Federal Rulemaking: Selected Agencies Should Clearly Communicate Public Comment Posting Practices Associated with Identity Information

Federal agencies publish on average 3,700 proposed rules yearly and are generally required to provide interested persons (commenters) an opportunity to comment on these rules. In recent years, some high-profile rulemakings have received extremely large numbers of comments, raising questions about how agencies manage the identity information associated with comments. While the APA does not require the disclosure of identifying information from a commenter, agencies may choose to collect this information.

This testimony summarizes GAO's June 2019 report on public comment posting practices (GAO-19-483). In that report, GAO examined (1) the identity information collected by comment websites; (2) the guidance agencies have related to the identity of commenters; (3) how selected agencies treat identity information; and (4) the extent to which selected agencies clearly communicate their practices associated with identity information. The agencies were selected on the basis of the volume of public comments they received on rulemakings. For this testimony, GAO obtained updates on the status of recommendations made to the selected agencies.

The Administrative Procedure Act (APA) governs the process by which many federal agencies develop and issue regulations, which includes the public comment process (see figure).

In June 2019, GAO found that Regulations.gov and agency-specific comment websites collect some identity information—such as name, email, or address—from commenters who choose to provide it during the public comment process. The APA does not require commenters to disclose identity information when submitting comments. In addition, agencies have no obligation under the APA to verify the identity of such parties during the rulemaking process.

GAO found in the June 2019 report that seven of 10 selected agencies have some internal guidance associated with the identity of commenters, but the substance varies. This reflects the differences in the way that the selected agencies handle commenter identity information internally.

GAO also found that the selected agencies' practices for posting public comments to comment websites vary considerably, particularly for duplicate comments (identical or near-identical comment text but varied identity information). For example, one agency posts a single example of duplicate comments and indicates the total number of comments received, but only the example is available to public users of Regulations.gov. In contrast, other agencies post all comments individually. As a result, identity information submitted with comments is inconsistently presented on public websites.

The APA allows agencies discretion in how they post comments, but GAO found that selected agencies do not clearly communicate their practices for how comments and identity information are posted. GAO's key practices for transparently reporting government data state that federal government websites should disclose data sources and limitations to help public users make informed decisions about how to use the data. If not, public users of the comment websites could reach inaccurate conclusions about who submitted a particular comment, or how many individuals commented on an issue.

In June 2019, GAO made recommendations to eight of the selected agencies regarding implementing and communicating public comment posting policies. The agencies generally agreed with the recommendations and identified action they planned to take in response. Since the June 2019 report, one agency has implemented GAO's recommendation.

Thank you for the opportunity to discuss our work on identity information  in the public comment portion of the rulemaking process. The  Administrative Procedure Act (APA) establishes procedures for  rulemaking, which is the process agencies follow to develop and issue  regulations. Agencies use regulations to carry out statutory directives to  achieve public policy goals, such as protecting the health and safety of  the public. Under the APA, agencies engage in three basic phases of the  rulemaking process: (1) initiate rulemaking actions, (2) develop proposed  rulemaking actions, or Notices of Proposed Rulemaking (NPRM), and (3)  develop final rulemaking actions. Built into agencies’ rulemaking  processes are opportunities for internal and external deliberations,  reviews, and public comments.

Federal agencies publish an average of 3,700 NPRMs each year. Most  agencies utilize Regulations.gov to receive public comments on proposed  rules, but some agencies have their own agency-specific websites.  Although the number of public comments submitted on NPRMs can vary  widely, in recent years some high-profile rulemakings have received  extremely large numbers of comments. For example, during the public  comment period for the Federal Communications Commission’s (FCC)  2017 Restoring Internet Freedom NPRM, FCC received more than 22  million comments through its public comment website. Subsequently,  media and others reported that some of the comments submitted to FCC  were suspected to have been submitted using false identity information.

The APA requires agencies to allow comments on NPRMs to be  submitted by any interested party (commenters). The APA does not  require the disclosure of identity information from commenters, such as  name, email, or address. Agencies therefore have no obligation under the  APA to verify the identity of such parties during the rulemaking process.  Agencies must give consideration to any significant comments submitted  during the comment period when drafting the final rule. However, courts  have held that agencies are not required to respond to every comment  individually. Agencies routinely offer a single response to multiple  identical or similar comments, because the comment process is not a  vote. As explained by Regulations.gov’s Tips for Submitting Effective  Comments, “… agencies make determinations for a proposed action  based on sound reasoning and scientific evidence rather than a majority  of votes. A single, well-supported comment may carry more weight than a  thousand form letters.”

My remarks today are based on our report issued in June 2019.  Specifically, this testimony discusses (1) the identity information selected  agencies collect through Regulations.gov and agency-specific comment  websites, (2) the internal guidance selected agencies have related to the  identity of commenters, (3) how selected agencies treat identity  information collected during the public comment process, and (4) the  extent to which selected agencies clearly communicate their practices  associated with posting identity information collected during the public  comment process.

For our report, we selected a nongeneralizable sample of 10 agencies  (selected agencies) that received a high volume of public comments for  rulemaking proceedings that accepted comments from January 1, 2013,  through December 31, 2017. These selected agencies included eight  agencies that use Regulations.gov as their agency’s comment website  (“participating agencies”) and two agencies that operate agency-specific  comment websites (“nonparticipating agencies”). We surveyed 52  program offices within these agencies about their comment process and  reviewed comment websites, agency guidance, and posted comment  data. We also interviewed relevant agency officials. Additional information  about our scope and methodology is available in our June 2019 report.  Since the issuance of that report, we received and reviewed additional  information from selected agencies related to the actions they have taken  in response to the report’s recommendations.

We conducted the work on which this statement is based in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on  our audit objectives.

Selected Agencies Collect Some Information from Commenters and Accept Anonymous Comments through Regulations.gov and Agency-Specific Websites

Consistent with the discretion afforded by the APA, Regulations.gov and  agency-specific comment websites use required and optional fields on  comment forms to collect some identity information from commenters. In  addition to the text of the comment, agencies may choose to collect  identity information by requiring commenters to fill in other fields, such as  name, address, and email address before they are able to submit a  comment. Regardless of the fields required by the comment form, the  selected agencies all accept anonymous comments in practice. Further,  because the APA does not require agencies to authenticate submitted  identity information, neither Regulations.gov nor the agency-specific  comment websites contain mechanisms to check the validity of identity  information that commenters submit through comment forms.

Regulations.gov and agency-specific comment websites also collect  some information about public users’ interaction with their websites  through application event logs and proxy server logs, though the APA  does not require agencies to collect or verify it as part of the rulemaking  process. This information, which can include a public user’s Internet  Protocol (IP) address, browser type and operating system, and the time  and date of webpage visits, is collected separately from the comment  submission process as part of routine information technology  management of system security and performance, and cannot be reliably  connected to specific comments.

Most Selected Agencies Have Some Internal Guidance Related to Commenter Identity

Seven of 10 selected agencies have documented some internal guidance  associated with the identity of commenters during the three phases of the  public comment process: intake, analysis, and response to comments.  However, the focus and substance of this guidance varies by agency and  phase of the comment process. As shown in table 1, for selected  agencies that have guidance associated with the identity of commenters,  the guidance most frequently relates to the comment intake or response  to comment phases of the public comment process.

The guidance for these phases addresses activities such as managing  duplicate comments (those with identical or near-identical comment text  but varied identity information) or referring to commenters in a final rule.  Agencies are not required by the APA to develop internal guidance  associated with the public comment process generally, or identity  information specifically.

Selected Agencies’ Treatment of Identity Information Collected during the Public Comment Process Varies

Within the discretion afforded by the APA, the 10 selected agencies’  treatment of identity information during the comment intake, comment  analysis, and response to comments phases of the public comment  process varies. Selected agencies differ in how they treat identity  information during the comment intake phase, particularly in terms of how  they post duplicate comments, which can lead to identity information  being inconsistently presented to public users of comment systems. With  regard to the comment intake phase in particular, the variation in how  agencies identify duplicate comments and post comments results in  identity information being inconsistently presented on Regulations.gov or  the agency-specific websites. Generally, officials told us that their  agencies either (1) maintain all comments within the comment system or  (2) maintain some duplicate comment records outside of the comment  system, for instance, in email file archives. For example, according to  officials of one participating agency—the Wage and Hour Division  (WHD)—all duplicate comments are stored in Regulations.gov. Our  analysis of WHD comments did not suggest that any comments were  missing from Regulations.gov. However, in one example, almost 18,000  duplicate comments were included in attachments under one individual’s  name in the comment title. While all of the comments are included within  10 separate attachments, none of the identity information included with  these comments can be easily found without manually opening and  searching all 10 attachments, most of which contain approximately 2,000  individual comments.

Selected agencies’ treatment of identity information during the comment  analysis phase also varies. Specifically, program offices with the  responsibility for analyzing comments place varied importance on identity  information during the analysis phase. Finally, all agencies draft a  response to comments with their final rule, but the extent to which the  agencies identify commenters or commenter types in their response also  varies across the selected agencies.

Selected Agencies’ Practices Associated with Posting Identity Information Are Not Clearly Communicated to Public Users of Comment Websites

Our analysis of Regulations.gov and agency-specific comment websites  shows that the varied comment posting practices of the 10 selected  agencies are not always documented or clearly communicated to public  users of the websites. In part to facilitate effective public participation in  the rulemaking process, the E-Government Act of 2002 requires that all  public comments and other materials associated with a given rulemaking  should be made “publicly available online to the extent practicable.”  Additionally, key practices for transparently reporting open government  data state that federal government websites—like those used to facilitate  the public comment process—should fully describe the data that are  made available to the public, including by disclosing data sources and  limitations. We found that the selected agencies we reviewed do not  effectively communicate the limitations and inconsistencies in how they  post identity information associated with public comments. As a result,  public users of the comment websites lack information related to data  availability and limitations that could affect their ability to use and make  informed decisions about the comment data and effectively participate in  the rulemaking process themselves.

Regulations.gov and Participating Agency Websites

Public users of Regulations.gov seeking to submit a comment are  provided with a blanket disclosure statement related to how their identity  information may be disclosed, and are generally directed to individual  agency websites for additional detail about submitting comments. While  additional information is provided in the Privacy Notice, User Notice, and  Privacy Impact Assessment for Regulations.gov, public users are not  provided any further detail on Regulations.gov regarding what  information, including identity information, they should expect to find in  the comment data. Additionally, there is not enough information to help  public users determine whether all of the individual comments and  associated identity information are posted.

Available resources on Regulations.gov direct public users to participating  agencies’ websites for additional information about agency-specific  review and posting policies. Seven of the eight participating agencies’  websites direct public users back to Regulations.gov and the Federal  Register, either on webpages that are about the public comment process  in general, or on pages containing information about specific NPRMs.  Three of these participating agencies—the Environmental Protection  Agency (EPA), Fish and Wildlife Service (FWS), and Food and Drug  Administration (FDA)—do provide public users with information beyond  directing them back to Regulations.gov or the Federal Register, but only  FDA provides users with details about posting practices that are not also  made available on Regulations.gov.

The eighth participating agency—the Employee Benefits Security  Administration (EBSA)—does not direct public users back to  Regulations.gov, and instead re-creates all rulemaking materials for each  NPRM on its own website, including individual links to each submitted  comment. However, these links go directly to comment files, and do not  link to Regulations.gov. While EBSA follows departmental guidance  associated with posting duplicate comments, which allows some  discretion in posting practices, the agency does not have a policy for how  comments are posted to Regulations.gov or its own website. Further, in  the examples we reviewed, the content of the NPRM-specific pages on  EBSA’s website does not always match what is posted to  Regulations.gov.

Because participating agencies are not required to adhere to  standardized posting practices, Regulations.gov directs public users to  participating agency websites for additional information about posting  practices and potential data limitations. However, these websites do not  describe the limitations associated with the identity information contained  in publicly posted comments. As allowed for under the APA, all of the  participating agencies in our review vary in the way in which they post  identity information associated with comments—particularly duplicate  comments. However, the lack of accompanying disclosures may  potentially lead users to assume, for example, that only one entity has  weighed in on an issue when, actually, that comment represents 500  comments. Without better information about the posting process, the  inconsistency in the way in which duplicate comments are presented to  public users of Regulations.gov limits public users’ ability to explore and  use the data and could lead users to draw inaccurate conclusions about  the public comments that were submitted and how agencies considered  them during the rulemaking process.

Both nonparticipating agencies use comment systems other than  Regulations.gov and follow standardized posting processes associated  with public comments submitted to their respective comment systems, but  the Securities and Exchange Commission (SEC) has not clearly  communicated these practices to the public. Although it appears to users  of the SEC website that the agency follows a consistent process for  posting duplicate comments, at the time of our June 2019 report, this  practice had not been documented or communicated to public users of its  website. In contrast, FCC identifies its policies for posting comments and  their associated identity information in a number of places on the  FCC.gov website, and on its Electronic Comment Filing System (ECFS)  web page within the general website. Regarding comments submitted to  rulemaking proceedings through ECFS, public users are informed that all  information submitted with comments, including identity information, will  be made public. Our review of ECFS comment data did not identify  discrepancies with this practice.

Although the public comment process allows interested parties to state  their views about prospective rules, the lack of communication with the  public about the way in which agencies treat identity information during  the posting process, particularly for duplicate comments, may inhibit  users’ meaningful participation in the rulemaking process. While the APA  does not include requirements for commenters to provide identity  information, or for agency officials to include commenters’ identity as part  of their consideration of comments, key practices for transparently  reporting open government data state that federal government websites— like those used to facilitate the public comment process—should fully  describe the data that are made available to the public, including by  disclosing data sources and limitations.

In our June 2019 report, we made eight recommendations. Specifically,  we recommended that five of the selected agencies establish a policy for  posting comments, and that those five agencies plus three others take  action to more clearly communicate their policies for posting comments,  particularly with regard to identity information and duplicate comments.  The eight agencies generally agreed with our recommendations and  identified actions they planned to take in response, such as developing  policies for posting duplicate comments and communicating those in  various ways to public users.

Since issuing our June 2019 report, SEC has taken action that is  responsive to the recommendation we made to it. Specifically, in  September 2019, SEC issued a memorandum that reflects SEC’s internal  policies for posting duplicate comments and associated identity  information. In addition, SEC has communicated these policies to public  users on the SEC.gov website by adding a disclaimer on the main  comment posting page that describes how the agency posts comments.

Chairmen Portman and Lankford, Ranking Members Carper and Sinema,  and Members of the Subcommittees, this concludes my prepared  remarks. I would be happy to answer any questions you may have at this  time.

For further information regarding this testimony, please contact Seto J.  Bagdoyan, (202) 512-6722 or bagdoyans@gao.gov. In addition, contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this statement. Individuals who made key  contributions to this testimony are David Bruno (Assistant Director),  Elizabeth Kowalewski (Analyst in Charge), and Dahlia Darwiche. Other  individuals who also contributed to the report on which this testimony is  based include Enyinnaya David Aja, Gretel Clarke, Lauren Kirkpatrick,  James Murphy, Alexandria Palmer, Carl Ramirez, Shana Wallace, and  April Yeaney.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

When federal agencies propose new rules, they usually provide an opportunity for public comment, but agencies aren't required to collect or verify commenters' identity information.

Mass mailing campaigns can result in thousands of duplicate comments. Agencies can post them individually, as attachments to a single comment, or as a count of duplicates received. Practices vary among agencies, within agencies, and for each rule.

The variation in how agencies post comments could create an inaccurate view of who submitted public comments. We testified about our recommendations that agencies should more clearly communicate their comment policies.


VA Health Care: Estimating Resources Needed to Provide Community Care

VA continues to focus on the use of community care to address challenges with veterans' access to health care services at VA medical facilities. In fiscal year 2019, VA plans to consolidate the Veterans Choice Program and several other community care programs under a single new Veterans Community Care Program. GAO and others have previously reported on past challenges VA has faced regarding the reliability, transparency, and consistency of its budget estimates for health care.

GAO was asked to review VA's use of community care and efforts to develop budget estimates for this care. This report describes (1) trends in obligations for and utilization of VA's community care programs since fiscal year 2014, (2) how VA develops its community care budget estimate and any subsequent changes made to this estimate, and (3) how VA's actual obligations for community care compared with estimated obligations for fiscal years 2017 and 2018.

GAO reviewed actual obligation and utilization data for fiscal years 2014 through 2018, as well as estimated obligations for fiscal years 2019 through 2021. GAO also reviewed available VA documentation on the methods and data used to develop VA's community care budget estimate that informed the President's budget request for fiscal years 2017 through 2019. GAO also interviewed VA officials and contractors responsible for developing these estimates, and OMB staff responsible for the federal budget.

VA and OMB reviewed a draft of this report. VA's technical comments were incorporated as appropriate.

To help ensure that veterans are provided timely and accessible health care services, the Department of Veterans Affairs (VA) may purchase care from non-VA providers, known as community care. VA obligated $14.9 billion for community care in fiscal year 2018, an increase of $6.7 billion (about 82 percent) since fiscal year 2014. The number of veterans authorized to use community care increased from 1.3 million to 1.8 million during this period. By fiscal year 2021, VA estimated obligations to increase to $17.8 billion, and officials estimate at least 1.8 million veterans will continue to use this care.

Note: VA estimated obligations for fiscal year 2019 to reflect $1.8 billion in anticipated savings as a result of a VA policy change regarding the timing of certain community care obligations.

VA uses a projection model to estimate the majority of resources needed to provide health care services. Beginning with the President's fiscal year 2018 budget request, VA updated its model to estimate the resources needed to purchase over 40 community care services accounting for over 75 percent of VA's community care budget estimate. These services include outpatient and inpatient care, among others. For the remainder of its community care budget estimate, which includes nursing care in state-operated homes, VA uses other methods based on historical utilization. VA's budget estimate is successively reviewed at VA and the Office of Management and Budget (OMB) to inform the President's budget request. VA identified several changes made during the review process to its budget estimate for fiscal years 2018 and 2019 to reflect more current information related to utilization and costs, among other factors.

VA's actual obligations for community care for fiscal years 2017 and 2018 were $1.2 billion and $2.2 billion higher, respectively, than originally estimated. According to VA officials, this occurred for several reasons, including policy changes and increased costs for the Veterans Choice Program. To support higher obligations, VA requested and received additional funding for the Veterans Choice Program outside the annual appropriations process and used other funding sources, such as unobligated amounts from prior fiscal years.

The Department of Veterans Affairs (VA) operates one of the nation’s  largest health care delivery systems. In fiscal year 2018, VA provided  care to over 6.9 million patients—mostly, veterans—and obligated about  $78 billion for that care. The majority of veterans utilizing VA health care  services receive care in VA-operated medical facilities, including 170 VA  medical centers and over 1,000 outpatient facilities. However, veterans  may also obtain services from non-VA providers in the community— known as community care—through one of several community care  programs aimed at helping ensure veterans receive timely and accessible  care.

In the last 5 years, Congress has taken steps to expand the availability of  community care for veterans. The Veterans Access, Choice, and  Accountability Act of 2014 created the temporary Veterans Choice  Program (Choice Program) and provided $10 billion in funding for  veterans to obtain health care services from community providers when  veterans faced long wait times or travel distances, or had other  challenges accessing care at VA medical facilities. Implemented in fiscal  year 2015, the temporary authority and funding of the Choice Program  was separate from that of other previously existing programs through  which VA has the option to purchase care from community providers. In  2018, the VA MISSION Act was enacted requiring VA to implement within  one year a permanent community care program—the Veterans  Community Care Program—that consolidates the Choice Program along  with several other community care programs. The act, among other  things, requires VA to ensure veterans can receive timely and accessible  community care when certain criteria are met. The act also requires VA to  issue regulations—including defining certain eligibility criteria—to carry  out the Veterans Community Care Program.

The amount of funding VA receives for community care and other health  care services is predominately determined as part of the annual  appropriations process. In preparation, VA must annually develop an  estimate of the resources needed to provide community care and other  health care services for two fiscal years—known as its health care budget  estimate. This budget estimate is one step in a complex, multistep  budget formulation process that culminates in an appropriations request  for VA health care in the President’s annual budget request to Congress.  Developing this estimate is inherently complex, as assumptions and  imperfect information are used to project the likely quantity and cost of the  health care services VA expects to provide. These projections are made 3  and 4 years into the future using data from the most recently completed  fiscal year. As such, VA’s budget estimate is prepared in the context of  uncertainties about the future—not only about program and veterans’  needs, but also about future economic conditions, presidential policies,  and congressional actions that may affect the funding needs in the year  for which the request is made. As a result of these uncertainties, the  amount of resources VA obligates during a fiscal year for health care  services may be different than the amount it estimates it will obligate in its  annual budget estimate.

We and others have previously identified challenges VA has faced  regarding the reliability, transparency, and consistency of its budget  estimates for medical services used to support the President’s budget  request. For example, in February 2012, we reported that VA’s estimated  savings from operational improvements for providing medical services— used to support both the President’s budget request for fiscal year 2012  and VA’s advance appropriations request for fiscal year 2013—lacked  analytical support or were flawed, raising questions regarding the  reliability of the estimated savings. Due to these issues and other  concerns related to veterans receiving timely care, we concluded that VA  health care is a high-risk area and added it to our High Risk List in 2015.

In light of these challenges and as VA looks to implement the VA  MISSION Act to consolidate a number of its community care programs for  veterans into a single program, you asked us to review VA’s use of  community care, as well as its efforts to develop a budget estimate for  this care. In this report, we describe  1.  trends in obligations for and utilization of VA’s community care  programs since fiscal year 2014,  2.  how VA develops its estimate of the resources needed for community  care and any subsequent changes made to this estimate, and  3.  how VA’s actual obligations for community care compared to its  estimated obligations for fiscal years 2017 and 2018.

To describe trends in obligations for VA’s community care programs since  fiscal year 2014, we reviewed data from VA’s budget justifications and  other data provided by VA on actual obligations for fiscal years 2014  through 2018—the most recently completed fiscal year for which these  data were available. We also reviewed the budget justification data on  estimated obligations for fiscal years 2019 through 2021. The  community care data we reviewed reflected obligations for all VA  community care programs for veterans and other eligible beneficiaries,  such as spouses and dependent children. For comparison purposes, we  reviewed data on VA’s total obligations for health care services, including  care provided in VA medical facilities and community care. We also  reviewed data on actual obligations by service type—such as dental care,  inpatient care, long-term care, outpatient care, and prosthetics. To  describe trends in utilization of community care programs, we reviewed  VA data on the number of veterans authorized to use community care  services, and the types and number of community care services those  veterans actually used from fiscal years 2014 through 2018. We also  reviewed data on the actual utilization of community care by other eligible  beneficiaries from fiscal years 2014 through 2018.

To describe how VA develops its estimate of the resources needed for  community care and any subsequent changes made to this estimate, we  reviewed and analyzed the VA’s budget justifications for the President’s  budget requests for fiscal years 2017 through 2019, which was the latest  fiscal year for which complete information were available to support the  President’s budget request. VA documents we reviewed included those  that describe the methods and types of data used to develop VA’s  community care budget estimates. VA data we reviewed included the  community care budget estimates projected by those methodologies and  changes made to those estimates that informed the President’s budget  request.

To describe how VA’s actual obligations for community care compared to  its estimated obligations for fiscal years 2017 and 2018, we reviewed data  from VA’s budget justifications and other data provided by VA on  estimated and actual obligations for community care for those years. We  chose this period because 2017 was the first fiscal year estimates of  obligations for community care were reported separately in VA’s budget  justifications, and 2018 was the most recently completed fiscal year for  which data were available. The community care data we reviewed  reflected obligations for all VA community care programs for veterans and  other eligible beneficiaries, including data by service type.

For all objectives, we spoke with officials from the Veterans Health  Administration’s (VHA) Office of Finance, Office of Community Care, and  the Office of Enrollment and Forecasting within the Office of the Assistant  Deputy Under Secretary for Health for Policy & Planning; VA’s actuarial  consultant for developing health care budget estimates; and the Office of  Management and Budget (OMB). Additionally, we assessed the reliability  of the VA data, including data on obligations for and utilization of health  care services, by checking for missing values and outliers, and  interviewed relevant VA officials who are knowledgeable about these  data. As a result of these steps, we determined that the data were  sufficiently reliable for the purpose of our reporting objectives.

We conducted this performance audit from April 2018 through June 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform our work to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

VA’s Community Care Programs and Planned Consolidation

VA has purchased health care services from community providers since  as early as 1945. In general, veterans may be eligible for community care  when they are faced with long wait times or travel long distances for  appointments at VA medical facilities, or when a VA medical facility is  unable to provide certain specialty care services, such as cardiology or  orthopedics. In general, community care services must be authorized in  advance of when veterans access the care.

Currently, there are several community care programs through which VA  purchases hospital care and medical services for veterans, including the  Choice Program. In implementing the VA MISSION Act, VA plans to  consolidate four of its community care programs for veterans under the  Veterans Community Care Program, which is expected to go into effect  by June 2019. (See table 1.)

VA also provides health care services to veterans and other eligible  beneficiaries through community providers under additional benefit  programs. These benefit programs include the Civilian Health and  Medical Program of the Department of Veterans Affairs (CHAMPVA) and  the Camp Lejeune Family Member Program, among others. After  implementing the VA MISSION Act, VA will continue to operate the  community care programs for other eligible beneficiaries, such as  CHAMPVA and others, as it has historically done. Appendix I contains  more information about VA’s community care programs.

Developing a Budget Estimate for VA Health Care

The amount of funding VA receives to provide its health care services is  determined during the annual appropriations process. In preparation for  the process, VA develops an estimate of the resources needed to provide  its health care services—known as its health care budget estimate—for  two fiscal years. This budget estimate is one step in a complex,  multistep budget formulation process, which culminates in an  appropriation request for VA health care that updates the earlier, advance  appropriation request for the upcoming fiscal year and an advance  appropriation request for the next fiscal year in the President’s annual  budget request to Congress.

VA’s health care budget estimate includes the total cost of providing  health care services, including direct patient costs, as well as costs  associated with management, administration, and maintenance of  facilities. VA uses its Enrollee Health Care Projection Model (EHCPM) to  estimate the majority of resources needed to meet the expected demand  for health care services, and uses other methods for the remaining  services. VA uses the EHCPM to make projections 3 and 4 years into  the future for budget purposes based on data from the most recent fiscal  year. For example, in 2017, VA used data from fiscal year 2016 to  develop its health care budget estimate for the fiscal year 2019 request  and advance appropriation request for fiscal year 2020. The EHCPM’s  estimates are based on three basic components: (1) the projected  number of veterans who will be enrolled in VA health care, (2) the  projected quantity of health care services enrollees are expected to use,  and (3) the projected unit cost of providing these services. Each  component is subject to a number of complex adjustments to account for  the characteristics of VA health care and the veterans who access VA’s  health care services. (See fig. 1.)

VA uses other methods to estimate resources needed for the remaining  portion of its budget estimate. This portion of the budget includes the  state home per diem program, CHAMPVA, and other health care  programs for veterans and other eligible beneficiaries, as well as health- care-related initiatives proposed by the Secretary of Veterans Affairs or  the President. (See app. II for more information about the other methods  VA uses in developing its health care budget estimate.)

VHA generally starts to develop a health care budget estimate  approximately 10 months before the President submits the budget to  Congress, which should occur no later than the first Monday in  February. The budget estimate changes during the 10-month budget  formulation process, in part, due to successively higher levels of review in  VA and OMB before the President’s budget request is submitted to  Congress. (See table 2.) The Secretary of Veterans Affairs considers the  health care budget estimate developed by VHA when assessing resource  requirements among competing interests within VA, and OMB considers  overall resource needs and competing priorities of other agencies when  deciding the level of funding requested for VA’s health care services.  OMB passes back decisions, known as a “passback,” to VA and other  agencies on their budget estimate, along with funding and policy  proposals to be included in the President’s budget request. VA has an  opportunity to appeal the passback decisions before OMB finalizes the  President’s budget request. Concurrently, VA prepares a congressional  budget justification that provides details supporting the policy and funding  decisions in the President’s budget request.

As of fiscal year 2017, VA primarily receives funding for all health care it  provides or purchases through the following appropriation accounts:

Medical Services: health care services provided to eligible veterans  and other beneficiaries in VA facilities and non-VA facilities, among  other things.

Medical Community Care: health care services that VA authorizes for  veterans and other beneficiaries to receive from community  providers.

Medical Support and Compliance: the administration of the medical,  hospital, nursing home, domiciliary, supply, and research activities  authorized under VA’s health care system, among other things.

Medical Facilities: the operation and maintenance of VHA’s capital  infrastructure, such as the costs associated with nonrecurring  maintenance, leases, utilities, facility repair, laundry services, and  groundskeeping, among other things.

Separate from VA’s health care appropriation accounts, the Veterans  Access, Choice, and Accountability Act of 2014 provided $10 billion in  funding for the Choice Program, which was implemented in early fiscal  year 2015 and authorized until funds were exhausted or through August  7, 2017, whichever occurred first. However, VA received additional  authority and funding to maintain the Choice Program through June 6,  2019, when the new Veterans Community Care Program is expected to  go into effect. VA expects that the new Veterans Community Care Program will be primarily funded through the Medical Community Care  appropriation account.

VA Obligations for and Number of Veterans Authorized to Use Community Care Have Grown from Fiscal Year 2014 through Fiscal Year 2018

VA’s Obligations for Community Care Increased by Over 80 Percent from Fiscal Years 2014 through 2018, and VA Estimates Obligations Will Grow an Additional 20 Percent through 2021

Our analysis of VA budget justification data shows that from fiscal year  2014 through fiscal year 2018, the total amount VA actually obligated for  community care increased 82 percent, from $8.2 billion to $14.9 billion.  Since VA implemented the Choice Program in fiscal year 2015, the share  of VA’s obligations for community care relative to VA’s total obligations for  health care services increased through fiscal year 2018, from about 14 to  19 percent of VA’s total obligations for health care services. By fiscal year  2021, VA estimates that the total amount obligated for community care  will increase to $17.8 billion, an increase of about 20 percent from the  $14.9 billion in actual obligations for fiscal year 2018. (See fig. 2.)

As figure 2 shows, the largest increase in actual obligations for  community care occurred from fiscal years 2015 through 2016, when they  increased by $3.4 billion, from $8.9 billion to $12.3 billion. According to  VA officials, this increase in obligations during this period reflected  veterans’ expanded use of community care through the Choice Program,  as more providers participated in the provider networks established by  third-party administrators or entered into provider agreements with VA  facilities. (Fig. 3 provides information on VA’s obligations for community  care by the Choice Program and by other community care programs.)  The increase in actual obligations for community care from fiscal year  2016 through fiscal year 2017 was also largely due to expanded use of  community care through the Choice Program. VA officials attributed this  increase to efforts to obligate as much of the available Choice Program  funding as possible before the anticipated end of the Choice Program in  August of 2017. From fiscal years 2017 through 2018, obligations for  community care continued to increase, but the increase was partially due  to greater use of other community care programs, according to VA  officials.

From fiscal years 2014 through 2018, the increases in total actual  obligations for VA community care were driven largely by increases in  obligations for outpatient and inpatient services. Over this time period,  VA’s actual obligations for outpatient services increased by $2 billion,  from $2.3 billion to $4.3 billion, and actual obligations for inpatient  services increased by $818 million, from $1.8 billion to $2.7 billion.  Figure 4 illustrates how outpatient and inpatient services accounted for  most of VA’s total community care obligations for fiscal year 2018.

VA estimated that from fiscal years 2019 through 2021, obligations for  community care will increase to $17.8 billion, which VA officials said are  attributable to the new eligibility criteria under the VA MISSION Act. The  authority for the Choice Program ends June 6, 2019, after which the new  Veterans Community Care Program—which consolidates VA’s  community care programs under the VA MISSION Act—will be expected  to begin. For comparison purposes, the largest increase in obligations for  services provided at VA medical facilities is estimated to occur between  fiscal years 2020 and 2021. VA officials said this increase is attributable,  in part, to efforts related to hiring and telehealth in response to the  eligibility criteria under the VA MISSION Act.

The Number of Veterans Authorized to Use Community Care Increased about 40 Percent from Fiscal Years 2014 through 2018

Our analysis of VA data on authorizations for community care shows that  the number of veterans authorized to use community care increased 41  percent from fiscal years 2014 through 2018. (See fig. 5.) The  approximately 1.8 million veterans authorized to use community care in  2018 represented about 30 percent of all veterans accessing VA health  care services that year (approximately 6.2 million veterans). By fiscal  year 2021, VA officials told us that they estimate that at least 1.8 million  veterans will still use community care.

Our analysis of VA data also shows that after being authorized for care,  veterans’ utilization of certain community care services increased from  fiscal years 2014 through 2018. Over this time period, a number of  outpatient services experienced increases of more than 200 percent in  utilization, especially chiropractic visits (418 percent, from 143,000 to  743,000 visits), physical therapy visits (252 percent, from 857,000 to 3  million visits), and non-mental health related office visits (243 percent,  from 651,000 to 2.2 million visits). In comparison, our analysis found  relatively smaller increases in veteran utilization for certain inpatient  services. For example, the utilization for surgical inpatient stays increased  about 39 percent—from 253,000 to 352,000 bed days.

VA Updated Its Projection Model to Develop Most of Its Community Care Budget Estimate; Subsequent Changes Reflect More Current Information and Other Factors

VA first developed a separate budget estimate for community care to  inform the President’s fiscal year 2017 budget request. Beginning with the  President’s fiscal year 2018 budget request, VA updated its EHCPM to  develop over 75 percent of its community care budget estimate and used  other methods to develop the remainder. Subsequent changes were  made to the community care budget estimates developed by the EHCPM  for fiscal years 2018 and 2019 through successively higher levels of  review in VA and OMB.

VA First Developed a Separate Budget Estimate for Community Care as Part of the President’s Fiscal Year 2017 Budget Request for VA

VA first developed a separate budget estimate of the resources it would  need for community care—as distinct from the care provided in VA  medical facilities—in order to inform the President’s fiscal year 2017  budget request for VA. Prior to this fiscal year 2017 budget request, VA  developed a single budget estimate of the resources needed to provide  all VA health care services, regardless of whether these services were  purchased from community providers or delivered in VA medical facilities,  because all these services were to be funded through the same  appropriation account. According to VA officials, at the time a separate  community care appropriation account and budget estimate were  unnecessary, because community care accounted for a relatively small  portion of VA’s overall health care budget. However, once the medical  community care appropriation account was established in fiscal year  2017, VA began developing a separate budget estimate for community  care, as required by law.

To develop its first estimate of the resources needed for community care  for fiscal year 2017, VA made adjustments to existing estimates for total  demand for care—both in VA medical facilities and community care  combined—developed by the EHCPM. At the time, VA used the EHCPM  to estimate the resources needed to provide VA health care services to veterans, including inpatient, outpatient, and long-term care. However,  the EHCPM did not make separate estimates for community care and  care provided at VA facilities; according to VA officials, VA adjusted the  EHCPM estimates by assuming that for each service, the share of total  utilization and costs devoted to community care would be the same as  they had been in the most recently completed fiscal year. In addition, after  this adjustment, VA made additional changes to the community care  budget estimate, which resulted in a net increase of $2.5 billion. Nearly all  of this increase reflected an anticipated impact of the expanded access  under the Choice Program, according to VA officials. Overall, this  approach accounted for about 75 percent of the $12.3 billion community  care budget estimate that informed the President’s budget request for  fiscal year 2017.

To develop the remaining portion of its community care budget estimate,  VA used methods other than the EHCPM that, according to VA officials,  were used historically to develop estimates of the resources needed for  the state home per diem program and benefit programs. For example, VA  develops budget estimates for certain services under the state home per  diem program by creating projections of the amount of care to be  provided using information about the size and demographic  characteristics of the enrolled veteran population and projections of the  unit cost of providing one day of care using recent cost experience.  According to VA officials, VA was able to continue using these other  methods, because the services under these programs have been  provided through community providers and not VA medical facilities.  While methods for each program vary, in general, these methods are  based on each program’s historical utilization and costs. (See app. II for  additional information on the methods VA uses to develop the budget  estimates for each of these community care programs.)

Beginning with the President’s Fiscal Year 2018 Budget Request, VA Updated Its Projection Model to Develop over 75 Percent of Its Community Care Budget Estimate

Beginning with the President’s fiscal year 2018 budget request, VA  updated its EHCPM directly to estimate most of the resources needed to  purchase community care for veterans. Specifically, VA updated the  EHCPM to estimate the amount of resources needed to purchase a set of  more than 40 community care services that have accounted for over 75  percent of VA’s total community care budget estimates of $12.6 billion for  fiscal year 2018 and $12.4 billion for fiscal year 2019. These health care  services were grouped into seven service types and include outpatient  care, inpatient care, and long-term care. (See app. III for a list of the  health care services). Of these services, outpatient services typically  accounted for the largest share of VA’s community care budget estimate.  For the remainder of community care services—including services  provided under the state home per diem program and benefit programs— VA did not use the EHCPM and instead continued to use the other  methods it has historically used to develop budget estimates for these  services. (See fig. 6.)

VA made several changes to the EHCPM to develop most of its  community care budget estimate. Historically, the EHCPM estimated  resources needed to meet the total expected demand for VA health  care—a combination of care provided in VA medical facilities and through  community care programs. VA updated the EHCPM to determine the  proportion of demand met by community care by projecting enrolled  veterans’ expected utilization of community care and the expected costs  of purchasing these services. In what follows, we describe five major  changes made to the EHCPM allowing VA to estimate the budgetary  resources needed for community care.  1.  Reliance on community care services. The EHCPM has historically  accounted for the extent to which enrolled veterans would be  projected to obtain health care services through the VA as opposed to  other health care programs or insurers—referred to as reliance on VA  health care. VA updated the EHCPM so that it can further account  for the extent to which enrolled veterans would be expected to use  VA’s community care programs as opposed to using care in VA’s  medical facilities. Each year, the EHCPM determines reliance on VA  community care based on a combination of historical experience—or  the extent to which community care was used in prior fiscal years— and on the projected impact of new VA policies and operational  guidance. For example, for the fiscal year 2019 budget estimates, the  EHCPM projected reliance on VA care to be about 38 percent, of  which 14 percent would be met through community care. Thus, the  EHCPM projected reliance on VA’s community care programs to be  about 5.3 percent for all care enrolled veterans are projected to use in  fiscal year 2019.  2.  Accounting for difference in community providers’ efficiency  delivering inpatient services. VA also updated the EHCPM so that  community care utilization projections account for the fact that  veterans receiving inpatient care through community providers  generally have relatively shorter lengths of inpatient stays compared  with veterans receiving care at VA medical facilities. According to  officials from VA and its actuarial consultant, community providers on  average have historically performed better than VA providers on  national benchmarks measuring how well providers manage the  length of inpatient stays, while not affecting quality of care. To account  for this difference, VA uses an adjustment factor when projecting  utilization of inpatient services based on potentially avoidable days of  care for community providers.  3.  Comparing projected utilization with actual utilization for  community care services. VA developed an adjustment factor for  the EHCPM’s utilization estimates to account specifically for the  differences between projected utilization and actual utilization of  community care for the most recently completed fiscal year of data.  According to VA officials, the difference typically reflects utilization  behavior among providers or patients that are difficult to estimate  based solely on historical data—such as changes in local practice  patterns (e.g., providers choosing to use magnetic resonance imaging  versus x-rays). To account for this behavior, VA compares projected  and actual utilization and creates an “actual-to-expected” adjustment  factor for each health care service to account for the difference.  4.  Projecting unit costs for community care services. VA updated  the EHCPM so that it could estimate what are known as the unit costs  of purchasing community care services for veterans. In general, the  unit cost of a community care service comprises the payment made to  the provider (known as direct patient costs), as well as the indirect  costs associated with administration and overhead. Indirect costs  include (1) the fees paid to the contractors for administrative  responsibilities for the Choice Program, (2) VA billing and processing  costs and care coordination costs associated community care  programs, and (3) certain costs associated with the VA Central Office  that support community care (e.g., the salaries for officials from the  Office of Community Care and other VA Central Office officials).  5.  Accounting for community care service complexity and inflation.

VA made other changes to the EHCPM’s unit cost projections for  community care. For example, VA updated the EHCPM so that it  accounts for costs associated with changes in the complexity—that is,  the level of resources required to deliver—of health care services VA  purchases from community providers. Officials from VA and its  actuarial consultant noted that more complex services require  relatively more resources to deliver, such as more expensive  equipment (e.g., magnetic resonance imaging); more provider time; or  higher-cost providers, such as surgeons. Officials anticipate that most  services that VA purchases in the community will increase in  complexity, leading to higher projected unit-costs for community  care. VA also updated the EHCPM so that its unit cost estimates for  community care account for inflation in the cost of labor and  equipment.

VA’s Community Care Budget Estimates Projected by the Model for Fiscal Years 2018 and 2019 Were Subsequently Changed to Reflect More Current Information, Among Other Factors

VA’s community care budget estimates are reviewed at successively  higher levels at VA and OMB to inform the President’s budget request for  VA. VA identified several changes made during the review process to its  estimates projected by the EHCPM for fiscal years 2018 and 2019; these  changes were due to the availability of more current information related to  utilization and costs, among other factors.

For fiscal year 2018, changes resulted in a budget request for VA  community care in the President’s budget request that was approximately  $1 billion lower than VA’s original EHCPM budget estimate of $10.7  billion. These changes included the following:

A $996 million decrease reflecting the availability of more current  information showing that an anticipated increase in utilization due to  the Choice Program was too high.

A $600 million decrease reflecting the availability of more current  information showing that overhead costs initially allocated to  community care in the data used in the EHCPM were too high.

A $180 million decrease accounting for VA’s implementation of a new  law that reduces VHA’s use of community care for examinations  determining veterans’ disability ratings.

A $500 million increase accounting for a court ruling that affected  veteran eligibility for reimbursement of emergency community care,  which was expected to increase utilization.

A $250 million increase reflecting the availability of more current  information that indicated administrative costs for the Choice Program  in the data used in the EHCPM were too low.

For fiscal year 2019, changes resulted in a budget request for VA  community care in the President’s budget request that was nearly $1  billion higher than VA’s original EHCPM budget estimate of $8.6 billion.  These changes included the following:

A $1.7 billion increase reflecting more current information indicating  that community care administrative costs and the utilization levels in  the data used in the EHCPM were too low.

A $1 billion increase accounting for a delay in the timing of the  implementation of community care network contracts. According to VA  officials, this resulted in the continued use of reimbursement rates in  community care that were higher than Medicare reimbursement  rates.

A $1.8 billion decrease that reflected VA’s implementation of a new  policy that changed the timing of community care obligations from  when a veteran is authorized to use community care to the when a  claim for actual services is paid.

VA’s Actual Obligations for Community Care in Fiscal Years 2017 and 2018 Were Higher than Estimated and Included Additional Funding Received for the Choice Program

VA’s Actual Obligations for Community Care in Fiscal Years 2017 and 2018 Were $1.2 Billion and $2.2 Billion Higher than Estimated, Respectively

Our analysis of data included in VA’s budget justifications shows that in  fiscal years 2017 and 2018, VA obligated $1.2 billion and $2.2 billion  more for community care than originally estimated at the time of the  President’s budget requests for those years. In both years, VA’s actual  obligations for both the Choice Program and other community care  programs were higher than estimated. (See table 3.) According to VA  officials, the higher-than-estimated obligations for the Choice Program for  fiscal year 2017 were driven, in part, due to changes in Choice Program  policies and a large increase in the cost per authorization for care. In the  case of other community care programs, VA officials told us that the  higher-than-estimated obligations for both fiscal years 2017 and 2018  were driven, in part, by local practice patterns (e.g., providers choosing to  use magnetic resonance imaging versus x-rays) and the capacity of VA  medical facilities to provide services. As discussed later in this report, VA  also received and reallocated additional funding to purchase community  care in fiscal years 2017 and 2018, which contributed to actual obligations  being higher-than-estimated obligations.

Our analysis of VA’s obligations by service type shows that in fiscal year  2017, VA’s higher-than-estimated obligations for community care were  primarily for outpatient and inpatient services, as shown in table 4. In  fiscal year 2018, the higher-than-estimated obligations for community  care were primarily for outpatient services, while there was an overall  decrease in obligations for inpatient services. (See table 5.) Additionally,  for some service types, VA’s actual obligations were lower than estimated  in fiscal years 2017 and 2018.

VA’s Higher-Than- Estimated Obligations for Community Care Included Additional Funding VA Received for the Choice Program Outside of the Annual Appropriations Process

To obligate $13.6 billion for community care in fiscal year 2017 and $14.9  billion in fiscal year 2018—amounts that were $1.2 billion and $2.2 billion  higher, respectively, than what VA originally estimated for its budget  request, and what VA received in its annual appropriation—VA requested  and received additional Choice Program funding outside of the annual  appropriations process. VA also reallocated funding from other sources,  including unobligated funding from a prior fiscal year and collections, to  pay for the other community care programs.

Specifically, the $13.6 billion and $14.9 billion VA obligated for community  care in fiscal years 2017 and 2018, respectively, came from the following  sources:

Choice Program. For both fiscal years, VA obligated from its  remaining funding and prior-year recoveries from the previous fiscal  years, and requested and received additional funding three times  outside of the annual appropriations process. (Table 6 below  summarizes the time frames during which VA requested and received  additional appropriations for the Choice Program outside of the annual  appropriations process for fiscal years 2017 and 2018.)

Other community care programs. For both fiscal years, VA  obligated from its annual appropriation and transferred a portion of its  overall collections from its Medical Care Collections Fund to the  medical community care account. In addition, for fiscal year 2018,  VA used unobligated funding and prior-year recoveries from fiscal  year 2017.

We provided a draft of this product to VA and OMB for comment. VA  provided technical comments, which we incorporated as appropriate.  OMB had no comments.

We are sending copies of this report to the Secretary of Veterans Affairs,  the Director of the Office of Management and Budget, appropriate  congressional committees, and other interested parties. This report is  also available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or silass@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix V.

Appendix I: The Department of Veterans Affairs’ Community Care Programs for Veterans and Other Eligible Beneficiaries

While the majority of veterans utilizing Department of Veterans Affairs’  (VA) health care services receive care in VA-operated medical facilities,  veterans may also obtain services from non-VA providers in the  community—known as community care—through one of several  community care programs aimed at helping to ensure that veterans  receive timely and accessible care. In implementing the VA MISSION  Act, VA plans to consolidate four of its community care programs for  veterans—dialysis contracts, individually authorized care, the Patient- Centered Community Care Program, and the Veterans Choice Program— under the Veterans Community Care Program, which is expected to go  into effect by June 2019. In addition, VA has several other community  care programs that serve veterans and programs that provide health care  services to other eligible beneficiaries, including a veteran’s spouse or  dependent child.

Community Care Programs for Veterans that VA Plans to Consolidate

Dialysis contracts. When dialysis services—a life-saving medical  procedure for patients with permanent kidney failure—are not feasibly  available at VA medical facilities, veterans may be referred to one of VA’s  contracted dialysis providers, and veterans may receive dialysis at local  clinics on an outpatient basis, or at home (if the contractors offer home- based dialysis services).

Individually authorized care. When a veteran cannot access a particular  specialty care service from a VA medical facility—either because the  service is not offered, the veteran would have to wait too long for an  appointment, or the veteran would have to travel a long distance to a VA  medical facility—VA medical facility staff may request an individual  authorization for the veteran to obtain the service from a community  provider who is willing to accept VA payment.

Patient-Centered Community Care. VA contracted with two third-party  administrators to develop regional networks of community providers of  specialty care, mental health care, limited emergency care, and maternity  and limited newborn care when such care is not feasibly available from a  VA medical facility. To be eligible to obtain care from Patient-Centered  Community Care providers, veterans must meet the same criteria that are  required for individually authorized care.

Veterans Choice Program. VA modified its Patient-Centered Community  Care contracts with the two third-party administrators to implement the  Veterans Choice Program. This program allows eligible veterans to obtain  health care services from community providers if the veteran meets  certain criteria, including when a veteran cannot receive care within 30  days from the veteran’s or physician’s preferred date, or face an unusual  or excessive burden in traveling to a VA medical center.

Other Community Care Programs for Veterans

Agreements with federal partners and academic affiliates. When  services are not available at VA medical facilities, VA may obtain  specialty, inpatient, and outpatient health care services for veterans  through different types of sharing agreements—those with other federal  facilities (such as those operated by the Department of Defense and the  Indian Health Service), those with Tribal Health Programs, and those with  university-affiliated hospitals, medical schools, and practice groups  (known as academic affiliates).

Emergency care. When emergency community care is not  preauthorized, VA may reimburse community providers for emergency  care for eligible veterans for a condition related to a service-connected  disability, and for eligible veterans for a condition not related to a service- connected disability.

Foreign Medical Program. The Foreign Medical Program is VA’s health  care benefits program for eligible veterans who are residing or traveling  abroad and have a service-connected disability.

State Home Per Diem Program. Under the State Home Per Diem  Program, states provide care for eligible veterans in three different types  of programs: nursing home, domiciliary, and adult day health care.

Community Care Programs for Other Beneficiaries

Camp Lejeune Family Member Program. The Camp Lejeune Family  Member Program is for family members of veterans that lived or served at  U.S. Marine Corps Base Camp Lejeune, North Carolina, for no fewer than  30 days between January 1, 1957, and December 31, 1987, and were  potentially exposed to drinking water contaminated with industrial  solvents, benzene, and other chemicals. The program provides health  care to veterans who served on active duty at Camp Lejeune and to  reimburse eligible Camp Lejeune family members for health care costs  related to one or more of 15 specified illnesses or medical conditions  specified in law.

Children of Women Vietnam Veterans Health Care Benefits Program.  This program provides health care benefits to female Vietnam veterans’  birth children who the Veterans Benefits Administration has determined to  have a covered birth defect. This program is not a comprehensive health  care plan and only covers those services necessary for the treatment of a  covered birth defect and associated medical conditions.

Civilian Health and Medical Program of the Department of Veterans  Affairs (CHAMPVA). CHAMPVA is a comprehensive health care  program that provides health care coverage for spouses, children and  primary caregivers of veterans who are permanently and totally disabled  from a service-connected disability. CHAMPVA functions similarly to  traditional health insurance, with most care in the program delivered using  non-VA community providers.

Spina Bifida Health Care Benefits Program. This program provides  health care benefits to certain Korea and Vietnam veterans’ birth children  who have been diagnosed with spina bifida.

Appendix II: Budget Formulation Process for the State Home Per Diem Program and Non- Veteran Community Care Programs

The Department of Veterans Affairs (VA) and its actuarial consultant use  the Enrollee Health Care Projection Model to develop most of the  department’s estimate of the resources needed to meet the expected  demand for VA’s health care services. VA uses other methods to estimate  the remaining resources needed. This remaining portion includes  community care programs for veterans and other eligible beneficiaries,  including the State Home Per Diem Program and the Civilian Health and  Medical Program of the Department of Veterans Affairs (CHAMPVA).

State Home Per Diem Program. This program pays per diem for state- provided care for eligible veterans in three different types of programs:  domiciliary, nursing home, and adult day health care. For state home  domiciliary and nursing care, categorized as institutional care, VA creates  budget projections based on historical funding data. For state home adult  day health care, categorized as non-institutional care, VA’s budget  estimates are based on projections of the amount of care provided— which is known as workload—and the unit cost of providing a day of this  care. VA projects the demand for non-institutional care services using  information about the size and demographic characteristics of the  enrolled veteran population. VA projects unit cost for non-institutional care  services by calculating unit-cost increases observed from recent  experience and then using this information to project future unit costs. VA  multiplies the workload estimates, unit-cost estimates, and the number of  days in the fiscal year to develop an estimate of the amount of resources  needed for non-institutional care.

CHAMPVA. CHAMPVA provides health care coverage for spouses and  children of veterans who are permanently and totally disabled from a  service-connected disability. CHAMPVA functions similarly to traditional  health insurance—most care within CHAMPVA is delivered using non-VA  community providers. Therefore, developing estimates of the resources  needed for CHAMPVA requires factoring in utilization patterns and cost  inflation that are generally outside of VA’s control. Budget estimates for  CHAMPVA are developed using a formula that computes the predicted  number of users and costs per-member per-year. VA works with its  actuarial consultant to generate projections of CHAMPVA users that  incorporate changes related to the population of disabled veterans and  projections of expected increases and decreases in the CHAMPVA- eligible population. In addition, the actuarial consultant projects the costs  per-member per-year, which is calculated by dividing the most current  fiscal year data on total CHAMPVA expenditures by the number of actual  users. Trends are then incorporated to predict the future costs per- member per-year, which is multiplied by projections of the number of  CHAMPVA users to develop CHAMPVA budget estimates.

Appendix III: Health Care Services included in the Enrollee Health Care Projection Model for Fiscal Year 2019

Using its Enrollee Health Care Projection Model (EHCPM), the  Department of Veterans Affairs (VA) developed estimates for 79 health  care services—available in VA medical facilities or through community  care—for the fiscal year 2019 President’s budget request. As shown in  table 7, VA developed separate estimates for the 43 services that were  available through community care. Some of these 43 services were only  available through community care. These services were primarily long- term care, including nursing home care provided at community nursing  homes, home hospice care, home respite care, homemaker or home  health aid programs, and purchased skilled nursing care.

Appendix IV: Community Care Data Sources in the Department of Veterans Affairs’ Enrollee Health Care Projection Model

The Department of Veterans Affairs (VA) and its actuarial consultant use  the Enrollee Health Care Projection Model (EHCPM) to develop most of  the department’s budget estimate to meet the expected demand for VA’s  health care services. This estimate includes the services that VA  purchases from non-VA community providers through its various  community care programs, including the Veterans Choice Program  (Choice Program).

Based on our interviews with various VA officials, VA’s Office of  Enrollment and Forecasting provided utilization and cost data from fiscal  year 2016 community care claims from four different sources for use in  the 2017 EHCPM, which was used to project the fiscal year 2019 budget  estimate. (See fig. 7.) Specifically, the Office of Enrollment and  Forecasting—which is responsible for compiling the claims data used in  the EHCPM—obtained community care claims data, including Choice  Program claims, from VA’s Fee Basis Claims System. In addition, the  Office of Enrollment and Forecasting worked with VA’s Allocation  Resource Center to gather additional utilization and cost data from  Choice Program claims processed outside the Fee Basis Claims System,  and other data needed for the 2017 EHCPM. Specifically, the Allocation  Resource Center compiled claims data for those Choice Program claims  paid through expedited payments. The Allocation Resource Center also  pulled data on dual eligible veterans, from the Department of Defense’s  Medical Data Repository, and indirect costs associated community care  claims (for example, costs associated with care coordination or claims  processing) from VA’s Managerial Cost Accounting system.

Appendix V: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Rashmi Agarwal (Assistant  Director), Aaron Holling (Analyst-in-Charge), Chad Clady, and Kate  Tussey made key contributions to this report. Also contributing were  Krister Friday, Jacquelyn Hamilton, and Muriel Brown.

Veterans Choice Program: Further Improvements Needed to Help Ensure  Timely Payments to Community Providers. GAO-18-671. Washington,  D.C.: September 28, 2018.

Veterans Choice Program: Improvements Needed to Address Access- Related Challenges as VA Plans Consolidation of its Community Care  Programs. GAO-18-281. Washington, D.C.: June 4, 2018.

VA’s Health Care Budget: In Response to a Projected Funding Gap in  Fiscal Year 2015, VA Has Made Efforts to Better Manage Future  Budgets. GAO-16-584. Washington, D.C.: June 3, 2016.

Veterans’ Health Care: Proper Plan Needed to Modernize System for  Paying Community Providers. GAO-16-353. Washington, D.C.: May 11,  2016.

Veterans’ Health Care Budget: Improvements Made, but Additional  Actions Needed to Address Problems Related to Estimates Supporting  President’s Request. GAO-13-715. Washington, D.C.: August 8, 2013.

Veterans’ Health Care: Improvements Needed to Ensure That Budget  Estimates Are Reliable and That Spending for Facility Maintenance Is  Consistent with Priorities. GAO-13-220. Washington, D.C.: February 22,  2013.

Veterans’ Health Care Budget: Better Labeling of Services and More  Detailed Information Could Improve the Congressional Budget  Justification. GAO-12-908. Washington, D.C.: September 18, 2012.

Veterans’ Health Care Budget: Transparency and Reliability of Some  Estimates Supporting President’s Request Could Be Improved.  GAO-12-689. Washington, D.C.: June 11, 2012.

VA Health Care: Estimates of Available Budget Resources Compared  with Actual Amounts. GAO-12-383R. Washington, D.C.: March 30, 2012.

VA Health Care: Methodology for Estimating and Process for Tracking  Savings Need Improvement. GAO-12-305. Washington, D.C.: February  27, 2012.

Veterans’ Health Care Budget Estimate: Changes Were Made in  Developing the President’s Budget Request for Fiscal Years 2012 and  2013. GAO-11-622. Washington, D.C.: June 14, 2011.

Veterans’ Health Care: VA Uses a Projection Model to Develop Most of  Its Health Care Budget Estimate to Inform the President’s Budget  Request. GAO-11-205. Washington, D.C.: January 31, 2011.

VA Health Care: Challenges in Budget Formulation and Issues  Surrounding the Proposal for Advance Appropriations. GAO-09-664T.  Washington, D.C.: April 29, 2009.

VA Health Care: Challenges in Budget Formulation and Execution.  GAO-09-459T. Washington, D.C.: March 12, 2009.

VA Health Care: Long-Term Care Strategic Planning and Budgeting Need  Improvement. GAO-09-145. Washington, D.C.: January 23, 2009.

VA Health Care: Budget Formulation and Reporting on Budget Execution  Need Improvement. GAO-06-958. Washington, D.C.: September 20,  2006.

To help ensure veterans have timely access to health care, the Department of Veterans Affairs purchases care from non-VA providers—known as community care—in addition to providing its own care.

We looked at how VA estimates resource needs for community care:

VA updated its budget projection model to estimate most of the resources needed

VA authorized 1.8 million veterans to use community care in fiscal year 2018

VA received additional community care funding for fiscal year 2018 and estimates were $2.2 billion lower than the actual $14.9 billion

VA's budget documents show estimates of $17.8 billion for this care by fiscal year 2021