Department of Veterans Affairs overpaid Choice Act healthcare costs by $132 million

The Golden Horseshoe is a weekly designation from Just the News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s. 

This week, our award is going to the Department of Veterans Affairs, for spending an estimated $132.1 million more than necessary by reimbursing third-party administrative healthcare claims at rates significantly higher than the market average for similar medical services. 

A new Veterans Affairs inspector general report details an audit of the Veterans Choice Program that shows the Office of Community Care "did not ensure that payment-rate schedules were current, accurate, and complete to prevent overpayments" pertaining to the Choice Act.

The Choice Program, which ran through 2019, was an initiative that was meant to give veterans more options for receiving healthcare (from non-VA providers), in addition to granting the Secretary of the Department of Veterans Affairs more authority to get rid ineffective executives at the department.

Two past OIG reports revealed that the program had been plagued with serious issues since its inception, wasting more than $140 million cumulatively on payment errors.

Within the Department of Veterans Affairs, the Office of Community Care is the division responsible for arranging payments between the agency and third-party administrators. They were therefore contractually obligated to reimburse third-party administrators at "verified usual and customary rates when no Medicare or VA fee schedule rates were available," according to the report.

Instead of establishing a reimbursement system that calculated "verified usual and customary rates," however, the Office of Community Care opted to pay the full "billed charge" of an estimated 1.1 million claims made through the Choice Program. That failure to establish usual and customary rates cost taxpayers approximately $132.1 million.

Worse still, the department had previously been issued instructions by the OIG to correct their methodology surrounding third-party administrator reimbursements. In fact, the report states that, $73 million of the improper payments could have been avoided if the Office of Community Care had simply implemented prior OIG recommendations "and developed effective payment and internal control processes for the Choice program."

The department has concurred "in principle" with each of the OIG's new recommendations. Of course, department officials have agreed to amend their practices in the past — but that did not prevent this latest round of heedlessly wasteful spending.

As they say, you can't change until you want to.