VA Falls Short on Several Requirements for Improper Payments Elimination

The IG’s review found that the department did not meet annual reduction targets for eight programs and it did not report a gross improper payment rate of less than 10% for seven programs.  VA satisfied the following four IPERA requirements:

• Published the FY 2018 Agency Financial Report (AFR) on VA’s website
• Conducted program-specific risk assessments
• Published improper payment estimates for all programs and activities identified as susceptible to significant improper payments
• Published corrective action plans where appropriate

In addition, the IG identified four programs and activities as noncompliant for four consecutive fiscal years, one program as noncompliant for three years, and four programs and activities as noncompliant for two years.  The IG also found that VA satisfied the additional reporting requirements for the VA Community Care program which is designated as high-priority.

Improper payments (IP) are defined as payments made by the government to the wrong person, in the wrong amount, or for the wrong reason. Improper payments include both overpayments and underpayments, and were estimated to total $151B in FY 2018. Although improper payments do not directly translate to fraud or monetary loss, they need to be addressed and reduced to protect the integrity of taxpayer and federal funds.

VA reported improper payment estimates totaling $14.7 billion, roughly a 38% increase from the $10.7 billion reported in FY 2017. The net increase was primarily the result of VA identifying and reporting higher improper payments for eight programs and activities: seven in VHA and one in VBA.

Programs not meeting reduction targets include:

• CHAMPVA
• Communications, Utilities, and Other Rent
• Medical Care Contracts and Agreements
• Pension
• Purchased Long-Term Services and Supports
• Supplies and Materials
• Compliant
• State Home Per Diem
• VA Community Care

Programs not reporting an improper payment rate of less than 10% include:

• Beneficiary Travel
• Communications, Utilities, and Other Rent
• Medical Care Contracts and Agreements
• Prosthetics
• Purchased Long-Term Services and Supports
• Supplies and Materials
• VA Community Care

According to an interview with VA Inspector General Michael Missal on Federal News Radio this month, some of VA’s improper payments are due to lack of documentation. Improper payments don’t directly equate to money lost or fraudulent activity. “Having proper documentation is a large portion of the problem,” according to Missal.   

The VA IG made two of the same recommendations to VHA that it did from their review of FY 2017 improper payment inventories:

• Implement steps to achieve stated reduction targets for CHAMPVA; Purchased Long-Term Services and Supports; Supplies and Materials; and VA Community Care programs and activities.
• Develop a timeline to reduce improper payments under the 10% threshold for the Beneficiary Travel; Communications, Utilities, and Other Rent; Medical Care Contracts and Agreements; Prosthetics; Purchased Long-Term Services and Supports; Supplies and Materials; and VA Community Care programs and activities.

The office made one new recommendation for VHA:

• Implement steps to achieve stated reduction targets for the Communications, Utilities, and Other Rent; Medical Care Contracts and Agreements; and State Home Per Diem programs and activities.

The IG also reiterated recommendations to VBA that still remain open from previous reviews:

• Implement steps to achieve stated reduction targets for the Pension program.
• Continue working with the DOD to increase the frequency of drill pay adjustments from annually to monthly.
• Continue to report statutory barriers preventing the complete resolution of drill pay improper payments in future AFRs until resolved.

VA’s management agreed with the IG’s recommendations and provided plans for corrective action.