Audit finds VA overpaid contractors $101 million
Two health-care contractors running the federal government’s Veterans Choice Program collected more than $101 million in overpayments during 2016-17, an audit released Thursday by the VA Office of Inspector General shows.
“Because of ineffective controls, OCC (the VA Office of Community Care) failed to identify improper claims,” an executive summary for the report says.
The two VA contractors, Phoenixbased TriWest Healthcare Alliance Corp. and Health Net Federal Services of California, allegedly collected $66.1 million in excess payments via duplicate bills, and $35.3 million more as a result of other errors.
The Veterans Choice Program was created in 2015 amid a health-care crisis first exposed at the Phoenix VA Medical Center.
Tens of thousands of patients nationwide were backlogged in an appointment system that spewed phony data. Many died or suffered while awaiting care.
Congress responded by authorizing $10 billion to pay for private medical appointments for veterans who could not get timely treatment through the VA.
TriWest and Health Net administer the program, setting up provider networks, booking appointments and processing payments.
TriWest President and CEO David McIntyre said overpayments were a product of past “mechanical errors on both sides,” but the system has been markedly improved over the past 18 months.
McIntyre has stressed that billing mistakes are common in the insurance industry, and the VA’s processing system was plagued by problems.
Health Net officials did not immediately respond to requests for comment.
Three years ago, the VA fell behind in reimbursing the two contractors, owing them hundreds of millions of dollars and endangering their liquidity. That problem was resolved by shifting to a “bulk payment” system with little or no review of individual billings.
Although the VA is at fault for internal control failures, inspectors also found hundreds of thousands of bills were “improperly submitted.”
The audit scrutinized 4.8 million medical charges. More than 5 percent of those were duplicates, mostly submitted by Health Net.
About 10 percent of the bills had other errors. A majority of those charges were submitted by TriWest.
The audit says Health Net has repaid $41 million.
McIntyre said TriWest is working with the VA to calculate a reimbursement amount. He estimates the company owes about $50 million.
The audit comes amid continuing turmoil at an agency with 350,000 employees serving about 9 million veterans at an annual expense of nearly $200 billion.
It also comes as the Trump administration is moving to overhaul privatecare options.
In March, President Donald Trump fired Veterans Affairs Secretary David Shulkin and nominated his personal physician, Ronny Jackson, for the job. Amid charges of unprofessional conduct, Jackson was forced to bow out. Rear Adm. Robert Wilkie was then nominated and confirmed for the Cabinet post.
Meanwhile, Trump signed the VA Mission Act, which includes provisions to consolidate Veterans Choice and other community-care programs, creating a streamlined system with clear procedures.
The VA announced in April that Health Net’s contract will expire this month.McIntyre said his TriWest is finalizing a two-year extension of its contract.
The audit released Thursday is the second to address issues in the multibillion-dollar Choice contracts. In November, the Office of Inspector General found the two contractors had received at least $89 million in overpayments.
Back then, the U.S. Attorney’s Office in Phoenix was pursuing a subpoena for possible witnesses to wire fraud and misuses of government funds. McIntyre said he’s never been advised of that investigation by prosecutors, and its status is unknown.