Question:
Why GAO Did This Study

Retail prescription drug expenditures were estimated to account for about 12 percent of total personal health care service spending in the United States in 2015, up from about 7 percent through the 1990s. Much of this growth was driven by use of expensive brand-name drugs, but price increases have been reported for some generic drugs as well. Prior GAO reports have identified multiple reasons for drug price increases, including limited competition. Experts have questioned whether consolidation among drug companies could reduce competition and R&D investment in new drugs.
GAO was asked to examine changes in the drug industry. This report describes: (1) how the financial performance and structure of the industry have changed over time, (2) how reported R&D spending and new drug approvals have changed, and (3) what is known about the potential effects of consolidation on drug prices and new drug development. GAO analyzed Bloomberg drug industry financial data for 2006 through 2015, and examined select publicly available estimates of company market shares for 2014 and market shares for certain therapeutic classes for 2016. GAO also analyzed estimates of company self-reported R&D spending and federal funding for biomedical R&D data, aggregate tax credit claims data, and drug approval data for the same approximate time period. All data were the most current available. In addition, GAO also reviewed published research and interviewed federal agency officials, economists, and representatives from industry and advocacy groups.

What GAO Found

GAO's analysis of revenue, profit margin, and merger and acquisition deals within the worldwide drug industry from 2006 through 2015 identified key trends:
Estimated pharmaceutical and biotechnology sales revenue increased from $534 billion to $775 billion in 2015 dollars.
About 67 percent of all drug companies saw an increase in their annual average profit margins from 2006 to 2015. Among the largest 25 companies, annual average profit margin fluctuated between 15 and 20 percent. For comparison, the annual average profit margin across non-drug companies among the largest 500 globally fluctuated between 4 and 9 percent.
The number of reported mergers and acquisitions generally held steady during this period, but the median disclosed deal value increased.
The largest 10 companies had about 38 percent of the drug industry's sales revenue in 2014. However, concentration was higher for narrower markets, such as for certain drugs in the same therapeutic class. In addition, experts noted that market pressures such as rising research and development (R&D) costs, fewer drugs in development, and competition from generic drugs, have driven structural changes in the industry such as increased use of acquisition by large drug companies to obtain access to new research.
From 2008 through 2014, worldwide company-reported R&D spending, most of which went to drug development (rather than research), increased slightly from $82 billion to $89 billion in 2015 dollars. During the same period, federal spending, which funded a greater amount of basic research relative to industry, remained stable at around $28 billion. In addition to grants, several federal tax provisions provided incentives for industry R&D spending, including the orphan drug credit, available for companies developing drugs intended to treat rare diseases, which increased more than five-fold from 2005 through 2014. Pertaining to drug approvals, the total number of new drugs approved for marketing in the United States fluctuated between 2005 and 2016, ranging from 179 to 263 drug approvals annually. Novel drugs—innovative products that serve previously unmet medical need or help advance patient care—accounted for about 13 percent of all approvals each year. Biologics—drugs derived from living rather than chemical sources—and orphan drugs accounted for growing shares of drug approvals, reflecting market and policy incentives to invest in these areas, according to experts GAO interviewed.
Research GAO reviewed indicates that fewer competitors in the drug industry are associated with higher prices, particularly for generic drugs. Research also suggests that drug company mergers can have varied impacts on innovation as measured by R&D spending, patent approvals, and drug approvals. Certain merger retrospective studies have found a negative impact on innovation.
The Department of Health and Human Services, Federal Trade Commission, Internal Revenue Service, and National Science Foundation provided technical comments on a draft of this report, which we incorporated as appropriate.


Question:
Why GAO Did This Study

Demonstrations—which represented roughly a third of the more than $300 billion in federal Medicaid spending in 2015—are a powerful tool to test new approaches to providing coverage and delivering Medicaid services that could reduce costs and improve beneficiaries' outcomes. Evaluations are essential to determining whether demonstrations are having their intended effects. States are required to evaluate their demonstrations and CMS can initiate its own federal evaluations of demonstrations.
GAO was asked to examine evaluations of demonstrations, including how the results have been used to inform Medicaid policy. This report examines (1) state-led evaluations and (2) federal evaluations. GAO reviewed evaluation documentation for eight states with high demonstration expenditures that varied in the number of years their demonstrations had been in effect and by geography. GAO also reviewed documentation for the ongoing federal evaluations and interviewed state and federal Medicaid officials. GAO assessed evaluation practices against federal standards for internal control and leading evaluation guidelines.

What GAO Found

Under section 1115 of the Social Security Act, the Secretary of Health and Human Services (HHS) may approve Medicaid demonstrations to allow states to test new approaches to providing coverage and for delivering services that can transform large portions of states' programs. However, GAO found that selected states' evaluations of these demonstrations often had significant limitations that affected their usefulness in informing policy decisions. The limitations included gaps in reported evaluation results for important parts of the demonstrations. (See table.) These gaps resulted, in part, from HHS's Centers for Medicare & Medicaid Services (CMS) requiring final, comprehensive evaluation reports after the expiration of the demonstrations rather than at the end of each 3- to 5-year demonstration cycle. CMS has taken a number of steps since 2014 to improve the quality of state-led evaluations, and in October 2017, officials stated that the agency planned to require final reports at the end of each demonstration cycle for all demonstrations. However, the agency has not established written procedures for implementing such requirements, which could allow for gaps to continue. CMS also plans to allow states to conduct less rigorous evaluations for certain types of demonstrations but has not established criteria defining under what conditions limited evaluations would be allowed.
Federal evaluations led by CMS have also been limited due to data challenges that have affected the progress and scope of the work. For example, delays obtaining data directly from states, among other things, led CMS to considerably reduce the scope of a large, multi-state evaluation, which was initiated in 2014 to examine the impact of state demonstrations in four policy areas deemed to be federal priorities. Though CMS has made progress in obtaining needed data, it is uncertain when results from the multi-state and other federal evaluations will be available to policymakers because CMS has no policy for making results public. By not making these results public in a timely manner, CMS is missing an opportunity to inform important federal and state policy discussions.

What GAO Recommends

GAO recommends that CMS: (1) establish written procedures for requiring final evaluation reports at the end of each demonstration cycle, (2) issue criteria for when it will allow limited evaluations of demonstrations, and (3) establish a policy for publicly releasing findings from federal evaluations of demonstrations. HHS concurred with these recommendations.


Question:
Why GAO Did This Study

On March 13, 2017, the President issued an executive order requiring a comprehensive reorganization of executive branch agencies. In April 2017, the Office of Management and Budget (OMB) provided guidance to federal agencies for developing their reform and workforce reduction proposals. Past proposals to reform and reorganize government have not always come to fruition and can take years to implement fully. GAO's prior work has shown that successful reforms or transformations depend upon following change management practices, such as agreement on reform goals, and the involvement of the Congress, federal employees, and other key stakeholders.
This report identifies the key questions that Congress, OMB, and agencies can use to assess the development and implementation of agency reforms. To meet this objective, GAO reviewed its prior work and leading practices on organizational transformations; collaboration; government streamlining and efficiency; fragmentation, overlap, and duplication; high-risk; and on other agency longstanding management challenges. GAO also identified subject matter specialists knowledgeable about issues related to government reform and strategic human capital management who reviewed and commented on GAO's draft questions.
GAO is not making recommendations to OMB in this report. OMB staff provided technical comments, which we incorporated as appropriate.


Question:
Why GAO Did This Study

Congress funds DCTAG through an annual appropriation, which was $40 million in fiscal year 2018. DCTAG provides D.C. residents up to $10,000 per year to attend college.
The Consolidated Appropriations Act, 2017, included a provision for GAO to review DCTAG. This report examines, among other things, the characteristics of DCTAG recipients and steps taken by the program to support recipients, as well as the extent to which OSSE reports DCTAG's performance to internal and external stakeholders.
GAO assessed the most recent data available on DCTAG, covering academic years 2007–2016, as well as data on college graduation, tuition, and fees from the Department of Education's Integrated Postsecondary Education Data System for academic years 2007–2016, and data on enrollment in high schools and median household income in D.C. from the U.S. Census Bureau's American Community Survey for 2007–2016; interviewed representatives of DCTAG and the entities it partners with to support recipients; and reviewed relevant laws, the applicability of standards for internal control, and guidance on performance management.

What GAO Found

The federally funded District of Columbia Tuition Assistance Grant (DCTAG) program was created in 1999 to give college-bound District of Columbia (D.C.) residents greater choices among institutions of higher education. Since its creation, the DCTAG program has awarded over $440 million to more than 26,000 residents to defray costs charged to out-of-state residents at some of the nation's public colleges and universities. While the program serves students from families with a wide range of household incomes, about half the students receiving a DCTAG award in academic years 2007–2016 came from the three D.C. wards with the lowest household incomes, as the figure below illustrates. DCTAG coordinates with public and private partners in the community to help students prepare for college, complete financial aid applications, and stay on track to graduate college.
Although the Office of the State Superintendent of Education (OSSE), which manages DCTAG on behalf of the Mayor of the District of Columbia, issues various annual reports, these reports do not relate program performance to the program's four goals. One of these goals is to help D.C. students make smarter college choices. OSSE officials stated that they regularly communicate information about DCTAG data and activities internally and externally. However, these efforts do not provide the context necessary for program managers, Congress, or the public to understand the program's goals, nor determine whether DCTAG is making progress toward meeting them. Standards for internal control state that program managers should communicate information that internal and external stakeholders need to help the program achieve its objectives. Absent an annual report relating performance to goals, DCTAG's stakeholders will be limited in their ability to assess the program's performance or identify opportunities to improve it.

What GAO Recommends

GAO recommends OSSE issue annual reports relating DCTAG's performance to program goals. In response to the recommendation, the Mayor stated that OSSE will expand annual reporting to include direct linkages and combine data points to better illustrate the program's performance.


Question:
Why GAO Did This Study

Under the Arms Export Control Act and its implementing regulations, DOD is required to recover nonrecurring costs—unique one-time program-wide expenditures—for certain major defense equipment sold under the FMS program. These costs include research, development, and one-time production costs, such as expenses for testing equipment. The Act also permits those costs to be waived under certain circumstances, such as to standardize equipment with select allies or to avoid a loss of sale.
GAO was asked to review DOD's use of nonrecurring cost waivers. This report addresses the (1) nonrecurring cost waivers approved by DOD from fiscal years 2012 through 2017, (2) factors DOD considers when reviewing waivers, and (3) efficiency of the waiver review process.
To conduct this work, GAO analyzed DOD data of nonrecurring cost waivers for fiscal years 2012 through 2017, the most recent and complete data, to identify the value of waivers. GAO then reviewed a non-generalizable sample of 24 of these waivers that included a mix of justifications and geographic regions. GAO reviewed relevant DOD policy and interviewed DOD officials about the process to assess these waivers.

What GAO Found

In the past 6 years, the Department of Defense (DOD) approved waivers valued at nearly $16 billion that it might otherwise have collected from foreign governments as part of its sales of major defense equipment through the Foreign Military Sales (FMS) program. The Arms Export Control Act, as delegated, authorizes the Defense Security Cooperation Agency (DSCA) within DOD to waive nonrecurring costs under certain circumstances, such as to standardize equipment with allies. From fiscal years 2012 through 2017, DSCA reviewed 813 waivers and denied 3, resulting in an approval rate of 99 percent. As shown in the figure below, the value of approved waivers significantly increased to nearly $6 billion last year, which is due to 2 waivers totaling nearly $3.5 billion for sales of missiles and related support systems.
Total Value of Approved Foreign Military Sales Nonrecurring Cost Waivers from Fiscal Years 2012 through 2017
When reviewing waivers, DSCA considers foreign policy and national security factors, such as interoperability with allies, and economic factors, such as support for the U.S. defense industrial base. Agency officials stated that approving waivers helps ensure sales go through and such broader benefits are realized. DSCA's practice to approve waivers is consistent with the authority it has been delegated under the Arms Export Control Act and is influenced by these benefits.
The process DOD has established to consider waivers is, at times, inefficient and repetitive. DSCA has final approval authority; however, multiple DOD offices must review and provide input on each waiver, with some offices reviewing waivers for the same purpose. Federal standards for internal control call for agencies to allocate resources and assign responsibilities to achieve efficiency and effectiveness. DOD has already taken steps to improve the efficiency of the waiver review process; for example, by reducing the time a few offices take to review the waivers. Nonrecurring cost waivers are one part of the larger FMS process, and continuing to streamline the waiver review process would better position DSCA and the military departments to identify opportunities to maximize efficiencies.

What GAO Recommends

DSCA should continue to identify opportunities to streamline the waiver review process. DSCA concurred with GAO's recommendation.


Question:
Why GAO Did This Study

Multiemployer plans are collectively bargained pension agreements often between labor unions and two or more employers. CSPF is one of the nation's largest multiemployer defined benefit pension plans, covering about 385,000 participants. Since 1982, the plan has operated under a court-enforceable consent decree which, among other things, requires that the plan's assets be managed by independent parties. Within 7 years, CSPF estimates that the plan's financial condition will require severe benefit cuts. GAO was asked to review the events and factors that led to the plan's critical financial status and the oversight DOL provides under the consent decree and under other federal laws.
GAO reviewed (1) what is known about the factors that contributed to CSPF's critical financial condition, (2) DOL's role in the administration of the 1982 CSPF consent decree and what actions the agency has taken under that role, and (3) what actions, if any, DOL has taken to oversee CSPF, beyond those required under the consent decree. GAO reviewed the consent decree and its amendments, relevant federal laws and regulations, agency guidance on plan management, and DOL protocols for investigating plans; interviewed CSPF representatives, International Brotherhood of Teamsters officials and members, federal officials, and industry stakeholders; and reviewed correspondence between DOL and CSPF and documents related to DOL investigations.

What GAO Found

The Central States, Southeast and Southwest Areas Pension Fund (CSPF) was established in 1955 to provide pension benefits to trucking industry workers and is one of the largest multiemployer plans. According to its regulatory filings, CSPF had less than half the estimated funds needed to cover plan liabilities in 1982 at the time it entered into a court-enforceable consent decree that provides for oversight of certain plan activities. Since then, CSPF has made some progress toward achieving its targeted level of funding; however, CSPF has never been more than 75 percent funded and its funding level has weakened since 2002, as shown in the figure below.
Stakeholders GAO interviewed identified numerous factors that contributed to CSPF's financial condition. For example, stakeholders stated that changes within the trucking industry, as well as a decline in union membership, contributed to CSPF's inability to maintain a healthy contribution base. CSPF's active participants made up about 69 percent of all participants in 1982, but accounted for only 16 percent in 2016. The most dramatic change in active participants occurred in 2007 when the United Parcel Service, Inc. (UPS) withdrew from the plan. At that time, UPS accounted for about 30 percent of the plan's active participants (i.e. workers). In addition, the market declines of 2001 to 2002 and 2008 had a significant negative impact on the plan's long-term investment performance. Stakeholders noted that, while each individual factor contributed to CSPF's critical financial condition, the interrelated nature of the factors also had a cumulative effect on the plan's financial condition.
The 1982 consent decree between the U.S. Department of Labor (DOL) and CSPF came about as a result of an investigation of alleged breaches of fiduciary duty and mismanagement of plan assets, and is intended to prevent their reoccurrence. In addition to reiterating the requirement that the plan comply with the Employee Retirement Income Security Act of 1974 (ERISA)—the primary law governing the treatment of private-sector pensions in the United States—the consent decree further outlines requirements for the plan to help ensure fiduciary controls and plan management, including seeking court approvals for the appointment of new trustees and changes to the plan's investment policy. The consent decree also delineates roles for DOL and other stakeholders. For example, it allows DOL to object to or comment on certain proposed plan actions, but does not require the agency to do so. GAO's review of plan documents found that the agency provided oversight and technical assistance in the areas specifically identified for its involvement under the consent decree, such as vetting proposed trustees prior to the court's approval.
DOL is primarily responsible for enforcing the reporting, disclosure, and fiduciary provisions of ERISA for all tax-qualified pension plans, including CSPF. ERISA sets forth a “prudent man standard of care” in the execution of fiduciary duties that, according to DOL, focuses on the process for making proper fiduciary decisions. Plan fiduciaries are responsible for selecting and monitoring investment managers, but are generally not liable for the individual investment decisions of those managers. To enforce ERISA, DOL conducts examinations and investigations. Since the consent decree was established, DOL officials reported that the agency has completed two investigations of CSPF. The two investigations—completed in 1998 and 2004—were closed without adverse findings against the plan. Beyond the agencies' oversight role, DOL collaborated with CSPF and others on steps intended to improve the plan's financial position, including contributing to discussions on proposed legislation and working with CSPF on its application to reduce benefits under the Multiemployer Pension Reform Act of 2014. The application was not approved by the U.S. Department of the Treasury.

What GAO Recommends

GAO is not making recommendations in this report.


Question:
Why GAO Did This Study

DOD provides health care, including mental health care, to eligible beneficiaries through TRICARE. Beneficiaries who use TRICARE Prime, a managed care option, must enroll to receive care. Prior to Jan. 1, 2018, beneficiaries did not need to enroll for TRICARE Standard, a fee-for-service option, or TRICARE Extra, a preferred provider organization option (referred to as nonenrolled beneficiaries). Although the TRICARE Standard and Extra options were terminated effective Jan. 1, 2018, the new TRICARE Select option has similar benefits for obtaining care from network and nonnetwork providers.
The National Defense Authorization Act (NDAA) for Fiscal Year 2008 directed DOD to conduct surveys of nonenrolled beneficiaries and civilian providers about access to care under the TRICARE Standard and Extra options. It also directed GAO to review the surveys' results. Additionally, the NDAA for Fiscal Year 2017 included a provision for GAO to review access to care under TRICARE Extra. This report addresses both provisions.
GAO analyzed DOD's surveys to determine (1) nonenrolled beneficiaries' access to care, (2) nonenrolled beneficiaries' ratings of TRICARE, (3) civilian providers' awareness and acceptance of TRICARE, and (4) nonenrolled beneficiaries' access by individual geographic area. GAO interviewed agency officials, analyzed the 2012-2015 surveys, and compared them to DOD's 2008-2011 surveys and to surveys of Medicare and Medicaid beneficiaries. In commenting on a draft of this report, DOD concurred with GAO's findings.

What GAO Found

The Department of Defense's (DOD) most recent surveys of TRICARE beneficiaries and civilian health care providers show that access to care has generally improved for nonenrolled beneficiaries who used the TRICARE Standard and Extra options. Specifically, GAO found the following:
Nonenrolled beneficiaries reported improved access to care in the most recent 4-year survey (2012-2015), compared to the prior survey (2008-2011). For example, a lower percentage of nonenrolled beneficiaries reported that they experienced problems finding a civilian provider in the most recent survey (29 percent) than those in the prior survey (31 percent). In addition, a higher percentage of nonenrolled beneficiaries (90 percent) reported that they were usually or always able to obtain a non-urgent appointment as soon as they thought they needed compared to the prior survey (87 percent).
The percentage of nonenrolled beneficiaries who reported positive experience ratings of TRICARE ranged from 71 to 83 percent over five categories, including ratings of primary, specialty, and mental health care providers. These ratings were generally higher than the prior survey. When compared to other federal health plans, nonenrolled TRICARE beneficiaries' positive experience ratings of primary and specialty care providers were lower than those of Medicare fee-for service beneficiaries, but higher than those of Medicaid beneficiaries.
The percentage of civilian providers who were aware of TRICARE increased from 82 percent in the prior survey to 84 percent. However, the percentage who accepted new TRICARE patients decreased from 58 percent to 55 percent. According to GAO's analysis of survey data, this overall decrease was mainly attributable to a decrease in mental health care providers' acceptance rates, as the acceptance rates for primary and specialty care providers remained unchanged. Network providers reported both higher awareness and acceptance of TRICARE than providers not in the network (referred to as nonnetwork providers). The biggest gap in both awareness and acceptance between network and nonnetwork providers was for mental health care providers:
About 96 percent of network mental health care providers reported awareness of TRICARE compared to 72 percent of nonnetwork mental health care providers.
About 79 percent of network mental health care providers reported accepting new TRICARE patients compared to 30 percent of nonnetwork mental health care providers.
GAO's analysis of both the beneficiary and provider surveys identified locations in New York, Washington, Texas, and Washington, D.C. where access to providers may be particularly problematic. Specifically, in these locations, beneficiaries reported more problems finding providers who accepted TRICARE and providers reported lower acceptance of TRICARE, compared to national averages.


Question:
Why GAO Did This Study

With approval from CMS, the federal agency responsible for overseeing state Medicaid programs, states can provide long-term care services and supports for disabled and aged individuals under one or more types of HCBS programs. State and federal Medicaid HCBS spending was about $87 billion in 2015. Effective needs assessments help states ensure appropriate access to, and manage utilization of, services and therefore costs. States' processes vary, and challenges include the potential for assessors to have conflicts of interest leading to over- or under-estimating of beneficiaries' needs for HCBS.
GAO was asked to examine states' needs assessment processes for provision of long-term services and supports. This report addresses (1) how selected states assess needs for HCBS, and (2) steps CMS has taken to improve coordination and effectiveness of needs assessments, among other objectives. GAO studied six states that varied in terms of assessment tools in use, participation in federal initiatives, HCBS delivery systems, and geographic location; reviewed federal requirements and documents; and interviewed CMS officials and stakeholders.

What GAO Found

The six selected states that GAO reviewed used multiple approaches to assess individuals' needs for Medicaid home- and community-based services (HCBS). Each state may have multiple HCBS programs authorized under different sections of the Social Security Act. These programs serve beneficiaries who generally need assistance with daily activities, such as bathing or dressing. States establish needs assessment processes to collect data on functional needs, health status, and other areas that they use to determine individuals' eligibility for HCBS and to plan services, such as the amount of services needed. The selected states varied in the extent to which they used different assessments across HCBS programs and used multiple types of entities—such as state or government agencies, contractors, or providers—to conduct them.
The Centers for Medicare & Medicaid Services (CMS) has taken steps to improve needs assessments but concerns about conflict of interest remain in regard to HCBS providers and managed care plans. HCBS providers may have a financial interest in the outcome of needs assessments, which could lead to overstating needs and overprovision of services. CMS has addressed risks associated with HCBS provider conflicts, such as by requiring states to establish standards for conducting certain needs assessments, but these requirements do not cover all types of HCBS programs. For example, specific conflict of interest requirements are generally not in place for needs assessments that are used to inform HCBS eligibility determinations. In addition, requirements for states to establish standards to address HCBS providers' potential for conflict of interest in conducting needs assessments that are used for service planning do not apply across all programs.
Similarly, managed care plans may have a financial interest in the outcome of HCBS assessments used for both determining eligibility and service amounts. Managed care plans could have an incentive to enroll beneficiaries with few needs, as plans typically receive a fixed payment per enrollee. For example, a plan in one state admitted in a settlement with the federal government to enrolling 1,740 individuals, from 2011 through 2013, whose needs did not qualify them. In 2013, CMS issued guidance that managed care plans may not be involved in assessments used to determine eligibility for HCBS, but CMS has not consistently required states to prevent this involvement. Among three states GAO reviewed with managed care HCBS programs, CMS required one to stop allowing plans to conduct such assessments but allowed plan involvement in two states. The absence of conflict-of-interest requirements across all types of HCBS programs and states is not consistent with federal internal control standards, which require agencies to respond to risks to program objectives.

What GAO Recommends

GAO recommends that CMS ensure that all Medicaid HCBS programs have requirements for states to address both service providers' and managed care plans' potential for conflicts of interest in conducting assessments. HHS concurred with GAO's recommendation.


Question:
Why GAO Did This Study

As of December 2018, the UN had 14 ongoing peacekeeping operations with approximately 103,000 personnel. The United States is the single largest financial contributor to these operations, assessed by the UN to contribute an estimated $1.7 billion in fiscal year 2018, according to State. It is also a member of the Security Council, the UN body tasked with maintaining international peace and security.
GAO was asked to review UN peacekeeping operations. In this report, GAO examines (1) the UN's process to establish and renew peacekeeping operations, including the tasks these operations perform; (2) State's assessment of the effectiveness of UN peacekeeping operations; (3) how the United States works within the UN to adjust peacekeeping mandates and associated resources; and (4) member states' concerns regarding the UN's performance information. To address these objectives, GAO analyzed UN and U.S. documents and interviewed UN and U.S. officials. GAO also interviewed officials at peacekeeping operations in the Democratic Republic of the Congo, Haiti, Kosovo, and Lebanon. GAO selected these operations because they represent those that perform a variety of tasks and are located in diverse regions.

What GAO Found

The United Nations (UN) Security Council establishes and renews peacekeeping operations by issuing resolutions, generally referred to as mandates, which can include a range of tasks, such as monitoring ceasefires and protecting civilians. Generally once or twice a year, the Security Council renews an operation's mandate and makes adjustments as needed.
GAO's review of the Department of State's (State) assessments as of December 2018 and discussions with State officials found that UN peacekeeping operations generally do not fully meet U.S. principles for effective peacekeeping, which include host country consent and an exit strategy, among others. GAO's review of 11 operations found that all 11 met or partially met the principle of host country consent, while five included or partially included an exit strategy. State officials stated that they must continue to work with the UN to ensure peacekeeping operations meet principles of effectiveness, which they noted are key to success.
The United States works with the UN Security Council and member states to adjust peacekeeping mandates, but it lacks sufficient information to determine if associated resources accurately reflect these adjustments. State officials noted that they do not have this information because UN peacekeeping budgets do not estimate costs by mandated task. UN peacekeeping guidance states that when the UN changes a peacekeeping mandate, it should make commensurate changes to that operation's resources. Without information on estimated costs by task, member states have difficulty determining that resources for UN peacekeeping operations accurately reflect mandate changes.
The UN has taken steps to improve peacekeeping performance data, but member states have raised concerns about that information's quality, including its completeness and timeliness. Among other concerns, member states note that the UN does not have complete information to assess the performance of civilians, who comprised about 14 percent of peacekeeping personnel, as of December 2018. In March 2018 the UN began peacekeeping reforms, including those to improve performance data. However, according to State officials, these efforts are in the early stages and more work is needed. Without fully addressing member states' concerns about the quality of information, the UN is limited in its ability to improve the performance of peacekeeping operations.

What GAO Recommends

GAO recommends that State take additional steps to ensure that the UN (1) peacekeeping operations meet principles of effectiveness, (2) provides information on the estimated costs of mandated tasks, and (3) addresses member states' concerns about the quality of performance information. State agreed with GAO's recommendations.


Question:
Why GAO Did This Study

In fiscal year 2017, DOD provided health care to 9.4 million beneficiaries, including servicemembers, retirees, and their families at a cost of $43 billion. For more than a decade, partially in response to congressional mandates, DOD has worked to address inefficiencies in the Military Health System to control costs.
To further achieve efficiencies, the NDAA for Fiscal Year 2017 required DOD to develop an implementation plan that addressed four elements related to transferring the administration of the MTFs to the DHA. DOD issued the plan in June 2018.
The NDAA also included a provision for GAO to review the plan. GAO determined whether (1) DOD's plan included the statutory elements related to the transfer of administration of the MTFs to the DHA and (2) additional information would be useful to demonstrate that the plan will reduce or better manage duplication and improve efficiencies. GAO assessed DOD's plan against the required elements and, where appropriate, considered the extent to which the plan provided detailed information related to key change management practices identified in past GAO work.

What GAO Found

The Department of Defense's (DOD) June 2018 plan addressed the four statutory elements for the transfer of the administration of the military treatment facilities (MTFs) from the military departments to the Defense Health Agency (DHA). Specifically, the plan provided information on (1) how the DHA will take administrative responsibility of the MTFs; (2) efforts to eliminate duplicative activities; (3) efforts to maximize efficiencies in the DHA's activities; and (4) reductions of headquarters-level military, civilian, and contractor personnel. DOD dedicated most of the plan to describing the governance structure of the proposed administrative framework and to describing the timeline for a phased transfer of the approximately 457 MTFs to the DHA by October 1, 2021. Initially, DOD was to transfer responsibility for the administration of the MTFs to the DHA by October 1, 2018. However, Congress in the National Defense Authorization Act (NDAA) for Fiscal Year 2019 amended the law to allow, among other things, DOD to complete the transfer by September 30, 2021.
DOD has taken key steps in its June 2018 plan to improve the effectiveness and efficiency of the administration of MTFs. However, DOD's plan has two weaknesses that could be mitigated with additional information. Specifically,
DOD excluded 16 operational readiness and installation-specific medical functions from consideration for transfer to the DHA. DOD did not define or analyze the potential effect of excluding these functions, which include dental care, substance abuse, and occupational health. Senior officials from the DHA and the Assistant Secretary of Defense for Health Affairs acknowledged that transferring the dental care function, for example, from the military departments to the DHA could potentially reduce duplicative activities.
DOD's plans to achieve the stated goal of reducing headquarters-level personnel, including contractor personnel, by 10 percent are unclear. In its June 2018 plan, DOD states that the DHA will experience personnel growth during each phase of the transition, but that it expects to reduce headquarters-level personnel by 10 percent by 2021. However, the plan does not provide specific details about how DOD will achieve the established goal of reducing headquarters-level personnel by 10 percent while the DHA experiences personnel growth. Further, the plan does not address whether and how contractor personnel factor into the reduction. This lack of clarity exists because DOD has not validated headquarters-level personnel requirements or conducted a comprehensive review to identify the least costly mix of military, civilian, and contractor personnel to meet the validated requirements.
Until DOD takes action to resolve these two weaknesses, DOD will likely not be well positioned to reduce or better manage duplication and improve efficiencies, including reducing headquarters-level personnel across the Military Health System. Furthermore, Congress will lack important information to determine the extent to which the transfer of the administration of the MTFs to the DHA is being planned and implemented effectively and efficiently.

What GAO Recommends

GAO recommends that DOD define and analyze the 16 operational readiness and installation-specific medical functions for duplication, validate headquarters-level personnel requirements, and identify the least costly mix of personnel. DOD concurred with all three recommendations and noted actions it was taking to address each one.


Question:
Why GAO Did This Study

VA is one of the largest federal property-holding agencies, and its inventory of vacant buildings has generally increased over the last 6 years. Disposing of its excess properties has been a long-standing challenge.
GAO was asked to review how VA manages its real property disposals. This report addresses: (1) the challenges VA faces in disposing of its vacant properties and how it is addressing those challenges and (2) the extent to which VA is tracking and monitoring the disposal of its vacant properties.
GAO reviewed VA's policies and planning documents regarding property disposals. GAO also selected 31 properties that were either disposed of or planned for disposal in fiscal year 2017, among other selection criteria. GAO interviewed VA officials and stakeholders involved in the disposal of the 31 selected properties and familiar with VA's disposal process, including steps VA is taking to address challenges.

What GAO Found

Conducting required environmental and historic reviews in a timely manner is among the challenges the Department of Veterans Affairs (VA) faces in its real property disposal process. These reviews include assessing the potential effects of property disposals on the environment and historic preservation. VA is taking steps to address these ongoing challenges. For example, VA has established a working group consisting of experts in historic preservation, environmental reviews, and real property to assist facilities' managers in expediting disposals. However, other ongoing challenges remain, including the marketability of VA properties and VA's lack of clear procedures for property disposals. While VA has guidance on disposals at the broad portfolio level, GAO determined that this guidance does not contain step-by-step procedures at the project level to assist facilities' managers to plan, implement, and execute disposals for the different disposal options. (See figure.) For example, a number of managers told GAO that they were not familiar with actions to take when transferring properties to a third party or turning over excess property to the General Services Administration for disposal. VA officials commented that facilities' managers do not frequently dispose of properties, so a procedural document outlining the steps and who is responsible for taking those steps may help staff navigate more complex disposal processes and avoid missteps and delays.
VA has enhanced its data collection on vacant properties, but the agency does not collect information needed to track and monitor disposal projects at the headquarters level. For example, VA requires facilities' managers to verify and certify the validity of vacant property data in the database used to manage real property—the Capital Asset Inventory. On disposal projects, however, VA lacks certain information, such as the status of environmental or historical reviews, to monitor progress. According to VA, the Capital Asset Inventory currently does not have enough capacity to collect key information and supporting documentation. VA officials said they plan to increase the capacity, but VA has not yet included some key information in the Capital Asset Inventory that could enable VA to monitor the progress of disposals. Without information on the status of disposal projects, VA cannot readily track and monitor its progress and identify areas where facilities' managers may need additional assistance.

What GAO Recommends

GAO is making three recommendations. These include developing disposal procedures for facilities' managers to help plan, implement, and execute disposal projects and collecting key information on the status of disposal projects, as VA implements its plans to increase the capacity of VA's Capital Asset Inventory. VA concurred with GAO's recommendations.


Question:
Why GAO Did This Study

In 2011, President Obama announced that the United States would turn its attention to the Asia-Pacific region and make the U.S. presence there a top priority. Rebalancing to the Pacific became strategic guidance that informed military planning. By the end of 2015, DOD published strategy documents that included references to the rebalance to the Pacific or related concepts. In February 2018, the Assistant Secretary of Defense for Asian and Pacific Security Affairs stated that while DOD continues to prioritize the Asia-Pacific region, the rebalance to the Pacific is no longer U.S. policy. DOD has published the 2018 National Defense Strategy, which establishes an objective of maintaining a favorable regional balance in the Pacific region, among other regions.
Prior to the change in policy, House Report 114-102 included a provision for GAO to review matters related to the U.S. rebalance to the Asia-Pacific region. GAO evaluated the extent to which DOD developed strategy documents to guide the rebalance to the Pacific that included desired elements of an effective national strategy.
GAO analyzed six DOD strategy documents that officials identified as providing guidance for the rebalance to the Pacific to determine whether, as a set, they included desired elements associated with an effective national strategy. DOD had no comments on this report.

What GAO Found

Department of Defense (DOD) strategy documents that collectively guided the rebalance to the Pacific included most of the desired elements of an effective national strategy. The U.S. Pacific Command (PACOM), which is responsible for the Asia-Pacific region, used DOD strategy documents to implement the President's direction to rebalance to the Pacific, which generally refocused U.S. efforts to that region. PACOM officials told GAO that there was no single rebalance-specific strategy document. Instead, officials identified a number of strategy documents published since 2012 that guided activities associated with the rebalance to the Pacific, including: Sustaining U.S. Global Leadership: Priorities for 21st Century Defense ; Quadrennial Defense Review ; National Military Strategy ; Guidance for the Employment of the Force ; Joint Strategic Capabilities Plan ; and the PACOM 2015 Theater Campaign Plan (DRAFT) .
Based on GAO's analysis, DOD's six strategy documents that guided the rebalance to the Pacific included 24 of the 31 desired elements of an effective national strategy. However, two key elements were missing from the group of strategy documents: (1) a definition of the rebalance to the Pacific, and (2) the identification of the overall results desired, or end state, for the rebalance. DOD officials also could not identify a definition for the rebalance to the Pacific in the strategy documents or provide a definition that was used consistently across the department.
According to a DOD official with performance management responsibilities, defining the rebalance to the Pacific and identifying the initiative's strategic objectives, or end state, were important for establishing accountability and measuring progress. For instance, a clear definition of rebalance could have helped those charged with implementation to distinguish activities essential to operationalizing the strategic guidance from activities that were peripheral to that effort. Similarly, knowing the end state could have helped management make the best use of resources, enable the assessment of progress, and facilitate the development of strategic and military objectives. In moving forward in the Asia-Pacific region, considering the identification of strategic end states as well as other missing elements could help position DOD to achieve its objectives in the region.


Question:
Why GAO Did This Study

Tickets for concerts, theater, and sporting events can be purchased—typically online—from the original seller (primary market) or a reseller (secondary market). Some state and federal officials and others have raised issues about ticketing fees, the effect of the secondary market on ticket prices, and the transparency and business practices of some industry participants. Event ticketing is not federally regulated. However, federal legislation enacted in 2016 restricts bots (ticket-buying software). Also, the Federal Trade Commission (FTC) has taken two enforcement actions related to deceptive marketing by ticket sellers under its broad FTC Act authority.
GAO was asked to review issues around online ticket sales. This report examines (1) what is known about online ticket sales, (2) consumer protection issues related to such sales, and (3) potential advantages and disadvantages of selected approaches to address these issues.
GAO focused on concert, theater, and major league sporting events for which there is a resale market. GAO analyzed data on fees, ticket volume, and resale prices from a variety of sources; reviewed the largest ticket sellers' websites and purchase processes; and reviewed federal and state laws and relevant academic literature. GAO also interviewed and reviewed documentation from government agencies; consumer organizations; ticket sellers; venue operators; promoters and managers; sports leagues; and academics (selected for their experience and to provide a range of perspectives).

What GAO Found

Ticket pricing, resale activity, and fees for events vary. Tickets to popular events sold on the primary market sometimes are priced below the market price, partly because performers want to make tickets affordable and maintain fans' goodwill, according to industry representatives. Tickets are often resold on the secondary market at prices above face value. In a nongeneralizable sample of events GAO reviewed, primary and secondary market ticketing companies charged total fees averaging 27 percent and 31 percent, respectively, of the ticket's price.
Consumer protection issues include difficulty buying tickets at face value and the fees and marketing practices of some market participants.
Professional resellers, or brokers, have a competitive advantage over consumers in buying tickets as soon as they are released. Brokers can use numerous staff and software (“bots”) to rapidly buy many tickets. As a result, many consumers can buy tickets only on the resale market at a substantial markup.
Some ticket websites GAO reviewed did not clearly display fees or disclosed them only after users entered payment information.
“White-label” resale sites, which often appear as paid results of Internet searches for venues and events, often charged higher fees than other ticket websites—sometimes in excess of 40 percent of the ticket price—and used marketing that might mislead users to think they were buying tickets from the venue.
Selected approaches GAO reviewed, such as ticket resale restrictions and disclosure requirements, would have varying effects on consumers and businesses.
Nontransferable tickets. At least three states restrict nontransferable tickets—that is, tickets whose terms do not allow resale. Nontransferable tickets allow more consumers to access tickets at a face-value price. However, they also limit consumers' ability to sell tickets they cannot use, can create inconvenience by requiring identification at the venue, and according to economists, prevent efficient allocation of tickets.
Price caps. Several states cap the price at which tickets can be resold. But according to some state government studies, the caps generally are not effective because they are difficult to enforce.
Disclosure requirements. Stakeholders and government research GAO consulted generally supported measures to ensure clearer and earlier disclosure of ticket fees, although views varied on the best approach (for example, to include fees in an “all-in” price or disclose them separately).
Some market-based approaches are being used or explored that seek to address concerns about secondary market activity. These approaches include technological tools and ticket-buyer verification to better combat bots. In addition, a major search engine recently required enhanced disclosures from ticket resellers using its advertising platform. The disclosures are intended to protect consumers from scams and prevent potential confusion about who is selling the tickets.


Question:
Why GAO Did This Study

Federal agencies and the nation's critical infrastructures—such as energy, transportation systems, communications, and financial services—are dependent on information technology systems to carry out operations. The security of these systems and the data they use is vital to public confidence and national security, prosperity, and well-being.
The risks to these systems are increasing as security threats evolve and become more sophisticated. GAO first designated information security as a government-wide high-risk area in 1997. This was expanded to include protecting cyber critical infrastructure in 2003 and protecting the privacy of personally identifiable information in 2015.
GAO was asked to update its information security high-risk area. To do so, GAO identified the actions the federal government and other entities need to take to address cybersecurity challenges. GAO primarily reviewed prior work issued since the start of fiscal year 2016 related to privacy, critical federal functions, and cybersecurity incidents, among other areas. GAO also reviewed recent cybersecurity policy and strategy documents, as well as information security industry reports of recent cyberattacks and security breaches.

What GAO Found

GAO has identified four major cybersecurity challenges and 10 critical actions that the federal government and other entities need to take to address them. GAO continues to designate information security as a government-wide high-risk area due to increasing cyber-based threats and the persistent nature of security vulnerabilities.
GAO has made over 3,000 recommendations to agencies aimed at addressing cybersecurity shortcomings in each of these action areas, including protecting cyber critical infrastructure, managing the cybersecurity workforce, and responding to cybersecurity incidents. Although many recommendations have been addressed, about 1,000 have not yet been implemented. Until these shortcomings are addressed, federal agencies' information and systems will be increasingly susceptible to the multitude of cyber-related threats that exist.

What GAO Recommends

GAO has made over 3,000 recommendations to agencies since 2010 aimed at addressing cybersecurity shortcomings. As of July 2018, about 1,000 still needed to be implemented.


Question:
Why GAO Did This Study

Created in the mid-1980s, FCC's Lifeline program provides discounts to eligible low-income households for home or wireless telephone and, as of December 2016, broadband service. Lifeline reimburses telephone companies that offer discounts through the USF, which in turn is generally supported by consumers by means of a fee charged on their telephone bills.
This testimony is based on GAO's May 2017 report and discusses steps FCC has taken to measure Lifeline's performance in meeting goals; steps FCC and USAC have taken to enhance controls over finances, subscribers, and providers; and any weaknesses that might remain.
For the May 2017 report, GAO analyzed documents and interviewed officials from FCC and USAC. GAO also analyzed subscriber data from 2014 and performed undercover tests to identify potential improper payment vulnerabilities. The results of this analysis and testing are illustrative, not generalizable.

What GAO Found

In its May 2017 report GAO found the Federal Communications Commission (FCC) has not evaluated the Lifeline program's (Lifeline) performance in meeting its goals of increasing telephone and broadband subscribership among low-income households by providing financial support, but it has recently taken steps to begin to do so. FCC does not know how many of the 12.3 million households receiving Lifeline as of December 2016 also have non-Lifeline phone service, or whether participants are using Lifeline as a secondary phone service. FCC revamped Lifeline in March 2016 to focus on broadband adoption; however, broadband adoption rates have steadily increased for the low-income population absent a Lifeline subsidy for broadband. Without an evaluation, which GAO recommended in March 2015, FCC is limited in its ability to demonstrate whether Lifeline is efficiently and effectively meeting its program goals. In a March 2016 Order, FCC announced plans for an independent third party to evaluate Lifeline design, function, and administration by December 2020.
FCC and the Universal Service Administrative Company (USAC)—the not-for-profit organization that administers the Lifeline program—have taken some steps to enhance controls over finances and subscriber enrollment. For example, FCC and USAC established some financial and management controls regarding billing, collection, and disbursement of funds for Lifeline. To enhance the program's ability to detect and prevent ineligible subscribers from enrolling, FCC oversaw completion in 2014 of an enrollment database and, in June 2015, FCC adopted a rule requiring Lifeline providers to retain eligibility documentation used to qualify consumers for Lifeline support to improve the auditability and enforcement of FCC rules.
Nevertheless, in its May 2017 report, GAO found weaknesses in several areas. For example, Lifeline's structure relies on over 2,000 Eligible Telecommunication Carriers that are Lifeline providers to implement key program functions, such as verifying subscriber eligibility. This complex internal control environment is susceptible to risk of fraud, waste, and abuse as companies may have financial incentives to enroll as many customers as possible. On the basis of its matching of subscriber to benefit data, GAO was unable to confirm whether about 1.2 million individuals of the 3.5 million it reviewed, or 36 percent, participated in a qualifying benefit program, such as Medicaid, as stated on their Lifeline enrollment application. FCC's 2016 Order calls for the creation of a third-party national eligibility verifier by the end of 2019 to determine subscriber eligibility. Further, FCC maintains the Universal Service Fund (USF)—with net assets of $9 billion, as of September 2016—outside the Department of the Treasury in a private bank account. In 2005, GAO recommended that FCC reconsider this arrangement given that the USF consists of federal funds. In addition to addressing any risks associated with having the funds outside the Treasury, FCC identified potential benefits of moving the funds. For example, by having the funds in the Treasury, USAC would have better tools for fiscal management of the funds. In March 2017, FCC developed a preliminary plan to move the USF to the Treasury. Until FCC finalizes and implements its plan and actually moves the USF funds, the risks that FCC identified will persist and the benefits of having the funds in the Treasury will not be realized.

What GAO Recommends

In its May 2017 report, GAO made seven recommendations, including that FCC ensure plans to transfer the USF from the private bank to the Treasury are finalized and implemented expeditiously. FCC generally agreed with all the recommendations.


Question:
Why GAO Did This Study

The LIHTC program, established under the Tax Reform Act of 1986, is the largest source of federal assistance for developing affordable rental housing and will represent an estimated $8.5 billion in forgone revenue in 2017. LIHTC encourages private-equity investment in low-income rental housing through tax credits. The program is administered by IRS and allocating agencies, which are typically state or local housing finance agencies established to meet affordable housing needs of their jurisdictions. Responsibilities of allocating agencies (in Section 42 of the Internal Revenue Code and regulations of the Department of the Treasury) encompass awarding credits, assessing the reasonableness of project costs, and monitoring projects.
In this testimony, GAO discusses (1) how allocating agencies implement federal requirements for awarding LIHTCs, assess reasonableness of property costs, and monitor properties' ongoing compliance; and (2) IRS oversight of the LIHTC program. This statement is based primarily on three reports GAO issued in July 2015 ( GAO-15-330 ), May 2016 ( GAO-16-360 ), and February 2017 ( GAO-17-285R ). GAO also updated the status of recommendations made in these reports by reviewing new or revised IRS policies, procedures, and reports and interviewing IRS officials.

What GAO Found

In its May 2016 report on the Low-Income Housing Tax Credit (LIHTC) program of the Internal Revenue Service (IRS), GAO found that state and local housing finance agencies (allocating agencies) implemented requirements for allocating credits, reviewing costs, and monitoring projects in varying ways. Moreover, some allocating agencies' day-to-day practices to administer LIHTCs also raised concerns. For example,
qualified allocation plans (developed by 58 allocating agencies) that GAO analyzed did not always mention all selection criteria and preferences that Section 42 of the Internal Revenue Code requires; and
allocating agencies could increase (boost) the eligible basis used to determine allocation amounts for certain buildings if needed for financial feasibility. However, they were not required to document the justification for the increases. The criteria used to award boosts varied, with some allocating agencies allowing boosts for specific types of projects and one allowing boosts for all projects in its state.
In its 2015 and 2016 reports, GAO found IRS oversight of the LIHTC program was minimal. Additionally, IRS collected little data on or performed limited analysis of compliance in the program. Specifically, GAO found that
Since 1986, IRS conducted seven audits of the 58 allocating agencies we reviewed. Reasons for the minimal oversight may include LIHTC being viewed as a peripheral program in IRS in terms of its mission and priorities for resources and staffing.
IRS had not reviewed the criteria allocating agencies used to award discretionary basis “boosts,” which raised concerns about oversubsidizing projects (and reducing the number of projects funded).
IRS guidance to allocating agencies on reporting noncompliance was conflicting. As a result, allocating agencies' reporting of property noncompliance was inconsistent.
IRS had not participated in and leveraged the work of the physical inspection initiative of the Rental Policy Working Group—established to better align the operations of federal rental assistance programs—to augment its databases with physical inspection data on LIHTC properties that the Department of Housing and Urban Development (HUD) maintains.
In its prior reports, GAO made a total of four recommendations to IRS. As of July 2017, IRS had implemented one recommendation to include relevant IRS staff in the working group. IRS has not implemented the remaining three recommendations, including improving the data quality of its LIHTC database, clarifying guidance to agencies on reporting noncompliance, and evaluating how the information HUD collects could be used for identifying noncompliance issues. In addition, because of the limited oversight of LIHTC, in its 2015 report GAO asked that Congress consider designating certain oversight responsibilities to HUD because the agency has experience working with allocating agencies and has processes in place to oversee the agencies. As of July 2017, Congress had not enacted legislation to give HUD an oversight role for LIHTC.


Question:
Why GAO Did This Study

CMS required prior authorization as a demonstration in 2012 for certain power mobility devices, such as power wheelchairs, in seven states. Under the prior authorization process, MACs review prior authorization requests and make determinations to approve or deny them based on Medicare coverage and payment rules. Approved requests will be paid as long as all other Medicare payment requirements are met.
GAO was asked to examine CMS's prior authorization programs. GAO examined 1) the changes in expenditures and the potential savings for items and services subject to prior authorization demonstrations, 2) reported benefits and challenges of prior authorization, and 3) CMS's monitoring of the programs and plans for future prior authorization. To do this, GAO examined prior authorization program data, CMS documentation, and federal internal control standards. GAO also interviewed CMS and MAC officials, as well as selected provider, supplier, and beneficiary groups.

What GAO Found

Prior authorization is a payment approach used by private insurers that generally requires health care providers and suppliers to first demonstrate compliance with coverage and payment rules before certain items or services are provided to patients, rather than after the items or services have been provided. This approach may be used to reduce expenditures, unnecessary utilization, and improper payments. The Centers for Medicare & Medicaid Services (CMS) has begun using prior authorization in Medicare through a series of fixed-length demonstrations designed to measure their effectiveness, and one permanent program. According to GAO's analyses, expenditures decreased for items and services subject to a demonstration. GAO's analyses of actual expenditures and estimated expenditures in the absence of the demonstrations found that estimated savings from all demonstrations through March 2017 could be as high as about $1.1 to $1.9 billion. While CMS officials said that prior authorization likely played a large role in reducing expenditures, it is difficult to separate the effects of prior authorization from other program integrity efforts. For example, CMS implemented a durable medical equipment competitive bidding program in January 2011, and according to the agency, it resulted in lower expenditures.
Many provider, supplier, and beneficiary group officials GAO spoke with reported benefits of prior authorization, such as reducing unnecessary utilization. However, provider and supplier group officials reported that providers and suppliers experienced some challenges. These include difficulty obtaining the necessary documentation from referring physicians to submit a prior authorization request, although CMS has created templates and other tools to address this concern. In addition, providers and suppliers reported concerns about whether accessories deemed essential to the power wheelchairs under the permanent durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) program are subject to prior authorization. In practice, Medicare Administrative Contractors (MAC) that administer prior authorization programs review these accessories when making prior authorization determinations, even though they are not technically included in the program and therefore cannot be provisionally affirmed. As a result, providers and suppliers lack assurance about whether Medicare is likely to pay for these accessories. This is contrary to a CMS stated benefit of prior authorization—to provide assurance about whether Medicare is likely to pay for an item or service—and to federal internal control standards, which call for agencies to design control activities that enable an agency to achieve its objectives.
CMS monitors prior authorization through various MAC reports. CMS also reviews MAC accuracy and timeliness in processing prior authorization requests and has contracted for independent evaluations of the demonstrations. Currently, prior authorization demonstrations are scheduled to end in 2018. Despite its interest in using prior authorization for additional items, CMS has not made plans to continue its efforts. Federal internal control standards state that agencies should identify, analyze, and respond to risks related to achieving objectives. CMS risks missed opportunities for achieving its stated goals of reducing costs and realizing program savings by reducing unnecessary utilization and improper payments.

What GAO Recommends

GAO recommends that CMS (1) subject accessories essential to the power wheelchairs in the permanent DMEPOS program to prior authorization and (2) take steps, based on results from evaluations, to continue prior authorization. The Department of Health and Human Services neither agreed nor disagreed with GAO's recommendations but said it would continue to evaluate prior authorization programs and take GAO's findings and recommendations into consideration in developing plans or determining appropriate next steps.


Question:
Why GAO Did This Study

Since January 2017, the Navy has suffered four significant mishaps at sea that resulted in serious damage to its ships and the loss of 17 sailors. Three of these incidents involved ships homeported in Japan. In response to these incidents, the Chief of Naval Operations ordered an operational pause for all fleets worldwide, and the Vice Chief of Naval Operations directed a comprehensive review of surface fleet operations, stating that these tragic incidents are not limited occurrences but part of a disturbing trend in mishaps involving U.S. ships.
This statement provides information on the effects of homeporting ships overseas, reducing crew size on ships, and not completing maintenance on time on the readiness of the Navy and summarizes GAO recommendations to address the Navy's maintenance, training, and other challenges.
In preparing this statement, GAO relied on work it has published since 2015 related to the readiness of ships homeported overseas, sailor training and workload issues, maintenance challenges, and other issues. GAO updated this information, as appropriate, based on Navy data.

What GAO Found

GAO's prior work shows that the Navy has increased deployment lengths, shortened training periods, and reduced or deferred maintenance to meet high operational demands, which has resulted in declining ship conditions and a worsening trend in overall readiness. The Navy has stated that high demand for presence has put pressure on a fleet that is stretched thin across the globe. Some of the concerns that GAO has highlighted include:
Degraded readiness of ships homeported overseas: Since 2006, the Navy has doubled the number of ships based overseas. Overseas basing provides additional forward presence and rapid crisis response, but GAO found in May 2015 that there were no dedicated training periods built into the operational schedules of the cruisers and destroyers based in Japan. As a result, the crews of these ships did not have all of their needed training and certifications. Based on updated data, GAO found that, as of June 2017, 37 percent of the warfare certifications for cruiser and destroyer crews based in Japan—including certifications for seamanship—had expired. This represents more than a fivefold increase in the percentage of expired warfare certifications for these ships since GAO's May 2015 report. The Navy has made plans to revise operational schedules to provide dedicated training time for overseas-based ships, but this schedule has not yet been implemented.
Crew size reductions contribute to sailor overwork and safety risks: GAO found in May 2017 that reductions to crew sizes the Navy made in the early 2000s were not analytically supported and may now be creating safety risks. The Navy has reversed some of those changes but continues to use a workweek standard that does not reflect the actual time sailors spend working and does not account for in-port workload—both of which have contributed to some sailors working over 100 hours a week.
Inability to complete maintenance on time: Navy recovery from persistently low readiness levels is premised on adherence to maintenance schedules. However, in May 2016, GAO found that the Navy was having difficulty completing maintenance on time. Based on updated data, GAO found that, in fiscal years 2011 through 2016, maintenance overruns on 107 of 169 surface ships (63 percent) resulted in 6,603 lost operational days (i.e., the ships were not available for training and operations).
Looking to the future, the Navy wants to grow its fleet by as much as 30 percent but continues to face challenges with manning, training, and maintaining its existing fleet. These readiness problems need to be addressed and will require the Navy to implement GAO's recommendations—particularly in the areas of assessing the risks associated with overseas basing, reassessing sailor workload and the factors used to size ship crews, managing investments to modernize and improve the efficiency of the naval shipyards, and applying sound planning and sustained management attention to its readiness rebuilding efforts. In addition, continued congressional oversight will be needed to ensure that the Navy demonstrates progress in addressing its maintenance, training, and other challenges.

What GAO Recommends

GAO made 14 recommendations in prior work cited in this statement. The Department of Defense generally concurred with all of them but has implemented only 1. Continued attention is needed to ensure that these recommendations are addressed, such as the Navy assessing the risks associated with overseas basing and reassessing sailor workload and factors used in its manpower requirements process.


Question:
Why GAO Did This Study

This testimony summarizes information contained in GAO's August 2017 report, entitled International Mail Security: Costs and Benefits of Using Electronic Data to Screen Mail Need to Be Assessed ( GAO-17-606 ).

What GAO Found

U.S. Customs and Border Protection (CBP) is the primary federal agency tasked with targeting and inspecting inbound international items and seizing illegal goods, including illegal or inadmissible drugs and merchandise. As mail and express cargo arrive in the United States, both the U.S. Postal Service (USPS) and express consignment operators (such as FedEx and DHL) provide items to CBP for inspection. However, unlike express consignment operators, USPS is not currently required to provide CBP with electronic advance data (EAD), such as the shipper's and recipient's name and address, for inbound international mail and does not have control over mail prior to its arrival in the United States. Thus, USPS relies on foreign postal operators to collect and provide EAD voluntarily or by mutual agreement.
In 2014 and 2015, USPS and CBP initiated two pilot programs at the New York International Service Center (ISC) to target certain mail for inspection using some of the EAD obtained under data-sharing agreements with foreign postal operators. Under the pilots, CBP uses EAD to target a small number of pieces of mail each day. According to USPS officials, when USPS employees scan either individual targeted pieces or larger sacks containing this targeted mail, they are alerted that CBP has targeted the item and set the item or sack aside for inspection. According to USPS and CBP, USPS has been unable to provide some targeted mail for inspection because locating targeted mail once it arrives at an ISC has been a challenge. Since the pilots began, USPS has provided CBP with about 82 percent of targeted mail for one pilot, and about 58 percent of targeted mail for the other. However, while USPS and CBP have collected some performance information for these pilots (including the percentage of targeted mail provided for inspection), this information is not linked to a specific performance target agreed upon by USPS and CBP--such as a specific percentage of targeted mail provided to CBP for inspection. Further, the agencies have not conducted an analysis to determine if the pilot programs are achieving desired outcomes. Because CBP and USPS lack clear performance goals for these pilots, they risk spending additional time and resources expanding them prior to fully assessing the pilots' success or failure.
In our report we found that the costs and benefits of using EAD to target mail for inspection are unclear. For example, according to USPS and CBP officials, increasing the use of EAD to target mail for inspection may have benefits, such as reducing time and resources needed for the screening process--potentially decreasing costs--and may increase the security of inbound mail. However, the costs of collecting and implementing the use of EAD are not yet known, and neither USPS nor CPB currently collect the data necessary to know whether using EAD might increase the security of inbound mail or decrease the time and costs associated with screening. For example, CBP has collected data on the percentage of inspections resulting in a seizure for mail inspected as a result of targeting in the pilot programs at the New York ISC. However, CBP does not collect comparable data for seizures resulting from inspections conducted based on current methods of choosing mail for inspection. In light of the challenges that collecting and using these data present, it is important that CBP and USPS carefully consider actions to enhance inbound international mail security to avoid wasting time and money on potentially ineffective and costly endeavors.

What GAO Recommends

In our report, we recommended that CBP, in coordination with USPS: (1) establish measureable performance goals to assess pilot programs and (2) evaluate the costs and benefits of using EAD to target mail for inspection compared with other targeting methods. CBP and USPS agreed with these recommendations and CBP plans to implement them by February 28, 2018.


Question:
Why GAO Did This Study

DOE's NNSA is responsible for managing the nuclear weapons stockpile and supporting nuclear nonproliferation efforts. DOE's Office of Environmental Management's mission includes decontaminating and decommissioning facilities that are contaminated from decades of nuclear weapons production.
Over the last few years, GAO has reported on a wide range of challenges facing DOE and NNSA. These challenges contribute to GAO's continuing inclusion of DOE's and NNSA's management of major contracts and projects on the list of agencies and program areas that are at high risk of fraud, waste, abuse, and mismanagement, or are in need of transformation. GAO also recently added the U.S. government's environmental liabilities to this list.
This statement is based on 25 GAO reports issued from April 2011 through January 2018 and discusses (1) challenges related to the affordability of NNSA's nuclear modernization plans; (2) challenges related to DOE's environmental liability; (3) the status of DOE's efforts to improve its management of contracts, projects, and programs; and (4) challenges facing NNSA's nonproliferation programs.

What GAO Found

The Department of Energy's (DOE) National Nuclear Security Administration (NNSA) faces challenges related to the affordability of its nuclear modernization programs. In April 2017, GAO found a misalignment between NNSA's modernization plans and the estimated budgetary resources needed to carry out those plans. Specifically, GAO found that NNSA's estimates of funding needed for its modernization plans sometimes exceeded the budgetary projections included in the President's planned near-term and long-term modernization budgets by billions of dollars. GAO also found that the costs of some major modernization programs—such as for nuclear weapon refurbishments—may also increase and further strain future modernization budgets. GAO recommended in April 2017 that NNSA include an assessment of the affordability of its modernization programs in future versions of its annual plan on stockpile stewardship; NNSA neither agreed nor disagreed with that recommendation.
DOE also faces challenges with addressing its environmental liabilities—the total cost of its cleanup responsibilities. In February 2017, GAO found that DOE was responsible for over 80 percent ($372 billion) of the U.S. government's estimated $450 billion environmental liability. However, this estimate does not reflect all of DOE's cleanup responsibilities. Notably, this estimate does not reflect all of the future cleanup responsibilities that DOE may face. For example, in January 2017, GAO found that the cost estimate for DOE's proposal for separate defense and commercial nuclear waste repositories excluded the costs and time frames for site selection and site characterization, and therefore full costs are likely to be billions of dollars more than DOE's reported environmental liabilities. To effectively address cleanup, GAO has made at least 28 recommendations to DOE and other federal agencies, which could reduce long-term costs as well as environmental risks more quickly. Of these, 13 remain not implemented.
DOE has taken several important steps that demonstrate its commitment to improving contract and project management, but challenges persist. Specifically, DOE's revised project management order, issued in May 2016, made several changes in response to recommendations GAO made in prior years, such as requiring that projects develop cost estimates and analyses of alternatives according to our best practices. However, DOE's recent efforts do not address several areas, such as acquisition planning for major contracts and aspects of program and project management, where the department continues to struggle. GAO has made several recommendations related to these areas, and DOE has generally agreed with and begun to take action on most of them.
Finally, NNSA faces challenges in implementing its nonproliferation programs. For example, in September 2017, GAO found that selected programs in NNSA's Office of Defense Nuclear Nonproliferation (DNN) did not measure performance against schedule and cost baselines, as recommended by program management leading practices because DNN's program management policy did not require programs to measure performance in this way. GAO recommended that DNN revise its policy to require programs to measure performance against cost and schedule baselines. NNSA indicated it plans to take action to revise its policy.

What GAO Recommends

GAO has previously suggested that Congress consider changes to the laws governing environmental cleanup activities. In addition to these suggestions, GAO has made numerous recommendations to DOE to address its management challenges.


Question:
Why GAO Did This Study

Research has shown that students who experience discipline that removes them from the classroom are more likely to repeat a grade, drop out of school, and become involved in the juvenile justice system. Studies have shown this can result in decreased earning potential and added costs to society, such as incarceration and lost tax revenue. Education and Justice are responsible for enforcing federal civil rights laws that prohibit discrimination in the administration of discipline in public schools.
GAO was asked to review the use of discipline in schools. To provide insight into these issues, this report examines (1) patterns in disciplinary actions among public schools, (2) challenges selected school districts reported with student behavior and how they are approaching school discipline, and (3) actions Education and Justice have taken to identify and address disparities or discrimination in school discipline. GAO analyzed discipline data from nearly all public schools for school year 2013-14 from Education's Civil Rights Data Collection; interviewed federal and state officials, as well as officials from a total of 5 districts and 19 schools in California, Georgia, Massachusetts, North Dakota, and Texas. We selected these districts based on disparities in suspensions for Black students, boys, or students with disabilities, and diversity in size and location. We also reviewed federal laws and a non-generalizable sample of seven recently resolved federal school discipline investigations (selected in part based on the type of alleged discrimination). We incorporated technical comments from the agencies as appropriate.

What GAO Found

Black students, boys, and students with disabilities were disproportionately disciplined (e.g., suspensions and expulsions) in K-12 public schools, according to GAO's analysis of Department of Education (Education) national civil rights data for school year 2013-14, the most recent available. These disparities were widespread and persisted regardless of the type of disciplinary action, level of school poverty, or type of public school attended. For example, Black students accounted for 15.5 percent of all public school students, but represented about 39 percent of students suspended from school—an overrepresentation of about 23 percentage points (see figure).
Officials GAO interviewed in all five school districts in the five states GAO visited reported various challenges with addressing student behavior, and said they were considering new approaches to school discipline. They described a range of issues, some complex—such as the effects of poverty and mental health issues. For example, officials in four school districts described a growing trend of behavioral challenges related to mental health and trauma. While there is no one-size-fits-all solution for the issues that influence student behavior, officials from all five school districts GAO visited were implementing alternatives to disciplinary actions that remove children from the classroom, such as initiatives that promote positive behavioral expectations for students.
Education and the Department of Justice (Justice) documented several actions taken to identify and address school discipline issues. For example, both agencies investigated cases alleging discrimination. Further, to help identify persistent disparities among the nation's schools, Education collects comprehensive data on school discipline every other year through its Civil Rights Data Collection effort.


Question:
Why GAO Did This Study

Since 1989, DOD has received billions of dollars to fund the National Guard's participation in a counterdrug program focused on domestic drug interdiction activities. DOD received $261 million for this program in fiscal year 2018. This program provides military support to assist state, local, and tribal law enforcement organizations with counterdrug activities and operates in 54 states and territories across the United States.
Senate Report 115-125 included a provision for GAO to evaluate the National Guard counterdrug program. This report (1) evaluates the extent to which DOD has strategy and implementing guidance for the National Guard counterdrug program, and (2) assesses DOD's processes to approve states' counterdrug plans and distribute funding to the program, among other things. GAO reviewed DOD's counterdrug strategy and guidance; DOD funding and personnel data; and its processes to distribute funding.

What GAO Found

The Department of Defense (DOD) lacks current strategy and guidance to implement the National Guard counterdrug program. Although a number of key national-level strategies, such as the National Drug Control Strategy, have been updated since 2011 to address changing drug threats, GAO found that DOD's 2011 Counternarcotics and Global Threats Strategy has not been updated to reflect these changes. In addition, the National Guard lacks detailed procedures and processes for the states to implement the National Guard counterdrug program, such as how to conduct cross-state aerial reconnaissance. Without current strategy or guidance, it will be difficult for the National Guard to operate its counterdrug program effectively.
DOD's processes to approve state counterdrug plans and distribute funding to the state-level counterdrug programs could be improved. Since at least 2009, DOD has provided funding to the states without first approving state plans for counterdrug activities, as required by statute. GAO found that the delay in approval of state counterdrug plans has worsened since fiscal year 2009; in fiscal year 2018, approval took over 9 months (283 days); see figure below. In 2018, DOD took some steps to address the timely review of state plans, but GAO found that those steps did not rectify the problem.
GAO also found that the process used by the National Guard to distribute funding to the states within the program does not incorporate DOD's strategic counternarcotics priorities, such as the U.S. southwest and northern border areas. GAO's work on results-oriented management states that strategy should inform program activities and resourcing. Until National Guard's process to distribute funding to state counterdrug programs is improved, it risks directing funding toward lower priority counterdrug activities at the expense of higher priority activities.

What GAO Recommends

GAO is making a total of five recommendations, including, among others, that DOD issue a strategic framework that addresses current drug threats, the National Guard issue guidance with detailed procedures on how states should administer the program, DOD assess the revised process for approving state plans, and the National Guard incorporate DOD's strategic counternarcotics priorities into its funding distribution process. DOD concurred with GAO's recommendations.


Question:
Why GAO Did This Study

Treasury established the HHF program in 2010 to help stabilize the housing market and assist homeowners facing foreclosure in the states hardest hit by the housing crisis. Through HHF, Treasury has obligated a total of $9.6 billion in Trouble Asset Relief Program funds to 19 state HFAs. HFAs use funds to implement programs that address foreclosure and help stabilize local housing markets—for example, by demolishing blighted properties. Congress extended HHF in 2015, and HFAs must disburse all HHF funds by December 31, 2021, or return them to Treasury.
The Emergency Economic Stabilization Act of 2008 included a provision for GAO to report on Troubled Asset Relief Program activities. This report focuses on the HHF program and examines, among other objectives, (1) the extent to which Treasury's monitoring addresses leading practices for program oversight and (2) HFAs' progress toward program targets.
GAO reviewed documentation of Treasury's HHF monitoring practices, interviewed HFAs (selected based on differences in program types implemented) and Treasury officials, and reviewed information on how HFAs developed program targets.

What GAO Found

For its Housing Finance Agency Innovation Fund for Hardest Hit Markets (HHF), the Department of the Treasury (Treasury) has addressed or partially addressed all 14 leading monitoring practices that GAO identified. For example, Treasury periodically collects performance data from housing finance agencies (HFA) and analyzes and validates these data. However, while Treasury requires HFAs to regularly assess the risks of their programs, it does not systematically collect or analyze these assessments. As a result, Treasury is missing an opportunity to ensure that HFAs are appropriately assessing their risk. Also, Treasury does not require HFAs to consistently document which of their staff are responsible for internal control execution. This documentation could help HFAs wind down their programs, particularly as staff turn over.
Most HFAs met Treasury's goals for drawing down HHF funds, with $9.1 billion disbursed to HFAs as of September 2018. HHF programs have assisted hundreds of thousands of distressed homeowners since 2010. However, the data Treasury has collected are of limited use for determining how well HFAs met their goals for assisting households and demolishing blighted properties, or for evaluating the HHF program overall. For example, Treasury did not develop a consistent methodology for HFAs to use when setting performance targets, which limits Treasury's ability to compare across programs or assess the HHF program as a whole. Further, GAO's guide to designing evaluations states that where federal programs operate through multiple local public or private agencies, it is important that the data these agencies collect are sufficiently consistent to permit aggregation nationwide. Although HFAs have until the end of 2021 to disburse their HHF funds, many programs are beginning to close, making it too late for meaningful changes to Treasury's approach to performance measurement. However, should Congress authorize Treasury to extend the program beyond December 2021 or establish a similar program in the future, it would be useful at that time for Treasury to develop a program evaluation design that would allow the agency to assess overall program performance, as well as performance across HFAs and program types.

What GAO Recommends

GAO recommends that Treasury collect and evaluate HFAs' risk assessments and routinely update staffing documentation. Treasury agreed with these recommendations and stated that it has already taken steps toward addressing them.


Question:
Why GAO Did This Study

Since the Space Shuttle was retired in 2011, the United States has been relying on Russia to carry astronauts to and from the space station. NASA's Commercial Crew Program is facilitating private development of a domestic system to meet that need safely, reliably, and cost-effectively before the seats it has contracted for on a Russian spacecraft run out in 2019.
In 2014, NASA awarded two firm-fixed-price contracts to Boeing and SpaceX worth a combined total of up to $6.8 billion to develop crew transportation systems and conduct initial missions to the space station. In February 2017, GAO found that both contractors had made progress, but their schedules were under mounting pressure.
This statement provides preliminary observations on the extent to which the contractors and the program are making progress toward meeting NASA's standards for human spaceflight, a process called certification.
This statement is based on ongoing work and information contained in GAO's February 2017 report on this program ( GAO-17-137 ). To do this work, GAO analyzed contracts, schedules, and other documentation.

What GAO Found

Both Boeing and Space Exploration Technologies (SpaceX) are making progress toward their goal of being able to transport American astronauts to and from the International Space Station (ISS). However, both continue to experience schedule delays. Such delays could jeopardize the ability of the National Aeronautics and Space Administration's (NASA) Commercial Crew Program to certify either company's option—that is, to ensure that either option meets NASA standards for human spaceflight—before the seats the agency has contracted for on Russia's Soyuz spacecraft run out in 2019. (See figure.)
GAO's ongoing work has identified three key risks, which are consistent with challenges reported in February 2017 that could further delay certification of each contractor's crew transportation system:
Aggressive schedules —NASA, Boeing, SpaceX, and independent review bodies have all noted that the contractors' schedule plans are aggressive. The anticipated schedule risks have since materialized.
Programmatic and safety risks —SpaceX and Boeing are addressing technical risks, which is not uncommon for NASA projects as they often push the state of the art in space technology. In addition, the contractors' systems must meet a standard for crew safety. Additional work remains to determine whether the contractors will meet this requirement.
Program office workload —Program officials told GAO that one of their greatest upcoming challenges will be to complete two oversight activities—conducting phased safety reviews and verifying that contractors meet requirements—concurrently. The program's ability to smooth its workload is limited, as the contractors generally control their development schedules. In February 2017, GAO found that proposed schedule changes could alleviate some overlap.
Delays and uncertain final certification dates raise questions about whether the United States will have uninterrupted access to the ISS after 2019, and may lessen NASA's return on investment with the contractors. GAO will continue to assess the contractors' and program's progress.

What GAO Recommends

GAO is not making any new recommendations. In February 2017, GAO recommended that NASA develop a contingency plan to maintain access to the ISS beyond 2018, when its contract with Russia for seats on the Soyuz was scheduled to end. NASA agreed with this recommendation and purchased Soyuz seats through 2019.