Department of Veterans Affairs 

Office of Inspector General 

Audit of 

Veterans Health Administration 

Mental Health Initiative Funding 

Report No. 09-00091-103 April 6, 2009

VA Office of Inspector General 

Washington, DC 20420 
To Report Suspected Wrongdoing in VA Programs and Operations 

Telephone: 1-800-488-8244 between 8:30AM and 4PM Eastern Time, 

 Monday through Friday, excluding Federal holidays 

 E-Mail: vaoighotline@va.gov 

 
 

 

 

 

 

Audit of Veterans Health Administration Mental Health Initiative Funding 

Department of 

Veterans Affairs Memorandum

Date: April 6, 2009 

From:	 Assistant Inspector General for Auditing (52) 

Subj:	 Audit of Veterans Health Administration Mental Health Initiative Funding 

(Report No. 09-00091-103) 

To:	 Under Secretary for Health (10) 

1. In its report to the full House of Representatives regarding military construction, 

veterans’ affairs, and related agency appropriations for Fiscal Year (FY) 2009, the 

House Committee on Appropriations directed the VA Office of Inspector General to 

audit the mental health initiative (MHI) funding. Our objective was to determine if 

the Veterans Health Administration (VHA) had an adequate process in place to 

ensure funds allocated for MHI were tracked and used accordingly. 

2. VHA’s Mental Health Strategic Plan identified a myriad of initiatives designed to 

help eliminate deficiencies and gaps in mental health services. In FY 2008, VHA 

allocated $371 million to fund these initiatives. To determine if VHA adequately 

tracked the use of these funds, we visited six randomly selected medical facilities and 

reviewed allocation and tracking records related to MHI funding. VHA had not 

developed performance metrics to identify the intended outcome of each initiative so 

we did not determine if these outcomes met VHA’s intent. 

3. VHA staff adequately tracked funds allocated for the MHI in FY 2008. The 

Office of Mental Health Service (OMHS) distributed funds through the Office of 

Finance for specific programs to medical facilities using transfer disbursement 

authorities. In addition, OMHS provided award memorandums explaining the 

funded program, necessary resources, and the funding amounts. Medical facility 

fiscal staff at each location established their own multiple fund control points and 

used spreadsheets to track salary and purchase order costs for the MHI. The Office 

of Finance staff received reports on the amounts spent and compared with the 

amounts allocated. Medical facility mental health care staff reported on personnel 

actions associated with filling the MHI positions and if the positions were filled 

internally, when the old positions were backfilled. OMHS staff monitored these 

personnel reports to track the status of the MHI positions. In FY 2009, the Office of 

Finance established standardized account classification codes for the MHI funds that 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

could further enhance transparency and accountability over how MHI funding is 

spent in the future. 

4. Funds allocated for MHI were used as intended. VHA allocated $19.4 million for 

the MHI to the six medical facilities we reviewed. We confirmed that $18.2 million 

(94 percent) of the $19.4 million were used for the MHI. The remaining $1.2 million 

consisted of numerous small dollar purchases; therefore, we reviewed those 

purchases only to the extent we were able to confirm the funds were used for mental 

health. We did not track the $1.2 million to specific programs. 

•	 Personnel Costs: In FY 2008, VHA spent about $16.4 of the $17.7 million 

allocated (a difference of $1.3 million) to fill 225 positions at our six sampled 

medical facilities. Medical facilities did not spend the remaining $1.3 million on 

personnel because of delays in the hiring process. According to facility 

personnel, the primary causes for these delays were difficulty recruiting because 

of facility location, noncompetitive salaries, lack of qualified applicants, or in 

some cases, delays resulting from the time needed to validate physician 

credentials or complete background checks. In March 2008, OMHS issued a 

memorandum acknowledging that facilities had unused funds from hiring delays. 

This memo identified selected opportunities where facilities could spend these 

unused funds and still meet the intent of the MHI. This included local 

advertising and related recruitment expenses, relocation expenses, staff training 

and education activities, and furniture for mental health areas. The facilities’ use 

of the $1.3 million was included in our review of other costs. 

• Other Costs: In FY 2008, the six medical facilities we reviewed spent about 

$3 million ($1.7 million allocated and $1.3 million in unused personnel funds) 

for other costs not related to personnel salaries. Facility records show that these 

funds were used for mental health activities such as purchasing equipment and 

furniture and paying travel costs to perform home based primary care. We 

conducted a more in-depth review of $1.8 million of the $3 million other 

expenditures and confirmed that they were used for the MHI. 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

5. We provided VHA our draft report for their review. The Under Secretary for 

Health agreed with the findings and noted that existing mental health performance 

measures address mental health services as a whole. Further, VHA is currently 

developing metrics for monitoring the implementation of the requirements listed in 

the Uniform Mental Health Services Handbook. 

(original signed by:) 

Belinda J. Finn 

Attachment A—Background 

Attachment B—Scope and Methodology 

Attachment C—MHI Allocations by Medical Facility 

Attachment D—Under Secretary for Health’s Comments 

Attachment E—OIG Contact and Staff Acknowledgments 

Attachment F—Report Distribution 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment A 

Background 

The President’s New Freedom Commission identified six goals and made a total of 

19 recommendations to address gaps in mental health services. In FY 2005, the Veterans 

Health Administration (VHA) developed a 5-year Mental Health Strategic Plan (MHSP) 

to address the goals identified by the Commission. The MHSP identified initiatives 

designed to improve veterans’ access to mental health care and to develop new or better 

procedures for assessment of mental health needs, clinical models of care, and 

coordination of mental health care efforts. The initiatives did not identify the specific 

resources needed; rather, it described the duties or services that were needed. For 

example, the initiatives included: 

•	 Developing a process for assessing mental health patients. 

•	 Developing clinical models of care and guidelines to integrate mental health and 

physical health. 

•	 Developing service agreements between primary care and mental health care. 

•	 Providing enhanced mental health services in community based outpatient clinics that 

can cover basic mental health needs and ensure appropriate referrals to medical 

facilities for more specialized care. 

In November 2006, the Government Accountability Office reported that VA did not 

adequately track spending for the initiatives.1

 They recommended that VA track the 

extent to which the resources allocated for planning for these initiatives is actually spent 

on them. 

Mental Health Initiative Funding 

In the FY 2008 budget submission to Congress, VHA requested $27.2 billion for medical 

services which included $360 million for the mental health initiative (MHI). Congress 

appropriated $29.1 billion to VHA for medical services but did not specify an amount for 

the MHI. In FY 2008, VHA augmented the $360 million it requested for the MHI with 

funds received as part of its overall funding for medical services and allocated 

$371 million to medical facilities for the MHI. Attachment C shows FY 2008 allocations 

by medical facility. 

Allocation Process 

The Office of Mental Health Services (OMHS) refined their method of allocating the 

MHI funding over the years. In FYs 2005 and 2006, OMHS allocated MHI funds to 

1

GAO, VA Healthcare: Spending for Mental Health Strategic Plan Initiatives Was Substantially Less Than Planned, 

GAO-07-66, (Washington D.C.: November 21, 2006). 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment A 

medical facilities based on proposals that detailed the specific projects and how the 

facilities would spend those MHI funds. In FY 2007 and 2008, OMHS allocated funds to 

continue the initiatives started in prior fiscal years (primarily to pay the salaries of MHI 

staff already hired) and to implement some selected new nationwide initiatives, such as 

having a Suicide Prevention Coordinator at each facility. 

In the FY 2008 VA Budget Submission, VHA requested funding to provide resources to 

continue the implementation of the MHI. VHA allocated these funds to programs that 

covered the specific initiatives identified in the MHSP. For example, the mental health 

primary care integration program covered the following initiatives. 

1. Assign a staff person for development of educational programs. 

2. Develop a joint education plan. 

3. Develop a process for assessing mental health patients and collect, monitor, and 

access electronic mental health databases. 

4. Develop clinical models of care and guidelines to integrate mental health and physical 

health. 

5. Develop service agreements between primary and mental health care. 

6. Implement current priorities and major projects. 

7. Develop evidence-based guidelines for performance measures. 

In September 2008, OMHS issued VHA Handbook 1160.01, Uniform Mental Health 

Services in VA Medical Centers and Clinics, which identified minimum clinical 

requirements for VHA mental health services. Each facility prepared an analysis 

comparing the services identified in the handbook to the services they provided at their 

facility. OMHS used these analyses to allocate funds in FY 2009 for new initiatives. 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment B 

Scope and Methodology 

We conducted our work from October 2008 to March 2009. We reviewed the MHI 

funding for FY 2008 and applicable laws, regulations, policies, procedures, and 

guidelines. We applied a probability proportional sample design to the total amount of 

the MHI funding allocated nationwide and randomly selected six medical facilities for 

review. 

•	 New York Harbor Healthcare System (New York, NY)—Veterans Integrated Service 

Network (VISN) 3 

•	 Miami VA Healthcare System (Miami, FL)—VISN 8 

•	 Clement J. Zablocki VA Medical Center (Milwaukee, WI)—VISN 12 

•	 G.V. (Sonny) Montgomery VA Medical Center (Jackson, MS)—VISN 16 

•	 Alexandria VA Medical Center (Alexandria, LA)—VISN 16 

•	 VA San Diego Healthcare System (San Diego, CA)—VISN 22 

We interviewed OHMS and Office of Finance staff in VA Central Office to determine the 

process for funding the MHI and the mechanisms for tracking and ensuring 

accountability of the funds. VHA had not developed performance metrics to identify the 

intended outcome of each MHI, so we did not determine if the outcome of each MHI was 

as VHA intended. As part of our sample for the initiatives at the six medical facilities, 

we: 

•	 Reviewed award memorandums sent by OMHS staff to medical facilities that 

identified how the funds were to be used. 

•	 Reviewed the MHI tracking reports to determine how the funds were used. 

•	 Interviewed VISN and medical facility staff to determine whether funds were used for 

the intended initiatives. 

•	 Interviewed medical facility staff hired into the MHI funded positions to determine if 

the staff was performing MHI duties. 

•	 Reviewed salary cost information (payroll reports and transfer disbursement 

authorities) and purchase orders to validate the MHI expenditures. 

We assessed the reliability of automated data by comparing allocation and expenditure 

data from both the Office of Finance and the OMHS to transfer disbursement authorities, 

salary records, purchase orders, and obligation documents. We also assessed the 

reliability of staffing acquisition data maintained by the OMHS through interviews with 

medical facility staff. We concluded that the Office of Finance’s allocation and 

expenditure data and OMHS’s allocation and staffing data used to accomplish the audit 

objectives was sufficiently reliable. However, the OMHS expenditure data was not 

reliable and its data was not used to reach audit conclusions. 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment B 

We conducted this audit in accordance with generally accepted government auditing 

standards for performance audits. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

conclusion based on our audit objectives. We believe that the evidence obtained provides 

a reasonable basis for our conclusion based on our audit objectives. 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment C 

Table 1. MHI Allocations by Medical Facility—FY 2008 

VISN Medical Facility Allocation 

1 Togus, ME $2,001,163 

1 White River Junction, VT $2,099,884 

1 Bedford, MA $2,183,463 

1 VA Boston HCS, MA $3,839,034 

1 Manchester, NH $1,219,598 

1 Northampton, MA $1,138,392 

1 Providence, RI $3,377,041 

1 VA Connecticut HCS, CT $4,358,718 

2 Western New York HCS, NY $10,121,751 

3 Bronx, NY $1,727,426 

3 New Jersey HCS, NJ $4,450,630 

3 VA Hudson Valley HCS, NY $2,438,651 

3 New York Harbor HCS, NY $2,587,314 

3 Northport, NY $2,340,099 

4 Wilmington, DE $1,669,014 

4 Altoona, PA $1,007,356 

4 Butler, PA $1,151,223 

4 Clarksburg, WV $999,329 

4 Coatesville, PA $1,002,461 

4 Erie, PA $855,888 

4 Lebanon, PA $2,243,761 

4 Philadelphia, PA $3,499,982 

4 Pittsburgh, PA $3,903,005 

4 Wilkes-Barre, PA $1,762,022 

5 Baltimore HCS, MD $5,318,631 

5 Martinsburg, WV $3,477,553 

5 Washington, DC $4,857,142 

6 Beckley, WV $526,299 

6 Durham, NC $2,550,126 

6 Fayetteville, NC $1,344,178 

6 Hampton, VA $2,072,277 

6 Asheville, NC $1,269,134 

6 Richmond, VA $3,893,014 

6 Salem, VA $2,776,221 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment C 

VISN Medical Facility Allocation 

6 Salisbury, NC $2,966,597 

7 Atlanta, GA $5,111,491 

7 Augusta, GA $2,644,264 

7 Birmingham, AL $2,441,580 

7 Charleston, SC $1,716,702 

7 Columbia, SC $3,129,513 

7 Dublin, GA $1,564,483 

7 Central Alabama Veterans HCS, AL $2,295,266 

7 Tuscaloosa, AL $2,212,612 

8 Bay Pines, FL $5,924,099 

8 Miami, FL $3,946,667 

8 West Palm Beach, FL $3,419,261 

8 Gainesville, FL $7,505,834 

8 San Juan, PR $3,574,536 

8 Tampa, FL $8,440,384 

8 Orlando, FL $2,017,901 

9 Huntington, WV $1,216,800 

9 Lexington, KY $1,602,438 

9 Louisville, KY $2,892,603 

9 Memphis, TN $2,190,641 

9 Mountain Home, TN $4,218,579 

9 Middle Tennessee HCS, TN $4,061,263 

10 Chillicothe, OH $1,360,939 

10 Cincinnati, OH $1,756,764 

10 Cleveland, OH $1,874,513 

10 Dayton, OH $2,125,183 

10 Columbus, OH $1,528,959 

11 Ann Arbor, MI $2,798,288 

11 Battle Creek, MI $3,683,170 

11 Danville, IL $1,085,380 

11 Detroit, MI $3,160,497 

11 Indianapolis, IN $2,717,384 

11 Northern Indiana HCS, IN $2,006,298 

11 Saginaw, MI $1,509,675 

12 Jesse Brown VAMC (Chicago), IL $1,800,378 

12 North Chicago, IL $1,265,088 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment C 

VISN Medical Facility Allocation 

12 Hines, IL $1,450,592 

12 Iron Mountain, MI $1,488,323 

12 Madison, WI $2,294,222 

12 Tomah, WI $587,302 

12 Milwaukee, WI $4,049,471 

15 Kansas City, MO $8,004,482 

15 St. Louis, MO $8,632,391 

16 Alexandria, LA $2,017,549 

16 Biloxi, MS $3,095,489 

16 Fayetteville, AR $3,493,913 

16 Houston, TX $5,099,336 

16 Jackson, MS $2,350,483 

16 Little Rock, AR $3,263,852 

16 Muskogee, OK $2,460,313 

16 New Orleans, LA $2,574,257 

16 Oklahoma City, OK $2,578,068 

16 Shreveport, LA $2,882,795 

17 Dallas, TX $6,955,696 

17 San Antonio, TX $4,189,598 

17 Temple, TX $7,523,509 

18 Albuquerque, NM $4,726,895 

18 Amarillo, TX $1,335,752 

18 Big Spring, TX $1,211,375 

18 Phoenix, AZ $2,654,484 

18 Northern Arizona HCS $1,882,508 

18 Tucson, AZ $2,001,610 

18 El Paso, TX $881,513 

19 Fort Harrison, MT $1,252,430 

19 Cheyenne, WY $1,520,157 

19 Denver, CO $3,836,772 

19 Grand Junction, CO $352,489 

19 Salt Lake City, UT $2,515,414 

19 Sheridan, WY $2,339,718 

20 Anchorage, AK $782,566 

20 Boise, ID $1,500,147 

20 Portland, OR $3,119,452 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment C 

VISN Medical Facility Allocation 

20 Roseburg, OR $1,360,278 

20 VA Puget Sound, WA $3,141,337 

20 Spokane, WA $846,185 

20 Walla Walla, WA $1,231,935 

20 White City, OR $543,225 

21 Honolulu, HI $2,502,808 

21 Fresno, CA $1,687,146 

21 N. California, CA $5,028,831 

21 Palo Alto, CA $9,429,350 

21 Reno, NV $1,336,631 

21 San Francisco, CA $2,785,866 

22 Las Vegas, NV $1,964,501 

22 Long Beach, CA $2,892,338 

22 Loma Linda, CA $3,413,124 

22 San Diego, CA $4,239,784 

22 West Los Angeles, CA $9,862,895 

23 Fargo, ND $2,018,869 

23 Sioux Falls, SD $1,331,935 

23 Black Hills HCS, SD $1,086,499 

23 Minneapolis, MN $6,738,690 

23 VA Nebraska Western Iowa HCS, NE $5,544,336 

23 St. Cloud, MN $1,263,440 

Total $370,982,736 

Note: VISNs 13 and 14 were combined to form VISN 23. 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment D 

Department of 

Veterans Affairs Memorandum

Date: March 26, 2009 

From:	 Under Secretary for Health (10) 

Subj: OIG Draft Report: Audit of the Veterans Health Administration Mental Health 

Initiative Funding (Project No. 2009-00091-R5-0006/WebCIMS 425238) 

To:	 Assistant Inspector General for Auditing (52) 

1. Thank you for the opportunity to respond to this draft report, which reflects positively 

on VHA’s effective oversight and management of funds allocated in Fiscal Year 2008 for 

mental health initiative (MHI) funding. I agree with your findings, and am particularly 

pleased with the significant improvements we have made developing a viable process 

to ensure that funds allocated for the MHI are tracked and used appropriately. 

2. I would, however, like to make a point about your statement that “VHA had not 

developed performance metrics to identify the intended outcome of each initiative so we 

did not determine if these outcomes met VHA’s intent.” While not specifically focusing 

on MHI funded programs, existing mental health performance measures address mental 

health services as a whole, and often incorporate related MHI program activities. 

Metrics for monitoring the implementation of the requirements listed in the Uniform 

Mental Health Services Handbook are currently being developed. 

3. Your findings have been useful to us, and we will continue to strongly support full 

implementation of MHI projects. If additional information is required, please have a 

member of your staff contact Margaret M. Seleski, Director, Management Review 

Service, at 202-461-8470. 

 (original signed by:) 

Michael J. Kussman, MD, MS, MACP 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment E 

OIG Contact and Staff Acknowledgments 

OIG Contact Larry Reinkemeyer 

816-997-6940 

Acknowledgments Robin Frazier 

Tim Halpin 

Patricia Hudon 

Joe Janasz 

Lance Kramer 

Russ Lewis 

Henry Mendala 

Daniel Morris 

Lynn Scheffner 

Oscar Williams 

VA Office of Inspector General 

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Audit of Veterans Health Administration Mental Health Initiative Funding 

Attachment F 

Report Distribution 

VA Distribution 

Office of the Secretary 

Veterans Health Administration 

Veterans Benefits Administration 

National Cemetery Administration 

Assistant Secretaries 

Office of General Counsel 

Non-VA Distribution 

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain on the OIG 

Web site for at least 2 fiscal years after it is issued. 

VA Office of Inspector General 

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