VA Needs to Improve Testing Procedures to Assess Compliance with Mandatory Improper Payment Requirements

The VA Office of Inspector General (OIG) concluded for fiscal year 2021 that VA complied with the Payment Integrity Information Act of 2019. As required, in the materials accompanying its annual financial statement, VA published estimates of improper and unknown payments for susceptible programs. Yet, while assessing compliance, the OIG determined VA can improve its testing procedures for these payments. Improper payments are payments that should not have been made or that were made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements, according to the Office of Management and Budget; unknown payments are those a program cannot discern were made to the correct recipient or for the correct amount. The OIG found testing procedures for two programs—Purchased Long-Term Services and Supports, and Medical Care Contracts and Agreements—do not go far enough. Because they do not include reviewing documentation for proof of receipt, they may not identify payments for goods and services never rendered. Identifying and including such payments would increase unknown payment rates. The OIG determined that because of the testing deficiencies, VA understated the improper and unknown payment estimates as follows: • Purchased Long-Term Services and Supports. VA reported approximately $1.9 billion in improper and unknown payments and a rate of approximately 73 percent; the OIG estimated $1.95 billion and approximately 75 percent. • Medical Care Contracts and Agreements. VA reported approximately $159 million in improper and unknown payments and a rate of approximately 16 percent; the OIG estimated $190 million and approximately 19 percent. While these differences were not large, improved testing procedures are needed so that VA’s future estimates remain valid. Therefore, the OIG believes VA needs to ensure adequate documentation is reviewed during payment testing.