I am pleased to present the Fiscal Year (FY) 2017 Agency Financial Report for the U.S. Department of Health and Human Services (HHS). This report features our financial and performance highlights over the FY ending September 30, 2017.
Our mission at HHS is to enhance and protect the health and well-being of all Americans. We fulfill this mission by administering more than 300 programs across our Operating Divisions, providing for effective health care and human services, and fostering advances in the world of science.
In 2017, the Department took on a number of complex challenges and projects that have already yielded real benefits for the American people. Some of them include:
In March, the President issued an Executive Order directing each department across the federal government to put together a plan to reorganize its operations with the goal of delivering critical services to the American people in the most efficient and effective manner possible. Pursuant to the President’s call for each Cabinet Department to reform and reconsider how it is organized, HHS launched ReImagine HHS in April, our effort to evaluate how we can better perform our mission.
Through deep consultation with the career staff and the generation of hundreds of separate ideas, the Department has identified strategic shifts to transform how we operate. These shifts will create efficiencies within our Department, improve customer service for the American people, eliminate redundancies within our work and, most importantly, enable us to achieve our mission more effectively than we do today.
The goals of these shifts are to make HHS more effective at fulfilling our mission, more focused on serving the American people, and a better place to work.
Opioid addiction is one of the most critical public health crises facing our nation, and addressing it is one of HHS’s top priorities. The crisis has left no corner of America untouched, and each day we lose more than 175 Americans to drug overdoses while millions more struggle with opioid addiction.
In April, HHS outlined a new, comprehensive five-point strategy for combating the crisis: (1) improving access to prevention, treatment, and recovery services, including the full range of medication-assisted treatment; (2) targeting availability and distribution of overdose-reversing drugs; (3) strengthening public health data and reporting; (4) supporting cutting-edge research on pain and addiction; and (5) advancing the practice of pain management. As part of a holistic range of actions on this priority, HHS disbursed $811 million in grant funding specifically to fight the opioid epidemic in Fiscal Year 2017; more support than any previous year.
In August, the Centers for Disease Control and Prevention released a “Vital Signs” report showing the amount of opioids prescribed in the United States decreased each year from 2010 to 2015; however, the amount prescribed is still three times higher nationally than it was in 1999. Meanwhile, the number of overdose deaths in 2016 is expected to exceed the number from 2015, which in one year was roughly equivalent to the number of Americans who died in the entire Vietnam War.
HHS has actively supported the President’s Commission on Combating Drug Addiction and the Opioid Crisis, which was established in March 2017 to study the scope and effectiveness of the federal response to this crisis and provide recommendations for improving the response. On October 26, 2017, we declared the opioid crisis a nationwide public health emergency. HHS will continue to contribute to this important effort as a key agency providing critical resources for care, treatment, and scientific advancement.
Health Care Reform
HHS is committed to ensuring that the American people have access to a health care system that provides high-quality care for the individual patient. The Patient Protection and Affordable Care Act (PPACA), as it stands, has presented major challenges to achieving that goal within certain parts of our health care system. The Department has taken numerous steps to increase choices within the constraints of the PPACA, including efforts to return states to their primary role as insurance regulators. HHS has also specifically encouraged states to pursue innovations within their Medicaid programs that enable patients to take charge of their own health care, through solutions such as health-savings-account-like programs for enrollees.
This approach also undergirds HHS’s approach to Medicare. In 2018, the average premium for a Medicare Part D prescription drug plan is projected to decline. This is encouraging news for the nearly 43 million seniors who are enrolled in the program, and proof of the successes of a patient-centered, market-driven approach to health care. Meanwhile, enrollment in Medicare Advantage continues to grow, another sign of the appeal of health care plans that offer Americans real choices and private competition.
Lowering drug costs is a key principle of the Administration’s efforts to address the challenges in our health care system, and HHS is committed to increasing the affordability and accessibility of care. HHS has initiated a broad effort to make drugs more affordable, particularly for America’s seniors, including aggressive efforts at the Food and Drug Administration to boost competition in drug markets.
We remain committed to improving our health care system to better serve the American people. It is our goal to foster a patient-centered health care system where Americans have more choices and lower costs, and where patients, families, and doctors are in charge of medical decisions.
The 2017 hurricane season has been extremely active, bringing destructive storms to the Southeastern United States and the Caribbean. HHS plays four major roles in dealing with such serious storms. First, the Agency deploys medical assets, such as members of the Public Health Service Commissioned Corps, the National Disaster Medical System, and mobile hospitals, ready to move in and fill gaps left in a region’s hospital system. Second, HHS provides data and expertise to first responders and local officials that aid them in identifying residents whose health may be especially impacted by the storm. Third, the Agency issues waivers in Medicare, Medicaid, and the Children’s Health Insurance Program to enable people to get the care they need, and help to evacuate hospitals or move patients if needed. Finally, the Agency supplies recovery assistance to address ongoing public health, health care, and human services issues, from the threats of mosquito-borne diseases and food safety to maintaining continuity of social services for the elderly and disabled.
All four of these activities have been necessary for Hurricanes Harvey, Irma, and Maria. In addition to engaging in collaborative efforts across the Administration, we continue to work closely with state, tribal, county, and local officials to respond to their needs and to assist in rescue and recovery efforts. The HHS team is serving alongside the many heroic first responders and ordinary citizens in local communities to help alleviate the suffering brought on by these hurricanes.
We will continue to provide the proper resources to help restore health and social services to communities affected by Hurricanes Harvey, Irma, and Maria, and other emergencies still to come.
HHS is committed to ensuring transparency and accountability of the funds the public and Congress entrust to us. For the 18th consecutive year, we obtained an unmodified (clean) opinion on the Consolidated Balance Sheets, Statement of Net Cost, Statement of Changes in Net Position, and the Combined Statement of Budgetary Resources. The auditors disclaimed an opinion on the Sustainability financial statements which are comprised of the Statement of Social Insurance and the Statement of Changes in Social Insurance Amounts, primarily due to the uncertainties surrounding provisions of the Patient Protection and Affordable Care Act and the impact of potential changes in law that would impact underlying assumptions of financial projections. These statements were developed based upon current law using information from the 2017 Medicare Trustees Report, as required by standards issued by the Federal Accounting Standards Advisory Board. The “Financial Section” of this report includes more detailed information.
As required by the Federal Managers’ Financial Integrity Act of 1982 and the Office of Management and Budget’s Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control, we also evaluated our internal controls and financial management systems. We identified two material noncompliances relating to Error Rate Measurement and the Medicare appeals process. The “Management’s Discussion and Analysis” section of this report includes further details. Based on our internal assessments, I can provide reasonable assurance that the financial and performance information contained in this report is complete, reliable, and accurate.
Future Challenges and Priorities
While HHS takes great pride in our accomplishments this year, we believe there are plenty of opportunities for improvement. We worked closely with the Office of Inspector General to gain its perspective about our most significant management and performance challenges, which are presented in the “Other Information” section under FY 2017 Top Management and Performance Challenges Identified by the Office of Inspector General. We are committed to addressing these challenges, including delivering quality services and benefits, exercising sound fiscal management, safeguarding public health and safety, and enhancing cybersecurity.
Employees of HHS are proud of the tremendous work they carried out in 2017 on behalf of our fellow Americans. Working with our partners and colleagues in Congress, we will continue our focus on improving how we enhance and protect the health and well-being of the American people in the years to come.
/Eric D. Hargan/
Eric D. Hargan
November 14, 2017
ABOUT THE AGENCY FINANCIAL REPORT
The HHS FY 2017 Agency Financial Report (AFR) provides fiscal and summary performance results that enable the President, Congress, and the American people to assess our accomplishments for the reporting period October 1, 2016, through September 30, 2017. This report provides an overview of our programs, accomplishments, challenges, and management’s accountability for the resources entrusted to us. We prepared this report in accordance with the requirements of Office of Management and Budget Circular A-136, Financial Reporting Requirements. This document consists of three primary sections and supplemental appendices:
This section provides an overview of HHS’s mission, activities, organizational structure, and program performance. It also includes an overview of the systems environment; a summary of the Department’s financial results and compliance with laws and regulations; and provides management’s assurances on HHS’s internal control.
This section begins with the independent auditor’s report and management’s response to the audit report. It also includes the financial statements with accompanying notes, and required supplementary information, including the Combining Statement of Budgetary Resources, Deferred Maintenance and Repairs, and Social Insurance information.
This section contains additional financial information and real property footprint data. It also includes a summary of the financial statement audit and management assurances, civil monetary penalties, grant closeout efficiencies, and a detailed payment integrity report. It concludes with the Inspector General’s assessment of the Department’s management and performance challenges.
This section includes data that support the main sections of the AFR. This includes a glossary of acronyms used in the report and resources for connecting with the Department.
The Department has chosen to produce an AFR and Annual Performance Plan and Report. In conjunction with the release of the President’s Budget in February 2018, additional reports that will be available on our website include:
- FY 2019 Annual Performance Plan and Report
- FY 2019 Congressional Budget Justification
Certificate of Excellence in Accountability Reporting
In May 2017, the United States Department of Health and Human Services (HHS) received the Certificate of Excellence in Accountability Reporting (CEAR) from the Association of Government Accountants (AGA) for its Fiscal Year (FY) 2016 Agency Financial Report. The CEAR Program was established by the AGA in collaboration with the Chief Financial Officers Council and the Office of Management and Budget to further performance and accountability reporting. Through the program, agencies improve accountability by streamlining reporting and improving the effectiveness of such reports to clearly show what an agency accomplished with taxpayer dollars and the challenges that remain. FY 2016 marked the fourth consecutive year the Department received this prestigious award.
AGA also presented HHS with a Best-In-Class Award for the Best Description of Financial Management Systems Strategy and Status.