two facilities that missed inspections lacked an 

additional control procedure—such as the use of an alternate controlled 

substance coordinator—to help prevent missed inspections when inspectors 

could not conduct them due to professional or other personal responsibilities. 

Second, while facilities develop their own set of inspection procedures that must 

follow VHA’s policy requirements, three of the four facilities did not ensure their 

written procedures included the nine VHA program requirements GAO reviewed. 

Third, VHA relies on coordinators at the facilities to ensure that the inspections 

are completed appropriately, but GAO found that VHA’s training course for the 

coordinators does not focus on its required inspection procedures. As a result of 

these weaknesses, VHA cannot ensure that its inspection programs are following 

all of its requirements. 

GAO found inconsistent oversight at the selected facilities of their controlled 

substance inspection programs by facility directors and the Veterans Integrated 

Service Networks (network) to which the facilities report. VHA assigns oversight 

responsibilities to each facility director and network. GAO found that directors at 

two of the four selected VA medical facilities had not implemented corrective 

actions to address missed inspections identified in the monthly inspection 

reports. In addition, two of the four selected networks did not review their

facilities’ quarterly trend reports, as required by VHA. Such reports identify 

inspection program trends such as missed inspections and areas for 

improvement. GAO found that one network that had reviewed the trend reports

failed to follow up with a facility to ensure it had submitted missed trend reports. 

Inconsistent oversight by the directors and networks is contrary to federal 

internal control standards that state oversight should be ongoing to assess 

performance and promptly remediate deficiencies in order to achieve objectives, 

including holding individuals accountable for their responsibilities. Without 

effective oversight of the inspection programs by directors and networks, VHA 

lacks reasonable assurance that its programs are being implemented as required 

to prevent and identify diversion of controlled substances. 

View GAO-17-242. For more information, 

contact Randall B. Williamson at (202) 512-

7114 or w illiamsonr@gao.gov. 

Why GAO Did This Study

Diversion of opioid pain relievers and 

other controlled substances by health 

care providers has occurred at several 

VA medical facilities. Such diversions 

for personal use can pose a threat to 

patients by depriving them of needed 

medications. Absent effective practices 

to mitigate its risk and quickly identify 

it, diversion can occur undetected. 

VHA requires each of its facilities to 

implement a controlled substance

inspection program to help reduce the 

risk of diversion. 

GAO was asked to examine VHA’s 

processes to prevent diversion and its 

oversight of these processes. This 

report examines VHA’s implementation 

and oversight of controlled substance 

inspection programs at selected 

facilities. GAO reviewed VHA policies 

and interviewed officials from VHA 

central office and from a 

nongeneralizable selection of four 

facilities and the networks that oversee 

them. Facilities were selected to reflect 

variation in geography and in the 

number of opioids dispensed at retail 

pharmacies in the state in which the 

facility operates. GAO compared the 

facilities’ implementation and oversight 

of the programs to VHA’s policy 

requirements and to federal standards 

for internal control. 

What GAO Recommends 

GAO is making six recommendations, 

including that VHA establish 

procedures to prevent missed 

inspections, review facilities’ inspection 

procedures, improve coordinator 

training, and direct facility directors and 

networks to ensure that facilities 

correct facility nonadherence to VHA 

policies. VA concurred with GAO’s 

recommendations.
Page i GAO-17-242 VA Controlled Substance Inspections

Letter 1

Background 6

Selected Facilities Did Not Conduct All Inspections, Follow All 

Inspection Procedures, or Develop Written Inspection 

Procedures that Were Fully Consistent with VHA Policy 9

Oversight of Controlled Substance Inspection Programs by 

Selected VA Medical Facilities and Their Networks Is 

Inconsistent 19

Conclusions 21

Recommendations for Executive Action 21

Agency Comments 22

Appendix I Use of Automated Dispensing Machine Reports to Identify Diversion 

of Controlled Substances at Selected VA Medical Facilities 26

Appendix II Comments from the Department of Veterans Affairs 29

Appendix III GAO Contact and Staff Acknowledgments 34

Table

Table 1: Veterans Health Administration’s (VHA) Procedures for 

Monthly Controlled Substance Inspections, as of February 

2016 7

Figure

Figure 1: Comparison of Written Inspection Procedures at Four 

VA Medical Facilities with Selected VHA Inspection 

Requirements, as of February 2016 16

Contents
Page ii GAO-17-242 VA Controlled Substance Inspections

Abbreviations

coordinator controlled substance coordinator

inspector controlled substance inspector

memo memorandum

network Veterans Integrated Service Network

OIG Office of the Inspector General 

VA Department of Veterans Affairs 

VHA Veterans Health Administration

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Page 1 GAO-17-242 VA Controlled Substance Inspections

441 G St. N.W.

Washington, DC 20548

February 15, 2017

The Honorable David P. Roe

Chairman

Committee on Veterans’ Affairs

House of Representatives

Dear Chairman Roe:

The rate of opioid overdose deaths tripled between 2000 and 2014 and 

the misuse of opioids such as oxycodone was a contributing factor.1 One 

way that providers and other health care employees misuse opioids—and 

other controlled substances that they have ready access to—is by 

diverting them from patients for their own personal use.2 Absent effective 

practices to mitigate the risk of diversion and quickly identify it after it 

occurs, providers and others can divert controlled substances over time 

without anyone knowing. This, in turn, poses a serious threat to patients 

by depriving them of needed medications. Although data on the frequency 

of diversion in medical facilities located in the United States—including 

those run by the Department of Veterans Affairs (VA)—is not available, 

diversion can occur anywhere in a facility where employees have access 

to controlled substances. Patient care areas may be more vulnerable to 

diversion; in these settings, providers can administer and dispose of 

controlled substances out of the view of others, making diversion by the 

 1Centers for Disease Control and Prevention, “Increases in Drug and Opioid Overdose 

Deaths—United States, 2000-2014,” Morbidity and Mortality Weekly Report, vol. 64, no. 

50 (2016).

2

According to the Controlled Substances Act, as amended, the term “controlled 

substance” means “a drug or other substance, or immediate precursor, included in [one of 

five classification schedules].” A controlled substance is placed in a respective schedule

based on whether it has a currently accepted medical use in treatment in the United 

States and its relative abuse potential and likelihood of causing dependence. Examples of 

controlled substances include pain relievers, such as Percocet or OxyContin, as well as 

tranquilizers, stimulants, and sedatives available only by prescription. Pub. L. No. 91-513, 

tit. II, 84 Stat. 1236, 1242-84 (codified as amended at 21 U.S.C. §§ 801-890, 901-971); 21 

C.F.R. Chp. II. 

Letter
Page 2 GAO-17-242 VA Controlled Substance Inspections

employee easier and detection more difficult, as discussed in the Mayo 

Clinic Proceedings.3

The Controlled Substances Act and implementing regulations require all 

medical facilities, including VA facilities, to have effective controls and 

procedures to adequately safeguard against theft and diversion of 

controlled substances.4 To fulfill this requirement, the Veterans Health 

Administration (VHA), which operates VA’s health care system, required 

that each of its medical facilities with stocks of controlled substances 

implement a controlled substance inspection program. VHA requires the 

programs to conduct monthly inspections following specified procedures 

outlined in VHA policy in all medical facility areas that are authorized to 

have controlled substances, such as patient care areas and pharmacies.

In recent years, diversion of controlled substances has occurred at 

several VA medical facilities. For example, an investigation in 2012 found 

that a former health care employee at the VA medical facility located in 

Baltimore, Maryland had been diverting the opioid fentanyl—an 

anesthetic used for patients undergoing surgical procedures—for his own 

use. The employee was injecting himself with syringes of fentanyl 

intended for patients undergoing surgery and then refilling the empty 

syringes with saline solution. Instead of receiving the prescribed dose of 

fentanyl with its intended anesthetic effect, patients received saline 

solution that was tainted with the Hepatitis C virus carried by the 

employee.5 Another investigation in 2012 found that an emergency room 

nurse at a VA medical facility was injecting herself with syringes of 

hydromorphone, an opioid pain reliever, intended for patients. After 

 3

K.H. Berge et al., “Diversion of Drugs Within Health Care Facilities, A Multiple-Victim 

Crime: Patterns of Diversion, Scope, Consequences, Detection, and Prevention,” Mayo 

Clinic Proceedings, vol. 87, no. 7 (2012). 

4

See 21 U.S.C. § 823; 21 C.F.R. §§ 1301.71-1301.76. The Controlled Substances Act 

requires persons and entities who manufacture, distribute, or dispense controlled 

substances or listed chemicals to register with the Drug Enforcement Administration, 

which by delegation from the U.S. Attorney General is responsible for administering and 

enforcing the Act and its implementing regulations. Registrants must keep complete and 

accurate record of inventories of controlled substances and ensure the controlled 

substances are securely stored and safeguarded. Pub. L. No. 91-513, tit. II, 84 Stat. 1236, 

1242-84 (codified as amended at 21 U.S.C. §§ 801-890, 901-971); 21 C.F.R. Chp. II.

5

Department of Justice, U.S. Attorney’s Office, District of New Hampshire, Former 

Employee of Exeter Hospital Pleads Guilty to Charges Related to Multi-State Hepatitis C 

Outbreak (New Hampshire: August 2013). This former VA employee also diverted 

controlled substances while working at medical facilities outside of VA.
Page 3 GAO-17-242 VA Controlled Substance Inspections

identifying discrepancies in the amounts of hydromorphone the nurse 

documented as having administered to patients, VA officials accused the 

nurse of diversion. Eventually, the nurse confessed to having diverted 

hydromorphone for approximately six months.

VHA has faced challenges implementing its controlled substance 

inspection programs. In 2009 and 2014, the VA Office of the Inspector 

General (OIG) identified a number of weaknesses in VA medical facilities’

implementation of controlled substance inspection programs. For 

example, the VA OIG found that some VA medical facilities had not 

conducted the required monthly inspections, and when facilities did 

conduct the monthly inspections, the inspections were sometimes 

incomplete because they did not follow all of the required VHA 

procedures.6 The VA OIG recommended that VHA, in conjunction with 

the Veterans Integrated Service Networks (network) and VA medical 

facility directors and other leaders, take action to ensure adherence with 

VHA’s requirements.7

You requested that we report on VHA’s processes to reduce the risk of 

diversion of controlled substances at its medical facilities and VHA’s 

oversight of these processes. This report examines:

1. the extent to which selected VA medical facilities have implemented 

controlled substance inspection programs as required by VHA 

policies, and

2. VHA’s oversight of these programs at selected VA medical facilities.

This report also provides information in Appendix I about selected VA 

medical facilities’ use of reports available from facilities’ automated 

dispensing machines—computer-controlled medication storage and 

 6

VA Office of the Inspector General, Healthcare Inspection: Review of Selected Pharmacy 

Operations in Veterans Health Administration Facilities (Washington, D.C.: Dec. 3, 2009) 

and Combined Assessment Program Summary Report: Evaluation of the Controlled 

Substances Inspection Program at Veterans Health Administration Facilities (Washington, 

D.C.: June 10, 2014).

7

Networks are responsible for overseeing the day-to-day functions of the VA medical 

facilities that are within their network. 
Page 4 GAO-17-242 VA Controlled Substance Inspections

dispensing cabinets in patient care areas—to help identify diversion of 

controlled substances.8

To examine the implementation of VHA’s controlled substance inspection 

programs at selected facilities, we selected four VA medical facilities to 

include in our review. We selected the four facilities to achieve variation in 

geography and in the number of prescriptions for opioid pain relievers 

dispensed in the states in which the facilities operate.9 The four VA 

medical facilities we selected are located in Washington, D.C.; 

Milwaukee, Wisconsin; Memphis, Tennessee; and Seattle, Washington. 

We compared the number of controlled substance inspections that each 

of the four VA medical facilities reported to us as having been completed 

from January 2015 through February 2016 to the number of inspections 

that should have been conducted, based on VHA’s policy requirement.10

We chose this time frame to include an entire year of the most recently 

completed inspections when we conducted our work. For each of the four 

selected facilities, we also requested and reviewed a random sample of 

documents from completed inspections in order to test the reliability of the

inspection information provided by the VA medical facilities. To determine 

the extent to which each VA medical facility’s inspection procedures were 

consistent with certain VHA requirements, we reviewed the inspection 

procedures in place at each of the four facilities as described in inspection 

program policies, training manuals, and other guidance documents, and 

 8

Automated dispensing machines generate reports that can track medication dispensing 

activities, such as the number of times providers access controlled substances to 

administer to patients, and these reports can be used to identify possible cases of 

diversion.

9

See Centers for Disease Control and Prevention, Opioid Painkiller Prescribing: Where 

You Live Makes a Difference (Atlanta, GA: July 1, 2014). These prescription data are 

based on a representative sample of retail, mail service and long-term care pharmacies.

10We based our review of the implementation of selected facilities’ inspection programs on 

VHA’s program requirements included in its 2010 inspection program policy. See 

Department of Veterans Affairs, Veterans Health Administration Handbook 1108.02,

Inspection of Controlled Substances (Washington, D.C., Mar. 31, 2010). In late November 

2016, VHA issued an update to its inspection program policy. See Department of Veterans 

Affairs, Veterans Health Administration Directive 1108.02, Inspection of Controlled 

Substances (Washington, D.C., Nov. 28, 2016). We reviewed VHA’s 2016 policy updates 

and found they did not materiallyaffect our findings, as discussed in this report. 
Page 5 GAO-17-242 VA Controlled Substance Inspections

compared these procedures to VHA’s policy requirements.11 We 

interviewed relevant officials from the four selected VA facilities—

including the controlled substance coordinator (coordinator), controlled 

substance inspectors (inspector), and pharmacists—to discuss the local 

operating policies and procedures and how they implemented their 

procedures. We also analyzed VHA’s online training course for 

coordinators and discussed this course with coordinators in each of the 

four VA medical facilities as well as other training they had received about 

VHA’s inspection program requirements, including training on the 

required inspection procedures. We also evaluated facilities’ processes

for ensuring completion of the inspections, and VHA’s coordinator 

training, against federal standards for internal control related to control 

activities.12 Our findings for the four selected VA medical facilities cannot 

be generalized to other VA medical facilities.

To examine VHA’s oversight of selected medical facilities’ controlled 

substance inspection programs, we reviewed VHA and VA medical facility 

policies and other relevant documents, including a 2014 VHA 

memorandum (memo), that describe oversight responsibilities.13 We 

compared the oversight responsibilities identified in VHA policies and the 

2014 memo to the selected facilities’ oversight activities. As part of this 

comparison, we reviewed documents such as monthly and quarterly 

inspection reports and interviewed VA medical facility directors and other 

facility leadership officials, including the chief of staff at the four selected 

facilities about their oversight activities and any information they review 

related to the inspection program. We also interviewed officials from 

VHA’s central office, and the four networks associated with each of the 

four selected VA medical facilities, about their oversight responsibilities 

and activities related to the controlled substance inspection programs. In 

 11We included in our review nine selected pharmacy and patient care area requirements 

related to ordering and receiving, inventory counts, hard-copy prescriptions, and 

administration of controlled substances. We did not review VHA’s requirements for the 

inspection of research laboratories as it was out of our scope. 

12GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: Sept. 10, 2014). GAO, Standards for Internal Control in the Federal 

Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1, 1999). Internal control is a 

process effected by an entity’s management, oversight body, and other personnel that 

provides reasonable assurance that the objectives of an entity will be achieved.

13See VA, VHA Handbook 1108.02, Inspection of Controlled Substances (Mar.31, 2010) 

and Memorandum on Controlled Substance Inspection Program Requirement, VA Office 

of Inspector General-Combined Assessment Program Findings (Washington, D.C.: July 9, 

2014).
Page 6 GAO-17-242 VA Controlled Substance Inspections

addition, we compared the facilities’ oversight activities and 

responsibilities identified in VHA policies and the 2014 VHA memo to 

federal standards for internal control related to monitoring and oversight.14

We conducted this performance audit from January 2016 to February 

2017 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

According to VHA policy on the inspection of controlled substances, each 

VA medical facility must establish a controlled substance inspection 

program, which is to be overseen mainly by the facility’s director. VHA’s 

policy stipulates that the VA medical facility director must 1) ensure that 

the facility’s program complies with VHA’s requirements, 2) establish local 

medical facility procedures for the controlled substance inspection 

program that are consistent with VHA’s requirements, and 3) appoint a 

coordinator, who is responsible for managing the program and the 

inspectors who conduct the inspections.15

The coordinator is responsible for ensuring that inspections are 

conducted unannounced and monthly in each area of the VA medical 

facility that stores controlled substances. To assist the coordinator, a 

team of inspectors is to be assigned from various areas of the medical 

facility to conduct the actual inspections. The coordinator is responsible 

for ensuring that the inspectors have completed required training and 

must document annually an assessment of the inspectors’ competencies. 

The coordinator is also responsible for ensuring that the inspections 

include all of VHA’s policy requirements. VHA policy requires the 

coordinator to develop and submit two reports to the VA medical facility 

director—a monthly inspection report and a quarterly trend report. 

According to VHA policy, the monthly inspection report is to summarize 

the inspection findings. VHA also requires that these reports include 

information on missed inspections for each month and if missed 

inspections are identified, the medical facility director is expected to work 

 14GAO-14-704G and GAO/AIMD-00-21.3.1.

15VA, VHA Handbook 1108.02, Inspection of Controlled Substances (Mar. 31, 2010). 

Background
Page 7 GAO-17-242 VA Controlled Substance Inspections

with the coordinator to develop an action plan to improve performance 

and continue to monitor for additional missed inspections.16 The quarterly 

trend report is to summarize patterns in discrepancies identified through 

the inspection program—such as discrepancies between the physical 

count of controlled substances and their recorded inventory by patient 

care area—problematic trends, and potential areas for improvement in 

the program.17 VHA also requires that networks review the quarterly trend 

reports during an annual quality management visit to the medical facility.18

VHA’s policy establishes the requirements for the monthly inspection of 

controlled substances at VA medical facilities and the procedures that 

inspectors must follow to implement these requirements. There are 

different procedures for conducting inspections of pharmacies compared 

to patient care areas such as inpatient units and clinic areas. See table 1.

Table 1: Veterans Health Administration’s (VHA) Procedures for Monthly Controlled Substance Inspections, as of February 

2016

Type of requirement Description of implementing procedure

Pharmacy

Ensure that all ordered 

controlled substances have 

been placed in inventory 

Inspectors must verify that all of the controlled substances that the Department of Veterans Affairs 

(VA) medical facility ordered and received were correctly documented as received into the pharmacy’s 

inventory. The inspector must obtain all invoices of controlled substances from the office responsible 

for ordering them since the last controlled substance inspection, and compare each invoice item to the 

pharmacy’s receipt report. 

Perform a physical count of 

controlled substances in the 

pharmacy

Inspectors must conduct a complete physical count of all controlled substances in the pharmacy the 

first month of the quarter. This includes controlled substances that are stored in the pharmacy’s vault 

and in automated dispensing machines. For subsequent months during the quarter, inspectors must 

conduct a physical count of ten percent of the controlled substances, based on a random sample. 

Inspectors must compare the complete and ten percent counts to the pharmacy’s inventory records.

Perform a physical count of 

the emergency cache

Inspectors must conduct a complete physical count of all controlled substances that VA medical 

facilities store in case of emergencies such as natural disasters, epidemics and terrorist attacks. 

These controlled substances are referred to as the emergency cache. Inspectors must conduct this 

count the first month of the quarter. Facilities may store the emergency cache inside or outside of the 

pharmacy.

 16VA, Memorandum on Controlled Substance Inspection Program (July 9, 2014).

17VA, VHA Handbook 1108.02, Inspection of Controlled Substances (Mar. 31, 2010). 

18This oversight responsibility is included in VHA’s 2014 memo. See VA, Memorandum on 

Controlled Substance Inspection Program (July 9, 2014).
Page 8 GAO-17-242 VA Controlled Substance Inspections

Type of requirement Description of implementing procedure

Verify the 72-hour inventory 

counts by pharmacy 

Inspectors must verify that pharmacy officials have completed required inventory counts of controlled 

substances stored in the pharmacy. Pharmacies are required to complete two or three inventory 

counts weekly, depending on how many days they are open. Inspectors must review pharmacy 

records to verify that all of these inventory counts of controlled substances were completed since the 

last controlled substance inspection. 

Reconcile one day of 

pharmacy dispensing 

Inspectors must check that the controlled substances that the pharmacy transferred to automated 

dispensing machines in patient care areas were received. For one day of the pharmacy’s dispensing, 

inspectors validate that the amounts of controlled substances dispensed match the amounts of 

controlled substances each automated dispensing machine received into inventory. 

Verify hard-copy prescriptions Inspectors must obtain a pharmacy report listing all prescriptions that were not electronically 

prescribed and signed by a licensed provider since the last controlled substance inspection and, for a 

sample of these prescriptions, verify that there is a matching hard-copy prescription in the pharmacy. 

The inspector must verify that the patient and provider names on the report are the same as those on 

the hard-copy prescription and also verify that the name, strength, and quantity of the prescribed 

controlled substance on the pharmacy report matches the information on the hard-copy prescription. 

The inspector must initial each reviewed entry on the pharmacy report and provide the report to the 

VA medical facility’s controlled substance coordinator. Inspectors must review 50 randomly chosen 

prescriptions or all prescriptions if the report lists less than 50 prescriptions.

Verify documentation of 

controlled substances on hold 

for destruction 

Inspectors must check that all controlled substances being held in the pharmacy for destruction 

because they are non-usable (e.g., expired, damaged) are documented on the pharmacy’s destruction 

report. 

Patient care areas

Perform a physical count of 

controlled substances in 

patient care areas 

Inspectors must conduct a complete physical count the first month of the quarter of all controlled 

substances in patient care areas, including those stored in automated dispensing machines and 

locked cabinets. On subsequent months during the quarter, inspectors must conduct a physical count 

of a minimum of ten controlled substances, based on a random sample of drugs, for example different 

drugs, strengths or routes of administration such as oral or intravenous. Inspectors must compare the 

complete and ten percent counts to each area’s inventory records. 

Validate dispensing of 

controlled substances 

Inspectors are to randomly choose five instances when controlled substances were removed from the 

automated dispensing machine (or locked cabinets) for each patient care area, or two if there are 

fewer than five instances when controlled substances were removed. Inspectors must review the 

veterans’ medical records to verify that there is a doctor’s order for the controlled substance and 

documentation that the controlled substance has been administered to the veteran.

Source: VHA. | GAO-17-242

Notes: Our review focused on controlled substance inspection requirements related to ordering and 

receiving; inventory counts and verification of inventory in the pharmacy and patient care areas; hardcopy prescriptions; and administration of controlled substances. These requirements are included in a 

VHA Handbook and memorandum. See Department of Veterans Affairs, Veterans Health 

Administration Handbook 1108.02, Inspection of Controlled Substances (Washington, D.C.: Mar. 31, 

2010); Memorandum on Controlled Substance Inspection Program Requirement of Hard Copy

Prescriptions with Controlled Substance E-Prescribing Implementation (Washington, D.C.: July 1, 

2013); and Controlled Substance Inspection Certification Course (Washington, D.C.: May 4, 2012). In 

its November 2016 revised policy, VHA eliminated the requirement for inspectors to verify that all 

controlled substances that w ere ordered and received were correctly documented as received into 

the pharmacy’s inventory.
Page 9 GAO-17-242 VA Controlled Substance Inspections

VHA policy requires that facilities inspect multiple patient care areas and 

pharmacies on a monthly basis. These inspections are intended to help 

mitigate the risk of drug diversion. We found that from January 2015 

through February 2016, one of the four selected facilities we reviewed 

missed 43 percent of the required monthly inspections, and another 

facility missed 17 percent of these inspections.19 The other two VA 

medical facilities we reviewed fully adhered to VHA’s requirement to 

conduct monthly inspections.

At the VA medical facility that missed 43 percent (131 of 308) of the 

required monthly inspections, we found that most (about 95 percent) of 

the facility’s missed inspections were for the facility’s patient care areas, 

while the remaining 5 percent of missed inspections at this facility were 

for the pharmacy. For example, we found that

 

19We calculated these percentages by dividing the total number of areas with controlled 

substances that the VA medical facilities did not inspect by the total number of areas that 

should have been inspected, from January 2015 through February 2016, according to 

VHA policy. Over this time period, each applicable area should have been inspected 14 

times. The total number of areas that store controlled substances varies by facility. VHA’s 

policy allows on rare occasions that a monthly inspection may be skipped so long as the 

area skipped is inspected the subsequent month. Further, VHA’s 2014 memo contains 

guidance on the other acceptable reasons for missed inspections, which include 

unplanned sick leave or other unforeseen circumstances. Because the coordinators at the 

facilities that missed inspections told us they could not quantify the number of missed 

inspections that may be due to these acceptable reasons, we did not account for this in 

our calculations. 

Selected Facilities 

Did Not Conduct All 

Inspections, Follow 

All Inspection 

Procedures, or 

Develop Written 

Inspection 

Procedures that Were 

Fully Consistent with 

VHA Policy

Two of Four Selected VA 

Medical Facilities Did Not 

Conduct All Required 

Monthly Inspections
Page 10 GAO-17-242 VA Controlled Substance Inspections

• inspectors missed monthly inspections in the facility’s patient care areas 

such as the operating room (all 14 inspections missed), bronchoscopy 

laboratory (all 14 inspections missed), and the intensive care units (7 of 

14 inspections were missed). The facility’s coordinator told us that the 

operating room was not inspected at all during our review period because 

the inspectors assigned to inspect the operating room needed to arrive 

before or after normal operating room hours to obtain access to the 

controlled substances and were unable to conduct the inspections due to 

their conflicting work schedules.20 The bronchoscopy laboratory was not 

inspected at all during our review period because it was not identified by 

the coordinator as an area having controlled substances.

• Inspectors missed inspections in some patient care areas for 2 to 4 

consecutive months. These areas included the intensive care units, 

cardiac catheter laboratory, and interventional radiology.

• Inspectors also missed inspections of the facility’s pharmacy for 3 

consecutive months.

At the VA medical facility that missed 17 percent (118 of 702) of the 

required monthly inspections, we found that most (about 95 percent) of 

the missed inspections were for the facility’s patient care areas, while the 

remaining 5 percent of missed inspections at this facility were for the 

pharmacy. For example, we found that

• inspectors missed monthly inspections in patient care areas such as the 

operating room (5 inspections missed), medical intensive care unit (4 

inspections missed), and pain clinic (6 inspections missed).

• Inspectors missed inspections of some patient care areas for 2 or 3 

consecutive months. These areas included the operating room, pain

clinic and inpatient psychiatry.

• Inspectors also missed inspections of one of the facility’s four pharmacies 

for 2 consecutive months.

We found one factor that contributed to the missed inspections at the two 

selected VA medical facilities was the lack of an additional control 

procedure to help prevent the medical facility from missing inspections, 

such as designating an alternate coordinator or appointing additional 

inspectors to fill in for the assigned inspector when needed. The 

 20The coordinators and inspectors at VA medical facilities that adhered to VHA’s 

requirement to conduct monthly inspections did not report difficulties completing the 

inspections of controlled substances stored in the operating room. 
Page 11 GAO-17-242 VA Controlled Substance Inspections

coordinator and inspector roles are usually collateral duties. The 

coordinators and inspectors at the four VA facilities we selected told us 

that in addition to their inspection program duties, they had substantive 

full-time responsibilities and scheduled their inspection work around their 

facility jobs.21 Both of the VA medical facilities that conducted all of the 

required monthly inspections had an alternate coordinator to assist the 

coordinator in managing the inspection program, including scheduling the 

inspections and following up with inspectors to ensure inspections are 

completed.22 At one of these facilities the alternate coordinator also 

conducted inspections when inspectors had unforeseen circumstances 

that prevented them from completing the assigned inspections.

In contrast, the two medical facilities that missed inspections during our 

review did not have an additional control procedure, such as the use of an 

alternate coordinator. The coordinators at these two medical facilities told 

us that managing the inspection program was challenging given their 

other full-time duties, which included supervising the VA medical facility’s 

patient food service and conducting quality improvement activities. One of 

the coordinators told us that she had not been informed of the time 

commitment related to the coordinator position prior to being appointed.

According to these two coordinators, it is a challenge to re-assign the 

inspections when the assigned inspectors cannot conduct the scheduled 

inspections due to unforeseen circumstances. For example, the 

coordinators at these two facilities explained that some inspectors waited 

until the end of the month to conduct their assigned monthly inspections, 

and because of competing priorities or unexpected health or personal 

issues, the inspections were sometimes not completed. In these cases, 

the coordinators told us inspectors may not notify the coordinator in time 

to find another inspector to complete the monthly inspections, and the 

coordinators may not have time to complete the inspections themselves. 

One of the coordinators at these facilities told us that she had requested 

an alternate coordinator be appointed to help ensure adherence to the 

 21In terms of supervisory accountability, inspectors report directly to their supervisors in 

the areas where they have full-time facility jobs rather than to the coordinator, according to 

VHA Central Office and local officials with whom we spoke. 

22One of the two VA medical facilities that conducted all of the required inspections had an 

alternate coordinator for the entire period we reviewed. The other VA medical facility that 

conducted all of the required inspections had an inspector who was learning the 

coordinator role by training with the current coordinator for six months during the period of 

our review. This inspector performed the role of an alternate coordinator during this time, 

and is currently the coordinator at this VA medical facility. 
Page 12 GAO-17-242 VA Controlled Substance Inspections

monthly inspection requirement and that the request was approved for an 

alternate coordinator to begin in January 2017.

In VHA’s November 28, 2016 update to its inspection policy, VHA added 

a responsibility related to the monthly inspection requirement and made 

recommendations regarding the appointment of more than one 

coordinator for certain purposes and regarding the coordinator’s time 

commitment. First, the update assigns the facility chief of pharmacy 

responsibility for ensuring that the coordinator has an accurate listing of 

all automated dispensing machines and controlled substance storage 

areas. If properly implemented, this update may help ensure that all areas 

requiring monthly inspections are identified. Second, the update 

recommends that facility directors (a) appoint more than one coordinator 

(e.g., an alternate) for the purpose of coverage, program continuity, and 

succession planning and (b) discuss the time commitment with the 

coordinator and the coordinator’s current supervisor and adjust other 

duties as necessary to provide adequate time for the coordinator to 

perform the inspection program duties. The update is likely an 

improvement as it raises awareness around the time commitment of the 

coordinator role and it also might address the identified risks of missing

inspections by recommending the appointment of more than one 

coordinator if needed for coverage of program responsibilities. However, 

because the update does not make the appointment of an alternate 

coordinator mandatory or require another control activity to address its 

risk, VHA still might lack reasonable assurance that inspections occur 

when the primary inspector is unable to fulfill that responsibility.

Federal internal control standards state that to achieve an entity’s 

objective, management should define responsibilities and assign them to 

key roles throughout the entity. Further, management should design 

control procedures to help fulfill the defined responsibilities and address 

any identified risk in not achieving the entity’s objective. If management 

learns that the existing control procedures are not operating as designed, 

management should review them and analyze and respond to any 

associated risks of not meeting the defined objective.23 The two facilities 

that did not adhere to VHA’s requirement to conduct monthly inspections 

did not have an additional control procedure in place, such as an 

alternate coordinator, to respond to the risk of missed monthly 

inspections, which is inconsistent with these internal control standards.

 23GAO-14-704G and GAO/AIMD-00-21.3.1.
Page 13 GAO-17-242 VA Controlled Substance Inspections

Missed inspections increase the likelihood that VHA may not meet the 

objective of the program—to reduce the risk of diversion of controlled 

substances. In 2009 and 2014, the VA OIG also found that VA medical 

facilities did not always conduct required monthly inspections.24 For 

example, in 2014 the VA OIG reported that of the 58 VA medical facilities 

it reviewed, the facilities missed required monthly inspections in 20 

percent of patient care areas with controlled substances.

We found that three of the four selected VA medical facilities, when 

conducting inspections, did not include, or correctly follow, three or more 

of the nine VHA requirements we reviewed. The fourth VA medical facility 

we reviewed had implemented inspection procedures that followed these 

requirements. The following are examples of inspections not following 

VHA requirements at these three selected facilities.

• At three of the selected VA medical facilities, inspectors did not perform 

physical counts of pharmacy emergency caches of controlled substances 

as required. Inspectors at one selected facility did not perform the count 

at all and at a second facility, inspectors told us that they counted some, 

but not all, of the cache, as required.25 Inspectors at the third facility only 

counted the cardboard shipping boxes in which the controlled substances 

were shipped and did not count the contents, according to the 

coordinator at the facility. However, without opening these shipping 

boxes to verify that they actually contained the controlled substances and 

counting them, inspectors would not know if any controlled substances 

had been removed from the boxes.

• At two of the selected VA medical facilities, inspectors did not verify that 

controlled substances had been properly transferred from VA pharmacies 

to automated dispensing machines in patient care areas. At one facility, 

inspectors verified only a sample of controlled substances dispensed by 

the pharmacy on a selected day to confirm that the controlled substances 

were actually transferred to patient care areas. According to VHA’s 

inspection program policy, inspectors are required to verify that all 

controlled substances transferred by a pharmacy on a selected day were 

 24VA, Office of the Inspector General, Review of Selected Pharmacy Operations (Dec. 3, 

2009) and Evaluation of the Controlled Substances Inspection Program (June 10, 2014). 

25For the emergency cache that the inspectors did count, they told us they compared the 

amount of inventory to what a facility official had written as the inventory, rather than the 

actual inventory in the pharmacy’s inventory reports. 

Controlled Substance 

Inspections Conducted at 

Three of Four Selected 

Medical Facilities Did Not 

Follow Certain VHA Policy 

Requirements
Page 14 GAO-17-242 VA Controlled Substance Inspections

received in these areas. At a second facility, inspectors told us that they 

did not conduct this required procedure in one of the facility’s two 

pharmacies. Without checking that all controlled substances were 

properly transferred from the pharmacy, inspectors may not identify 

controlled substances that are dispensed by the pharmacy and 

subsequently diverted rather than stocked in the automated dispensing 

machines located in patient care areas.

• At two selected VA medical facilities, inspectors did not verify that all of 

the controlled substances slated for destruction had been documented.

According to VHA’s inspection program policy, facilities’ pharmacies are 

to maintain a list of controlled substances that are scheduled to be 

destroyed because, for example, the medication is past its expiration 

date or has been crushed or damaged in some way. According to VHA’s 

inspection program policy, inspectors are required to verify that all 

relevant medications are included in this list; however, inspectors at two 

of the selected facilities told us they only verified that a sample of the 

controlled substances being held for destruction was documented. 

Because the inspectors reviewed only a sample of these controlled 

substances, the facility lacks assurance that all controlled substances 

intended for destruction have been logged into the pharmacy’s computer 

system, thereby increasing the risk that controlled substances could be 

diverted.

• At one selected VA medical facility, inspectors did not count all of the 

controlled substances stored in the patient care areas. At this facility, 

inspectors did not count the controlled substances stored in all the 

automated dispensing machines in the facility’s cardiac catheter 

laboratory, interventional radiology area, and gastrointestinal endoscopy 

area, according to a facility official. Although each of these areas had two 

machines that dispensed controlled substances, inspectors only counted

the inventory in one of the two machines in each area. In addition, 

inspectors did not count any inventory of controlled substances stored in 

this facility’s bronchoscopy laboratory. Because the inspectors did not 

count controlled substances in these areas, the facility lacks assurance 

that the physical inventory matches the recorded inventory.

Similar to our findings, the VA OIG found in 2009—and again in 2014—

that VA medical facilities did not always follow VHA’s required procedures 

in conducting monthly inspections. For example, in 2014 the VA OIG 

reported that in 24 percent of the facilities’ inspections, inspectors did not 

verify controlled substances had been properly transferred from the 

facilities’ pharmacies to the automated dispensing machines in patient 

care areas. Furthermore, the VA OIG reported that in 17 percent of the 

inspections, inspectors did not perform physical counts of the emergency 
Page 15 GAO-17-242 VA Controlled Substance Inspections

caches. As a result, inspections in these facilities may not have identified 

controlled substances that were diverted from their emergency cache or 

while in transfer from the pharmacy to patient care areas.

In its 2016 inspection policy update, VHA modified its requirement for 

inspectors to verify that controlled substances are properly transferred 

from pharmacies to automated dispensing machines. The policy states 

that in cases where there was no dispensing of controlled substances to a 

specific automated dispensing machine on the day the inspector selected 

to review, the inspector should select another day to examine that 

machine.

In comparing the written procedures at the four VA medical facilities we 

reviewed with selected VHA requirements, we found that three facilities 

did not have written inspection procedures that were fully consistent with 

VHA’s policy requirements. (See figure 1.) This likely contributed to 

inspections not following certain VHA policy requirements at the three 

selected VA medical facilities, as previously discussed. The VA medical 

facility directors are responsible for establishing local written medical 

facility policies on the inspection of controlled substances and ensuring 

that their inspection programs adhere to VHA’s policy requirements, 

according to VHA’s inspection program policy. To respond to this 

requirement, facilities are to develop inspection program procedures and 

guidance documents describing the procedures for inspectors.

Three VA Medical 

Facilities Did Not Develop 

Written Controlled 

Substance Inspection 

Procedures That Were 

Fully Consistent with VHA 

Policy
Page 16 GAO-17-242 VA Controlled Substance Inspections

Figure 1: Comparison of Written Inspection Procedures at Four VA Medical Facilities with Selected VHA Inspection 

Requirements, as of February 2016

Note: At the four selected Department of Veterans Affairs (VA) medical facilities, w e reviewed written 

inspection procedures that w ere included in the local inspection program policies, training manuals 

and other guidance documents and compared them to Veterans Health Administration’s (VHA)

inspection program requirements included in VHA’s 2010 policy. See Department of Veterans Affairs, 

Veterans Health Administration Handbook 1108.02, Inspection of Controlled Substances

(Washington, D.C.: Mar. 31, 2010).

a

VA medical facility C had no w ritten procedures for its pharmacy inspections. Although this VA 

medical facility’s inspection program policy stated that inspections must follow the required 

procedures included in VHA’s Handbook 1108.02, this handbook w as not included in the guidance 

that inspectors told us they used in performing and implementing the inspection procedures.

The one VA medical facility that had implemented all of the selected VHArequired inspection procedures has an ongoing process to specifically

conduct comprehensive reviews of the facility’s inspection procedures to 

ensure they are consistent with VHA’s requirements. At this facility, the 

current and prior coordinators had each conducted separate reviews of 

the facility’s procedures in coordination with two pharmacy managers, 

according to a facility official. Further, the coordinator and two pharmacy 

managers at this facility review the procedures anytime there is an update 

to VHA’s requirements to ensure that their medical facility is adherent, 

according to a facility official. For example, the facility conducted a review 

in 2013 when VHA updated its pharmacy inspection requirements for the 

review of hard copy prescriptions. As a result of this review, the facility 

updated its local inspection program policy, the written procedures, and 
Page 17 GAO-17-242 VA Controlled Substance Inspections

other guidance documents that the inspectors use to conduct the monthly 

pharmacy inspections. Moreover, a facility official told us that the 

coordinator informs the VA medical facility director of the inspection 

program changes so that the facility director is aware of the new 

requirements. In contrast, at the other three selected VA medical facilities, 

the coordinators’ reviews of the facilities’ inspection procedures were not 

as comprehensive. At two of these facilities, the coordinators told us that 

they had compared some, but not all, of their facility’s inspection 

procedures to VHA’s requirements. At another facility, the coordinator told 

us he had compared all of the facility’s procedures to the VHA 

requirements, but he did not involve other facility officials, such as 

pharmacy managers, to verify the accuracy of his review.

Furthermore, VHA requires that the coordinators have a complete 

understanding of VHA’s inspection procedures and ensure that the 

inspectors have completed inspections using the required procedures. 

However, we found in our analysis of the contents of VHA’s online 

coordinator training course that it lacks substantive information about 

VHA’s required inspection procedures. VHA officials told us the 

coordinator training course is designed to focus on the management 

aspects of carrying out the coordinator role (e.g., recruiting inspectors, 

scheduling inspections, and generating required reports) as opposed to 

VHA’s inspection procedures. VHA’s online course for inspectors, in 

comparison, includes substantive information about the required 

inspection procedures.26 VHA recommends but does not require that the 

coordinators take the online training course for inspectors. While two of 

the four coordinators we interviewed told us they were provided helpful 

on-the-job training at their medical facilities, which included shadowing 

the prior coordinator, three of them told us that additional coordinator 

training was needed. In addition to online and on-the-job training, 

coordinators have opportunities to discuss various aspects of their VA 

medical facilities’ inspection programs on an ongoing basis, for example, 

by participating in the voluntary bi-monthly meetings that VHA officials 

facilitate for coordinators. Although VHA officials told us that these bimonthly meetings often focus on VHA’s required inspection procedures, 

 26VHA requires that inspectors take the inspector online course and have refresher 

training on an annual basis.
Page 18 GAO-17-242 VA Controlled Substance Inspections

two of the four coordinators told us that they did not regularly participate 

in these meetings.27

In its 2016 inspection policy update, VHA eliminated one of the 

requirements that we reviewed—verifying that ordered controlled 

substances are placed in inventory—and added a requirement that 

coordinators must take the coordinator online training course within 30 

days of their appointment. The update also addresses certain other 

inspection procedures we reviewed such as verifying the transfer of 

controlled substances.28 However, these changes do not address the lack 

of a comprehensive review of medical facilities’ inspection procedures or 

the lack of substantive information about VHA’s required inspection 

procedures in VHA’s online training course for coordinators. The lack of a 

comprehensive review of the medical facilities’ inspection procedures and 

the inadequate coordinator training are inconsistent with federal internal 

control standards. These standards state that management should 

periodically review policies and procedures for continued relevance and 

effectiveness in achieving the entity’s objectives or addressing related 

risks.29 Without a process in place to review medical facilities’ local 

inspection procedures and modify inspection procedures as appropriate, 

VHA cannot ensure that VA medical facilities’ procedures adhere to 

VHA’s policy requirements. Federal internal control standards also state 

that effective management is essential to achieving results and 

operational success depends on personnel being properly trained. 

Training is aimed at developing employee knowledge and skills to 

achieve organizational goals. While the updated November 2016 policy 

mandates coordinators’ training, VHA’s existing training for coordinators 

does not focus on VHA’s required inspection procedures. As a result, 

 27VHA officials told us they have provided training to coordinators upon request. In 

September 2016, VHA officials provided in-person training to 26 new coordinators who 

volunteered to participate. This training included information about VHA’s required 

inspection procedures. VHA officials also make information about the inspection 

procedures available to coordinators on an internal VA website. 

28As another example, VHA added a requirement to its procedure for validating the 

dispensing of controlled substances. Inspectors are now required to verify the 

documentation of two signatures for any wasting of partial doses. 

29GAO-14-704G and GAO/AIMD-00-21.3.1. 
Page 19 GAO-17-242 VA Controlled Substance Inspections

VHA cannot ensure that all coordinators have adequate information to 

determine if the inspections have been completed as required.30

Facility directors are responsible for reviewing monthly inspection reports 

that the coordinators at the facilities submit, and these reports must 

provide information on missed inspections and reasons for missed 

inspections. They are also responsible for working with coordinators to 

develop and implement corrective action plans if missed inspections are 

identified. Medical facility directors are also required to review quarterly 

trend reports submitted by facility coordinators, which summarize 

information from the controlled substance inspections and may provide 

information on problems with the inspection programs and needed 

improvements.31

We found that medical facility directors did not consistently perform these 

duties at two of the four selected VA medical facilities. At the two VA 

medical facilities that missed monthly inspections, facility directors did not 

implement corrective actions to prevent future missed inspections. These 

facility directors told us they reviewed the monthly inspection reports, and 

some of these reports that we reviewed showed that inspections were in 

fact missed. As discussed earlier, one of the facilities missed 43 percent 

of the required inspections, while the other facility missed 17 percent of 

the inspections. In addition, one of four medical facility directors did not 

receive quarterly trend reports during our review period and did not 

implement a corrective action to ensure that he receives future quarterly 

trend reports. VHA’s 2016 inspection policy update added the 

requirement that corrective actions to prevent missed inspections are to 

be documented in the monthly inspection reports that the coordinators 

submit to the directors. However, the update does not require corrective 

action plans to be documented for other types of inspection program 

nonadherence—for example, if an inspection was conducted but did not 

include all of the required procedures.

 30In addition to our findings in this report, in prior work we have identified gaps in training 

for VHA staff in other VHA programs. As a result of inadequate training, among other 

problems, we placed VA health care on our High Risk List in 2015. See GAO, High-Risk 

Series: An Update, GAO-15-290 (Washington, D.C.: Feb.11, 2015). 

31The oversight responsibilities for VA medical facility directors that we reviewed are 

included in VHA’s 2010 inspection program policy and its 2014 memo. See VA, VHA 

Handbook 1108.02, Inspection of Controlled Substances (Mar. 31, 2010) and 

Memorandum on Controlled Substance Inspection Program (July 9, 2014).

Oversight of 

Controlled Substance 

Inspection Programs 

by Selected VA 

Medical Facilities and 

Their Networks Is

Inconsistent
Page 20 GAO-17-242 VA Controlled Substance Inspections

We also found that oversight provided by the four networks to which the 

four selected VA medical facilities in our review report was inconsistent. 

The networks are responsible for reviewing their facilities’ quarterly trend 

reports; VHA included this requirement in the 2014 memo it issued in 

response to the VA OIG findings on implementation problems with the 

inspection programs.32 Officials from two of the four networks we 

interviewed told us they did not review the quarterly trend reports. 

Officials in one of these two networks told us they were unaware of the 

requirement. An official in the other network told us the network did not 

review their facilities’ quarterly trend reports due to a lack of 

communication within the network about the requirement. In addition, we 

found that one of two networks that had reviewed the quarterly trend 

reports did not take action to ensure that one of the facilities in our review 

had completed quarterly trend reports. For example, this network found 

during its site-visit review of this facility that the coordinator had not 

completed and submitted the quarterly trend reports to the medical facility 

director, as required. We also found that this coordinator had not 

completed other quarterly trend reports during our 14-month review 

period, and the facility’s director did not develop a corrective action plan 

to ensure the completion of these reports in the future.

The inconsistent oversight provided by facility directors and networks of 

VA’s controlled substance inspection programs is contrary to federal 

internal control standards. These standards state that management 

should document internal control issues, determine appropriate corrective 

actions for deficiencies on a timely basis, and complete and document 

these actions. The standards also state that management should 

establish and operate monitoring activities to monitor the internal control 

system and appropriately remediate identified deficiencies on a timely 

basis. Further, the standards state that an oversight body should also 

monitor the status of remediation efforts to ensure they are completed on 

a timely basis. Management, with oversight from the oversight body, 

should take corrective action as necessary to enforce accountability of 

individuals performing their internal control responsibilities.33 Without a 

process to ensure consistent monitoring by facility directors and networks 

that includes correcting missed inspections and other nonadherence and 

 32See VA, Memorandum on Controlled Substance Inspection Program (July 9, 2014).

33GAO-14-704G and GAO/AIMD-00-21.3.1.
Page 21 GAO-17-242 VA Controlled Substance Inspections

holding individuals accountable, VHA lacks reasonable assurance that 

the facilities are meeting the objective of the inspection program.34

VHA’s controlled substance inspection programs are one of the primary 

means VHA uses to reduce the risk of the diversion of controlled 

substances at its VA medical facilities. However, we found weaknesses in 

the implementation of these programs. In particular, because of gaps in 

facilities’ local inspection procedures and coordinator training, VHA 

cannot ensure its controlled substance inspection programs are being 

correctly implemented. As a result, VHA’s ability to detect diversion and 

protect its veterans from harm that can result from diversion—such as 

depriving them of needed pain medications—is limited. Further, without 

ongoing program monitoring by the facility directors and networks, 

including holding VA medical facilities accountable for identifying and 

correcting nonadherence to program requirements, VHA lacks reasonable 

assurance that implementation problems will be corrected on a timely 

basis.

Although our review focused on four selected facilities, the problems we 

identified in implementing and overseeing the inspection programs are 

consistent with the problems identified by the VA OIG in its reviews of 

controlled substance inspection programs at other VA medical facilities in 

2009 and again in 2014. These longstanding program implementation 

issues and weaknesses in oversight are cause for concern, and VHA has 

a responsibility to ensure that all of its controlled substance inspection 

programs are being implemented as it intends.

To help VHA achieve its objective of reducing the risk of diversion through 

effective implementation and oversight of the controlled substance 

inspection program, the Secretary of Veterans Affairs should direct the 

Under Secretary for Health to take the following six actions:

• ensure that VA medical facilities have established an additional control 

procedure, such as an alternate controlled substance coordinator or 

 34In addition to our findings in this report, in prior work we have also found inadequate 

oversight and accountability in other VHA programs, including an insufficient focus on 

medical facilities’ adherence to program requirements. As a result of these problems, 

among others, we placed VA health care on our High Risk List in 2015. See GAO-15-290. 

Conclusions

Recommendations for 

Executive Action
Page 22 GAO-17-242 VA Controlled Substance Inspections

additional inspectors, to help coordinators meet their responsibilities and 

prevent missed inspections;

• ensure that VA medical facilities have established a process where 

coordinators, in conjunction with appropriate stakeholders (e.g., 

pharmacy officials), periodically compare facility inspection procedures to 

VHA’s policy requirements and modify facility inspection procedures as 

appropriate;

• improve the training of VA medical facility controlled substance 

coordinators by ensuring the training includes the inspection procedures 

that VHA requires;

• ensure that medical facility directors have designed and implemented a 

process to address nonadherence with program requirements, including 

documenting the nonadherence and the corrective actions taken to 

remediate nonadherence or the actions that demonstrate why no 

remediation is necessary; 

• ensure that networks review their facilities’ quarterly trend reports and 

ensure facilities take corrective actions when nonadherence is identified; 

and 

• ensure that networks monitor their medical facilities’ efforts to establish 

and implement a review process to periodically compare facility 

inspection procedures to VHA’s policy requirements.

We provided a draft of this report to VA for review and comment. In its 

written comments, reproduced in appendix II, VA concurred with our six 

recommendations and described plans to implement them by October 

2017. The department also provided technical comments, which we 

incorporated as appropriate.

In its comments, VA stated that to address our first recommendation, 

VHA will require the medical facility directors to appoint an alternate 

coordinator for their controlled substance inspection programs—to 

provide back-up support to the coordinator—and add inspectors to ensure 

that the monthly inspections are not missed. VA noted that it will 

communicate these requirements to the facility directors in a memo that 

VHA Central Office will develop. VA also stated that the facilities’ quality 

managers will report to the networks on whether the facilities have 

appointed alternate coordinators and added inspectors. Facilities that 

have not met these requirements will develop action plans for doing so. 

The networks, in turn, will monitor the facilities’ implementation of the 

requirements and will provide to VHA Central Office any facility action 

Agency Comments 
Page 23 GAO-17-242 VA Controlled Substance Inspections

plans. VA also noted in its comments that officials within VHA Central 

Office will meet to decide if additional actions are needed to ensure that 

the medical facilities have alternate coordinators and additional 

inspectors. To ensure that the actions that VHA identified for medical 

facilities and networks to conduct on a recurring basis are taken, we 

encourage VHA to include them in its inspection program policy. 

To address our second recommendation, VA stated that VHA will require 

the medical facility directors to compare their current inspection program 

policies and procedures with VHA’s inspection program policy using a 

self-assessment guide that VHA developed. VA added that a 

multidisciplinary group of medical facility staff—including the coordinator 

and chief of pharmacy—will be responsible for conducting the 

comparison, while each facility’s quality management committee will 

review the results. If discrepancies between a facility’s procedures and 

VHA’s program requirements are identified, the facility must develop an 

action plan for addressing the issue, and the quality management 

committees will track the facilities’ progress in correcting discrepancies. 

The networks, in turn, will monitor that the facilities have completed the 

assessment and corrected any identified discrepancies and will provide 

VHA Central Office with any action plans. Furthermore, officials within 

VHA Central Office will meet to decide if additional actions are needed to 

ensure that the facilities have completed the comparison and corrected 

any identified discrepancies. To ensure that all of the actions that VHA 

identified for medical facilities and networks to conduct on a recurring 

basis are taken, we encourage VHA to include them in its inspection 

program policy. 

To address our third recommendation, VA stated that VHA will require the 

coordinators to complete its online controlled substance training course 

for inspectors—which includes detailed information about VHA’s 

inspection procedures. VA noted that it will include this requirement in the 

memo VHA plans to send to the medical facility directors to address our 

first recommendation, as described above. In addition, VA stated that 

VHA will update its inspection program policy to include this new training 

requirement for coordinators. VA added that the networks will monitor 

facilities’ adherence to the training requirement and will provide action 

plans to VHA Central Office for facilities whose coordinators have not 

completed the training course. According to VA, officials within VHA 

Central Office will also meet to decide if further actions are needed to 

ensure that the coordinators have taken the online training course for 

inspectors. In addition to including the new training requirement in its 

inspection program policy, we encourage VHA to include in policy the 
Page 24 GAO-17-242 VA Controlled Substance Inspections

networks’ responsibilities for monitoring facilities’ adherence to the 

training requirement. 

To address our fourth recommendation, VA stated that VHA Central 

Office will develop guidance directing the medical facility directors to 

assess adherence with VHA’s inspection program requirements at least 

quarterly. Further, the facilities’ quality management committees will 

review the monthly and quarterly inspection reports for adherence with 

VHA’s inspection program requirements and will ensure—when 

nonadherence is identified—that the facilities have established, 

documented, and completed necessary corrective actions. According to 

VA, the committees will also report progress on correcting identified 

nonadherence to the facility directors. In addition, the networks will 

monitor facilities’ progress in correcting nonadherence and will provide to 

VHA Central Office any action plans for nonadherent facilities. VA stated 

that officials within VHA Central Office will meet to determine if further 

actions are needed to ensure that nonadherence is corrected. To ensure 

that the actions that VHA identified for medical facilities and networks to 

conduct on a recurring basis are taken, we encourage VHA to include 

them in its inspection program policy. 

To address our fifth and sixth recommendations, VA stated that VHA 

Central Office will develop a memo outlining the requirements for 

networks to review their facilities’ quarterly inspection reports, ensure 

facilities take corrective actions when nonadherence is identified, and 

monitor facilities’ efforts to periodically compare their inspection 

procedures with VHA’s inspection policy requirements. VA noted that 

VHA Central Office will provide this memo to the network directors who, in 

turn, will disseminate the memo to the medical facility directors. VA stated 

that the facility quality managers will report to the networks on whether 

the facilities have taken corrective actions when nonadherence is 

identified in the quarterly reports as well as compared their inspection 

procedures with VHA’s policy requirements. VA further stated that the 

networks will provide VHA Central Office with action plans for any 

facilities with identified nonadherence, while officials within VHA Central 

Office will meet and decide if further actions are needed to ensure 

adherence. To ensure that the actions that VHA identified for medical

facilities and networks to conduct on a recurring basis are taken, we 

encourage VHA to include them in its inspection program policy. 
Page 25 GAO-17-242 VA Controlled Substance Inspections

As agreed with your office, unless you publicly announce the contents of 

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

report date. At that time, we will send copies to the appropriate 

congressional committees and the Secretary of Veterans Affairs. In 

addition, the report will be available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-7114 or williamsonr@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs are on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix III. 

Sincerely yours,

Randall B. Williamson

Director, Health Care
Appendix I: Use of Automated Dispensing 

Machine Reports to Identify Diversion of 

Controlled Substances at Selected VA Medical 

Facilities

Page 26 GAO-17-242 VA Controlled Substance Inspections

This appendix describes information about the four selected Department 

of Veterans Affairs (VA) medical facilities’ use of information available 

from their automated dispensing machines that store controlled 

substances in patient care areas.1 Specifically, we present information 

about the extent to which facilities we selected used information available 

from these machines, the type of information reviewed, and how facilities 

used the information to help identify potential diversion.2

Veteran Health Administration (VHA) policy states that VA medical facility 

staff may use information from electronic reports that facility automated 

dispensing machines generate to help identify potential drug diversion.3

Automated dispensing machines are computerized drug storage and 

dispensing medication cabinets located in medical facility patient care 

areas, including surgical and emergency care areas. These machines 

track information on medication dispensing activities that can be used to 

identify potential diversion, such as the number of times each nurse 

removes a controlled substance to administer to a patient, the type and 

amount of drug dispensed, and the patients to whom the drug was 

 1

The information in this appendix is based on our review of VHA inspection policies and 

interviews with VA medical facility officials and documents they provided. Specifically, we 

interviewed relevant officials from the four selected VA medical facilities, including 

pharmacy staff and coordinators, to discuss the types of reports they generate and how 

they use the information in these reports to help identify diversion of controlled 

substances. We reviewed documents they provided, including examples of monthly 

reports showing the amount and types of controlled substances that nurses and 

anesthesia clinicians removed from their inventory to administer to patients.

2

Regularly reviewing controlled substance activity reports generated from automated 

dispensing machines to identify potential outliers—and then further investigating these 

cases—is considered a leading practice to identify diversion by several organizations. For 

example, see Minnesota Hospital Association, Road Map to Controlled Substance 

Diversion Prevention 2.0, accessed November 7, 2016, 

http://www.mnhospitals.org/Portals/0/Documents/ptsafety/diversion/Road%20Map%20to%

20Controlled%20Substance%20Diversion%20Prevention%202.0.pdf, and K.H. Berge et 

al., “Diversion of Drugs Within Health Care Facilities, A Multiple-Victim Crime: Patterns of 

Diversion, Scope, Consequences, Detection, and Prevention,” Mayo Clinic Proceedings, 

vol. 87, no. 7 (2012). 

3

See Department of Veterans Affairs, Veterans Health Administration Handbook 1108.02,

Inspection of Controlled Substances (Washington, D.C.: Mar. 31, 2010) and Veterans 

Health Administration Directive 1108.02, Inspection of Controlled Substances (Nov. 28,

2016). 

Appendix I: Use of Automated Dispensing 

Machine Reports to Identify Diversion of 

Controlled Substances at Selected VA 

Medical Facilities
Appendix I: Use of Automated Dispensing 

Machine Reports to Identify Diversion of 

Controlled Substances at Selected VA Medical 

Facilities

Page 27 GAO-17-242 VA Controlled Substance Inspections

administered.4 Among the types of reports that can be generated from 

these machines are the dispensing practices report, which can provide 

information about potential drug diversion by identifying the average 

number of drug doses dispensed per month by users of the machines in a 

given medical facility area, and the transaction report, which provides 

details of dispensing activity by date, nurse accessing the medicine, and 

patient.

Below are examples of the information from automated dispensing 

machines that the four selected VA medical facilities used to help identify 

diversion.

• In VA medical facility A, a pharmacist reviews dispensing practices 

reports monthly and sends them to the nurse managers and head of 

anesthesiology for their review, pointing out certain outliers that the 

reports automatically flag.5 A facility official told us that the facility began 

reviewing the dispensing practices reports regularly in 2013 after a 

pharmacist used a report to investigate a discrepancy in which a 

physician’s order for hydromorphone that an emergency room nurse had 

dispensed could not be verified.6 The report showed that the nurse 

removed a significantly higher quantity of hydromorphone compared to 

his co-workers during a 12-month period. A pharmacist further reviewed 

the medical records of 10 patients the nurse treated and found he had 

dispensed hydromorphone without a physician’s order for 6 of the 

patients. In a state court system the nurse later pled guilty to diverting 

hydromorphone.

• In VA medical facility B, a pharmacist reviews dispensing practices 

reports monthly for the most frequently dispensed controlled substances 

to identify potential outliers. The pharmacist explained that the facility 

does not use specific criteria to define potential outliers and that the last 

 4

These automated dispensing machines generally require user identifier and passwords 

and have data processing technology and software that can be used to generate different 

types of reports to monitor controlled substance activities by clinician, patient, and drug 

type. Several manufacturers produce machines with various software capabilities. The 

reports’ names and content vary depending on the manufacturer.

5

Because the dispensing practices reports do not account for certain factors that may 

affect controlled substance activity (e.g., whether nurses are full or part-time), nurse 

managers and the head of anesthesia are better qualified to interpret activity given their 

knowledge of the staff and patients in their areas, according to a pharmacy official. 

6

This discrepancy was identified through the controlled substance inspection program.
Appendix I: Use of Automated Dispensing 

Machine Reports to Identify Diversion of 

Controlled Substances at Selected VA Medical 

Facilities

Page 28 GAO-17-242 VA Controlled Substance Inspections

time the facility identified a potential outlier was in 2012.7 In this case the 

pharmacist contacted the nurse’s manager, who explained that the nurse 

had provided a disproportionate share of the care to patients in that area, 

which accounted for the nurse’s higher-than-expected dispensing of 

controlled substances.

• VA medical facility C does not regularly review dispensing practices 

reports to help identify diversion. A pharmacy official from this facility told 

us he reviews discrepancy reports and may review controlled substance 

dispensing on occasion, for example, to help resolve a discrepancy with 

an automated dispensing machine, but that reviewing such data on a 

regular basis would be very time consuming.8

• In VA medical facility D, the inspection program coordinator has identified 

four nurse outliers as potential diverters since 2015 by analyzing 

dispensing practices reports, and the coordinator told us that she has 

provided the results of her analysis to other facility officials for further 

investigation. The coordinator focuses her reviews on oxycodone and 

fentanyl because they are highly addictive and are most likely to be 

diverted, according to the coordinator. The coordinator reviews the total 

amount of these drugs that each nurse has removed from the automated 

dispensing machines compared to other nurses in the same patient care 

areas. After identifying a potential outlier, to determine if the nurse 

continues to be an outlier the coordinator reviews additional information. 

For example, the coordinator would review the nurse’s dispensing activity 

over a different time period as well as the types of patients the nurse has 

treated, since some patients (e.g., those with cancer) have higher than 

average use of controlled substances.9

 7

According to the pharmacist, potential outliers depend on the patient care area as well as 

the difference in the amounts of controlled substance a nurse dispensed compared to the 

nurse’s peers in the area. To illustrate, she explained that nurses should generally 

dispense the same amounts of controlled substances in the intensive care unit and if one 

nurse had removed a significantly higher amount in a month compared to another nurse in 

that unit, the nurse would be considered an outlier. In comparison, large differences may 

be reasonable in other units with patients more likely to use different amounts of controlled 

substances, according to this pharmacist.

8

The discrepancy is recorded when an automated dispensing machine’s electronic 

controlled substance inventory count differs from the actual count.

9

The coordinator told us that if a nurse’s dispensing activity is two standard deviations or 

higher than the average amount dispensed the coordinator considers the nurse a potential 

outlier.According to the coordinator, this review process can take about 3 to 5 months.
Appendix II: Comments from the Department 

of Veterans Affairs

Page 29 GAO-17-242 VA Controlled Substance Inspections

Appendix II: Comments from the Department 

of Veterans Affairs
Appendix II: Comments from the Department 

of Veterans Affairs

Page 30 GAO-17-242 VA Controlled Substance Inspections
Appendix II: Comments from the Department 

of Veterans Affairs

Page 31 GAO-17-242 VA Controlled Substance Inspections
Appendix II: Comments from the Department 

of Veterans Affairs

Page 32 GAO-17-242 VA Controlled Substance Inspections
Appendix II: Comments from the Department 

of Veterans Affairs

Page 33 GAO-17-242 VA Controlled Substance Inspections
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 34 GAO-17-242 VA Controlled Substance Inspections

Randall B. Williamson, (202) 512-7114 or williamsonr@gao.gov

In addition to the contact named above, Marcia A. Mann, Assistant 

Director; Pamela Dooley, Analyst-in-Charge; Mary Ann Curran-Dozier; 

and Carmen Rivera-Lowitt made key contributions to this report. Also 

contributing were Muriel Brown, Krister Friday, and Jacquelyn Hamilton.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100546)
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