VA Health Care: Changes Needed to Improve Resource Allocation to Health Care Networks Page: 3 of 17
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network workload and adjustments are made for factors beyond the
control of network management. These include the health care needs of
veterans and certain local cost differences. In addition, VERA's design
protects patients from the effects of network budget shortfalls. But
implementation weaknesses we identified result in approximately $200
million annually that could be reallocated to better align network resources
with workloads. First, VERA's measurement of network workload is not as
accurate as it could be to determine each network's allocation because
VERA excludes most veterans with higher incomes who do not have
service-connected disabilities-about one-fifth of VA's workload. Second,
VERA does not adjust as accurately as it could for cost differences among
networks that result from differences in patients' health care needs or case
mix across networks. We also found that VA has not analyzed whether the
networks' need for supplemental resources-provided through the
National Reserve Fund-is the result of potential problems in VERA,
network inefficiency, or other factors. Without such information, VA can
neither ensure the appropriateness of supplemental funding nor take
We made recommendations to correct weaknesses in VERA's workload and
case-mix measures. Although VA concurred with all our recommendations,
in commenting on a draft of our report, VA stated that it planned to wait for
further study before determining how and whether to change VERA for
fiscal year 2003. Given the already extensive study by VA and others of
VERA's workload and case-mix measures, we believe VA should implement
these changes for fiscal year 2003. In addition, VA's response to our
recommendation regarding the supplemental funding process does not
fully address our recommendation because it does not provide information
on the relative contributions of specific factors to network shortfalls such
as network inefficiency, imperfections in VERA, and other factors.
Background Before VERA was implemented during fiscal year 1997, VA based its
allocation of resources primarily on facilities' historical expenditures. By
the 1990s, the share of the veteran population in the Northeast and Midwest
declined while the share of the veteran population in the South and West
increased. However, resources continued to be allocated based on
historical expenditures, resulting in inequitable resource allocations to
some VA networks. VERA was intended to correct these regional
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United States. General Accounting Office. VA Health Care: Changes Needed to Improve Resource Allocation to Health Care Networks, text, May 14, 2002; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc290062/m1/3/: accessed September 19, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.