Thompson Letter on GPRA - HHS
August 17, 1999
The Honorable Donna E. Shalala
Secretary
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Dear Secretary Shalala:
As you know, the Congress is focused on ensuring that the federal government delivers better results to its citizens and taxpayers. The Congress has enacted a statutory framework to achieve these results. This statutory framework includes the Government Performance and Results Act (GPRA); financial management statutes, such as the Chief Financial Officers Act; and information resources management statutes, such as the Clinger-Cohen Act. Each of these reforms aims at achieving more efficient and effective performance throughout the federal government.
As part of our oversight agenda, the Committee has developed information on how effectively the Department of Health and Human Services (HHS) is using the above statutory tools to improve its performance in several key areas such as becoming more results-oriented and resolving long-standing problems of fraud, waste, and mismanagement. The purpose of this letter is to share with you the information we have developed and obtain your response to certain questions pertaining to it. With this dialog as a start, we hope to work with you on a continuing basis to ensure that HHS delivers the best possible results for the American people.
Performance plan assessment
The Congress continues to look closely at how well departments and agencies are implementing GPRA. At the request of this Committee and others, GAO recently completed an assessment of the HHS annual performance plan for fiscal year (FY) 2000. According to GAO, the HHS plan–
provides a limited picture of intended performance across the Department, a limited discussion of strategies and resources the Department will use to achieve its goals, and limited confidence that HHS’ performance will be credible.
GAO identifies as being among the key weaknesses of the plan its lack of performance goals that are consistently measurable and its failure to adequately describe agency procedures to verify and validate performance data. GAO found that many HHS components "provide, at best, sketchy descriptions of agencies’ efforts to verify and validate performance data." For example, the Substance Abuse and Mental Health Services Administration relies exclusively on data provided by local agencies to measure their performance in serving homeless and mentally ill persons without making any effort to verify the validity or quality of this data.
I hope you will carefully review GAO’s critique of your Department’s performance plan and make necessary improvements. Without measurable goals supported by credible performance data, the Department’s first GPRA performance report next year will have little value in informing Congress and the public about what HHS and its programs are accomplishing.
Need to implement audit recommendations on major management problems
One area where there have been too few results is solving major management challenges that seem to persist year after year at most agencies, including HHS.
As you know, the preeminent major management challenge at HHS is Medicare fraud and error. I appreciate that the estimated annual error rate for Medicare fee-for-service payments has dropped dramatically over the past few years. However, the most recent error rate remains equally dramatic–amounting to $12.6 billion, or over 7 percent of the total budget, for fiscal year 1998. Thus, Medicare remains the single largest documented source of waste and error in federal programs.
Medicare fraud and error was included on GAO’s original 1990 "high-risk" list of problem areas most vulnerable to waste, fraud, abuse, and mismanagement, and it has remained a high-risk program to the present. Recent legislation, specifically the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Balanced Budget Act of 1997 (BBA), have given the Department’s Health Care Financing Administration (HCFA) new tools, as well as major new responsibilities, in its administration and oversight of the Medicare program. New contracting authority granted under HIPAA can lead to a significant restructuring of how HCFA and its contractors carry out the Medicare program. Medicare+Choice, created by the BBA, is a major new managed care initiative. The solvency of Medicare’s Hospital Insurance Trust Fund continues to be a serious concern; the Fund trustees’ 1998 annual report projects that the fund will be depleted by the year 2008. Overshadowing all of this is HCFA’s need to assure that its computer systems are ready for the year 2000, which has delayed efforts to improve systems operations in numerous areas.
Since the beginning of fiscal year 1997, GAO has issued more than 50 reports and testimonies relating to different aspects of the Medicare program. At the present time, there are about 50 open GAO recommendations that HHS has yet to fully implement. An enclosure to this letter describes the 11 most serious open GAO recommendations. These recommendations pertain to a wide variety of Medicare program issues, including the implementation of claims auditing and anti-fraud technologies, contractor procedures for reviewing claims, excessive payments for medical supplies, HCFA’s methods for revising physician payments, and HCFA’s oversight of Health Maintenance Organization institutional payments.
According to information provided to the Committee by your Inspector General (IG) and GAO, there are a number of open audit recommendations addressing other major management problems at HHS as well. An enclosure describes 22 such unresolved recommendations by the IG. There are also 79 additional open GAO recommendations on HHS major management problems, 26 of which are described in another enclosure.
Need for specific performance goals to address major management problems
It is essential that agency heads and other managers commit themselves to tangible steps that will lead to solutions and that agency heads accept accountability for following through on these commitments. One obvious way to do this is to establish specific and measurable goals in your annual GPRA performance plans. Indeed, Office of Management and Budget (OMB) guidance implementing GPRA states:
Performance goals for management problems should be included in the annual plan, particularly for problems whose resolution is mission-critical, or which could potentially impede achievement of program goals . . .
GAO recently evaluated the extent to which the HHS fiscal year 2000 performance plan contains specific performance goals to address the 14 high-risk and other most serious management problems confronting the Department that GAO and your IG have identified. According to the GAO evaluation, which is detailed in an enclosure, the Department’s plan contains such performance goals for 12 of these 14 problem areas. I am pleased to see that some of these goals directly address some of the Department’s most serious problems in specific and meaningful ways. For example, HHS has a goal to reduce erroneous Medicare fee-for-service payments to 7 percent by 2000 and to 5 percent by 2002. HHS also has a goal to obtain unqualified audit opinions on the FY 2000 financial statements for the Department as a whole, as well as all of its operating divisions.
Some of the other goals addressing major management problems are less comprehensive and apply only to limited parts of HHS operations. For example, it seems appropriate for HHS to develop Department-wide goals to improve the coordination of its programs and to develop better performance measures.
Congressional follow-up
With so many tax dollars being wasted, this Committee expects agencies to take every opportunity to use the many tools available to them, such as GPRA plans, to resolve major management problems. Furthermore, the GAO and your own IG exist to work in partnership with you to solve longstanding issues of waste, fraud, and abuse.
I hope that the information provided with this letter will stimulate you to make greater use of these tools and resources. In this regard, I ask that you review the enclosed information and respond to the following questions:
- Do you disagree with any of the GAO or IG recommendations described in the enclosures? If so, what is the basis for your disagreement?
- Where you agree with the recommendations, what specific actions are you taking to implement each one and how long will it take to complete them?
- Do you disagree with any of the GAO or IG designations of management problems facing HHS? If so, which ones and why?
- Where you agree with the problem designations, are you prepared to establish specific and measurable commitments to address each one of them in your next performance plan?
- If so, could you outline preliminarily what approach you plan to take for each problem?
- If you believe that any of these problems do not lend themselves to specific and measurable performance plan goals, please explain why. Please also explain what alternative steps you are taking to solve the problem and to ensure accountability for doing so.
I would appreciate your prompt response to this letter. After receiving your response, the Committee staff will arrange a meeting with your representatives, as well as GAO and IG officials, to discuss your response. If you have any questions about this request, please contact Robert Shea, of the Committee staff, on 224-4751.
Sincerely,
Fred Thompson
Chairman
FT:rs
Enclosures
