Report: VA Misused $92.5M for Health Claims Processing System

March 3, 2015 in News

The Department of Veterans Affairs violated an appropriations law by incorrectly using nearly $93 million to develop its Health Care Claims Processing System, according to a report by the VA Office of Inspector General, FierceHealthIT reports (Dvorak, FierceHealthIT, 3/3).

Report Details

The review was conducted in response to allegations received by the VA OIG’s hotline that the Veterans Health Administration’s Chief Business Office misused medical support and compliance funds to develop the claims processing system (VA OIG report, 3/2).


VA OIG found that the department broke an appropriations law by wrongfully billing an administrative account about $92.5 million for the development of the processing system (FierceHealthIT, 3/3).

Specifically, the report found that the VA has:

  • Spent about $73.8 million in medical support and compliance funds since 2010; and
  • Obligated an additional $18.7 million in funds for the system (Mazmanian, FCW, 3/2).

According to the report, medical support and compliance funds are to be used only for administering activities related to medical, construction, supply and research (FierceHealthIT, 3/3). Meanwhile, VA’s IT spending is supposed to go through the Office of Information and Technology (FCW, 3/2).

The report found that the former deputy CBO for VHA “did not seek the required IT systems appropriations to fund” the project (FierceHealthIT, 3/3).

Officials involved in the project said they used medical support and compliance funds so the system could be built and launched more quickly. By doing so, the department “avoided competing with other VA projects for IT systems appropriations,” according to the report (FCW, 3/2).


The VA OIG report suggested that the interim undersecretary for health:

  • Develop oversight mechanisms;
  • Reclaim the medical support and compliance funds; and
  • Obtain appropriate funding for the system’s development.

Further, the report said that the interim undersecretary should determine whether administrative action should be taken against senior officials involved in the program (FierceHealthIT, 3/3).

According to the report, the interim undersecretary agreed with the report and plans to correct the issue by Sept. 30, 2015 (VA OIG report, 3/2).

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