VA unable to collect over $665M in revenue because of tool suspension, OIG says

The Department of Veterans Affairs has been unable to collect millions of dollars in revenue because it suspended use of a tool that helped it determine billing claims from veterans who received community care, according to a report released on Tuesday by VA’s Office of Inspector General. 

VA used the Program Integrity Tool to centralize collected data from community care claims. OIG said the tool allowed VA to identify waste, fraud and abuse, as well as determine “if healthcare claims should be billed to veterans or private insurance companies for the treatment of non-service-connected care.”

According to OIG’s report, VA paused its use of the tool in February 2023 “after becoming aware of issues with its database code logic and of compromised stored data.” 

“This pause was intended to further evaluate the tool’s processes, data, documentation and its underlying information technology system architecture, and to determine the cause of potential data errors and identify improvement opportunities,” the report said. 

Although the department continued to process and pay out claims that it received, the watchdog said the Veterans Health Administration’s revenue operation “has been unable to assess new claims for veteran copayments or bill private insurers” since the pause. That means, the OIG report stated, that "VHA is missing opportunities to increase available funding for veterans' health care."

“As a result, there will be a backlog of approximately 40 million paid community care claims that must be processed when the tool comes back online,” the report said, adding that it estimates that the suspension of the tool “has resulted in approximately $665.5 million in revenue operations collections that have not been recovered as of February 2024.”

OIG added that the tool’s use to detect and prevent waste, fraud and abuse is also “on hold by VHA until the tool resumes.”

In a memo attached to the watchdog’s report, VA’s Office of Information and Technology said it “has made significant progress resolving defects and bringing the Program Integrity Tool back online.”

Of the 18 defects — including “eight high-priority issues and one critical issue” — that OIT identified in the Program Integrity Tool in a November 2023 review, the department told the watchdog that it has “addressed over one-third of the identified defects,” including the one critical defect and three of the high priority issues. 

Although the tool is still offline, OIT said it “has ingested initial data sets from four source systems.” This includes data from the VA Choice System, which helps veterans access community care options if VA medical facilities are not close by or have too long of a wait. 

OIT said source data from this system “has undergone rigorous testing, including an independent review as well as user acceptance testing by revenue operations,” and that billing for this data resumed on June 6. 

OIT said it also anticipated billing to resume for other systems that also feed data to the Program Integrity Tool — such as the Electronic Claims Adjudication Management System and the Community Care Reimbursement System — after the watchdog completed its report.