VA and Defense Health Care: Evolving Health Care Systems Require Rethinking of Resource Sharing Strategies (Letter Report, 05/17/2000, GAO/HEHS-00-52). Pursuant to a congressional request, GAO provided information on the Department of Veterans Affairs' (VA) and Department of Defense's (DOD) shared health care resources, focusing on: (1) the benefits gained from sharing; (2) the extent to which VA and DOD are sharing health care resources; and (3) barriers and challenges VA and DOD face in their efforts to share health resources. GAO noted that: (1) as a provider of services, VA most frequently cited increased revenue as a benefit and DOD most often cited the opportunity to enhance staff proficiency; (2) VA and DOD providers also cited fuller utilization of staff and equipment as benefits; (3) as a receiver of services, VA cited improved beneficiary access and DOD cited reduced cost of services as benefits; (4) for fiscal year (FY) 1998, sharing activity occurred under 412, or about three-quarters, of the existing local sharing agreements; (5) direct medical care accounted for about two-thirds of services exchanged--the remaining one-third included ancillary services, such as laboratory testing, and support services, such as laundry; (6) most of this activity occurred under a few agreements and at a few facilities, usually in locations where multiple DOD facilities were near VA hospitals or where DOD facilities provided specialized services; (7) overall, 75 percent of direct medical care episodes occurred under just 12 agreements for inpatient care, 19 agreements for outpatient care, and 12 agreements for ancillary care; (8) reimbursements for care provided under sharing agreements were similarly concentrated; (9) in FY 1998, three-quarters of the $29 million in reimbursements for provided care was collected by only 26 of the 145 facilities participating in active agreements; (10) at the joint venture sites, where another $21 million in services was exchanged, GAO found activity was concentrated at the two locations where VA and DOD integrated many hospital services and administrative processes; (11) specifically, almost 300,000 episodes of care were provided, and $3.2 million in cost avoidance was measured at these two locations; (12) two barriers identified most often by both VA and DOD are: (a) inconsistent reimbursement and budgeting policies; and (b) burdensome agreement approval processes; (13) a more recent barrier centers on DOD policies and guidance in implementing its managed care program; (14) a DOD legal opinion and subsequent policy in effect prohibits military treatment facilities from using existing sharing agreements with VA for direct medical care; (15) consequently, DOD's contracts with private health care companies may supersede the sharing of direct medical care between VA and DOD facilities; and (16) while the policy supports VA facilities' participation in the contractors' health care networks, the military Surgeons General and local VA and DOD officials told GAO that the policy is causing confusion over what services can be shared. --------------------------- Indexing Terms ----------------------------- REPORTNUM: HEHS-00-52 TITLE: VA and Defense Health Care: Evolving Health Care Systems Require Rethinking of Resource Sharing Strategies DATE: 05/17/2000 SUBJECT: Health care services Health services administration Veterans benefits Interagency relations Joint ventures Health resources utilization Data bases IDENTIFIER: DOD TRICARE Program VA Veterans Integrated Service Network CHAMPUS VA/DOD Health Care Resources Sharing Program VA/DOD Federal Health Care Resources Sharing Database Civilian Health and Medical Program of the Uniformed Services ****************************************************************** ** This file contains an ASCII representation of the text of a ** ** GAO Testimony. ** ** ** ** No attempt has been made to display graphic images, although ** ** figure captions are reproduced. Tables are included, but ** ** may not resemble those in the printed version. ** ** ** ** Please see the PDF (Portable Document Format) file, when ** ** available, for a complete electronic file of the printed ** ** document's contents. ** ** ** ****************************************************************** GAO/HEHS-00-52 Appendix I: Scope and Methodology 36 Appendix II: Facilities With Active Agreements 39 Appendix III: Other Medical Services Provided 45 Appendix IV: Comments From the Department of Veterans Affairs 48 Appendix V: Comments From the Department of Defense 54 Appendix VI: GAO Contacts and Staff Acknowledgments 56 Table 1: Inpatient, Outpatient, and Ancillary Care Provided and Reimbursements Collected by VA and DOD Under Sharing Agreements, Fiscal Year 1998 12 Table 2: Facilities Collecting Most Reimbursements Under Sharing Agreements in Fiscal Year 1998, by Provider of Services 13 Table 3: Volume of Activity at Joint Ventures by Type of Joint Venture, Fiscal Year 1998 18 Table 4: Joint Purchasing Arrangements Among VA and DOD Facilities Participating in Local Sharing Agreements, Fiscal Year 1998 21 Table 5: DOD Services' Response Rates 38 Table 6: VA Facilities With Active Local Sharing Agreements and Their Locations 39 Table 7: DOD Facilities With Active Sharing Agreements and Their Locations 43 Table 8: Other Medical Services Provided by VA 45 Table 9: Other Medical Services Provided by DOD 46 Table 10: Support Services Provided by VA and DOD and Reimbursements Collected in Fiscal Year 1998 47 Figure 1: Types of Benefits Reported by VA and DOD Survey Respondents 9 Figure 2: Locations of Facilities Collecting Most Reimbursements Under Sharing Agreements in Fiscal Year 1998 16 AFB Air Force Base CHAMPUS Civilian Health and Medical Program of the Uniformed Services DOD Department of Defense MEPS military entrance processing station MMSO military medical support office MTF military treatment facility VA Department of Veterans Affairs VAMC VA medical centers VISN Veterans Integrated Service Network Health, Education, and Human Services Division B-282020 May 17, 2000 The Honorable Clifford Stearns Chairman, Subcommittee on Health Committee on Veterans Affairs House of Representatives The Honorable Terry Everett Chairman, Subcommittee on Oversight and Investigations Committee on Veterans Affairs House of Representatives The Honorable Christopher Shays Chairman, Subcommittee on National Security, Veterans Affairs and International Relations Committee on Government Reform House of Representatives The Department of Veterans Affairs (VA) and the Department of Defense (DOD) provide health care services to more than 12 million beneficiaries. VA and DOD operate a total of more than 700 medical facilities at a combined cost of about $34 billion annually. To promote more cost-effective use of these resources and more efficient delivery of care, we recommended in 1978 legislation that would encourage the sharing of federal health care resources between VA and DOD.1 In May 1982, the Congress enacted the VA and DOD Health Resources Sharing and Emergency Operations Act (Sharing Act).2 Since then, we have identified several eligibility and reimbursement policies that have limited sharing between VA and DOD3; legislation has been enacted to remove these obstacles.4 To learn more about the status of sharing, you asked us to (1) describe the benefits gained from sharing, (2) determine the extent to which VA and DOD are sharing health care resources, and (3) identify any barriers and challenges VA and DOD face in their efforts to share health resources. In addition, you asked us to identify opportunities for improving VA and DOD's annual reporting to the Congress on their sharing activities. For this review, we spoke with VA and DOD headquarters officials and obtained information through a mail survey sent to over 400 VA medical facilities and DOD units participating in local sharing agreements. We conducted site visits at four VA and three DOD medical facilities participating in local sharing agreements in Florida, Illinois, and Virginia. In addition, we visited two sites, New Mexico and Nevada, that have initiated joint venture agreements to provide integrated VA and DOD services in a single facility. We also visited the joint venture site in Florida, where VA and DOD share space in a new jointly constructed facility, and conducted telephone interviews with officials at the other sites where VA and DOD share space: Alaska, California, Hawaii, Oklahoma, and Texas. We also analyzed information in the VA/DOD Federal Health Care Resources Sharing Database, which is solely maintained by VA and used to develop the agencies' joint annual reports to the Congress, and held discussions with DOD's managed care contractors to obtain their views on the resource sharing program. (For details on our methodology, see app. I.) We conducted our work between January 1999 and April 2000 in accordance with generally accepted government auditing standards. Over the last 20 years, VA and DOD have pursued opportunities to share health care resources through local agreements, joint ventures, national sharing initiatives, and other collaborative efforts. As both providers and receivers of services, local VA and DOD officials identified a number of benefits--qualitative and quantitative--resulting from the sharing program. As a provider of services, VA most frequently cited increased revenue as a benefit and DOD most often cited the opportunity to enhance staff proficiency. VA and DOD providers also cited fuller utilization of staff and equipment as benefits. As a receiver of services, VA cited improved beneficiary access and DOD cited reduced cost of services as benefits. In addition, some cost savings were measured. For example, some facilities compared the costs associated with sharing and the costs of purchasing services from private providers. Some cost savings were measured by determining the costs avoided. Through our survey and fieldwork, we found that while a majority of the local and joint venture sharing agreements were active, activity was concentrated. For fiscal year 1998, sharing activity occurred under 412, or about three-quarters, of the existing local sharing agreements. Direct medical care accounted for about two-thirds of services exchanged; the remaining one-third included ancillary services, such as laboratory testing, and support services, such as laundry. However, most of this activity occurred under a few agreements and at a few facilities, usually in locations where multiple DOD facilities were near VA hospitals or where DOD facilities provided specialized services. Overall, 75 percent of direct medical care episodes occurred under just 12 agreements for inpatient care, 19 agreements for outpatient care, and 12 agreements for ancillary care. Reimbursements for care provided under sharing agreements--another indicator of activity--were similarly concentrated. In fiscal year 1998, three-quarters of the $29 million in reimbursements for provided care was collected by only 26 of the 145 facilities participating in active agreements. At the joint venture sites, where another $21 million in services was exchanged, we found activity was concentrated at the two locations where VA and DOD integrated many hospital services and administrative processes. Specifically, almost 300,000 episodes of care were provided, and $3.2 million in cost avoidance was measured at these two locations. Participation by local facilities in 10 nationwide sharing efforts or other collaborative efforts outside the Sharing Act was minimal. VA and DOD officials reported a number of barriers that could jeopardize current and future sharing agreements. Among the barriers identified most often by both VA and DOD, two are long-standing barriers that we have previously reported on: inconsistent reimbursement and budgeting policies and burdensome agreement approval processes. The lack of flexibility to negotiate rates that are mutually beneficial has discouraged sharing and impeded collaboration. A more recent barrier--one that has major implications for the nature and future of sharing--centers on DOD policies and guidance in implementing its managed care program. Specifically, a DOD legal opinion and subsequent policy in effect prohibits military treatment facilities (MTF) from using existing sharing agreements with VA for direct medical care--which constitute the majority of the sharing agreements. Consequently, DOD's contracts with private health care companies may supersede the sharing of direct medical care between VA and DOD facilities. While the policy supports VA facilities' participation in the contractors' health care networks, the military Surgeons General and local VA and DOD officials told us that the policy is causing confusion over what services can be shared. In light of this policy and other recent changes in VA's and DOD's health care systems, we are recommending that DOD reevaluate its position regarding sharing and, together with VA, determine what actions are needed to ensure the most cost-effective use of federal health care resources. Despite the benefits and activity reported to us through our survey and fieldwork, the lack of comparable historical information precluded an assessment of the sharing program's actual progress. Although VA and DOD's joint database shows substantial growth in the number of local sharing agreements, it does not show the volume of activity--the actual number of services provided and the compensation for each of these services--under these agreements, nor does it capture activity under the joint venture agreements and the 10 national initiatives. Collaborative efforts occurring outside the act--another important indicator of sharing--are also not systematically recorded. In addition, data in VA and DOD's joint database are of questionable accuracy. For example, we found discrepancies between the number of agreements reported in the database and the number actually in effect. Without a baseline of activity or complete and accurate data, we could not analyze trends in the level of sharing activity over the years. To better enable VA and DOD to monitor sharing activity and measure the program's progress, we are recommending that VA and DOD broaden the scope of the information captured in their joint database and improve the quality of the information. VA operates one of the world's largest health care systems, spending about $18 billion a year to provide care to approximately 4.1 million veterans who receive health care through 181 VA medical centers and 272 outpatient clinics nationwide. DOD spends about $16 billion on health care for over 5 million beneficiaries, including active duty personnel, military retirees, and dependents. Most DOD health care is provided at the more than 500 Army, Navy, and Air Force military hospitals and clinics worldwide. To encourage the sharing of federal health care resources between VA and DOD, the Sharing Act authorizes VA medical centers (VAMC) and DOD's MTFs to become partners and enter into sharing agreements to buy, sell, and barter medical and support services. The law states that the head of each medical facility of either agency can enter into agreements; local officials propose the agreements, and VA and DOD headquarters officials review the proposals for final approval. Agreements can be valid for up to 5 years. VA and DOD sharing activities fall into four categories: � Local sharing agreements allow VAMCs and MTFs to exchange health and support services to maximize their resources. Under a local sharing agreement, partners can be a provider of services, a receiver of services, or both. Health services shared under these agreements include inpatient and outpatient care; ancillary services, such as diagnostic and therapeutic radiology; dental care; and specialty care services, such as services for the treatment of spinal cord injury. Shared support services include administration and management, research, education and training, patient transportation, and laundry. � Joint venture sharing agreements , as distinguished from local sharing agreements, aim to avoid costs by pooling resources to build new facilities or to capitalize on existing facilities. There are three types of joint ventures: (1) VA and DOD services integrated in a single facility, (2) VA sharing DOD facility space, and (3) the construction of a separate VA facility adjacent to an existing DOD facility on DOD property. Joint ventures require more cooperation and flexibility than local agreements do because two separate health care systems must develop multiple sharing agreements that allow them to operate as one system. VA and DOD partners must work together to draft these agreements and establish operational procedures for the joint facility, such as joint medical reviews and patient recordkeeping. � National sharing initiatives are being developed by the VA/DOD Executive Council, a management-level group created under the Sharing Act and revitalized in February 1998 as part of the Vice President's Reinventing Government initiative. The council's goal is to identify and implement interagency initiatives that are national in scope--such as the joint disability discharge initiative, which eliminated the duplicative physical examinations that military personnel were required to undergo to be discharged and receive VA disability benefits. The council consists of each department's chief health officers and key deputies, and the Surgeon General from each military branch. The council generally meets monthly.5 � Other collaborative efforts not specifically covered under the Sharing Act are also being explored by local VA and DOD facilities. For example, in 1998, VA and DOD collaborated on the joint purchasing of pharmaceuticals, laboratory services, medical supplies and equipment, and other support services. As required by the Sharing Act, VA and DOD report annually to the Congress on the status of VA/DOD sharing. Over the years, VA and DOD have identified numerous benefits associated with sharing health resources, including significant improvements in resource and facility utilization at the local level. VA and DOD partners responding to our survey attributed a number of specific benefits to their local sharing agreements. (See fig. 1.) As providers, VA survey respondents most frequently cited as benefits increased revenue and fuller utilization of staff and equipment; DOD respondents cited increased medical staff proficiency through, for example, broadening the range of populations that physicians treat, such as older patients and patients with more severe or multiple conditions. As receivers, about 70 percent of both VA and DOD respondents cited reduced cost of services and improved beneficiary access and patient satisfaction as benefits to sharing. Figure 1: Types of Benefits Reported by VA and DOD Survey Respondents Source: GAO survey, 1999. Agreements and Facilities To measure the activity that occurred under sharing agreements in fiscal year 1998 and establish a baseline for measuring future growth, we surveyed VA and DOD sharing partners on the health and support services they provided under sharing agreements and the type of compensation--measured by reimbursements and barter arrangements--made to the facility providing the service. We found that under three-quarters of the agreements, services were provided, compensation was made, or both. Most services provided were for direct medical care. However, activity was concentrated under a small percentage of agreements and facilities, usually in locations where multiple DOD facilities were near VA hospitals or where DOD facilities provided specialized services. Activity under the joint ventures, while generally robust, was similarly concentrated at the two sites where the local partners have integrated many hospital services and administrative processes. These two joint ventures reported over 300,000 episodes of care and $3.2 million in actual cost savings to the government, compared with the remaining four joint ventures that were operational as of 1998, which reported a total of about 60,000 episodes of care and about $21.5 million in reimbursements. Local participation in the 10 national sharing initiatives, even those that have been fully developed, has been minimal. Some local VA and DOD sharing partners also reported sharing arrangements not covered by the Sharing Act, such as using joint purchasing agreements to augment the individual buying power of VA and DOD. However, the data for these arrangements have not been systematically collected and consequently, the benefits are not readily quantifiable. Care Accounting for Most Services Provided In fiscal year 1998, 72 percent (412) of the 572 existing sharing agreements6 had some activity.7 Of the 412 active agreements, VA provided services under 352 agreements at 108 facilities. DOD provided services under 60 agreements at 37 facilities. VA and DOD partners also reported a total of $29 million in sharing agreement reimbursements for providing health and support services in fiscal year 1998--less than 1 percent of VA and DOD's combined health care budget of $34 billion.8 Of the $29 million, VA received over $22 million from DOD and DOD received about $7 million from VA. Under 58 of the 412 active agreements, services were bartered. Of these bartered agreements, 35 were for training services, such as an agreement with VA for DOD to train its medical reserve units at VA hospitals. For 33 of the training agreements, VA provided space to DOD reserve units for training purposes; for the remaining 2, DOD provided education and training opportunities for VA. The remaining agreements were for various health and support services. Although dollar values were not generally assigned for the bartered agreements, those that did assign a value reported a total of about $775,000. Direct medical care accounted for over 60 percent of the 412 agreements active in fiscal year 1998, with VA providing most of this care. Outpatient care accounted for most of the services exchanged, and inpatient services accounted for most of the reimbursements. Of the total reimbursements, VA and DOD provided a breakdown for $22 million: 84 percent of the reimbursements was for medical care and 16 percent was for support services. VA and DOD also provided other health services under their sharing agreements in fiscal year 1998, including pharmacy, dental, vision, and physical therapy services. VA provided 21 other types of health services and DOD provided 18, receiving about $4 million and almost $900,000, respectively. (See tables 8 and 9 in app. III.) VA and DOD also provided a number of support services, such as transportation and laundry, with reimbursements totaling over $3.5 million. Although most of these agreements were for education and training services, laundry services accounted for most of the reimbursements for support activities. Specifically, over $2 million was collected by VA and nearly $400,000 was collected by DOD for laundry services. (See table 10 in app. III.) Collected by a Few Facilities Although 72 percent of the sharing agreements were active in fiscal year 1998, the services exchanged and the revenue collected varied widely from agreement to agreement (see table 1). For example, under active agreements for inpatient care, the number of services provided by DOD ranged from 1 to 221 per agreement; reimbursements for services under an agreement ranged from about $2,000 to $1.6 million. Under active agreements for outpatient care, the number of services provided by VA ranged from 1 to more than 6,000 per agreement; reimbursements for services ranged from $90 to almost $1.7 million. Table 1: Inpatient, Outpatient, and Ancillary Care Provided and Reimbursements Collected by VA and DOD Under Sharing Agreements, Fiscal Year 1998 Services Reimbursements provideda Facilities ProviderActive with active Total Range Total Range agreements agreements Inpatient admissions VA 70 34 333 1-49 $2,585,733 $352-1,437,874 DOD 16 13 556 1-221 2,905,140 1,935-1,600,000 Outpatient visits VA 154 53 39,202 1-6,023 5,167,051 90-1,683,537 DOD 23 12 13,438 2-8,574 433,886 506-177,330 Ancillary care procedures b VA 115 41 34,368 1-11,953 1,650,906 5-609,079 DOD 21 17 14,860 3-2,624 759,481 8-198,914 Note: Agreements may have covered more than one type of care and, therefore, would be counted more than once. Not all survey respondents provided all requested information. aActual episodes of care. bThese procedures include laboratory and radiology services. Notably, we found that inpatient, outpatient, and ancillary services were provided under a few agreements or by a few facilities. Inpatient care provided under 12 active agreements at 6 VA and 6 DOD facilities accounted for 75 percent of inpatient services shared. Similarly, outpatient care provided under 19 agreements at 11 VA and 4 DOD facilities and ancillary care provided under 12 agreements at 6 VA and 6 DOD facilities accounted for 75 percent of these services. In addition, 75 percent of the total reimbursements under the active agreements was collected by 26, or 18 percent, of the 146 facilities with sharing agreements (see table 2). Table 2: Facilities Collecting Most Reimbursements Under Sharing Agreements in Fiscal Year 1998, by Provider of Services Continued Provider of Number of services Facilities receiving services agreements Reimbursements VA provided Louisville, Fort Knox; Navy Military Ky. Medical Support Office (MMSO); 3 $2,577,783 Columbus Air Force Base (AFB) Fort Eustis; Fort Lee; Fort Lee Richmond, Va. Kenner Clinic; Langley AFB; 9 2,482,830 DOD-wide (for spinal cord injuries) Onizuka Air Station; Travis AFB; Army National Guard; Army Palo Alto, Defense Finance Accounting Calif. Service; Army Camp Parks; 7 1,823,666 California Medical Detachment; DOD-wide (for all medical care) Army 347th Reserves; Fort Sam Houston; Navy MMSO; Navy Miami, Fla. Reserve, Hialeah; Navy Clinic, 8 1,239,533 Key West; Coast Guard, Norfolk, Va. Fort Knox, Ky.; 114th Combat Army Hospital; Grand Forks AFB, N.Dak.; Army National Guard Minneapolis, Reserve; Air Force 934th Minn. Squadron; Air National Guard 9 904,640 133rd Medical Squadron; Navy MMSO; Navy and Marine Reserves; Coast Guard, Norfolk, Va. Keller Army Medical Hospital, West Point; Massachusetts Brockton/West National Guard; Hanscom AFB; Roxbury, Mass. Army 399th Combat Hospital; 5 873,332 Army Research Institute of Environmental Medicine Ireland Army Hospital, Fort Knox, Ky.; Army Reserves; Army Indianapolis, Reserves 337th Combat; Army Ind. Defense Finance Accounting 7 847,371 Service; Navy MMSO; Navy Reserves; Wright Patterson AFB Military Entrance Processing Cleveland, Station (MEPS); Fort Knox Army Ohio Medical Activity; Ohio National 3 784,811 Guard Tomah, Wis. Fort Knox; Air Force, Volk 5 750,890 Field; Navy MMSO Irwin Army Hospital, Fort Riley; Munson Army Hospital, Fort Leavenworth; Army Dental Clinic Command; Kansas Army National Guard; Kansas Air Leavenworth, National Guard-190th; Kansas Kans. Air National Guard at McConnell 14 687,866 AFB; Army Health Services; Army 4204th Reserve Hospital; Army Reserve 7211th Medical Support Unit; Army 325th Field Hospital; Navy MMSO; Coast Guard, Norfolk, Va. Army Command; Army National Long Beach, Guard; Los Angeles AFB; Navy, Calif. Port Hueneme; Navy Reserve; 7 600,369 Navy MMSO; Coast Guard, Norfolk, Va. Pittsburgh, 339th General Hospital; Army Pa. Medical Department; Navy MMSO 3 486,000 Air Force 66th Medical Group; Air Force 109th Medical Group; Air Force 109th Medical Albany, N.Y. Squadron; Air National Guard, 10 447,426 Stratton; Army National Guard; 364th General Hospital; MEPS, Albany; Fort Drum; Navy Hospital, Oakland; Navy MMSO Mississippi Air National Guard; Mississippi Army National Guard; Fort Sam Houston Army Jackson, Miss. Medical Command; Army Reserve; 10 411,287 Naval Air Station, Meridian; Navy MMSO; Jackson State University Reserve Officers Training Corps North Texas VA Army, Fort Sam Houston; MEPS; Health Care Texas Army National Guard; System, Sheppard AFB 82nd Medical 6 404,463 Dallas, Tex. Squadron; Navy, Corpus Christi; Navy MMSO Wilford Hall Medical Center, South Texas Lackland AFB; Brooke Army Health Care Medical Center, Fort Sam System, San Houston; Navy, Corpus Christi; 6 352,136 Antonio, Tex. Naval Reserve Fleet Hospital 21; Navy MMSO Army Reserve 81st Command; Army Reserve Regional Support; Naval Tampa, Fla. Air; Florida National Guard; 6 328,199 Navy MMSO; Coast Guard, Norfolk, Va. Army, Fort Brooklyn, N.Y. Monmouth/Ainsworth/Patterson; 5 325,356 Army MEPS; Navy MMSO; Coast Guard, Norfolk, Va. Augusta, Ga. Dwight David Eisenhower Army 3 306,993 Medical Center, Fort Gordon DOD provided Brooke Army Medical Center, San South Texas VAMC 3 1,677,000 Antonio, Tex. Womack Army Hospital, Fort Fayetteville VAMC; Durham VAMC 4 839,065 Bragg, N.C. Keesler AFB Medical Center, Biloxi VAMC 1 586,857 Biloxi, Miss. Walter Reed Army Medical Center, VA Lakeside, Chicago, Ill.; 9 557,044 Washington, Washington, D.C., VAMC D.C. Naval Hospital, Guam Honolulu VA 1 528,393 Bassett Army Community Hospital, Fort Wainwright, Alaska VA Healthcare System 1 468,423 Fairbanks, Alaska Madigan Army Medical Seattle/Puget Sound VA Health Center, Care System 1 442,858 Tacoma, Wash. Total 146 $21,734,591 Most sharing activity measured by reimbursement occurred in the eastern portion of the country and in areas where VA and DOD facilities are in proximity to each other (see fig. 2). For example, Walter Reed Army Medical Center in Washington, D.C., received over $400,000 from VA for providing inpatient services under three sharing agreements. For ancillary care procedures, the VAMC in Louisville, Kentucky, received over $600,000 in payments from Fort Knox under one sharing agreement--more than a third of the total reimbursements for all ancillary care services provided by VAMCs under active sharing agreements. Figure 2: Locations of Facilities Collecting Most Reimbursements Under Sharing Agreements in Fiscal Year 1998 While sharing activity under the joint ventures was substantial--as would be expected, given the effort required to establish a joint venture--most activity was found at the two joint venture sites where local partners integrated many hospital services and administrative processes: Nevada and New Mexico. For example, in fiscal year 1998, these two joint ventures provided almost 300,000 episodes of medical care and together reported a combined cost avoidance--or savings to the government--of over $3.2 million.9 In contrast, only about 60,000 episodes of care were provided at the remaining four joint ventures operational as of 1998, with reimbursements between these partners totaling about $21.5 million (see table 3). Table 3: Volume of Activity at Joint Ventures by Type of Joint Venture, Fiscal Year 1998 Continued Joint venture and Activity for fiscal year partners Facility type 1998 Integrated Construction of 110-bed hospital for VA and DOD Alaska: Elmendorf AFB, patients in 1999, with 3rd Medical Group and 10 intensive care unit a Anchorage VAMC beds staffed by VA and 25 surgical beds staffed by Air Force. VA reported $2 million in cost avoidance. The facility provided VA and DOD beneficiaries a total Nevada: Nellis AFB and Begun in 1991, of 17,961 inpatient days VA Southern Nevada construction of 114-bed (12,501 VA and 5,460 Air Health Care System, Las hospital for Air Force Force) and 198,916 Vegas and VA patients; outpatient visits (158 VA completed in 1994. and 198,758 Air Force). (Note: VA has separate ambulatory outpatient facilities.) Two efforts have been VA and DOD reported in completed: excess of $1.2 million in cost avoidance. The --integrated existing facility provided VA and New Mexico: Kirtland AFB375-bed hospital in 1987 DOD beneficiaries a total and Albuquerque VAMC and of 48,044 inpatient days (47,025 VA and 1,019 Air --new Air Force Force) and 15,894 outpatient clinic built outpatient visits (9,000 in 1989. VA and 6,894 Air Force). Shared space VA reimbursed the DOD California: David Grant medical center $7.2 Medical Center, Air Begun in 1993, 468-bed million for 1,691 Force 60th Medical Air Force hospital inpatient care Group, and VA Northern remodeled to accommodate admissions, 5,768 California Health Care VA patients. outpatient visits, 274 Systemb ancillary services, and 524 radiation and hyperbarics services.c Initiative begun in Florida: Key West Naval 1994; construction of Branch Clinic outpatient clinic (Jacksonville Naval completed January 2000, d Hospital) and Miami VAMCwith VA and Navy sharing space. Three efforts have been phased in since 1991: --VA psychiatric ward in Army hospital opened in VA reimbursed the DOD 1994, medical center $9.4 Hawaii: Tripler Army million for 1,105 Medical Center and --construction of 60-bed inpatient admissions, Honolulu VAMC center for aging 10,704 outpatient visits, completed in 1997, and and over 6,200 consultations. --construction of ambulatory clinic will be completed in May 2000. V A facility constructed on DOD property Initiative begun in Oklahoma: Reynolds Army 1990; construction of VA VA reimbursed the DOD Community Hospital at outpatient clinic hospital $201,291 for Fort Sill and Oklahoma adjacent to Army radiology, laboratory, City VAMC Hospital completed in custodial, and food 1995. services. VA reimbursed the DOD Initiative begun in medical center $4.7 Texas: William Beaumont 1987; construction of million for 3,585 Army Medical Center at ambulatory care center inpatient admissions, Fort Bliss and El Paso adjacent to the Army 22,559 outpatient visits, VAMC hospital completed in 1,009 ancillary 1995. procedures, and support services (6 security guards). aThe hospital opened in May 1999. It will track data on bed occupancy, laboratory procedures, radiology, and MRI (magnetic resonance imaging) tests, and emergency room visits by VA and DOD patients. bIncludes outpatient clinics at Chico, Fairfield, Mather, Marc Island, Martinez, Oakland, and Redding. cHyperbarics is the administration of oxygen under increased pressure while the patient is in an airtight chamber. These treatment facilities--which have been used to treat carbon monoxide poisoning, gas gangrene, burns, smoke inhalation, and decompression sickness (bends)--are expensive to build and operate and are needed by only a small number of patients. dThe clinic opened in January 2000; therefore, measurable activity has not occurred. Minimal We found little participation among local sharing partners in 10 initiatives introduced by the VA/DOD Executive Council since its inception--even 2 that have been fully developed. The first--a Military and Veterans Health Coordination Board established by the President in November 1998--works through the VA/DOD Executive Council to conduct studies and research and provide ongoing direction to ensure national coordination among VA, DOD, and the Department of Health and Human Services on military and veterans health matters. Even though this initiative provides many opportunities for local involvement, we found little evidence of local participation. The second fully developed council initiative was implemented in September 1999 when DOD issued procedures for conducting joint disability discharge physical examinations to do away with duplicate examinations of military personnel applying for a service-connected disability. By requiring only one examination, the program is expected to eliminate costly redundancies in physical examinations and accelerate the processing of disability claims. Nevertheless, only 21 VA facilities and 18 DOD facilities reported participating in the joint disability discharge initiative. Few survey respondents reported participation in the council's remaining eight initiatives, which are in various stages of development. These also have direct implications for local sharing: � Cost reimbursement : To create a uniform cost-reimbursement methodology for sharing health resources. � Medical/surgical supply acquisition : To pursue joint clinical and pharmacy functions and to eliminate redundancies in reviews, contracts, prescribing guidelines, and utilization management. � Specialized treatment system/centers of excellence : To use existing VA and DOD capability for specialized services and to combine programs to reduce infrastructure overlaps, such as designating the Albuquerque VAMC as the national center for neuroimaging for both VA and DOD. � Information management and technology : To encourage VA and DOD to collaborate on technical standards for developing systems to jointly manage information such as patient medical records. � Medical technology assessments : To examine VA's and DOD's acquisition and use of medical technology to avoid duplicate purchases and better use existing equipment. � Patient safety : To develop a process for sharing lessons learned on patient safety and develop best practices to reduce preventable adverse drug events. � Clinical practice guidelines : To develop VA/DOD evidence-based guidelines for disease treatment to improve patient outcomes. � Joint congressional interaction : To improve communication between DOD and VA congressional contacts on the extent of interdepartmental sharing. Of the survey respondents, 13 VAMCs and 22 MTFs reported that they had entered into one or more joint purchasing arrangements in fiscal year 1998 to purchase pharmaceuticals, laboratory services and supplies, medical supplies and equipment, and other types of services (see table 4). For example, the Madigan Army Medical Center in Tacoma, Washington, and the Roosevelt Roads Naval Hospital in Puerto Rico reported to us that they use VA's Subsistence Prime Vendor Program to jointly purchase food and supplies. Other joint arrangements involve several VA and DOD facilities. Table 4: Joint Purchasing Arrangements Among VA and DOD Facilities Participating in Local Sharing Agreements, Fiscal Year 1998 Purchasing arrangement Number of VA Number of DOD facilities facilities Pharmaceuticals 2 8 Laboratory services/supplies 8 11 Medical supplies 6 7 Medical equipment 2 11 Other services 4 22 Some respondents reported savings as a result of their joint purchasing activities. For example, under one medical purchasing contract--involving three VAMCs and nine DOD facilities--VA and DOD expect cost savings of $4.5 million over the 5-year contract period. VA and DOD also reported that their joint purchasing contract for medical transcription services at the VAMC and Naval Hospital in San Diego saved over $200,000 in fiscal year 1999; over the 5-year contract, they anticipate saving over $1 million. Program Local VA and DOD officials identified a number of barriers that could jeopardize current sharing agreements or impede further sharing of health care resources. The barrier identified most often by DOD was the geographic distance between the VA and DOD partner facilities, making it difficult for them to rely on each other to provide services and reasonable access to their beneficiaries, while VA has found that its ability to provide services to DOD beneficiaries has been limited by VA beneficiaries' full utilization of its VAMCs. Survey respondents continue to identify two long-standing barriers--policies governing reimbursement and budget and processes for approving sharing agreements--which we have previously reported on.10 Significant transformations in VA's and DOD's health care delivery systems have also affected how VA and DOD share resources. For example, both agencies are purchasing more health care services from private providers and implementing managed care principles. In response, VA and DOD have each developed service regions that have operational control over providers and facilities, including hospitals. Among the barriers identified, recent policies and guidance governing DOD's managed care program, TRICARE, may have the most significant implications for sharing because they have resulted in confusion among the military Surgeons General and local VA and DOD partners about what can be shared and how that sharing can occur. Agreements Are Long-Standing Barriers Since 1978, we have reported that certain reimbursement and budgeting policies discouraged sharing between VA and DOD. Specifically, we found that due to a lack of understanding among local officials, some VA and DOD hospitals set reimbursement rates at total costs rather than at incremental costs. However, recovering incremental costs would give providers more incentive to share because recovering these costs increases the facilities' revenues and also decreases per-unit costs for the remainder of the providers' patients. We have also reported that MTFs' incentive to share was reduced because they submit reimbursements received for services provided under sharing agreements to a centralized DOD account, instead of keeping the reimbursements for their own use, as VAMCs do. Although certain actions have been taken to address these two barriers, they still exist. To address the first barrier, the VA/DOD Executive Council Healthcare Financial Management Committee approved in December 1997 guiding principles and recommendations for costing of services to provide local flexibility to negotiate rates that are beneficial to both VA and DOD. Subsequently, each branch of the service drafted implementing guidelines. However, some survey respondents reported that, as of August 1999, these reimbursement issues remained. For example, VA guidance stresses using incremental costs for sharing agreements, but some VAMCs reported charging the total cost of providing care to DOD beneficiaries, including overhead costs, such as administration. While some MTFs bill at less than total cost for care provided to VA beneficiaries, others bill at the total cost. Regarding the second barrier, the council believes that local officials may be misinterpreting DOD's guidelines on the authority to retain reimbursements from VA partners and has recommended better articulation of these guidelines. According to local DOD officials, some MTFs still deposit these funds into a centrally managed DOD account, although DOD guidance states that MTFs can keep funds received from sharing agreements. In our survey, a number of respondents specifically noted that flexibility to negotiate rates and clarification of reimbursement guidelines would provide a greater incentive to share. A related barrier, according some VA and DOD local officials, centers on "dual eligible beneficiaries"--retired military who are also veterans. These beneficiaries who seek care under a sharing agreement have dual access to care--based on space available at MTFs and VA eligibility status. Each agency tries to shift to the other the responsibility for treatment and payment, making collaboration on sharing agreements for this population particularly difficult. Other long-standing barriers VAMCs and MTFs reported relate to VA's and DOD's budgeting processes. For example, Air Force officials at both the Nevada and New Mexico joint ventures told us that their budget requests for medical personnel and operations and maintenance funding only take into account the DOD patient load, even though, as an integrated joint venture site, the Air Force facilities treat significant numbers of VA patients. An official at the Nevada joint venture believes that, as a result of this restriction, the facility's staffing levels--including those for doctors and technicians--were reduced in fiscal year 1999 and, consequently, the facility's capacity to serve veterans was also reduced. VA's and DOD's budgeting also encourages local facilities to keep beneficiaries within their own system. For example, a VAMC might transfer a VA patient to another VAMC to avoid having to use its funds to reimburse the DOD partner--even though the care may be less costly at the DOD partner facility and provide better patient access. Thirty-one percent of VA survey respondents and 25 percent of DOD respondents also cited the process for approving sharing agreements as a barrier to sharing. Local VAMCs generally have the authority to approve their participation in sharing opportunities that they have identified. Once agreements have been reached locally, VA headquarters gives approval for entry into the sharing database and grants local officials program oversight. According to VA headquarters' officials, this approval process has been expedited and now is completed within 3 work days. MTFs, on the other hand, must receive approval from DOD headquarters to participate. According to local DOD officials, this requirement prolongs the process and has resulted in some agreements not being entered into. Some local DOD officials indicated that such experiences have discouraged them from seeking other potential sharing arrangements. Sharing Program Over the past 2 decades, changes in beneficiary populations, resources, and the health care environment have significantly influenced VA's and DOD's health care delivery systems and how the two agencies share health resources. Since 1980, the veteran population has declined from more than 30 million veterans to about 26 million in 1998. Barring a buildup of military forces, the veteran population is expected to continue to decline--VA estimates that the number of veterans will drop to 16 million by 2020. At the same time, however, the number of veterans aged 85 and older--a population frequently requiring nursing home care--has been projected to increase from about 150,000 in 1990 to over 1 million by 2010. DOD's beneficiary population is also changing. While the number of active duty personnel is declining, the number of military retirees is increasing as is the number of dependents. Over the past several years, DOD and VA resources have also changed. For example, DOD closed one-third of its MTFs, and VA has consolidated a number of its health care facilities. To respond to these changes, VA and DOD have made significant changes in their health care systems, mainly adopting managed care principles and shifting care from inpatient to outpatient treatment. In October 1995, VA began to transform its hospital-based health care delivery system into a community-based system. VA developed 22 Veterans Integrated Service Networks (VISN)--geographic service areas defined by patient populations, referral patterns, and facility locations. Each VISN has operational control over and responsibility for a capitated budget for all service providers and patient care facilities, including hospitals. In addition to purchasing from the private sector some services that VA historically provided, VISNs are forming alliances with neighboring VA medical facilities, entering sharing agreements with other government providers, and purchasing services directly from the private sector. Over a 3-year period ending fiscal year 1998, VA reduced its inpatient workload by 38 percent and bed days of care per 1,000 veterans by 47 percent, resulting in a reduction of more than 20,000 hospital beds and consolidation of numerous administrative and clinical services. VA needs to continue with its efforts to realign its current assets. DOD's health care system has undergone a similar transformation. In March 1995, DOD established its managed health care program, TRICARE, and created 12 service regions, each with a capitated budget primarily based on the total number of beneficiaries in the region. Under TRICARE, beneficiaries can choose one of three program options:11 TRICARE Prime, similar to a health maintenance organization; TRICARE Extra, similar to a preferred provider organization; and TRICARE Standard, a fee-for-service benefit intended to replace CHAMPUS.12 In October 1999, DOD implemented TRICARE Prime Remote to serve active duty personnel at locations 50 miles or more from an MTF. Each TRICARE service region is administered by a lead agent who coordinates the health efforts of the three military departments and is responsible for ensuring that the provider network is adequate. Through competitive bid procedures, DOD contracts with private health care companies for services that DOD facilities are unable to provide. These regionwide contracts with provider networks represent a significant change in the delivery of DOD health care. DOD Policy May Eliminate Local Sharing of Direct Medical Care A number of VA and DOD officials, including each service's Surgeon General, stated that TRICARE has the potential to limit the services VA provides under the sharing program. In response to a DOD legal opinion stating that local sharing agreements for direct medical care represent competing networks with TRICARE contractors, DOD issued a policy memorandum in May 1999 that, in effect, nullifies these agreements.13 According to the legal opinion, MTFs are required to refer DOD beneficiaries to TRICARE network providers for health care when such care is not available at the MTF, and referring a beneficiary to a VAMC partner violates the TRICARE contract unless the VAMC is a member of the network. All five TRICARE contractors told us that VA sharing agreements have had little effect on their current workload and profit. While the policy still allows sharing for support services, it calls into question all of the local sharing agreements in which VA provides direct medical care, which compose about 80 percent of the services covered under the agreements that were reported to us as active. For example, with the recent rollout of TRICARE Prime Remote, more than 100 active agreements where VA provides medical care to military beneficiaries located 50 miles or more from an MTF could effectively be eliminated. According to DOD policy, TRICARE contractors are encouraged to include VA health care facilities in their networks, as authorized under the Veterans' Health Care Eligibility Reform Act of 1996.14 As of September 1999, DOD reported that almost 80 percent (or 137) of 172 VAMCs were TRICARE subcontractors. However, among VA survey respondents, only 53 percent reported being TRICARE contractors in fiscal year 1998, while 44 percent indicated providing some level of service under TRICARE. In addition, VA officials believe that, as network providers, VAMCs will not be used as extensively as they were under the sharing agreements because they will be among many other providers from which beneficiaries can choose. The use of VA providers under TRICARE may be most extensive in remote locations, as the five TRICARE contractors told us that they rely on subcontracts with VA in these locations to ensure an adequate network. TRICARE Payment Practices May Discourage Future Sharing On October 1, 1999--subsequent to the administration of our survey--DOD issued a policy that transfers funding and payment responsibility for all MTF-referred care--or supplemental care--from the MTFs to TRICARE support contractors. VA officials told us that because this new policy went into effect, VA sharing partners have been paid late, have received payments for services provided under sharing agreements at less than the sharing agreement negotiated rate, or have not received payment at all. These payment problems are the result of VA's and the TRICARE contractors' different billing processes. For sharing agreements, VA submits one bill for all medical and professional services, whereas TRICARE requires itemized bills for each service. Therefore, when TRICARE support contractors receive bills for sharing agreements, they often reimburse for only one service, resulting in VA's not getting reimbursed for a number of the services it provided. According to VA officials, the new policy has negatively affected the current sharing agreements and may become a disincentive to future sharing. DOD officials told us that they are aware of the billing and reimbursement problems that VA partners are encountering under the new policy. However, DOD has not described how or when it will resolve this issue. Since 1987, VA and DOD have reported annually to the Congress on the status of the sharing program, as required under the Sharing Act. The reports are developed using information from the VA/DOD Federal Health Care Resources Sharing Database, which is maintained by VA. While the annual reports show growth in sharing, this growth is based on the number of agreements entered into and the range of services they cover. This measure is inadequate for determining program status because it does not reflect actual sharing activity through the volume of services provided and reimbursements collected. Although we collected such information through our survey, without comparable historical data, program progress cannot be determined. In addition, the information in the joint database is incomplete and inaccurate. In 1984, VA and DOD reported to the Congress that there was a combined total of 102 VA and DOD facilities with local sharing agreements.15 By 1994, the number of facilities with sharing agreements totaled 284. For fiscal year 1998, the most recent year for which the annual report was issued,16 VA and DOD claimed significant growth in sharing, stating that virtually all VAMCs were involved in sharing agreements with virtually all MTFs. VA and DOD also claimed growth in the number of services covered under these agreements. In 1987, they reported that 1,387 services were covered; by 1998, this number had increased to 10,586 services,17 including those covered under TRICARE contracts.18 Program results, however, cannot be measured by increases in the number of sharing agreements and the number of services covered. Such numbers indicate only the potential for sharing, not the actual volume of services shared. Without measuring the actual activity--that is, the volume of services exchanged and the reimbursements collected or costs avoided--VA and DOD's claims of growth in the sharing program can be misleading, as the numbers suggest that more sharing is occurring than may be the case. VA and DOD have also provided in their annual reports to the Congress a general description of the eight joint venture agreements. However, as with the local sharing agreements, the actual activity at the joint venture sites is not measured, nor is the progress of the 10 national sharing initiatives. Collaborative activities occurring under authority other than the Sharing Act are also not reported. Although VA and DOD are not required to report on activities occurring outside the act, the full extent of sharing cannot be determined without capturing such information. Of the 355 VA and DOD facilities that responded to our survey and were listed as a sharing partner in the VA/DOD sharing database as of April 1999, 83 (64 DOD facilities and 19 VA facilities) told us that they do not participate in sharing agreements--a discrepancy that indicates the database overstated the number of partners by 31 percent. We also found discrepancies between the number of sharing agreements in the VA/DOD database and the number of agreements that facilities reported to us during each of our site visits. In some cases, the number of agreements was understated in the database. For example, an agreement between the Southern Nevada Health Care System and the Air Force hospital in Las Vegas, Nevada, was not listed in the sharing database. In other cases, the number of agreements was overstated. For example, the sharing database listed 17 agreements between the New Mexico VAMC and Kirtland AFB, while documentation provided by VA and DOD officials at these sites listed only 8 agreements. We found several weaknesses in the management of the database that could account for some of these discrepancies: � Expired and terminated agreements are deleted from the database only once a year, according to VA database managers. Therefore, many agreements may be listed as active when they are not. � New and terminated agreements are not consistently reported by sharing partners to VA database managers. For example, we found that 21 VAMCs did not submit the required forms for reporting new sharing agreements to VA for inclusion in the database. � Education and training agreements are underreported because some sharing partners do not know that they are required to report them, although VA and DOD's reporting policy clearly requires that these agreements be included. VA and DOD sharing partners generally believe the sharing program has yielded benefits in both dollar savings and qualitative gains, illustrating what can be achieved when the two agencies work together. Although the benefits have not been fully quantified, it seems worthwhile to continue to pursue opportunities to share resources where excess capacity and cost advantages exist, consistent with the law. However, reductions in excess capacity for certain services resulting from various efficiency and right-sizing initiatives, along with extensive contracting for services, especially through TRICARE, have changed the environment in which resource sharing occurs. In particular, DOD's policy regarding referrals under TRICARE has, in effect, thrown the resource sharing program into turmoil and put VA and DOD at odds on how to make the most effective use of excess resources where they still exist. Additionally, ongoing changes within VA's and DOD's health care systems--such as the implementation of managed care, the shift from inpatient to outpatient delivery settings, and projected decreases in patient populations--have altered and will continue to change the scope and magnitude of sharing opportunities. Under these circumstances, the criteria and conditions that make resource sharing a cost-effective option for the federal government--not just VA or DOD alone--need to be reviewed and the strategies for sharing rethought. To determine the most appropriate courses of action, several questions require answers. For example, does VAMC treatment of TRICARE patients result in lower overall cost for the government than contracting with private providers? Would requiring VAMCs to be considered the equivalent of MTFs yield a more efficient and cost-effective way to provide needed care to beneficiaries? Are there additional joint contracting opportunities that would provide needed services to VA's and DOD's respective populations more cost-effectively than each agency providing such care itself? Also, if sharing is to be optimized, can significant and long-standing barriers be overcome, such as the need for processes that facilitate billing, reimbursement, budgeting, and timely approval of sharing agreements? VA and DOD need to work in concert to answer such questions. However, reaching timely agreement could prove difficult given the different business models VA and DOD are using to provide health care services to their beneficiaries. Therefore, we are advising that, in the event such an agreement is not reached, it may be necessary for the Congress to provide specific guidance to both VA and DOD, clarifying the criteria, conditions, and expectations for VA and DOD collaboration. In addition, we have identified specific steps each agency needs to take to stabilize the current sharing program until a reassessment of its direction, goals, structure, and criteria can be made. The Secretaries of VA and DOD should jointly assess how best to achieve the goals of health resource sharing, considering the changes that have occurred over the last decade in the VA and DOD health care systems and the populations they serve. This assessment should include a determination of the most cost-effective means of providing care to beneficiaries from the federal government's perspective--not just from the perspective of either VA or DOD. As part of this assessment, DOD and VA should determine the appropriate mix of purchasing care directly from contractors or providing care directly through their own systems, including medical sharing opportunities, by identifying current and expected excess capacities. In addition, to the extent sharing opportunities and potential are identified, we recommend that the agencies jointly address the barriers that have impeded sharing and collaboration, by establishing procedures to accommodate each other's budgeting and resources management functions as well as facilitate timely billing, reimbursement, and agreement approval. Finally, to increase the usefulness of the joint VA/DOD database as a means for assessing and reporting sharing progress to the Congress, we recommend that the Secretaries direct, respectively, the Under Secretary for Health and the Assistant Secretary of Defense (Health Affairs) to include in the joint database � the volume and types of services provided, reimbursements collected, and costs avoided under local and joint venture sharing agreements between VA and DOD facilities by having facilities report this activity to the medical sharing office and � similar information on the progress and activity occurring under national initiatives and other sharing activities authorized outside of the Sharing Act. To provide stability to the current sharing program while DOD and VA reassess how best to achieve the goals of resource sharing legislation, we recommend that the Secretary direct the Assistant Secretary (Health Affairs) to review and clarify, for each category of beneficiary, DOD's policy on the extent to which direct medical sharing is permitted with VA, including whether the current sharing agreements are still in effect and under what circumstances DOD requires VA to be part of the TRICARE network in order to share resources; provide clear guidance to contractors on how to process claims to ensure timely reimbursements; and take a more proactive role in managing the joint VA/DOD sharing database. To increase the attractiveness of VAMCs as cost-effective providers of services to DOD, we recommend that the Secretary of VA direct the Under Secretary for Health to ensure that VAMCs follow VA's guidelines and charge incremental costs rather than total costs under sharing agreements. As the health care environment in which VA and DOD share resources continues to evolve, VA and DOD will likely continue to be challenged in their collaborations on how best to make effective use of excess federal health care resources. If the two agencies are unable to resolve their differences in a reasonable amount of time, the Congress should consider providing direction and guidance that clarifies the criteria, conditions, roles, and expectations for VA and DOD collaboration. We provided VA and DOD a draft of this report for comment (see apps. IV and V, respectively). Generally, each agency agrees that there are opportunities to improve the administration of the sharing program. However, regarding our recommendation to jointly reassess how best to achieve the goals of health resources sharing, the two agencies responded very differently. VA did not concur with our recommendation. It stated that our draft report seriously downplayed DOD's resistance to cooperative federal sharing activity and that it has taken strong actions to remove virtually all barriers to comprehensive sharing. VA did comment, though, that it would continue to seek ways to work cooperatively with DOD and to actively participate with other program officials in reassessing and implementing improved program goals. DOD, on the other hand, agreed with our recommendation and stated that a Health Care Sharing Work Group is being created under the Executive Council to facilitate sharing and resolve sharing-related issues. DOD's and VA's widely different responses to our recommendation, in our opinion, typifies the current chasm between them on sharing-related matters and clearly points to the need for the two agencies to try harder to resolve their differences. Therefore, we stand by our recommendation that VA and DOD work together to rethink how they can best meet the goals of sharing and have added to the recommendation some of the areas that VA and DOD should consider in this collaboration. Further, because VA's and DOD's comments indicate that they may be unwilling or unable to work together to address our recommendation in a timely manner, we have added a matter for congressional consideration to provide VA and DOD direction and guidance if the agencies fail to act within a reasonable time. Regarding TRICARE, VA believes that our report should point out that DOD's policy effectively prohibits VAMCs and MTFs from sharing for direct medical care. However, DOD commented that the policy does not prohibit such sharing--which seems to contradict its legal opinion on TRICARE. Our draft report described the implications of the policy on sharing, and we have added material to underscore the confusion that surrounds the interpretation and implementation of this policy. In response to our recommendation to reassess its TRICARE policy on referring patients to VAMCs, DOD said that the policy requires clarification. However, DOD did not indicate that it would reassess the policy in light of the effects it has had on sharing. Therefore, we expanded our recommendations to specifically call for DOD to review and clarify (1) the extent to which direct medical care is permitted with VA for all categories of beneficiaries, (2) the circumstances under which VA must be a part of the TRICARE network, and (3) whether current sharing agreements remain in effect. Regarding our recommendation addressed to VA to increase the usefulness of the VA/DOD sharing database by expanding the data it captures, VA commented that the database was not designed to be used as a broad evaluative tool but, instead, was created to develop data for the annual report to the Congress, as required under the law. VA's statement implies that the intent of the law for reporting to the Congress is not to provide information that can be used to assess the effects and progress of the sharing program. We disagree and believe that in requiring VA and DOD to report annually on the sharing program, the Congress is seeking information that will help it gauge, over time, how the agencies are responding to the mandate that they seek opportunities to share federal health care resources and thereby hold down federal costs. VA also had concerns regarding the effort it believes will be required to implement our recommendation to gather more comprehensive data on sharing activity. We believe, however, that the approach VA outlined in its comments is more than is needed to improve the database and that VA misinterpreted the intent of our recommendation. For example, VA states that to measure the actual exchange of services between local and joint venture sharing partners, it would need to use clinical workload data and ensure compatibility with DOD's workload data. However, VA and DOD could collect data on the actual exchange of services through other less resource-intensive and costly undertakings, such as a simple reporting of activity by each VA and DOD facility to show the number and types of services provided. We collected this information on sharing activity through our survey. VA also commented that, in addition to having sole administrative responsibility for the database, it alone has borne the costs for two system upgrades. To the extent that VA is concerned about this, it should work out an agreement with DOD to share costs. VA also disagreed that VAMCs generally charge the full cost of providing care to DOD beneficiaries and noted that its guidance stresses incremental costs. In response, we discuss VA's guidance regarding incremental costs but note that some VAMCs reported to us that they charged the total cost of providing care to DOD beneficiaries, including overhead costs. VA also expressed concern that certain information on the sharing program was not included in our draft report. For example, VA noted that it was working with DOD to develop joint telemedicine standards. In our report, we highlighted the VA/DOD Executive Council's 10 initiatives; telemedicine is part of medical technology assessment. In addition, our survey asked VA and DOD partners to provide information on sharing activities occurring under authority other than the Sharing Act; none of the respondents reported participating in the telemedicine effort. Further, VA and DOD's most recent annual report to the Congress does not discuss telemedicine. VA also commented that we did not discuss MTF use of VA's Subsistence Prime Vendor Program. Our draft cited this contract as an example of a joint purchasing arrangement; we revised the report to name the program. Last, VA commented that there are many sharing agreements for dental services; we reported this information in appendix III of the draft report submitted to VA (see table 8). VA and DOD also provided technical comments, which we incorporated where appropriate. Copies of this report are being sent to the Honorable Togo West, Secretary of Veterans Affairs; the Honorable William S. Cohen, Secretary of Defense; and other interested parties. We will also make copies available to other upon request. Please contact me at (202) 512-7101 if you or your staff have any questions concerning this report. Staff contacts and other contributors are listed in appendix VI. Cynthia Bascetta Associate Director, Veterans' Affairs and Military Health Care Issues Scope and Methodology We spoke with VA and DOD headquarters officials and obtained information through a mail survey sent to every VA medical facility and DOD unit identified by the agencies as participating in local sharing agreements. We also conducted site visits to VA and DOD medical facilities participating in local sharing agreements in Florida (Miami VAMC and the Jacksonville Naval Hospital Branch Clinic in Key West), Illinois (North Chicago VAMC and Great Lakes Naval Hospital), and Virginia (Hampton VAMC, Richmond VAMC, and Fort Lee Kenner Clinic). We also met with VA and DOD officials at three joint venture sites: Florida (Miami VAMC and Jacksonville Naval Hospital Branch Clinic in Key West), Nevada (Nellis AFB Michael O'Callaghan Federal Hospital and Las Vegas VA Outpatient Clinic), and New Mexico (Albuquerque VAMC and Kirtland AFB); we conducted telephone interviews with officials at the remaining joint ventures in Alaska (Anchorage VAMC and Elmendorf AFB), California (Air Force 60th Medical Group at David Grant Medical Center and VA Northern California Health Care System), Hawaii (Honolulu VA Outpatient Clinic and Tripler Army Medical Center), Oklahoma (VAMC Oklahoma City and Reynolds Army Community Hospital at Fort Sill), and Texas (El Paso VAMC and William Beaumont Army Medical Center). In addition, we analyzed information maintained in the VA/DOD Federal Health Care Resources Sharing Database, which is used to develop the agencies' joint annual reports to the Congress. We also interviewed officials from DOD's five managed care contractors (Anthem Alliance for Health, Foundation Health Federal Services, Humana Military Health Care Services, Sierra Military Health Services, and TriWest Health Care Alliance) to obtain their views on any effect DOD's TRICARE managed care program may have on the sharing agreements. We also conducted a literature search to obtain background information and reviewed previous GAO studies conducted on VA/DOD sharing in the past. To develop questions used in the survey, we spoke with VA and DOD officials about sharing agreements under Public Law 97-174. Our questions focused on services provided or received, experiences encountered with the agreements, and other types of sharing activities such as national initiatives or joint purchasing arrangements. Before mailing our questionnaire, we pretested it with VA and DOD officials knowledgeable about sharing activities at four VA medical facilities and three DOD facilities. We refined the questionnaire in response to their comments to help ensure that the potential respondents could provide the information requested and that our questions were fair, relevant, unbiased, and answerable with readily available information. To identify survey recipients, we used the VA/DOD Federal Health Care Resources Sharing Database. As of April 1999, the database indicated that 547 VA and DOD facilities had at least one VA/DOD sharing agreement and that the number of agreements totaled 803. We adjusted our population to 447 (154 VA and 293 DOD) facilities, omitting the 8 joint venture partners, 11 duplicate partners in the VA/DOD database, 6 inactivated units, and 75 facilities where DOD was unable to provide mailing addresses.19 In identifying facilities, we frequently could not determine from the information in the database which branch of service the DOD partner represented. For example, a partner may have been listed as "10th Medical Group." To determine the specific branch of service for each DOD partner, we met with VA officials who provided us information from either their knowledge of the DOD unit's participation or from DOD documents. Identifying reserve and national guard units was also difficult, particularly since DOD points of contact are not included in the database. We mailed the questionnaires to the 154 VAMC directors in June 1999 and to the 293 individual DOD unit commanders in June and July 1999. We conducted two follow-up mailings and telephone follow-ups to nonrespondents. We ended our data collection in November 1999. To adjust for the consolidation and integration of some facilities,20 the closing of some facilities, and duplicate submissions, we further reduced our population by 33 facilities. Our final adjusted population was 414 facilities (138 VA facilities and 276 DOD facilities), with a response rate of 100 percent for VA facilities and 79 percent for DOD facilities. (See table 5 for individual DOD services' response rates.) Table 5: DOD Services' Response Rates Adjusted population Responses Response rate Army 116 83 72% Air Force 75 64 85 Coast Guard 25 24 96 Navy 60 46 77 Total 276 217 79% Of the 355 facilities that responded, 272 indicated that they were a provider or receiver of medical or support services and 83 reported that they did not participate in sharing agreements. Therefore, we restricted our analysis to the 272 respondents who indicated that they were a provider or a receiver of shared medical or support services. These responding facilities participated in 572 agreements. Facilities With Active Agreements In fiscal year 1998, 108 VA and 37 DOD facilities had active agreements. Table 6 lists the 108 VA facilities by VA's 22 Veterans Integrated Service Network (VISN) areas--geographic service areas defined by patient populations, referral patterns, and facility locations; table 7 lists the 37 DOD facilities by branch of service. Table 6: VA Facilities With Active Local Sharing Agreements and Their Locations Continued Facility City and state VISN 1 Edith Nourse Rogers Memorial VA Hospital Bedford, Mass. Boston VA Medical Center Boston, Mass. Brockton/West Roxbury VA Medical Center Brockton, Mass. Northampton VA Medical Center Northampton, Mass. Manchester VA Medical Center Manchester, N.H. VA Connecticut Health Care System--Newington Campus Newington, Conn. White River Junction VA Regional Outpatient White River Junction, Clinic Vt. VISN 2 Samuel S. Stratton VA Medical Center Albany, N.Y. VA Western New York Health Care System--Buffalo Buffalo, N.Y. Canandaigua VA Medical Center Canandaigua, N.Y. VA Health Care Network Upstate New York at Syracuse Syracuse, N.Y. VISN 3 Bronx VA Medical Center Bronx, N.Y. Brooklyn VA Medical Center Brooklyn, N.Y. VA Hudson Valley Castle Point VA Medical Center Castle Point, N.Y. Northport VA Medical Center Northport, N.Y. VISN 4 James E. Van Zandt VA Medical Center Altoona, Pa. Coatesville VA Medical Center Coatesville, Pa. Lebanon VA Medical Center Lebanon, Pa. Philadelphia VA Medical Center Philadelphia, Pa. VA Pittsburgh Healthcare System--Highland Drive Campus Pittsburgh, Pa. Wilkes-Barre VA Medical Center Wilkes-Barre, Pa. Wilmington VA Medical Regional Outpatient Clinic Wilmington, Del. VISN 5 Baltimore VA Medical Center Baltimore, Md. Louis A. Johnson VA Medical Center Clarksburg, W.Va. Beckley VA Medical Center Beckley, W.Va. Hampton VA Medical Center Hampton, Va. Hunter Holmes McGuire VA Medical Center Richmond, Va. VISN 6 Salem VA Medical Center Salem, Va. Asheville VA Medical Center Asheville, N.C. Durham VA Medical Center Durham, N.C. Fayetteville VA Medical Center Fayetteville, N.C. Salisbury VA Medical Center Salisbury, N.C. VISN 7 Atlanta VA Medical Center Atlanta, Ga. Augusta VA Medical Center Augusta, Ga. Birmingham VA Medical Center Birmingham, Ga. Tuscaloosa VA Medical Center Tuscaloosa, Ala. Ralph H. Johnson VA Medical Center Charleston, S.C. William Jennings Bryan Dorn VA Medical Center Columbia, S.C. VISN 8 Bay Pines VA Medical Center Bay Pines, Fla. North Florida/South Georgia Veterans Health System Gainesville, Fla. James A. Haley Veterans Hospital Tampa, Fla. West Palm Beach VA Medical Center West Palm Beach, Fla. San Juan VA Medical Center San Juan, P.R. VISN 9 Huntington VA Medical Center Huntington, W.Va. Louisville VA Medical Center Louisville, Ky. Lexington VA Medical Center Lexington, Ky. Memphis VA Medical Center Memphis, Tenn. James H. Quillen VA Medical Center Mountain Home, Tenn. Alvin C. York VA Medical Center Murfreesboro, Tenn. Nashville VA Medical Center Nashville, Tenn. VISN 10 Cincinnati VA Medical Center Cincinnati, Ohio VA Healthcare System of Ohio Cleveland, Ohio VA Outpatient Clinic Columbus, Ohio Dayton VA Medical Center Dayton, Ohio VISN 11 Ann Arbor VA Medical Center Ann Arbor, Mich. Battle Creek VA Medical Center Battle Creek, Mich. Aleda E. Lutz VA Medical Center Saginaw, Mich. Richard L. Roudebush VA Medical Center Indianapolis, Ind. VISN 12 North Chicago VA Medical Center North Chicago, Ill. Marion VA Medical Center Marion, Ill. William S. Middleton Memorial Veterans Hospital Madison, Wis. Tomah VA Medical Center Tomah, Wis. Clement J. Zablocki VA Medical Center Milwaukee, Wis. VISN 13 Fargo VA Medical Regional Outpatient Clinic Fargo, N.Dak. VA Black Hills Healthcare System--Fort Meade Fort Meade, S.Dak. VA Black Hills Healthcare System--Hot Springs Hot Springs, S.Dak. Royal C. Johnson VA Medical Regional Outpatient Clinic Sioux Falls, S.Dak. Minneapolis VA Medical Center Minneapolis, Minn. St. Cloud VA Medical Center St. Cloud, Minn. VISN 14 VA Central Iowa Healthcare System--Des Moines Des Moines, Iowa Iowa City VA Medical Center Iowa City, Iowa Lincoln VA Medical Center Lincoln, Nebr. Omaha VA Medical Center Omaha, Nebr. VISN 15 Harry S. Truman Memorial Veterans' Hospital Columbia, Mo. St. Louis VA Medical Center--John Cochran Division St. Louis, Mo. Dwight D. Eisenhower VA Medical Center Leavenworth, Kans. Wichita VA Medical Regional Outpatient Clinic Wichita, Kans. VISN 16 Biloxi VA Medical Center Biloxi, Miss. G. V. (Sonny) Montgomery VA Medical Center Jackson, Miss. Alexandria VA Medical Center Alexandria, La. New Orleans VA Medical Center New Orleans, La. Overton Brooks VA Medical Center Shreveport, La. Oklahoma City VA Medical Center Oklahoma City, Okla. Little Rock VA Medical Center Little Rock, Ark. VISN 17 Houston VA Medical Center Houston, Tex. VA North Texas Health Care System--Sam Rayburn Memorial Veterans Center Bonham, Tex. Central Texas Veterans Health Care System--Thomas T. Connally Medical Center Marlin, Tex. South Texas Veterans Health Care System--Audie L. Murphy Memorial Veterans Hospital San Antonio, Tex. Amarillo VA Medical Center Amarillo, Tex. VISN 18 Carl T. Hayden VA Medical Center Phoenix, Ariz. Tucson VA Medical Center Tucson, Ariz. VISN 19 Cheyenne VA Medical Center Cheyenne, Wyo. VA Medical Center--Sheridan Sheridan, Wyo. Denver VA Medical Center Denver, Colo. Salt Lake City VA Medical Center Salt Lake City, Utah VISN 20 Boise VA Medical Center Boise, Idaho Portland VA Medical Center Portland, Oreg. VA Puget Sound Healthcare System--Seattle Seattle, Wash. Spokane VA Medical Center Spokane, Wash. VISN 21 VA Central California Health Care System Fresno, Calif. VA Palo Alto Health Care System Palo Alto, Calif. San Francisco VA Medical Center San Francisco, Calif. Ioannis A. Lougaris VA Medical Center Reno, Nev. VISN 22 Jerry L. Pettis Memorial VA Medical Center Loma Linda, Calif. Long Beach VA Medical Center Long Beach, Calif. VA Greater Los Angeles Healthcare System--Wadsworth Division (West Los Angeles VA Los Angeles, Calif. Medical Center) VA Greater Los Angeles Healthcare System--Southern California System of Clinics Sepulveda, Calif. San Diego VA Medical Center San Diego, Calif. Note: The eight VA facilities that are partners in joint ventures are not listed. Table 7: DOD Facilities With Active Sharing Agreements and Their Locations Continued Facility City and state Army Keller Army Community Hospital, West Point West Point, N.Y. Tobyhanna Army Depot Tobyhanna, Pa. Walter Reed Army Institute of Research Washington, D.C. Walter Reed Army Medical Center Washington, D.C. Medical Research Materiel Command, Fort Detrick Frederick, Md. U.S. University of Health Sciences Bethesda, Md. DeWitt Army Community Hospital, Fort Belvoir Fort Belvoir, Va. Womack Army Medical Center, Fort Bragg Fayetteville, N.C. Moncrief Army Hospital, Fort Jackson Columbia, S.C. Dwight David Eisenhower Army Medical Center, Fort Gordon Augusta, Ga. Bayne-Jones Army Community Hospital, Fort Polk Leesville, La. Irwin Army Community Hospital, Fort Riley Manhattan, Kans. Darnell Army Community Hospital, Fort Hood Killeen, Tex. Brooke Army Medical Center, Fort Sam Houston San Antonio, Tex. 4005th Army Augmentation Reserve Unit Houston, Tex. Raymond W. Bliss Army Community Hospital, Fort Huachuca Sierra Vista, Ariz. Madigan Army Medical Center, Fort Lewis Tacoma, Wash. Bassett Army Community Hospital, Fort Wainwright Fairbanks, Alaska Air Force 107th Medical Squadron, New York Air National Guard Niagara Falls, N.Y. 74th Medical Group, Wright-Patterson AFB Dayton, Ohio 375th Medical Group, Scott AFB Scott AFB, Ill. Arnold Air Force Station Tullahoma, Tenn. 2nd Medical Group, Barksdale AFB Shreveport, La. 81st Medical Group, Keesler AFB Biloxi, Miss. 59th Medical Wing, Lackland AFB San Antonio, Tex. 319th Medical Group, Grand Forks AFB Grand Forks, N.Dak. Minot AFB, 5th Medical Group Minot, N.Dak. 355th Medical Group, Davis--Monthan AFB Tucson, Ariz. 77th Medical Group, Mather AFB Mather AFB, Calif. 157th Medical Squadron, Air Mobility Command, Army National Guard Peese, N.H. 92nd Medical Group, Fairchild AFB Spokane, Wash. Coast Guard U.S. Coast Guard Academy New London, Conn. Navy Naval Hospital Portsmouth, Va. Naval Hospital Pensacola, Fla. Navy Reserve (Fleet Hospital Cheyenne) Cheyenne, Wyo. Navy Reserve Spokane, Wash. Naval Hospital Guam Guam Other Medical Services Provided The results of our survey show that VA provided 21 categories of other medical services under 49 active agreements and DOD provided 18 categories of other medical services under 17 active agreements. VA reported receiving more than $4 million from DOD for these other services (see table 8). Of this amount, $898,719 was reported for dental services, ranging from $37 to $521,119 per agreement, excluding bartered agreements. Another $183,702 was reported for pharmacy services provided to DOD beneficiaries, ranging from $60 to $180,162 per agreement. DOD reported receiving almost $900,000 from VA for these other medical services; more than a third ($355,790) was for filling prescriptions for VA beneficiaries (see table 9). Support services provided by VA and DOD in fiscal year 1998 and the reimbursements collected are shown in table 10. Table 8: Other Medical Services Provided by VA Continued VA-provided medical service Amount received Dental $898,719 Prosthetic devices/implants 328,696 Women's clinic 194,143 Pharmacy 183,702 Physical therapy 83,300 Psychologist supervision 73,177 Physical examinations/preventive care 56,010 Ears 39,360 Nuclear medicine 12,378 Bone scans 6,949 Depleted uranium outpatient servicesa 6,000 PET (positron-emission tomography) scans 5,800 Echocardiogram interpretations 4,020 Dietician 3,517 Mental health 3,312 Laboratory services 2,061 Eyeglasses 68 Health and medical technicians b Nursing supervision b Nursing b Miscellaneous other medical servicesc 2,245,297 Total $4,146,509 aServices to treat patients who have had contact with or have been contaminated by depleted uranium--a low-level radiation hazard that results when the waste products of uranium processing are used in weapons, such as shell casings. bFacility could either not break out amount received for individual service or service was bartered. cIncludes other services for five VA hospitals that were unable to break out costs by specific services. Table 9: Other Medical Services Provided by DOD DOD-provided medical service Amount received Pharmacy $355,790 Hyperbaricsa 153,340 General surgeon support 75,194 Nuclear medicine 44,585 Blood 42,800 Obstetrician/gynecology 33,402 Preventive care 27,619 Sleep studies 12,100 Laboratory 5,683 Physician assistant 5,265 Nursing supervision 3,173 Ambulatory surgical unit 2,124 Dietician 840 Dental b Health and medical technicians b Orthopedic surgery b PET scans b Miscellaneous other medical services 134,570 Total $896,485 aHyperbarics is the administration of oxygen under increased pressure while the patient is in an airtight chamber. These treatment facilities--which have been used to treat carbon monoxide poisoning, gas gangrene, burns, smoke inhalation, and decompression sickness (bends)--are expensive to build and operate and are needed by only a small number of patients. bFacility could either not break out amount received for individual service or service was bartered. Table 10: Support Services Provided by VA and DOD and Reimbursements Collected in Fiscal Year 1998 VA DOD Support service Number of Amount Number of Amount agreements collecteda agreements collecteda Laundry 23 $2,063,848 3 $347,219 Research 2 161,475 5 138,661 Administration and management 4 65,071 4 0 Education and training 55 8,496 3 0 Otherb 22 421,656 6 376,116 Total 105c $2,720,546 18c $861,996 aNot all survey respondents provided reimbursements collected. bIncludes services such as housekeeping, waste collection, police and fire protection, and pest control. cAgreements can contain more than one service; therefore, columns do not add to total. Comments From the Department of Veterans Affairs Comments From the Department of Defense GAO Contacts and Staff Acknowledgments Ann Calvaresi-Barr, (202) 512-6986 Karyn Papineau, (202) 512-7155 In addition to those named above, the following staff made key contributions to this report: Wendy Fleischer, Susan Lawes, Elsie Picyk, Mary Reich, Karen Sloan, Connie Wilson, and Craig Winslow. (101623) Table 1: Inpatient, Outpatient, and Ancillary Care Provided and Reimbursements Collected by VA and DOD Under Sharing Agreements, Fiscal Year 1998 12 Table 2: Facilities Collecting Most Reimbursements Under Sharing Agreements in Fiscal Year 1998, by Provider of Services 13 Table 3: Volume of Activity at Joint Ventures by Type of Joint Venture, Fiscal Year 1998 18 Table 4: Joint Purchasing Arrangements Among VA and DOD Facilities Participating in Local Sharing Agreements, Fiscal Year 1998 21 Table 5: DOD Services' Response Rates 38 Table 6: VA Facilities With Active Local Sharing Agreements and Their Locations 39 Table 7: DOD Facilities With Active Sharing Agreements and Their Locations 43 Table 8: Other Medical Services Provided by VA 45 Table 9: Other Medical Services Provided by DOD 46 Table 10: Support Services Provided by VA and DOD and Reimbursements Collected in Fiscal Year 1998 47 Figure 1: Types of Benefits Reported by VA and DOD Survey Respondents 9 Figure 2: Locations of Facilities Collecting Most Reimbursements Under Sharing Agreements in Fiscal Year 1998 16 1. See Legislation Needed to Encourage Better Use of Federal Medical Resources and Remove Obstacles to Interagency Sharing (GAO/HRD-78-54, June 14, 1978 ). 2. P.L. 97-174, 96 Stat. 70. 3. See VA/DOD Health Care: Further Opportunities to Increase the Sharing of Medical Resources (GAO/HRD-88-51, Mar. 1, 1988 ). 4. The National Defense Authorization Act of 1990 and 1991 authorized the use of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) funds to pay VA for services rendered to CHAMPUS beneficiaries. 5. The council is responsible for preparing five reports on VA/DOD Sharing, as required by the Secretaries of VA and DOD to meet a congressional mandate. One report has been issued; four are pending. 6. Of the total number of sharing agreements, 481 covered VA-provided services and 91 covered DOD-provided services. 7. We considered an agreement active if the respondent provided data on the number of services actually provided, the compensation received, or some combination of these. For a listing of VA and DOD facilities with active agreements, see app. II. 8. In January 1999, the Congressional Commission on Servicemembers and Veterans Transition Assistance issued a report on the effectiveness of programs providing benefits and services to active duty military personnel and veterans. In the commission's view, sharing activity based on the estimated revenue generated from the sharing agreements has been inadequate when compared to VA and DOD's combined health care budget. 9. Because these integrated joint ventures operate seamlessly, they collect financial information based on cost avoidance rather than the total reimbursements made to each other. 10. GAO/HRD-78-54, June 14, 1978, and GAO/HRD-88-51, Mar. 1, 1988. 11. A fourth program--TRICARE Senior Prime, a managed care option for certain beneficiaries age 65 and older--is currently in the demonstration phase. 12. CHAMPUS finances private sector care for dependents of active duty members, retirees and their dependents, and survivors. The program is still in effect. 13. The opinion was written to clarify language in TRICARE contracts covering three regions (I, II, and V); presumably, sharing for medical care does not violate the TRICARE contracts in the other regions. 14. P.L. 104-262 sec. 302(a). The act expanded the authority for entering into sharing agreements between VA's and DOD's managed care contractors. 15. VA and DOD did not begin reporting the total number of agreements until fiscal year 1992. 16. The fiscal year 1999 report was under review at the time of our work. 17. The number of services appears high because VA and DOD count each service listed for each agreement. 18. Although not included in the annual sharing report to Congress, VA financial records beginning in 1990 track the total revenue VA received from sharing agreements and the revenue it pays to DOD for services it provides VA. In 1990, VA collections for sharing agreements totaled $23,013,257; payments to DOD totaled $2,916,528. In 1999, VA collections for sharing agreements totaled $32,194,216, and payments to DOD totaled $23,853,957. According to VA officials, the increase in VA payments to DOD can be attributed to the joint venture locations where DOD is the host. 19. We did not mail surveys to the eight joint ventures because sharing activity is assumed; we did interview officials at all the joint ventures. In addition, we did not mail a survey to the Navy's Military Medical Support Office (MMSO), Great Lakes, Illinois, because it is a fiscal intermediary for the Navy and Marine Corps and is neither a receiver nor provider of services. We did interview MMSO officials and obtained information on the more than 100 sharing agreements that it oversees. 20. A number of VA hospitals have recently integrated and developed one management team to oversee numerous hospitals within a geographic service area. In 15 cases, the integrated facility completed one questionnaire for all the hospitals within the integrated system. *** End of document. ***