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. 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 with the coordinator to develop an action plan to improve performance and continue to monitor for additional missed inspections. 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. VHA also requires that networks review the quarterly trend reports during an annual quality management visit to the medical facility. 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. 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. 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 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. 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 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. 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. 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 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. 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. 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. 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. 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 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 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. The one VA medical facility that had implemented all of the selected VHA- required 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 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. 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 bi- monthly meetings often focus on VHA’s required inspection procedures, two of the four coordinators told us that they did not regularly participate in these meetings. 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. 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. 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, VHA cannot ensure that all coordinators have adequate information to determine if the inspections have been completed as required. 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. 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. 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. 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. Without a process to ensure consistent monitoring by facility directors and networks that includes correcting missed inspections and other nonadherence and holding individuals accountable, VHA lacks reasonable assurance that the facilities are meeting the objective of the inspection program. 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 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 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 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. 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. 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. 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. 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. 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 administered. 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. 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. 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 time the facility identified a potential outlier was in 2012. 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. 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. 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.

Summary: 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. 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. 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.