VA misused $92.5 million on software, IG says

The Department of Veterans Affairs broke appropriations law when it billed an administrative account for an IT project designed to pay private sector providers for services provided to VA beneficiaries, according to the VA Office of Inspector General.

Officials charged with procuring a claims processing system for the Veterans Health Administration told IG investigators that they used funds from the Medical Support and Compliance (MS&C) appropriation in order to get a system built and delivered more quickly, per the report. By using MS&C funds, VHA "avoided competing with other VA projects for IT systems appropriations," the report found.

The system in question is the Health Care Claims Process System (HCPS). The VHA's Chief Business Office began spending money to develop a system to process purchased-care claims, even though IT spending at the VA is supposed to go through the Office of Information and Technology. VA has spent about $73.8 million MS&C funds on the system since 2010, with an additional $18.7 million obligated, for a total of $92.5 million in improperly used funds.

Development of the claims processing system has been included in the OI&T Project Management Accountability System since 2012, despite the irregularity in its funding stream. The PMAS dashboard tracks improvements and enhancements to VA systems that cost more than $250,000, and is part of an agency-wide push to centralize IT spending, management and security.

The IG report recommends reclaiming the $18.7 million in HCPS obligated funding that hasn't gone out the door, supporting the program with OI&T funds, and exploring whether administrative action should be taken against any senior officials who participated in the HCPS program.