Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight

GAO and others have identified insufficiencies in state-reported Medicaid data that affect CMS's ability to oversee the program effectively. Recent increases in improper payments—estimated at $36.7 billion in fiscal year 2017—exacerbate concerns about program oversight.

CMS officials identified the T-MSIS initiative, which began in 2011, as its main effort to improve Medicaid data, and cited aspects of T-MSIS aimed at improving the scope and quality of state-reported data. GAO reported in January 2017 that it is unclear when T-MSIS data will be available from all states; how CMS will ensure data quality; or how the data will be used to enhance oversight of Medicaid.

GAO was asked to review states' experiences with T-MSIS implementation and planned uses of T-MSIS data. This report examines (1) states' experiences regarding T-MSIS implementation, and (2) challenges to CMS's and states' use of T-MSIS data for oversight. GAO reviewed federal laws, guidance, and internal control standards; reviewed documents and interviewed officials from eight states, selected based on their T-MSIS reporting status, location, program expenditures, and other factors; and interviewed CMS officials, CMS contractors, and individuals involved with other states' T-MSIS efforts.

As of November 2017, 49 states had begun reporting Transformed Medicaid Statistical Information System (T-MSIS) data—a significant increase from 18 states reporting these data one year earlier. All eight states GAO reviewed identified converting their data to the T-MSIS format on an element-by-element basis as the main challenge in their reporting efforts. For some data elements, states had to expand or collapse their data to match the T-MSIS format.

With the continued implementation of T-MSIS, the Centers for Medicare & Medicaid Services (CMS) has taken an important step toward developing a reliable national repository for Medicaid data. However, data challenges have hindered states' and CMS's use of the T-MSIS data for oversight.

None of the six selected states reporting T-MSIS data in August 2017 was reporting complete data. These states said that certain unreported elements were contingent on federal or state actions, and others were not applicable to the state's Medicaid program. States did not always specify in their documentation whether they planned to report elements in the future or when they would report complete data.

Six of eight selected states expressed concerns about the comparability of T-MSIS data across states. Further, all states were interested in CMS facilitating information sharing among states. CMS has not compiled and shared information about states' data limitations, which would help states accurately compare their T-MSIS data to other states' T-MSIS data.

CMS has taken steps for the initial use of T-MSIS data, but does not have a plan or associated timeframes for using these data for oversight. As a result, important CMS goals for T-MSIS, such as reducing states' reporting burden and enhancing program integrity activities, are not being fully realized.

GAO recommends that CMS (1) improve T-MSIS's completeness and comparability to expedite its use, and (2) articulate a specific oversight plan. The Department of Health and Human Services concurred with GAO's recommendations.

Medicaid—the joint federal-state health financing program estimated to  cover over 73 million low-income and medically needy individuals in fiscal  year 2017—allows states significant flexibility to design and implement  their programs within broad federal parameters. While this flexibility has  allowed states to fashion their programs based on their unique needs, it  also complicates oversight. The Centers for Medicare & Medicaid  Services (CMS), the agency within the Department of Health and Human  Services (HHS) that oversees Medicaid, has a critical role in monitoring  states’ compliance with federal requirements, including ensuring that  federal Medicaid payments are made appropriately. To help inform its  oversight, CMS relies on data that are submitted by states. For example,  for expenditure and utilization data that can be linked to individual  enrollees, states historically submitted data to be incorporated into CMS’s  Medicaid Statistical Information System (MSIS) data.

We and others have reported that insufficiencies in available Medicaid  data, including MSIS data, have affected CMS’s ability to ensure proper  payments and beneficiaries’ access to care. These concerns are not  new; however, recent trends in improper payments have exacerbated  concerns about Medicaid oversight. In particular, of the $596 billion in  federal and state Medicaid expenditures in fiscal year 2017, improper  payments were an estimated $36.7 billion, a significant increase from the  estimated $14.4 billion in improper payments in fiscal year 2013.

CMS has acknowledged the need for improved Medicaid data. The  Transformed Medicaid Statistical Information System (T-MSIS) initiative is  the agency’s primary effort, conducted jointly with states, to improve its  collection of Medicaid expenditure and utilization data, and replace  MSIS. CMS officials cite aspects of T-MSIS that are designed to broaden  the scope and improve the quality of state-reported data, as well as the  data’s usefulness for states. For example, T-MSIS is intended to include  data not previously reported by states, such as unique provider  identification numbers and information on third-party liability, which could  be used to help enhance CMS and states’ program oversight. T-MSIS  also includes automated quality checks that should improve the quality of  data that states report.

In a January 2017 report, we examined CMS efforts to implement T-MSIS  and concluded that uncertainty existed with respect to when all states  would report T-MSIS data; how CMS will ensure the quality of these data;  and how CMS will use them for oversight purposes. You asked us to  examine states’ experiences regarding T-MSIS implementation, including  obstacles they have faced in reporting quality data, and their planned  uses of these data for oversight. In this report, we examine  1.  states’ experiences regarding the implementation of T-MSIS, including  CMS’s actions to facilitate states’ efforts; and  2.  challenges to CMS’s and states’ use of T-MSIS data for oversight.

To examine states’ experiences regarding the implementation of T- MSIS—including CMS’s actions to facilitate their efforts—we reviewed  federal laws and guidance, and interviewed CMS officials and contractors  who assisted the agency with T-MSIS implementation. We reviewed  CMS documentation of the number of states reporting T-MSIS data and  of its actions to support states’ T-MSIS implementation efforts. We also  selected a non-generalizable sample of eight states for further review:  Louisiana, Michigan, Minnesota, North Carolina, Pennsylvania, Utah,  Virginia, and Washington. We selected these states based on variation in  their T-MSIS reporting status, geographic location, program expenditures,  use of Medicaid managed care programs, and participation in CMS’s T- MSIS pilot program. For each selected state, we reviewed relevant  documents, and interviewed officials about their experiences reporting T- MSIS data and CMS’s efforts to assist them. To supplement the  information provided by our selected states, we also interviewed  individuals who were identified through background research as having  experience with other states’ T-MSIS reporting efforts. We also reviewed  prior GAO reports on Medicaid data and reports published by other  entities, such as the HHS Office of Inspector General (HHS-OIG).

To examine challenges to CMS’s and states’ use of T-MSIS data for  oversight, we reviewed CMS guidance, selected states’ documentation of  T-MSIS reporting efforts, and federal internal control standards. We also interviewed officials from CMS and selected states regarding their plans  to use these data for oversight. To assess the completeness of the T- MSIS data that selected states were reporting, we analyzed state  documents regarding unreported T-MSIS data elements and their plans to  report them in the future. These documents, which states submit to CMS,  are known as Addendum Bs. To assess the reliability of the Addendum B  data, we compared them with related documentation, such as CMS  guidance, and with information from interviews with knowledgeable CMS  and state officials. We also assessed the data for duplicate values and  clarified inconsistencies we identified. We confirmed with state officials  that their documents reflected unreported T-MSIS data elements as of  August 2017. We determined that these data were sufficiently reliable  for our purposes.

We conducted this performance audit from December 2016 through  December 2017 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.

CMS intends for the T-MSIS initiative to provide a national data repository  that would support federal and state program management, financial  management, and program integrity activities, among other functions. T- MSIS is also intended to benefit states by reducing the number of reports  CMS requires them to submit, and by improving program efficiency by  allowing states to compare their data with other states’ data in the  national repository or with information in other CMS repositories, including  Medicare data. For example, CMS intends to use T-MSIS data for  reports that states are currently required to submit, such as Early and  Periodic Screening, Diagnostic, and Treatment Program reports.

T-MSIS is designed to capture significantly more data from states than is  the case with MSIS, thereby collecting data not previously reported that  should provide CMS and states with information to enhance their  oversight efforts. T-MSIS includes the five data files that were collected  through MSIS: an eligibility file and four claims files (inpatient, long-term  care, pharmacy, and other). The scope of data to be collected from these  five previously defined MSIS files has expanded to include more detailed  information on enrollees, such as their citizenship, immigration, and  disability status; and expanded diagnosis and procedure codes  associated with their treatments.

Additionally, T-MSIS requires states to report three new data files on (1)  providers, (2) third-party liability, and (3) managed care organizations  (MCO).

The provider file includes a unique identifier for each provider, as well  as data fields to show provider specialty and practice locations. Each  of these identifiers can assist CMS and state oversight by providing  information on provider referrals, Medicaid payments to specific  providers, and identifying ineligible providers.

The third-party liability file includes data on whether a beneficiary has  any health insurance in addition to Medicaid, or other potential  sources of funds that could reduce Medicaid’s expenditures. Medicaid  is generally the payer of last resort, meaning if Medicaid enrollees  have another source of health care coverage, that source should pay,  to the extent of its liability, before Medicaid does. Information on  beneficiaries’ other sources of coverage could help ensure that  Medicaid pays only those expenditures for which it is liable.

The managed care file includes more detailed information on MCOs,  such as type and name of managed care plans, covered eligibility  groups, service areas, and reimbursement arrangements. In addition  to identifying which MCOs are reporting encounter data as required,  this file could help CMS’s oversight by allowing the agency to identify  excess plan profits and volatility of expenditures for some beneficiary  groups across states.

In total, T-MSIS includes approximately 1,400 data elements, according  to CMS. Many of these elements, however, have content that is used in  more than one of the eight T-MSIS files. For example, the element “DATE  OF BIRTH” is required in five T-MSIS files—Eligibility, Claim Inpatient,  Claim Long-term Care, Claim Prescription, and Claim Other. CMS  requires states to report all T-MSIS elements that are applicable to their  programs, and has worked closely with states to facilitate their efforts to  report these data. For example, before CMS approves a state for  reporting T-MSIS data, states must complete a number of activities,  including developing detailed work plans and completing a series of data  testing phases. For a state to meet CMS’s requirements for submitting  T-MSIS data, it must report data for all eight files, but not necessarily all  elements within each file.

In addition, T-MSIS includes aspects aimed at improving the timeliness  and accuracy of data submitted by states. For example, CMS requires  states to report T-MSIS data monthly, rather than quarterly, as was the  case with MSIS. Regarding data accuracy, T-MSIS includes  approximately 2,800 automated quality checks that provide states with  feedback on data format and consistency, according to CMS; this is in  contrast to MSIS, which had relatively few automated checks. Other  quality checks are to ensure logical relationships across T-MSIS files.

Both we and the HHS-OIG have previously recommended that CMS take  steps to address the quality of T-MSIS data. In our January 2017 report,  we recommended that CMS take immediate steps to assess and improve  T-MSIS data. As part of that effort, we noted that CMS could refine their  T-MSIS data priority areas to identify those that are critical for reducing  improper payments and expedite efforts to assess and ensure their  quality. CMS agreed with our recommendation, but as of September  2017, the agency had not implemented it. More recently, the HHS-OIG  reported that CMS and states continue to have concerns regarding the  completeness and reliability of T-MSIS data, echoing concerns raised in  its 2013 review of CMS’s T-MSIS pilot program. The HHS-OIG noted it  was concerned that CMS and states would delay further efforts rather  than assign the resources needed to address the outstanding challenges,  and reaffirmed its 2013 recommendation that CMS establish a deadline  for when T-MSIS data will be available for program analysis and other  management functions.

Despite Challenges Converting State Data to the T-MSIS Format, Nearly All States are Reporting T-MSIS Data, and CMS Has Shifted Its Focus to Improving Data Quality

Despite challenges converting their data to the T-MSIS format, most  states were reporting T-MSIS data as of November 2017, representing  significant progress over the past year. With most states reporting, CMS  has shifted its efforts to working with states to improve the quality of T- MSIS data.

Overall, 49 States Are Reporting T-MSIS Data; Selected States Identified Converting their Data into the T-MSIS Format as a Significant Reporting Challenge

As of November 2017, 49 states have begun reporting T-MSIS data, a  significant increase from the 18 states that had started reporting these  data in October 2016. These reporting states represent over 97 percent of  the 2017 Medicaid population nationwide. CMS officials told us that they  expect all states to report T-MSIS data by 2018. (See fig. 1.)

As of November 2017, all eight of our selected states were reporting T- MSIS data, with seven of them having begun in September 2016 or  later. Selected states’ estimated spending a collective $14.16 million on  their efforts to report T-MSIS data from October 2011 through June 2017,  ranging from approximately $850,000 in Virginia to $4.42 million in  Minnesota. (See table 1.) The age and scope of states’ existing  Medicaid Management Information Systems (MMIS) were among the  factors that affected certain states’ spending and timing on this effort.

Mapping the data—the process by which states convert their data to the  T-MSIS format on an element-by-element basis—was the primary  challenge our eight selected states identified in reporting T-MSIS data. In  some cases, before converting their data to the T-MSIS format, states  had to obtain data they had not previously collected from other state  entities, MCOs, or providers. For example, Minnesota had to begin  collecting information on denied claims from MCOs, and Utah had to  collect third-party liability information from other state agencies. In  addition, while some state data elements could be converted to the T- MSIS format fairly easily, because the relationships between the two were  clear, the conversion of other data elements was more complicated. For  example, the T-MSIS data element for male and female is “M” and “F,”  respectively. Accordingly, in states that identified gender by a numeric  value, “1” for male and “2” for female, the conversion to T-MSIS for this  element was a fairly straightforward one-to-one relationship. However, for  other data elements, the conversion process was more complex,  requiring states to expand or collapse their data to match the T-MSIS  format. (See fig. 2.) Selected states shared examples of steps they took  to convert state data to the T-MSIS format.

Louisiana officials noted that they had to map the state’s single  durable medical equipment (DME) element to multiple specific T- MSIS DME elements, such as DME pharmacy or DME orthotics.

Virginia officials said they had to combine three state ambulance  service provider elements into a single T-MSIS element.

In addition, individuals who had experience with other states’ T-MSIS  reporting efforts also noted that states may not have always collapsed  categories in the same way. For example, one state collapsed its 109  provider categories to match T-MSIS’s 57 provider categories, according  to an individual who worked with the state on this effort. This individual  noted that there were 32 state provider elements that did not directly  match a specific T-MSIS element, so the state grouped them all into the  “other” T-MSIS element.

Changes in CMS’s data reporting requirements further complicated some  states’ efforts to convert their data to the T-MSIS format, according to  officials from our selected states. CMS updated the T-MSIS data  dictionary—the document that defines the required T-MSIS elements and  their reporting formats—twice in 2013 and again in November 2015.  According to CMS officials, they updated the data dictionary to clarify and  remove inconsistencies from guidance in response to feedback from  states. Some of the selected states reported that the changes included in  this update required considerable rework, and in some cases, delayed  their T-MSIS reporting. For example, Washington officials noted that the  2015 update became available at the point it was completing a T-MSIS  testing phase. Due to the rework required to comply with the new data  specifications, the state’s efforts to report T-MSIS data were delayed by  nearly one year. Similarly, Minnesota officials also cited rework  associated with changes to the 2015 data dictionary, which contributed to  delays in their efforts to report T-MSIS data.

CMS’s Efforts to Support States Have Shifted from Reporting T-MSIS Data to Improving T-MSIS Data Quality

Over the past six years, CMS has relied on a variety of mechanisms to  support states’ efforts to report T-MSIS data.

CMS assigned technical assistants to help states understand the T- MSIS requirements, prioritize steps to report T-MSIS data, and serve  as a resource on technical issues. The majority of selected states  had positive comments about the technical assistance they received.  For example, Pennsylvania officials said its technical assistant  regularly met with them, answered any questions they had, and  facilitated their efforts to complete T-MSIS testing.

CMS began hosting national webinars covering a range of topics,  including clarification on specific T-MSIS elements that CMS identified  as challenging or subject to error, and updates on the nationwide  implementation. The webinars also provided an opportunity for states  to ask CMS questions about T-MSIS requirements.

CMS established web-based avenues through which the agency  could compile and disseminate information, as well as elicit questions  from states and contractors. For example, CMS provided an electronic  option for states to submit questions regarding policy and technical  issues.

CMS took additional steps to help states, including creating a  SharePoint web site through which states are notified about changes  in guidance.

With nearly all states having begun reporting T-MSIS data, CMS has  shifted its efforts to improving the quality of the T-MSIS data reported,  and these efforts are still evolving. For example, to provide states with  immediate feedback on their reported T-MSIS data, CMS created an  online “operational dashboard” for each state, which provides specific  information on errors in its reported data. Using information on the  operational dashboard, states can identify the frequency and cause of  certain errors, which facilitates their efforts to resolve them more  expeditiously and to improve future submissions. All six of the selected  states reporting T-MSIS data had positive comments about the value of  the operational dashboard, with some of them noting that the feedback on  errors was a significant improvement from their experience with MSIS,  where feedback had a considerable time-lag. More recently, according to  agency officials, CMS has initiated a pilot study with four states to identify  anomalies in their reported data that merit further attention, obtain  feedback on automated quality measures, and determine the best  approach for ongoing quality review. While work on the pilot is ongoing,  CMS officials anticipate using what they learned to expand the agency’s  quality review to include all states.

In addition, CMS has turned to external stakeholders to evaluate the  quality of T-MSIS data. Specifically, CMS has shared T-MSIS data with a  Technical Expert Panel it formed to obtain feedback on inconsistencies  and other quality concerns. According to CMS officials, the Technical  Expert Panel focused on a preliminary set of T-MSIS data from a limited  number of states. The agency officials noted that Technical Expert Panel  members include individuals from HHS’s Office of the Actuary, the  Congressional Budget Office, and the Medicaid and CHIP Payment and  Access Commission, among others. Panel participants analyzed the T- MSIS data from 11 states on the specific topics in which they have  expertise. According to CMS officials, the panel is to provide its results to  the agency in a summary report.

Data Completeness and Comparability Concerns Hinder CMS’s and States’ Use of T-MSIS for Oversight

Ongoing data concerns raise questions about how soon—and to what  extent—T-MSIS data will be sufficient to achieve the goals of improving  CMS’s and states’ ability to use Medicaid data for oversight. For example,  none of the six selected states that were reporting T-MSIS data as of  August 2017 were reporting complete data at that time. In reviewing  selected states’ documentation of unreported data elements, we  determined that the number of unreported data elements ranged from  about 80 elements to 260 elements. Although T-MSIS includes about  1,400 data elements, the number of data elements relevant to each state  varies, in part, because certain elements may not be applicable to all  states and others may be populated at the state’s discretion. In addition,  the content of some data elements are present in more than one of the  eight T-MSIS files. As a result, the number of unreported elements may  overstate the extent of state efforts needed to report complete T-MSIS  data.

Our selected states provided a range of reasons for not reporting T-MSIS  data elements, including that certain elements were contingent on federal  or state actions. In other cases, state officials indicated that data  elements were too costly to report, so they would not be reporting them.  We identified further examples of where certain data elements were not  applicable to states’ Medicaid programs, and therefore were not  required. (See table 2.)

Although CMS requires states to report all T-MSIS data elements  applicable to their program, CMS officials said they did not specify a  reporting deadline for states, and selected states’ documentation to CMS  did not always include the reasons they did not report certain elements, or  whether or when they planned to report them. Due to the lack of clarity  and completeness in selected states’ documentation, we were not able to  identify the reasons for all unreported data elements. However, among  our selected states, Virginia’s documentation more clearly specified  most—but not all—of the reasons it was not reporting 260 T-MSIS  elements.

Virginia identified 167 elements that its MMIS did not capture, and  noted that once the state’s new Medicaid information system is fully  implemented in 2019, the state will be able to report them.

Virginia identified 16 elements as pending other state or related  actions.

Virginia identified 18 elements as pending the implementation of HHS  efforts.

Virginia identified 53 elements as not applicable to aspects of its  Medicaid program.

Without complete information from all states on unreported data elements  and their plans to report them, it is unclear when—and to what extent—T- MSIS data will be available to use for oversight, which is inconsistent with  federal internal control standards for using quality information to achieve  objectives.

In some cases, data elements important for program oversight were not  reported by two or more of the six selected states reporting T-MSIS data,  limiting T-MSIS’s usefulness for oversight in these areas. (See table 3.)

Another factor affecting the ability of CMS and states to use T-MSIS data  for oversight is that not all of the 49 states submitting T-MSIS data are  submitting current data. According to CMS officials, before beginning to  report T-MSIS data, each state stops reporting MSIS data. At that point,  there is a temporary gap in the state’s reporting until it receives CMS’s  approval to begin reporting T-MSIS data. After a state gets CMS’s  approval, it must first submit the T-MSIS data that correspond to the date  that it stopped submitting MSIS data; the data for previous months is  known as “catch up” data. Once a state reports that data, it then shifts to  reporting current T-MSIS data. According to CMS, as of November 2017,  42 of the 49 states reporting T-MSIS data were reporting current data; the  remaining 7 states were still reporting catch up data for previous  months.

Regarding the comparability of T-MSIS data across states, state officials  we interviewed cited concerns that could affect their use of T-MSIS for  oversight. Officials from most selected states cited the benefit that a  national repository of T-MSIS data could provide by allowing them to  compare their Medicaid program data—such as spending or utilization  rates—to other states, which could potentially improve their oversight.  However, concerns about comparability of the data make officials from  most selected states hesitant to use the data for this purpose. In  particular, officials from six of eight selected states, and other individuals  we interviewed, are not confident that the decisions states made when  converting their data to the T-MSIS format were consistent across states.  An individual who worked with other states on T-MSIS reporting efforts  noted that states may have made different decisions about what types of  providers to include as part of the “all other” category of providers within  T-MSIS. While one state he worked with included a range of provider  types, such as licensed drug and alcohol counselors and non-emergency  medical transportation providers, in the “all other” T-MSIS provider  category, other states may have made different decisions. Some state  officials and individuals working with states noted that states’ different  decisions may complicate their ability to use the data for cross-state  comparisons. Further, officials from some of the selected states noted  that they were not familiar with the quality of other states’ T-MSIS data.

CMS has begun to take steps to address the quality of the T-MSIS data;  however, its efforts are still evolving. For example, in May 2017, CMS  identified 12 data quality priority areas for states to focus on for improving  the accuracy and consistency of T-MSIS data, including accurately  categorizing beneficiaries into T-MSIS eligibility groups and ensuring  consistency related to MCO reporting. CMS has worked to identify  existing or develop new guidance for each of these priority areas, and to  compile the guidance in a central location for states’ reference. As of  August 2017, CMS officials said they compiled guidance for 11 of the 12  areas, and intended to continue work with states on these priorities.

In addition, CMS has not created a mechanism to disseminate  information about states’ data limitations or states’ efforts to improve and  use the data, which also affects their utility for oversight. Officials from  four of the eight selected states said that learning more about other  states’ T-MSIS data could help allay their concerns about comparability,  and two of the four states said it could also help them address their own  data quality issues. Additionally, officials from all eight selected states  were interested in opportunities to learn more about other states’ use of  the data.

CMS officials acknowledged the benefits of a mechanism to disseminate  information about states’ data limitations more broadly, and to facilitate  information sharing among states. CMS officials told us that they plan to  launch a Learning Collaborative with states to facilitate feedback and  collaboration. This effort could address a range of data-related topics,  including data quality. CMS officials told us they were taking actions to  put the Learning Collaborative in place, and may launch the collaborative  in early 2018.

The lack of an effort to facilitate information sharing is inconsistent with  CMS’s goals for T-MSIS and with federal internal control standards for  using and communicating quality information to achieve objectives.  Absent such an effort, CMS is missing an opportunity to help states  understand ways they could improve the quality of their T-MSIS data and  facilitate states’ use of the data for oversight. CMS is also missing an  opportunity to expedite quality improvements that could result from states  conducting their own independent analyses.

Although CMS has taken steps to begin using T-MSIS data, it has not yet  fully articulated a plan for how and when it will use T-MSIS data for its  own broader oversight efforts of state Medicaid programs. For example,  according to CMS officials, the agency has begun to use T-MSIS data to  generate Money Follow the Person reports, and has begun exploring  additional uses of T-MSIS data to reduce states’ reporting burden.  These preliminary efforts are consistent with one of CMS’s stated goals  for T-MSIS, which is to reduce states’ reporting burden by relying on T- MSIS data in place of separate reports that states currently submit, and  officials from six of eight selected states indicated that such an effort  would reduce their reporting burden.

However, as of August 2017, CMS officials acknowledged that they had  yet to outline how best to use T-MSIS data for program monitoring,  oversight, and management, because they were still largely focused on  working with the remaining states to begin reporting T-MSIS data,  analyzing the quality and usability of the T-MSIS data, and preparing the  data for research purposes. CMS’s lack of a specific plan and time frames  for using T-MSIS data is inconsistent with federal internal control  standards related to using and communicating quality information to  achieve objectives. Absent a specific plan and time frames, CMS’s ability  to use these data to oversee the program, including ensuring proper  payments and beneficiaries’ access to services, is limited.

As part of its efforts to address longstanding concerns about the data  available to oversee the Medicaid program, CMS has taken important  steps toward developing a reliable national repository for Medicaid data.  T-MSIS has the potential to improve CMS’s ability to identify improper  payments, help ensure beneficiaries’ access to services, and improve  program transparency, among other benefits. By providing more  standardized data on various aspects of Medicaid—such as spending or  utilization rates—states could be better positioned to compare their  programs to other states, thereby improving their ability to identify  program inefficiencies or opportunities for improvement.

Implementing the T-MSIS initiative has been a significant undertaking.  Over the past 6 years, CMS has worked closely with states and has  reached a point where nearly all states are reporting T-MSIS data. While  recognizing the progress that has been made, more work needs to be  done before CMS or states can use these data for program oversight. It  remains unclear when all states will report complete and comparable T- MSIS data, and how CMS and states will use them to improve oversight.  In the interim, improper Medicaid payments continue to increase,  reaching $36.7 billion in fiscal year 2017. Further delays in T-MSIS’s use  limit CMS’s ability to reverse that trend in the near term, underscoring the  need for CMS to take additional steps to expedite the use of the data.

We are making the following two recommendations to CMS.

The Administrator of CMS, in partnership with the states, should take  additional steps to expedite the use of T-MSIS data for program  oversight. Such steps should include, but are not limited to, efforts to obtain complete information from all states on unreported T-MSIS  data elements and their plans to report applicable data elements;  identify and share information across states on known T-MSIS data  limitations to improve data comparability; and  implement mechanisms, such as the Learning Collaborative, by which  states can collaborate on an ongoing basis to improve the  completeness, comparability, and utility of T-MSIS data.  (Recommendation 1)

The Administrator of CMS should articulate a specific plan and associated  time frames for using T-MSIS data for oversight. (Recommendation 2)

We provided a draft of this report to HHS for comment. In its written  comments, HHS concurred with our recommendations, and noted that  strong Medicaid data can help the federal government and the states  move toward better health outcomes and improve program integrity,  performance, and financial management. With most states now reporting  T-MSIS data, HHS highlighted efforts it has taken to improve the quality  of T-MSIS data. For example, HHS developed a database on data quality  findings, which could be used to identify solutions for common problems  across states, and has begun to develop a data quality scorecard for T- MSIS users, which aggregates data quality findings in a user-friendly tool.  Regarding taking steps to expedite the use of T-MSIS data for program  oversight, HHS stated that it will (1) continue to work to obtain complete  T-MSIS information from all states; (2) take additional steps to share  information across states on T-MSIS data limitations; and (3) implement  ways for states to collaborate regarding T-MSIS. HHS also noted that it is  in the process of developing a plan for using T-MSIS data for oversight.  HHS emphasized that it is dependent on states—and their available  staffing and resources—to address data quality and reporting issues.  HHS also provided technical comments, which we incorporated as  appropriate. HHS’s comments are reprinted in appendix I.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of HHS, and other interested  parties. In addition, the report will be available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or yocomc@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs can be found on the last  page of this report. Major contributors to this report are listed in appendix  II.

Appendix I: Comments from the Department of Health and Human Services

Carolyn L. Yocom, (202) 512-7114 or yocomc@gao.gov.

In addition to the contact named above, individuals making key  contributions to this report include Susan Anthony (Assistant Director),  Manuel Buentello (Analyst-in-Charge), Anna Bonelli, and Robin Burke.  Also contributing were Muriel Brown, Drew Long, and Jennifer Rudisill.

State-reported data help the federal government oversee the Medicaid program, which made an estimated $36.7 billion in payment errors in 2017. However, there have been longstanding concerns that those data are not sufficient for effective oversight.

To help, federal administrators established a new data repository. Nearly all states now submit data that could be used to improve oversight and program management. However, concerns persist over the completeness and comparability of state data.

We recommended federal administrators take steps to expedite collection of complete and comparable data, and draft a plan for how they will use the data.


Federal Personal Property: Opportunities Exist to Improve Identification of Unneeded Property for Disposal

The federal government owns billions of dollars of personal property—such as office furniture, scientific equipment, and industrial machinery. By law, each agency is required to follow GSA's disposal process so that an agency's unneeded property can be used by other agencies or certain non-federal entities. Since 2012, agencies have reduced their office and warehouse space due to government-wide initiatives, a reduction that in turn has required agencies to dispose of some affected personal property.

GAO was asked to review how federal agencies identify and dispose of unneeded personal property. This report examines (1) how selected agencies assess whether personal property is needed and (2) how these agencies dispose of unneeded property and how, if at all, space reduction efforts have affected disposals. GAO reviewed federal statutes and regulations, and selected five agencies—EPA, Forest Service, GSA, HUD, and IRS—mainly based on space reduction results and goals. GAO reviewed these agencies' property disposal data for 2012 through 2016 and interviewed headquarters and field staff about their property management and disposal processes.

The five agencies GAO reviewed—the Environmental Protection Agency (EPA), Forest Service, General Services Administration (GSA), Department of Housing and Urban Development (HUD), and Internal Revenue Service (IRS)—generally do not have policies or processes for identifying unneeded personal property, such as office furniture, on a proactive basis. Instead, officials from these agencies said they typically identified unneeded property as a result of a “triggering event,” such as an office space reduction. Executive agencies are required by law to continuously review property under their control to identify unneeded personal property and then dispose of it promptly. Without such policies or processes, agencies may not be routinely identifying unneeded property that could be used elsewhere, and efforts to maximize federal personal property use and minimize unnecessary storage costs may not be effective. GSA has issued regulations establishing a government-wide disposal process for unneeded personal property. However, according to GSA officials, the agency lacks the authority to promulgate regulations or formal guidance on management of in-use agency property, and there is no government-wide guidance to agencies on identifying unneeded personal property. Agencies are required to have internal control activities—such as policies and procedures—for reasonable assurance of efficient operations and minimal resource waste, and the Office of Management and Budget (OMB) provides guidance to agencies on implementing such activities. Guidance from OMB that emphasizes agencies' internal control responsibilities could help ensure that agencies are proactively and regularly identifying property that is no longer needed.

The selected agencies reported little difficulty in following GSA's personal property disposal process, reporting over 37,000 items as unneeded property in fiscal years 2012 through 2016. This property was disposed of through transfers to other agencies, donations to authorized recipients, sales, or discarding. When disposing of personal property from space reduction projects at locations GAO visited, agencies also reported using GSA's process (see figure). Overall, agencies said they have not experienced major challenges with disposing of personal property from space reduction efforts. This lack of challenges could be because projects are geographically dispersed and spread over several years.

OMB should provide guidance to executive agencies on managing their personal property, emphasizing that agencies' policies or processes should reflect the requirement to continuously review and identify unneeded personal property. OMB did not comment on GAO's recommendation.

The federal government owns and manages billions of dollars of  “personal property”—a term that refers to most government property other  than real property—ranging from common products, such as office  equipment and furniture, to specialized apparatuses, including scientific  devices and heavy machinery. In fiscal year 2016, federal civilian  agencies reported $206 billion in personal property assets, but the actual  amount owned is considerably higher. Each year, agencies identify  thousands of items that are no longer needed, or “excess.”  In some  cases, this classification is because the items are broken and cannot be  repaired, or obsolete; however, many items are in good working order but  are no longer needed to meet agencies’ missions. Because this property  was originally purchased with federal funds and represents a significant  investment, the government seeks to promote its reuse by other federal  agencies, to minimize new procurement costs, and by non-federal  entities, in order to maximize the property’s public benefit. The General  Services Administration (GSA) plays a central role in the process of  reusing and disposing of excess property and has issued regulations  which govern agencies’ personal property disposal. In fiscal year 2016,  agencies reported disposing of more than 160,000 items (with an original  acquisition cost reported at nearly $2 billion in nominal dollars) using  GSA’s disposal process. However, reports that we and others have  previously issued have shown that this process is not always effective in  maximizing use of property because, for example, agencies have retained  property that they no longer need and that others could have used.  Furthermore, government-wide space reduction initiatives—such as  Freeze the Footprint and Reduce the Footprint—have encouraged  agencies to reduce their domestic office and warehouse space and could  have implications for how agencies identify and dispose of unneeded  personal property. As agencies reduce office and warehouse space, they  will also likely have to make arrangements for the personal property  inside these spaces.

You asked us to review agency processes for managing and disposing of  federal personal property, including preparations to address excess  personal property resulting from space reduction efforts. This report  examines (1) how selected federal agencies assess whether personal  property is needed and (2) how selected federal agencies dispose of  unneeded personal property and how, if at all, space reduction efforts  have affected these disposals.

To address our objectives, we reviewed applicable federal statutes,  regulations, and guidance regarding personal property management; our  prior work; and reports by other federal agencies’ offices of inspectors  general on personal property issues. In addition, to determine how  selected federal agencies assess whether personal property is needed,  we selected five federal agencies and reviewed pertinent agency  documents, such as personal property policies, and interviewed agency  officials about their processes for managing personal property assets,  such as their inventory procedures and asset management systems.  These agencies are the Environmental Protection Agency (EPA), the  Forest Service within the U.S. Department of Agriculture (USDA), GSA’s  Office of Administrative Services (GSA OAS), the Department of Housing  and Urban Development (HUD), and the Internal Revenue Service (IRS)  within the Department of the Treasury. In order to select agencies that  were more likely to have relevant, recent experience with excess personal  property from space reduction efforts, we ranked the 23 non-Defense  agencies based on their Freeze the Footprint square footage reduction  results, Reduce the Footprint space reductions goals, and the amount of  declared excess personal property over the last 5 years, and eliminated  the bottom third of the agencies. We selected GSA as our first agency  due to its central role in personal property disposal and randomly selected  four additional agencies from the remaining agencies. The information we  obtained from these agencies about their personal property management  is not generalizable to all federal agencies. We compared existing federal  guidance related to personal property management and the selected  agencies’ policies and processes with federal internal control standards  related to designing control activities. We also conducted literature  searches to identify best practices in personal property or asset  management. To identify criteria and examples of a formal process for  assessing property for continued need, we reviewed federal regulations  and agency policies on personal property management from the National  Aeronautics and Space Administration (NASA) based on our prior work.  We also interviewed GSA’s Office of Government-wide Policy (GSA  OGP) officials and Office of Management and Budget (OMB) staff to  discuss regulations and policies pertaining to personal property and their  role in personal property management.

To determine how selected federal agencies dispose of excess and  surplus personal property and how, if at all, space reduction efforts have  affected disposals, in addition to the above, we conducted site visits to a  non-generalizable selection of 2 locations—Philadelphia, Pennsylvania,  and Denver, Colorado—to meet with regional and local officials from each  of our agencies responsible for managing and disposing of excess  personal property. We selected locations that had the highest number of  our selected federal agencies present, the largest amount of personal  property declared as excess, and space reduction projects. We discussed  any impacts space reductions had on excess property and requested  supporting documentation on the amount of property declared as excess  and the disposition outcomes of that property. We did not independently  verify the information that was provided because data reported as excess  from space reduction projects is not always tracked separately from other  property disposed of for other purposes. We also reviewed documents  and interviewed officials from GSA’s Office of Personal Property  Management (GSA OPPM) in GSA’s headquarters, in Philadelphia, and  in Fort Worth, Texas. The GSA OPPM offices in these two cities have  responsibility over the locations we selected to visit. We did not assess  agencies’ inventory processes and generally excluded certain types of  personal property, such as aircraft and vehicles, from our review because  we have reviewed or are reviewing these types of property in prior or  ongoing work. We reviewed regulations governing some of these types of  property as part of our work and some of the data on agencies’ owned  property and property they declared excess includes these items.

We conducted this performance audit from July 2016 to February 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. Appendix I contains additional  information about our scope and methodology.

Federal agencies’ personal property may include commonly used items,  such as computers, office equipment, and furniture, and more specialized  property reflective of their mission, such as scientific devices, fire control  equipment, heavy machinery, precious metals, generators, and  chemicals. Some items require special handling, such as hazardous  materials, animals, and firearms. See figure 1 for examples of federal  personal property.

Federal agencies manage personal property while they are using it.  Specifically, executive agencies are required by law to: maintain adequate inventory controls and accountability systems for  property under their control;   continually survey property under their control to identify excess; promptly report excess property to GSA and dispose of it in  accordance with GSA regulations; and use existing agency property or obtain excess property from other  federal agencies before purchasing new property.

GSA assists agencies when they no longer need personal property and  has established a government-wide personal-property disposal process in  federal regulation. The process generally begins when an agency  declares a personal property item as “excess”—that is, the agency  determines it no longer needs the item to carry out its mission. Agencies  are to make this determination only after ensuring the property is not  needed elsewhere within the agency. Once property is declared excess,  there are four potential property disposal methods: transfer to another  federal agency or certain non-federal entities, donation, sale, and  abandonment or destruction. Federal agencies and some non-federal  entities have the priority to acquire excess property, through transfer. If  none of these eligible entities have requested the property for transfer  after 21 days, the property becomes “surplus”—that is, GSA determines  that federal agencies no longer need the item to carry out their missions.  Surplus property may be donated to eligible entities through a State  Agency for Surplus Property, representing the state of the prospective  donee. Property not donated within 5 days after the close of the 21-day  screening period may be sold to the general public and, finally, unsold  property may be abandoned or destroyed. See appendix II for an  expanded description of the personal property disposal process.

OMB is responsible for establishing government-wide management  policies and requirements and provides guidance to agencies to  implement them. OMB has issued guidance for specific types of personal  property, such as for government aircraft and information technology  systems. OMB also implemented the Freeze the Footprint and Reduce  the Footprint initiatives, starting in 2012, to reduce the amount of  domestic office and warehouse space needed by the federal government,  in part, through consolidations and improved space utilization. As a result,  federal agencies have reported achieving space reductions, and they  have goals for additional reductions in the future. Although these  reductions are a relatively small part of the federal government’s overall  footprint, according to OMB, through this and other efforts agencies  collectively reduced their office and warehouse space by about 25 million  square feet from fiscal years 2012 through 20156. As federal agencies  continue to reduce office and warehouse space, they will also likely have  to manage or dispose of personal property, such as office furniture or  stored property, from these spaces.

Selected Agencies Had Personal Property Accountability and Inventory Control Processes but Most Did Not Have a Formal Process for Assessing Property for Continued Need

Agencies Inventory Their Most Valuable and Sensitive Property

Each of the five selected agencies we reviewed have policies and  processes for carrying out their responsibilities to maintain adequate  accountability systems and inventory controls for property under their  control:

All five agencies have policies for regularly inventorying their personal  property to physically locate and verify property tracked in their asset  management systems. EPA, GSA OAS, and IRS policies require  physical inventories of personal property once a year, while Forest  Service’s policy requires inventories every other fiscal year and a 10  percent sample inventory in the alternate years. HUD policies  require inventories every 2 years at its headquarters, but according to  HUD officials, field locations conduct inventories annually.

All of the agencies also have an electronic asset-management system  for maintaining information on personal property. Although each  agency has its own system, and the type of information maintained  varied by agency or type of property, generally each system  generates a record for each property item that provides descriptive  information about the item, such as manufacturer name, model  number, serial number or other identifier, acquisition cost, condition,  and current location.

We found that the five agencies use these policies and processes to track  and inventory certain property determined by each agency to be  “accountable.” Accountable property is nonexpendable personal property  with an expected useful life of 2 years or longer that an agency  determines should be tracked in its property records, based on an item’s  acquisition cost and sensitivity. Each agency determines its own  appropriate acquisition cost threshold: four of the agencies—EPA, Forest  Service, HUD, and IRS—consider property with an original acquisition  cost of $5,000 or greater to be accountable; GSA OAS’s accountable  threshold is $10,000 or greater. In addition, certain sensitive property— such as digital cameras, laptop computers with hard drives, and  firearms—is considered accountable regardless of acquisition cost  because it could be easily stolen or can store data or personal  information.

Table 1 provides a snapshot of accountable personal property items— including the reported original acquisition cost, amount, and examples— reported from 4 of the selected agencies’ asset management systems in  2017.

The agencies in our review generally did not track in their asset  management systems or formally inventory their remaining—or “non- accountable”—personal property that did not meet their definition of  accountable property. According to agency officials we interviewed, they  do not track or inventory low value items because: (1) the cost and  manpower required to do so are too high; (2) certain property, such as  office furniture, is less susceptible to theft; or (3) agencies believe they  are not required by law to inventory low value items. While agencies are  required to have systems of accounting and internal controls that provide  effective control over, and accountability for, their assets, they generally  have latitude in how they implement these procedures, including which  property to track and inventory.

Most Selected Agencies Did Not Have a Systematic Process for Assessing the Continued Need for Personal Property

While the five selected agencies had policies and processes for their  property accountability and inventory control responsibilities, they largely  did not have policies and processes for carrying out their responsibilities,  as established in law, to continually survey property under their control to  identify excess. According to officials at each of the selected agencies,  the responsibility for identifying unneeded property generally lies with that  agency’s property custodians—designated officials who are assigned  responsibility for the property—or the agency program or individual using  the property. Four of the five selected agencies’ policies do not require  property custodians or other property users to assess property for  continued need. Furthermore, these four agencies’ policies did not have  specific criteria for the property custodian or user to assess property for  continued need. Only IRS’s personal-property management policy  specifies that the property custodian is responsible for identifying excess  property and provides criteria to be applied in doing so, such as whether  property is still needed in its location and the feasibility of transferring it to  other locations, taking into account the property’s condition and  transportation charges. An official at one of the selected agencies  identified several specific criteria that should be used to assess property  for continued need, including the item’s serviceability, whether it poses a  safety hazard, and the feasibility of relocating it. However, the official  acknowledged that these or any other criteria are not part of the agency’s  formal policy.

The personal property policy of an agency not included in our review— NASA—includes requirements and criteria to review NASA property for  continued need in multiple ways. For example, it requires a high-level  NASA official to conduct a walk-through inspection annually to identify  idle or underused equipment that is no longer needed and report it as  excess. It also requires, as part of an annual property inventory, that  property that appears to be excess, worn out, or in obvious need of repair  be noted as such and that guidance on identifying unneeded property be  provided to personnel involved in conducting the inventories as well as  employees assigned to use the property.

In addition to not having policies on identifying and assessing property for  continued need, agencies we reviewed also did not have a systematic  process for doing so. Instead, when describing situations in which they  declared property as excess, officials said they typically did so as a result  of a “triggering event.” The types of triggering events the officials cited  include an office move or consolidation or a lifecycle replacement of  laptops. For example, officials from field locations of three of these  agencies reported declaring most of their existing furniture as excess as  the result of an office relocation or renovation. Agency officials said they  were unable to use their existing furniture and had to declare it excess  because it did not conform to new space utilization standards. At  another agency, officials were disposing of a large number of laptop  computers that had been declared excess because they had been  replaced by new computers. Officials at two agencies said an assessment  of property for continued need is an assumed practice that is part of the  inventory for accountable property. However, an official from one of these  agencies acknowledged that assessing need is not addressed in the  written instructions provided to those conducting the inventory. Officials  from two other agencies acknowledged that they continue to retain  unneeded property that should be declared excess in storage on-site but  had not pursued disposal due to other competing responsibilities with  higher priorities.

Proactively assessing personal property for continued need instead of  responding to a triggering event can help agencies achieve both effective  and efficient operations by ensuring that only needed property is retained  and unneeded property is identified and declared excess. Federal internal  control standards require that agencies design and maintain internal  control activities—such as policies and procedures—to identify risks  arising from mission and mission-support operations, and to provide  reasonable assurance that agencies are operating in an efficient manner  that minimizes the waste of resources. Such a system also provides  reasonable assurance that agency property is safeguarded against  waste, loss, or unauthorized use. OMB staff and GSA officials agreed that  assessing all types of property—accountable and non-accountable—for  continued need is important and called-for by internal control standards.  Because the agencies we reviewed did not have systematic processes for  assessing the continued need for personal property, they may not be  aware of potential risks of maintaining property that may no longer be  needed for operational purposes.

Furthermore, previous work others have performed has shown that  inaction on unneeded or idle property can limit efficient use of the  government’s personal property, unnecessarily use an agency’s  resources, or miss opportunities for potential cost savings, for example:

The Department of Homeland Security’s Inspector General found that  the U.S. Coast Guard could not ensure that personal property was  efficiently reutilized or properly disposed of to prevent unauthorized  use or theft because the Coast Guard did not have adequate policies,  procedures, and processes to identify and screen, reutilize, and  dispose of excess personal property properly, including criteria for  identifying such property.

The EPA’s Inspector General estimated EPA could save $8.9 million  in reduced warehouse costs through improved management of stored  personal property.

GSA personal property asset management studies conducted in 2003  and 2005 found, among other things, that personal property is not  being used to its fullest extent in some agencies and that no  government-wide usage assessment or standard exists to detect  whether property is no longer needed and can be reported as  excess.

Without a triggering event, agencies may not be seeking out or identifying  property that is no longer needed and declaring it excess as often as they  should. Such unneeded property may be put to better use elsewhere  within the agency or the federal government, or agencies may purchase  or lease new property instead of using another agency’s property that is  unneeded but not reported as excess. In addition, agencies may be  missing opportunities to realize cost savings by identifying and disposing  of unneeded property, such as property stored in warehouses, to reduce  or make better use of that space.

While the requirements for agencies to continually survey property under  their control to identify excess is established in law, according to GSA  officials, there are no government-wide regulations on managing personal  property or fulfilling this specific requirement. According to GSA OGP officials, GSA does not have the authority to promulgate regulations or  issue formal guidance on personal property that is in use by executive  agencies. Furthermore, according to the officials, GSA is only authorized  by law to prescribe regulations on excess and surplus personal property.  OMB staff stated that they could issue a notification, such as a controller  alert to agencies’ chief financial officers, to reinforce the statutory  requirement that agencies conduct assessments of personal property for  continued need. OMB periodically issues such alerts to highlight  emerging financial management issues for agencies and also issues  guidance to agencies through bulletins, circulars, and memorandums. By  issuing a controller alert or other guidance, OMB can help ensure that  agencies are proactively taking steps to evaluate their property for  continued need, including developing appropriate policies for doing so,  and can thereby improve efforts to promote maximum use of excess  personal property.

Selected Agencies Used GSA’s Disposal Process to Dispose of Unneeded Property, Including Property from Space Reductions Selected Agencies Used a Structured Disposal Process for Personal Property

Officials from the five agencies we reviewed reported that they followed  GSA’s automated process to dispose of property once they had made the  determination it was no longer needed to support their agency’s mission.  As previously described, GSA regulations on disposing of property  establish a specific process for all executive agencies to follow, and GSA  has also issued guidance to help agencies dispose of property under this  process. In particular, once an agency has determined that the property it  has is no longer needed within the agency, the agency is required to  promptly report the property to GSA as excess, typically by entering  information about it into GSAXcess, GSA’s web-based system for  facilitating personal property disposal. This method requires agency  employees to manually enter information using data entry screens that  include help screens and error messages. GSA encourages agencies to  provide a complete description of the property and to include multiple  photographs of it. Officials from the five agencies we reviewed reported  no significant difficulties with entering information into GSAXcess;  collectively, these agencies reported over 37,000 items as excess  property from fiscal year 2012 through 2016. Figure 2 indicates the  number of items each selected agency reported to GSA as excess during  that period.

Once information entry is completed, the disposal process begins. If the  property is not disposed of during one stage, it advances to the next  stage. The disposal process is shown in figure 3.

Agency officials we interviewed told us that responsibility for disposing of  property is decentralized and typically occurs at the property’s location,  whether at an agency headquarters, regional office, or lower level.  Because of the large federal government presence in the Washington,  D.C., area, agency offices in that area may have access to resources to  facilitate the disposal process that are unavailable elsewhere, such as  transferring excess property to certain entities that complete some or all  aspects of the disposal process for a fee. Two such entities are GSA’s  Personal Property Center in Springfield, Virginia, which takes full  accountability and control of an agency’s excess property for a fee and  handles all the details of the disposal process, and USDA’s Centralized  Excess Property Operation in Beltsville, Maryland. According to USDA’s  Agriculture Property Management Regulations, property not needed by  USDA or its bureau offices in the Washington, D.C., area must be  transferred to this office for final disposal actions. It also provides these  same services to some non-USDA agencies.

Agencies also use GSAXcess to search for and select available excess  property. Agency officials told us that the system also sends disposition  instructions to the property-holding agency, when the property is to be  transferred to other federal agencies, donated, or sold and that the  agencies follow these instructions. For example, when an agency  requests an excess item in GSAXcess and GSA approves the request,  the system notifies the requesting agency and the property-holding  agency and provides contact information to arrange to complete the  transaction. None of the selected agency officials reported difficulties  completing a transfer or donation transaction. For property not  transferred, donated, or sold, GSA notifies the agency that the property  has no commercial value and can be abandoned or destroyed. All of our  selected agencies reported trying to recycle such property.

Selected Agencies Reported Little Difficulty Disposing of Personal Property from Space Reduction Initiatives

Selected agency officials told us they disposed of property from space  reduction efforts, such as Freeze the Footprint and Reduce the Footprint,  the same way as other personal property—using GSA’s disposal process.  To meet space reduction goals, selected agencies are undertaking  projects at dozens of locations. Projects have primarily involved leased  space for offices and warehouses and have included office moves,  consolidations, and closures.

As federal agencies carry out these space reduction projects, they must  also address any personal property in the project spaces. Selected  agencies reported several factors that affected their decisions about this  property, which for three of the agencies was primarily office furniture.  Four agencies reported needing less space than they previously occupied  because of changes in agency missions or staffing levels. Furthermore,   officials from GSA OAS and IRS noted that workplace trends, including  teleworking and decreased staffing, reduced the space needed. Finally,  agencies also reported that the office furniture itself was mostly  unsuitable because it was old and because it could not be configured for  use in more efficient office space designs. As a result, some selected  agency locations that completed an office move or renovation project  reported that most of their existing furniture was not needed in their new  space. For example, in its Reduce the Footprint plan for fiscal years 2017  through 2021, HUD noted that many of its locations were designed and  furnished when it had a much larger staffing level and reported that in  2016, its usable square feet per employee was 356. Subsequently, HUD  revised its space design standards, requiring future office spaces to  adhere to a utilization rate of 175 square feet or less. At the HUD project  we visited, an official told us the furniture in use before the project was old  and was generally too large to be used to achieve space design  standards.

In 2017, Housing and Urban Development  (HUD) reduced its Denver regional office  space by 30 percent. HUD’s lease was  expiring and it needed less space because it  had fewer employees in the office, in part due  to increased telework. Adhering to new space  utilization standards in its office and furniture  design further reduced HUD’s overall required  space. An example of a new workstation is  shown above. Before the project, the agency  occupied about five floors of a commercial  building. HUD renovated in place, one floor at  a time, and replaced its existing office  furniture with new. Personal property at this  office included primarily office furniture, such  as desks and 25-year old modular systems,  and equipment, such as telephones. As each  floor was completed and employees moved to  new workstations, the property official on-site  disposed of their old furniture and  workstations by entering its information in  GSAXcess. The official reported selling some  of the excess furniture after completing the  first floor but recycled or discarded excess  furniture in subsequent rounds.

In some cases, agencies did not dispose of all the personal property after  a space reduction project but instead were able to retain it for other uses  within the agency. For example, IRS officials reported closing an office in  Englewood, Colorado, and transferred its furniture to Ogden, Utah, for  storage for an upcoming project. GSA OAS officials in Denver said that  after a space reduction project in which GSA decreased the size of its  regional office, it retained the unneeded furniture and office space for  temporary use by other agencies. For property that was declared excess  following a space reduction project, agencies reported transferring,  donating, and selling property to dispose of it, using GSA’s process. For  example, officials in GSA OAS, Forest Service, and IRS locations told us  they transferred some excess property to other federal agencies. The  Forest Service in Denver transferred some modular office furniture to the  Bureau of Land Management and the U.S. Postal Service. The Forest  Service and IRS also reported donating property, such as office furniture  and equipment, through the State Agencies for Surplus Property program.  Four agencies reported selling some of their property from a space  reduction project. For example, HUD’s regional office in Denver sold  some of its excess office furniture, which dated to 1992, and recycled or  discarded the remainder.

When disposing of property from a space reduction project, some  agencies sought assistance from GSA. GSA’s Office of Personal Property  Management (GSA OPPM) assists agencies, when requested, in  disposing of personal property, and officials at selected agency locations  reported receiving assistance and training. In one example, GSA  officials told us that a regional office of a selected agency needed to  dispose of an office full of furniture and, in addition to using the disposal  process, contacted GSA OPPM for additional assistance. Because of the  large amount of property, GSA OPPM took steps to make other agencies  in the area aware of the available property and facilitated access to allow  agencies to view the property. In another example, GSA OPPM officials  met with officials from another agency in the planning stages of a  relocation to answer questions and provided advice and guidance for  disposing of personal property.

When the Forest Service’s lease on its  Denver-area office expired, the agency leased  space in another location, requiring a move  but reducing its office by over 21,000 square  feet. The agency sought to conform to new  space utilization standards, which required  more efficiently-designed furniture than its  existing office furniture. Because the Forest  Service did not reuse most of its old furniture  in its new space, it no longer had a need for it.  The Forest Service retained some of the  furniture for use in other Forest Service offices  within the region and declared the remainder  as excess. Through GSAXcess, the Forest  Service transferred some of its excess  furniture to other federal agencies, such as  the Bureau of Land Management and the U.S.  Postal Service. The Forest Service sold some  furniture at auction; broken items were  recycled.

Agencies may dispose of large amounts of property during a space  reduction project, but overall, agency officials reported few challenges in  doing so. This may be in part because any effects from space reductions  are distributed across an entire agency. Although selected agencies’  average Reduce the Footprint space reduction goals ranged from 97,000  square feet to 662,000 square feet each fiscal year from 2016 to 2020,  each agency’s efforts consisted of dozens of geographically dispersed  projects of various sizes to be completed over several years. For  example, as of fiscal year 2016, EPA had 21 space reduction projects  planned from fiscal years 2016 through 2021, with individual anticipated  reductions ranging from less than 1,000 square feet to more than 140,000  square feet. At least one project is present in 8 of EPA’s 10 regions.  Agencies’ ability to pay for space reduction projects may also have  affected these projects’ effects. Two selected agencies said they delayed  projects because of a lack of funding. Agencies may reduce costs over  the long term because of lower rent for smaller spaces but they may have  to pay some expenses upfront, such as for moving, renovations, and new  furniture.

Although officials from all five agencies told us they have been able to  manage personal property disposals from space reductions, they  identified factors that can impact the efficient use of the disposal process  during a space reduction project and some strategies taken to address  them:  Inventorying non-accountable property: As a space reduction project  commenced at a location, most selected agencies reported that they  did not have a complete list of the personal property affected by the  project. As previously described, selected agencies do not maintain  an itemized list of non-accountable personal property and for four  agencies, office furniture is generally non-accountable. During a  space reduction project, property personnel had to develop some type  of inventory to identify property that would be needed and property  that should be disposed of. Selected agencies had various methods  for conducting such an inventory. For example, officials from two  agencies said they walked through the affected space and created a  list of all the items. Officials from one agency said a contractor was  hired for this purpose. Most agencies reported using the inventory  they created to enter information on excess property into GSAXcess.  Officials at GSA’s OPPM offices in Philadelphia and Fort Worth said  that they offer training and guidance to agencies in conducting  inventories.

Managing disposals within time frames: Agencies generally are not  able to begin the disposal process until the property is no longer in  use. For example, agency staff continue to use their old workspaces  until they can move to new workspaces. Agencies also face  deadlines, such as vacating space due to a lease expiration or  commencement of renovation work. Officials from three agencies  described challenges completing the disposal process—reporting  excess personal property as well as completing transactions to  transfer, donate, sell or abandon or destroy it—within required time  frames. Some agency officials reported using different strategies to  address this timing challenge. For example, one agency official was  able to enter information about the excess property items into  GSAXcess while employees were still using them. According to the  official, this was possible because a note could be included in the  property item’s description in GSAXcess, with the date when the  property would be available. When the property was no longer in-use  within the agency, the transfers or other transactions were completed.  Additionally, an agency may conduct an on-site screening of its  unneeded property to allow other federal agencies or authorized  parties to physically view and identify any furniture they want. For  example, GSA OPPM officials in Philadelphia conducted an on-site  screening of unneeded office furniture resulting from the agency’s  regional office relocation.

Federal agencies collectively have billions of dollars’ worth of personal  property, ranging from office furniture to highly specialized equipment  that, when in use, supports agency missions. However, the agencies in  our review did not have policies and systematic processes for identifying  unneeded property. Furthermore, other’s previous work has shown that  agencies across the government may not be effectively assessing their  property for continued need, leading to idle property that could be put to  better use elsewhere within the agency or the federal government and  potential unnecessary storage costs. Consequently, agencies may be  retaining property that is no longer needed. GSA has recognized that  opportunities may exist for agencies to more effectively manage property  under their control, but according to GSA OGP officials, GSA’s authority  is limited to agency property that has been declared excess or surplus.  According to OMB staff, OMB has the authority to issue guidance, such  as controller alerts, emphasizing agencies’ property management  obligations, and thus, it is well-positioned to assist agencies to more  effectively manage their property and to ensure unneeded property is  made available to others, as appropriate.

The Director of OMB should provide guidance to executive agencies on  managing their personal property, emphasizing that agencies’ policies or  processes should reflect the requirement to continuously review and  identify unneeded personal property. (Recommendation 1)

We provided a draft of this report to OMB, EPA, the Forest Service, GSA,  HUD, and IRS for comment.  OMB stated that it did not have any  comments on our draft report in an email and provided a technical  clarification to the report, which we incorporated. GSA and IRS provided  technical comments in an email, which we incorporated as appropriate.   EPA, the Forest Service, and HUD each stated in an email that they did  not have any comments on the draft report.

We are sending copies of this report to the appropriate congressional  committees, the Director of the Office of Management and Budget, the  Administrator of the Environmental Protection Agency, the Secretary of  the U.S. Department of Agriculture, the Administrator of the General  Services Administration, the Secretary of the Department of Housing and  Urban Development, and the Secretary of the Department of the  Treasury. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact  me at (202) 512-2834 or rectanusl@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff making key contributions to this  report are listed in appendix III.

Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to examine (1) how selected federal  agencies assess whether personal property is needed and (2) how  selected federal agencies dispose of unneeded personal property, and  how, if at all, space reduction efforts have affected disposals. We  excluded certain types of personal property, such as aircraft and vehicles,  from our review because of our prior or ongoing work. To address our  objectives, we reviewed applicable federal statutes and regulations  pertaining to personal property management and disposal, our prior work,  and reports by federal agencies’ Offices of Inspector General on personal  property issues.

In addition, to determine how selected federal agencies assess whether  personal property is needed, we conducted background searches to  inform our understanding of key practices for personal property and asset  management through a search of databases containing peer-reviewed  articles, government reports, general news, hearings and transcripts, and  association and think tank papers. We also reviewed relevant asset  management practices, such as ASTM standards and the General  Services Administration’s (GSA) Federal Asset Management Evaluation  and Personal Property Asset Management Study. In order to select  agencies that may have had recent experiences with excess personal  property, we selected 5 of the 24 agencies that were included in the  Freeze the Footprint and Reduce the Footprint initiatives.  We selected  agencies based on their overall Freeze the Footprint results, in terms of  the amount of square feet reduced, and Reduce the Footprint goals for  reducing domestic office and warehouse space, and the amount of  personal property declared excess over the last 5 years, as reported to  GSA’s GSAXcess system from fiscal years 2012 to 2016, to coincide with  the Freeze the Footprint time frame. Specifically, we obtained  information on the Freeze the Footprint results and Reduce the Footprint  goals from the Office of Management and Budget’s public website and  from Performance.gov. We limited our scope to civilian federal agencies  with personal property within the United States. Although we have  previously reported that the overall accuracy of data that agencies  reported on office and warehouse space reductions could be improved,  we found that the data were generally reliable for our purposes. After  reviewing the data for any inconsistencies and discussing the information  with selected agency officials to ensure that the reported numbers for the  Reduce the Footprint initiative were current, we determined that the  quality of the data were sufficient for our use in selecting agencies. In  order to select agencies that were more likely to have relevant, recent  experience with excess personal property from space reduction efforts,  we ranked these agencies based on their Freeze the Footprint results,  Reduce the Footprint goals, and the amount of declared excess personal  property, and eliminated the bottom third of the agencies. We selected  GSA as our first agency due to its central role in excess personal property  disposal, and randomly selected four additional agencies from the  remaining agencies. These agencies were the Environmental Protection  Agency, the U.S. Department of Agriculture, the Department of Housing  and Urban Development, and the Department of the Treasury. The  organizational structure of two selected agencies, the Department of  Agriculture and the Department of the Treasury, is different than the other  three agencies in that they are comprised primarily of sub-agencies.  Therefore, we selected the largest sub-agency for both departments—the  Forest Service within the Department of Agriculture and the Internal  Revenue Service within the Department of the Treasury.

We obtained information from the five selected federal agencies on the  total value and number of items in their asset management systems in  2017 to understand the size and scope of personal property assets they  manage. As we used the information to describe the scope of the  agencies’ property holdings, we did not verify the data. We also analyzed  documents, such as the selected agencies’ personal property  management policies, along with policies from the National Aeronautics  and Space Administration and Department of Energy, to understand how  they addressed requirements for managing personal property. We  included these agencies’ policies based on our review of prior work  related to personal property. We interviewed officials from the selected  agencies about their processes for managing personal property assets,  such as their inventory procedures. However, we did not independently  assess agencies’ inventory practices. We also interviewed staff from the  Office of Management and Budget (OMB) to discuss regulations and  policies pertaining to personal property and OMB’s role in personal  property management.

To determine how selected federal agencies dispose of excess and  surplus personal property and how space reduction efforts may have  affected disposals, in addition to the above, we obtained information from  each selected agency on its space reduction projects and interviewed  officials about their roles and responsibilities in the agency’s space  reduction planning efforts and personal property disposal process. We  also conducted site visits to Philadelphia, Pennsylvania, and Denver,  Colorado to meet with regional and local officials from each selected  agency responsible for managing and disposing of personal property.  These locations were chosen based on the number of our selected  federal agencies present, the amount of excess personal property  declared, and the existence of space reduction projects. We discussed  property accountability policies, overall personal property disposal  processes, and how the disposal processes were affected by  government-wide space savings initiatives, such as Freeze the Footprint  and Reduce the Footprint, and any efforts to prepare for them, and  requested supporting documentation on the amount of property declared  as excess and the disposition outcomes of that property. We did not  independently verify the information that was provided, as data reported  as excess from space reduction projects are not always tracked  separately from other property disposed of for other reasons. We  reviewed documents and interviewed officials from GSA’s Office of  Personal Property Management (GSA OPPM) in GSA’s headquarters, in  Philadelphia and in Fort Worth, Texas, to discuss their role in assisting  agencies in disposing of personal property and to obtain their views on  how personal property disposals have been affected by space  reductions. Finally, we interviewed GSA’s Office of Government-wide  Policy (GSA OGP) officials about the Interagency Committee on Property  Management and the Property Management Executive Council  regarding their personal property and asset management efforts and met  with officials and representatives from the following: the U.S. Department  of Agriculture’s Centralized Excess Property Operation, the Users and  Screeners Association–Federal Excess Personal Property, and the  National Association of State Agencies for Surplus Property to discuss  their roles in the reuse and disposal of Federal personal property.

Appendix II: The Disposal Process for Federal Personal Property

The Federal Property and Administrative Services Act of 1949, as  amended, requires executive agencies, in part, to promptly report excess  property to the General Services Administration (GSA) and dispose of it in  accordance with GSA regulations. Each executive agency is also  required to fulfill requirements for personal property by using existing  agency property or by obtaining excess property from other federal  agencies before purchasing new property. GSA’s disposal process, as  laid out in federal regulation, incorporates and facilitates these  requirements, providing a means for both disposing of and acquiring  unneeded property: agencies with excess personal property can dispose  of it and other agencies, authorized non-federal entities, and, eventually,  the general public can acquire this property.

Disposal before Declaring Property as Excess to GSA

After determining that a property item is no longer needed to complete its  mission, an agency may have several options for proceeding before  formally declaring the property as excess to GSA:  Immediately authorize abandonment or destruction of the property:  Determine, in writing, that the property has no commercial value or  the estimated cost of its continued care and handling would exceed  the estimated proceeds from its sale. If an agency makes such a  determination, it may abandon or destroy the property without  reporting it to GSA as excess. In lieu of abandonment or destruction,  an agency may donate excess personal property to a public body  without going through GSA.

Directly transfer the property to another federal agency: Agencies  usually become aware of available property through informal means,  such as a contact at the disposing agency, according to GSA. GSA  approval for such a transfer is not needed if the total original  acquisition cost for each item does not exceed $10,000. If this cost is  greater than $10,000, the acquiring agency must obtain prior approval  from GSA. In either case, the acquiring agency must notify GSA of the  transfer.

Directly transfer the property to an eligible recipient under a special  authority: Special authorities are legal provisions that are designed to  give excess assets to groups that may use them for a particular  purpose, such as universities that can use the National Aeronautics  and Space Administration’s scientific equipment in their research.  Some authorities exist to collectively support all federal agencies and  some support an agency-specific program. According to GSA, the  primary government-wide programs are the Stevenson-Wydler  Technology Innovation Act of 1980 and Executive Order 12999, also  known as the Computers for Learning program. Recipients meeting  eligibility requirements of the special authority contact agencies to  determine the availability of property, and the agency and recipient  must complete the appropriate documentation to make a record of the  transfer.

Disposal Process after Declaring Property as Excess to GSA

An agency initiates GSA’s disposal process by formally declaring property  as excess, either by completing and submitting a form to GSA or, more  typically, by electronic entry of an item into GSAXcess, GSA’s real-time,  Web-based site for facilitating the disposal process. The latter method  requires agency employees to enter information about the excess  property using data entry screens that include help screens and error  messages. GSA encourages reporting agencies to provide a complete  description of the property and to include multiple photographs of the  property.

The disposal process generally consists of four sequential stages in  which personal property may be transferred to another agency or eligible  recipient, donated, sold, or abandoned or destroyed, as described  below. If the property is not disposed of during one stage, it advances to  the next stage, though the holding agency generally retains physical  custody of the property until it is disposed of. Table 2 illustrates actions  a disposing agency and eligible property recipients take during each of  the four stages of the disposal process after an agency declares property  excess.

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the individual named above, the following individuals made  important contributions to this report: David J. Wise (Director), Nancy  Lueke (Assistant Director), Travis Thomson (Analyst-in-Charge), Lacey  Coppage, Rosa Leung, Josh Ormond, Amy Rosewarne, Pamela Vines,  and Elizabeth Wood.