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Exclusive: VA Spending on Mobile Apps and VistA Enhancements Violated Appropriations Law

The Department of Veterans Affairs misused $51.9 million in medical appropriations to fund development of mobile health applications and an enhancement to the Veteran Information Systems and Technology Architecture (VistA), violating Federal appropriations law, according to a preliminary inspector general report obtained by MeriTalk.

The laws in question prohibit the use of medical care support and services funding for anything other than expenses related to inpatient and outpatient care, medical supplies and equipment, prescription drugs, and nursing homes, as well as caregiver assistance and health care employee salaries. But officials from the Veterans Health Administration (VHA) and VA’s Office of Information and Technology deliberately “circumvented IT policy and appropriations law to avoid competing for IT Systems appropriations” to help fund five mobile apps and an enhancement to VA’s main electronic health record system.

According to investigators, when former VA Chief Information Officer Stephen Warren launched a major mobile development initiative in 2012, the agency lacked the necessary funding to develop the apps and take care of other key IT programs, such as the addition of debt management tools to VistA. Because of the funding shortfalls, VA and VHA officials argued that VA’s policy on what constitutes an IT system was outdated, and they opted to use guidance from the Food and Drug Administration that defined a mobile medical app as a “medical device.”

Stephen Warren is the former VA chief information officer. He is now the CIO at the Office of the Comptroller of the Currency.
Stephen Warren is the former VA chief information officer. He is now the CIO at the Office of the Comptroller of the Currency.

“According to an Agency official, sometime between 2009 and 2010 (when the Transformation, or T-21, Initiatives started) there was a concern that VA would need to allocate more IT funds toward Veterans Benefits Administration development costs; thereby impacting the IT budget,” the preliminary report states. “Because of this constraint on the IT budget, former senior Agency officials decided to shift development costs to the administrations by requiring them to spend [medical support and services] appropriations to finance the T-21 Initiatives, including IT development costs.”

Investigators said several members of VHA’s Chief Financial Office warned VA’s former under secretary for Health, assistant secretary for Information Technology, and deputy assistant secretary for IT Resource Management that shifting costs to medical administration accounts would violate the Purpose Statute—an 1809 law that says appropriations can only be used as specifically determined by Congress.

“However, according to a Chief Financial Office staff member, that was not well received by leadership,” according to the IG report. Former VA senior leaders used the Food and Drug Administration’s guidance, that defined a mobile medical application as a medical device when it will be used for mitigating, treating, or preventing diseases, to justify authorizing VHA’s use of MS&C and MS appropriations for mobile health application development.

“Of the approximately $51.9 million, VA spent $39.1 million in questioned costs on IT development and enhancement activities instead of medical care and administrative activities,” the IG report states. “In addition, VA could put $12.8 million in health care funds, that remain obligated, for IT development to better serve our veterans’ health care needs.”

Mobile App Development

VHA’s Office of Informatics and Analytics (OIA) used about $36 million of medical services and support appropriations to procure contractor services for the development of five mobile health applications.  At the time, Warren had launched a series of mobile computing initiatives across VA that would offer email and other applications on iPhones and iPads. VHA planned to use mobile health applications on devices such as BlackBerrys, iPhones, and iPads so that doctors and nurses could access medical information and enhance communication with caregivers. Three of these applications were also intended to provide help desk support.

The VA IG compared the software development identified for the five software applications to the Pressure Ulcer application—an application that OI&T is developing and financing using the IT Systems appropriation—and found the development efforts were near identical although the funding varied for the five mobile health applications.

The VA IG compared the software development identified for the five software applications to the Pressure Ulcer application—an application that OI&T is developing and financing using the IT Systems appropriation—and found the development efforts were near identical although the funding varied for the five mobile health applications. Table 1 identifies the mobile health applications and funding sources for each application.
Table 1 identifies the mobile health applications and funding sources for each application.

Sources told MeriTalk that at least $5 million of medical services funding has been spent by VHA’s Office of Connected Care to acquire tablet computers. According to the FDA, however, mobile applications can be considered medical devices but not the platform that is running them.

“VHA has used medical dollars for IT software development under the guise of creating mobile applications, of which they have released very few and to date have no meaningful health care team-facing application in production,” a source said. “Additionally, not only are medical dollars being used for medical mobile application development, but IT resources and staff are also developing medical mobile applications; further confusing the appropriate use of funds.”

A year later, nearly 2,000 of the tablets remain in a warehouse because of backward compatibility issues with their operating systems.

VistA Enhancement

To support the VistA enhancement, the Chief Business Office obligated $3.1 million of medical services funds to the Debt Management Center (DMC).  The DMC is enhancing VistA to comply with the Debt Collection and Management Reform Act of 2012 by developing debt management tools, such as the administrative wage garnishment.

According to IG investigators, officials from Finance and Logistics, CBO Revenue Operations, and the DMC Director signed service-level agreements that served as a funding mechanism to obligate medical services and support appropriations for the enhancement. The medical appropriations were used to cover the DMC’s labor and contract costs for design, governance, IT infrastructure, and maintenance, according to the report.

According to the IG, the DMC deposited the medical appropriations into the Franchise Fund, counted the funds as revenue earned, and used the revenue to procure a contractor to complete the VistA enhancement.

“When we asked who gave approval to use the MS&C funds; a CBO Program official told us that approval was not needed because the CBO is a DMC customer and the DMC will recover its costs through its customers,” the IG report states. “Thus, it was implied that the MS&C appropriations should be used to cover the development costs.”

Medical support and compliance funds need to be restored to their proper appropriation to comply with appropriation laws, the IG report states.

This is not the first time VA components have been found guilty of misappropriating medical services funds for IT systems development and purchases. Last year, the IG reported that VHA’s Chief Business Office violated appropriations law by obligating $92.5 million in medical services funding to finance the development of the Health Care Claims Processing System. By using medical funds, VHA avoided having to compete with other VA projects for IT appropriations.

VA CIO LaVerne Council recently acknowledged this problem during a MyVA Advisory Committee meeting in April. “It is hard to work with OIT. As a result, there is a lot of ‘shadow IT’ being put in place by the business lines” throughout VA, Council said.

IG Recommendations

  1. We recommended the Assistant Secretary for the Office of Management establish an interdepartmental team to develop a directive that defines what constitutes information technology and specify the appropriation to use.
  1. We recommended the Assistant Secretary for the Office of Management ensure the directive is updated to ensure that new and emerging advances in information technology are included in the directive.
  1. We recommended the Assistant Secretary for the Office of Management confer with the Office of General Counsel and Assistant Secretary for Information Technology and Under Secretary for Health to determine the appropriate funding needed to finance the mobile health application development, pick that appropriation, and stick to it.
  1. We recommended the Under Secretary for Health obtain the appropriate funding to support mobile health application development and the VistA enhancement.
  1. We recommended the Under Secretary for Health seek the return of all medical support and compliance and medical services funds used to support the mobile health application development and the VistA enhancement.
  1. We recommended the Under Secretary for Health deobligate all medical support and compliance and medical services funds that remain obligated toward the development of the mobile health applications.
  1. We recommended the Assistant Secretary for the Office of Management, after returning all medical support and compliance and medical services funds, make accounting adjustments accordingly, determine whether Antideficiency Act violations occurred, and report violations as appropriate.
  1. We recommended the Under Secretary for Health and the Assistant Secretary for the Office of Management confer with the Office of Human Resources and the Office of General Counsel to determine if appropriate administrative action should be taken against any senior officials in the Office of Informatics and Analytics, Chief Business Office, or Debt Management Center supervisory chain of command, and ensure that action is taken.
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