[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
VA'S OPEN CASH REGISTER:
FRAUD, WASTE, ABUSE AND
REVENUE OPERATIONS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION
of the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
THURSDAY, SEPTEMBER 19, 2024
__________
Serial No. 118-82
__________
Printed for the use of the Committee on Veterans' Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via http://govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
57-109 WASHINGTON : 2026
COMMITTEE ON VETERANS' AFFAIRS
MIKE BOST, Illinois, Chairman
AUMUA AMATA COLEMAN RADEWAGEN, MARK TAKANO, California, Ranking
American Samoa, Vice-Chairwoman Member
JACK BERGMAN, Michigan JULIA BROWNLEY, California
NANCY MACE, South Carolina MIKE LEVIN, California
MATTHEW M. ROSENDALE, SR., Montana CHRIS PAPPAS, New Hampshire
MARIANNETTE MILLER-MEEKS, Iowa FRANK J. MRVAN, Indiana
GREGORY F. MURPHY, North Carolina SHEILA CHERFILUS-MCCORMICK,
C. SCOTT FRANKLIN, Florida Florida
DERRICK VAN ORDEN, Wisconsin CHRISTOPHER R. DELUZIO,
MORGAN LUTTRELL, Texas Pennsylvania
JUAN CISCOMANI, Arizona MORGAN MCGARVEY, Kentucky
ELIJAH CRANE, Arizona DELIA C. RAMIREZ, Illinois
KEITH SELF, Texas GREG LANDSMAN, Ohio
JENNIFER A. KIGGANS, Virginia NIKKI BUDZINSKI, Illinois
Jon Clark, Staff Director
Matt Reel, Democratic Staff Director
SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION
MATTHEW M. ROSENDALE, SR., Montana, Chairman
NANCY MACE, South Carolina SHEILA CHERFILUS-MCCORMICK,
KEITH SELF, Texas Florida, Ranking Member
GREG LANDSMAN, Ohio
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
official version. Because electronic submissions are used to prepare
both printed and electronic versions of the hearing record, the process
of converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
----------
THURSDAY, SEPTEMBER 19, 2024
Page
OPENING STATEMENTS
The Honorable Matthew M. Rosendale, Sr., Chairman................ 1
The Honorable Sheila Cherfilus-McCormick, Ranking Member......... 2
WITNESSES
Panel I
The Honorable Kurt DelBene, Assistant Secretary for Information
and Technology and Chief Information Officer, U.S. Department
of Veterans Affairs............................................ 4
Accompanied by:
Ms. Cherri Waters, Executive Director, Health Portfolio,
Office of Information and Technology, U.S. Department of
Veterans Affairs
Ms. Laura Duke, Chief Financial Officer, Veterans Health
Administration, U.S. Department of Veterans Affairs
Ms. Tracy Davis-Bradley, Ph.D., Chief Integrity and
Compliance Officer, Veterans Health Administration, U.S.
Department of Veterans Affairs
Ms. Jennifer McDonald, Ph.D., Director, Community Care Division,
Office of Inspector General, U.S. Department of Veterans
Affairs........................................................ 5
APPENDIX
Prepared Statements Of Witnesses
The Honorable Kurt DelBene Prepared Statement.................... 27
Ms. Jennifer McDonald, Ph.D. Prepared Statement.................. 30
Statements For The Record
Questions for the Record Submitted for the U.S. Department of
Veterans Affairs............................................... 37
U.S. Department of Veterans Affairs' Response to Questions for
the Record..................................................... 41
VA'S OPEN CASH REGISTER:
FRAUD, WASTE, ABUSE AND
REVENUE OPERATIONS
----------
THURSDAY, SEPTEMBER 19, 2024
Subcommittee on Technology Modernization,
Committee on Veterans' Affairs,
U.S. House of Representatives,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:16 a.m., in
room 360, Cannon House Office Building, Hon. Matt Rosendale
(chairman of the subcommittee) presiding.
Present: Representatives Rosendale, Mace, Self, Cherfilus-
McCormick, and Kennedy.
OPENING STATEMENT OF MATTHEW M. ROSENDALE, CHAIRMAN
Mr. Rosendale. Good morning. The subcommittee will come to
order. I want to welcome our witnesses to discuss the Program
Integrity Tool (PIT) and the other important systems that U.S.
Department of Veterans Affairs (VA) uses to manage community
care payments.
The Program Integrity Tool consolidates all community care
claims payment data into one place. The Veterans Health
Administration (VHA) uses it to do two important things, first,
to prevent fraud, waste, and abuse when paying community care
providers' claims, and second, to bill and collect for non-
service-connected care.
When care is not service-connected VHA is responsible for
billing the veteran's insurance companies or, in some
instances, the veterans for copays. These medical collections,
over 90 percent which are insurance company billings, are an
important part of the budget that pays for care for other
veterans.
Without PIT, VA is essentially operating an open cash
register. There are no controls on the cash coming out at the
register and the cashier is not collecting the change and
putting it back in.
That was essentially the situation beginning in February
2023 when the technical defects in PIT became overwhelming and
VA had to turn the system off. To some degree that is still the
situation.
The Office of Inspector General (OIG) estimated that $665
million in revenue was not collected, most of which is owed by
these insurance companies, and millions of dollars of fraud,
waste, and abuse went undetected. VA struggled to get PIT
working again until July of this year, and it is still not
clear whether all the problems can be resolved.
This has been an 18-month struggle marked by unsteady
leadership, questionable decision-making, and terrible
contractor performance. The department has not been eager to
answer many questions on this.
Chairman Bost sent Secretary McDonough a letter on July 30
asking a dozen detailed questions only to receive a curt
response on September the 6th from Mr. DelBene dismissing all
the questions because a meeting with the committee staff had
taken place.
We still need answers. Congress has the constitutional
prerogative and the duty to ask the executive branch questions.
I would like a commitment from VA to respond in full in writing
to whatever we are unable to cover today.
We need to determine how exactly the cash register opened
and whether it is truly closed. This is even more important
given the $12 billion VHA budget shortfall that you are
reporting for next year.
Only yesterday did VA give us the arithmetic showing that
$12 billion consists of. We still have a lot of questions how
the numbers were developed, and the committee staff is
expecting a meeting with VA about that next week.
VA has told us that community care is part of the
shortfall, but we have received conflicting information about
whether delayed medical collections are a part of it.
We are slowly getting closer to a complete explanation of
the healthcare shortfall, in particular, the improper payments
and community care billings that VA failed to capture deserve
extra scrutiny.
Community care is a $31 billion program and the improper
payment rate is 4.9 percent. Not all of that is waste or fraud.
About a third of that is compliance issues not affecting the
payment amounts, but altogether the improper payments work out
to be about $1.5 billion annually and the missed collections
add up to nearly $1 billion over 18 months.
Again, these are dollars that insurance companies owe the
VA which could be used to deliver services and benefits to our
veterans. Instead, it is improving the insurance companies'
bottom line and benefiting their stockholders.
As we have said time and time again in this subcommittee,
Information Technology (IT) system failures are no excuse to
waste taxpayers' money. I have no doubt that Congress will get
to the bottom of the healthcare shortfall and prevent veterans'
care from being undermined. VA's leaders need to understand
they cannot incite a panic and pressure Congress to bail them
out for their mistakes.
Today, our responsibility is to untangle the web
surrounding PIT and understand the true impacts on the budget.
With that, I will yield to Ranking Member Cherfilus-McCormick
for her opening statement.
OPENING STATEMENT OF SHEILA CHERFILUS-MCCORMICK, RANKING MEMBER
Ms. Cherfilus-McCormick. Thank you, Mr. Chairman.
Thank you to our witnesses for being here today.
Today, our focus is the Program Integrity Tool, or the PIT.
This key tool serves as a main processor of community care
billing data which is used to bill private insurance and
veterans for non-service-connected care, to detect duplicative
payments, and aid in fraud, waste, and abuse detection.
In February 2023, the PIT's operations were paused after
defective code, duplicate claims, and inaccurate data were
identified and relayed to management offices. Over 18 months
later, VA has not resumed full operation of this tool.
While I am glad to hear that the PIT has resumed revenue
operations and billing functions, I remain concerned about the
weight that is backlogged will have on both the VA employees
and our veteran patients. Excuse me.
In its July 16, 2024 management advisory memo, the
Inspector General (IG) estimated that the PIT pause affected
approximately 40 million paid claims totaling around $665.5
million that may have otherwise supported veterans' care.
Additionally during the PIT's pause, revenue operations
have been unable to bill veterans for copays they may have
incurred while receiving care in the community. VHA has
reported that in some cases veterans may be billed for care
that is over a year old.
While these veterans at some point should have been aware
of these impending bills, it is unreasonable to expect veterans
to choose between paying a year delayed bill or navigating the
system to secure a debt waiver.
I am concerned about veterans, many of whom are on a fixed
income, receiving a massive debt due to another VA IT system
failure. We cannot allow VA's struggling IT infrastructure to
cause financial stress to our veterans.
VA has not yet quantified how many veterans will be
impacted by these delayed bills or to what extent. I urge VA to
fully assess the impact that this pause has had on our veterans
before beginning copay collections.
I yield back.
Mr. Rosendale. Thank you, Ranking Member Cherfilus-
McCormick.
I will now introduce the witnesses on our first and only
panel. First, from the Department of Veterans Affairs, we have
assistant secretary for Information and Technology and chief
information officer Mr. Kurt DelBene.
We also have Ms. Cheri Waters, executive director of the
Health Portfolio in the Office of Information and Technology
(OIT).
From the Veterans Health Administration we have Ms. Laura
Duke, chief financial officer and Ms. Tracy Davis-Bradley, the
chief integrity and compliance officer.
Finally, from the VA Office of Inspector General, we have
Ms. Jennifer McDonald, director of the Community Care Division.
I ask the witnesses to please stand and raise your right
hands. Do you solemnly swear under penalty of perjury that the
testimony you are about to provide is the truth, the whole
truth, and nothing but the truth?
Thank you and let the record reflect that all witnesses
have answered in the affirmative.
[Witnesses sworn.]
Mr. Rosendale. Mr. DelBene, you are now recognized for 5
minutes to deliver your opening statement on behalf of the VA.
STATEMENT OF KURT DELBENE
Mr. DelBene. Good morning, Chairman Rosendale, Ranking
Member Cherfilus-McCormick, and distinguished members of the
subcommittee. Thank you for the opportunity to testify on the
Department of Veterans Affairs, the Office of Information and
Technology's efforts to rebuild the Program Integrity Tool.
I am accompanied by Ms. Cheri Waters, the OIT executive
director of Health Portfolio, Software Program Management and
my colleagues from the Veterans Health Administration, Ms.
Laura Duke, the chief financial officer of VHA and Dr. Tracy
Davis-Bradley, executive director, Office Of Integrity and
Compliance (OIC).
VA's Program Integrity Tool serves as a centralized
repository for community care billing data used for detecting
fraud, waste, and abuse, as well as third-party billing.
Originally designed to identify duplicate payments, the tool's
uses and sources expanded over time to meet a wider variety of
needs.
In December 2022, as part of the PIT's realignment under
VHA's Division of Program Integrity and the Office of Integrity
and Compliance, VA identified the need to significantly enhance
staffing and resource support for this critical tool.
Due diligence completed by OIC in partnership with OIT in
early 2023 led to the detection of issues with the data base's
code logic that resulted in data inaccuracies. Upon discovery
of these issues, VA took immediate action to pause PIT
operations in February 2023.
We promptly notified Congress and the Office of the
Inspector General of the need for this pause and the underlying
reasons.
Since pausing PIT operations, we have made significant
strides in addressing the identified issues. We implemented
more rigorous oversight and expanded our team to support our
rebuild efforts.
We are happy to report that revenue operations has resumed
functionality and is steadily processing the backlog of data.
We expect the full backlog to be completed and in revenue
operation's hands by the end of Fiscal Year 2025.
Despite these challenges, revenue operations collected
$171.6 million in third-party community care collections during
July and August 2024 since receiving the data backlog. The PIT
pause allowed revenue operations to catch up on normal backlog,
achieving their collections target of 100.7 percent for Fiscal
Year 2024.
I would also like to address OIG's estimate of the $665
million in delayed community care revenue. While this figure is
significant, it is important to emphasize that this revenue
will ultimately be collected and does not represent a permanent
loss. As my colleague Ms. Duke can attest, this amount is not a
significant source of overall VA revenue.
As for fraud, waste, and abuse efforts while the PIT was
offline, OIC has used alternative methods to detect and report
suspicious transactions. OIC leveraged upstream systems and
other data sources to identify and prevent fraud, waste, and
abuse.
Moving forward, VHA and OIT are working in lockstep to
improve collaboration as we design modern and efficient
workflows for revenue operations and for fraud, waste, and
abuse detection. We remain committed to full recovery of the
PIT and will continue to provide this subcommittee with updates
on its progress.
Our dedication to rebuilding the PIT and strengthening its
capabilities demonstrates our commitment to upholding
integrity, efficiency, and effectiveness within the VA. As the
rebuild efforts show, we will continue prioritizing critical
systems, developing proactive roadmaps for those systems,
strengthening technical expertise, and fostering contractor
accountability to safeguard the long-term health of essential
IT systems like the PIT.
Chairman Rosendale, Ranking Member Cherfilus-McCormick, and
members of the subcommittee, thank you for the opportunity to
present this testimony today. I appreciate your commitment to
addressing the pressing challenges we face in our digital
transformation efforts.
I recognize that our continued collaboration to prioritize
and overcome these challenges enhances the care and benefits we
provide to veterans, and I look forward to answering your
questions. Thank you.
[The Prepared Statement Of Kurt DelBene Appears In The
Appendix]
Mr. Rosendale. Thank you, Mr. DelBene. The statement of Mr.
DelBene will be entered into the hearing record.
Ms. McDonald, you are now recognized for 5 minutes to
deliver your opening statement on behalf of OIG.
STATEMENT OF JENNIFER MCDONALD
Ms. McDonald. Good morning, Chairman Rosendale, Ranking
Member Cherfilus-McCormick, and members of the subcommittee.
Thank you for the opportunity to testify on OIG's oversight of
VHA's pause of its Program Integrity Tool. In February 2023,
VHA collaborated with OIT to pause the tool after becoming
aware of ongoing issues with errors in coding and unreliable
data.
The tool is a consolidated data repository that is critical
to VHA's efforts to collect copayments for veterans and
reimbursements from private health insurers for non-service-
connected paid community care claims. It is also used for VA's
fraud, waste, and abuse detection and mitigation efforts for
community care claims.
The pause was intended to give VHA time to evaluate the
tool's processes, data, documentation, and underlying IT
system. It was also meant to determine the causes of any data
errors and identify improvement opportunities.
Since at least 2022, VHA entities were aware of data
accuracy and integrity concerns, such as claims entered
inaccurately and duplicate claims. In July of this year, we
issued a management advisory memorandum discussing the major
impacts of the tool's pause on both revenue collection and on
the detection of fraud, waste, and abuse for paid community
care claims.
We found collections of veteran's copayments were
approximately $23 million lower for the first two quarters of
Fiscal Year 2024 than for the same period in Fiscal Year 2023.
Once the tool is fully functional, VHA will have to work
through the backlog of paid claims to bill veterans' for
copayments. This could negatively affect veterans because they
may receive bills for care that is over 18 months old.
In May 2024, VHA told us they are working with the Office
of General Counsel to implement a regulatory change to allow
for debt waivers for these veterans. We estimated that the
pause resulted in over $665 million in collections from private
insurers that had not been recovered between February 1st, 2023
and February 1, 2024.
Further, the financial impact will continue to accumulate
at an estimated $55.5 million per month in potential lost
revenue from private insurers until VHA resumes collection
activities.
We also estimated that VHA will have to review a backlog of
approximately 40 million paid claims to determine if they are
billable for copayments for veterans or for private insurers
for revenue collection.
In August 2024, VHA officials stated that data from the
tool were available to process community care claims for
reimbursement. However, we have not yet confirmed this
independently. Given our prior oversight, the OIG has concerns
about VHA's ability to work through the claims backlog in a
timely manner.
In a 2022 OIG audit to determine how effectively VHA billed
private insurers, we found that VHA had not established an
efficient process to ensure private insurers were billed within
timelines. This audit found VA's billing and revenue collection
processes were not aligned with insurers' timely filing
deadlines, complete claims information was not always
available, and workload and staffing challenges delayed the
billing of private insurers.
We made three recommendations to the VHA that remain open
until the tool is fully operational and we can assess
implementation.
The pause has also impeded VA's oversight efforts to help
identify fraud, waste, and abuse. For example, the tool
currently cannot apply real-time views of provider behavior
patterns across community care programs. The OIG recognizes
that VHA is deciding whether to bring the oversight function of
the tool back online or to replace it.
We suggest that VA consider the following actions. First,
to ensure there are sufficient resources and processes to
promptly bill the backlog of community care claims.
Second establish processes to prevent further disruption of
revenue collections.
Finally, provide adequate resources to perform fraud,
waste, and abuse examinations of the data on the backlog of
community care claims.
In conclusion, the pause of the Program Integrity Tool
delayed VHA's ability to collect hundreds of millions of
dollars of revenue and has impacted VHA's fiscal stewardship
efforts.
We urge VHA to take all necessary actions to ensure the
tool's full functionalities are restored. Given the effects on
veterans being billed for services provided as long as 18
months ago and delayed revenue collections from private
insurers, we will continue to monitor VHA's actions and keep
the committee informed.
Mr. Chairman, this concludes my statement. I am happy to
answer any questions you may have.
[The Prepared Statement Of Jennifer McDonald Appears In The
Appendix]
Mr. Rosendale. Thank you very much, Ms. McDonald. The
written statement of Ms. McDonald will be entered into the
hearing record.
We are now going to proceed with the questioning, and I
will recognize myself for 5 minutes.
Ms. Duke, let us go over the basics. What does the Veteran
Health Administration bill insurance companies for community
care? Why, excuse me. Why does the Veterans Health
Administration bill insurance companies for community care and
what role does the Program Integrity Tool, the PIT, play in
that?
Ms. Duke. Yes. Good morning and thank you for the question.
The role of the billing is from a billing perspective we are
source neutral regarding whether the care is provided in the
community or in the direct care system. We need to bill first
and third-party for eligible veterans, regardless of where the
care is delivered.
The PIT tool was the data repository that gave us a lens on
all of the care that was provided in the community that has
been reimbursed through a variety of different programs, as the
program has grown in increments over the years.
Mr. Rosendale. Okay. Please explain what happened to the
community care billing data while PIT was offline?
Ms. Duke. That data was available in the source systems
that actually complete the billing activity to ensure that we
are paying the third-party providers, but we did not
necessarily have the adequate data about what was delivered to
enable our team to determine the veteran's first and third-
party responsibilities.
That data was still available. It was just not in a form
that we could intake into our systems.
Since July that data has become available. They have begun
pushing that data available to us, and we have begun working
through it at a very fast clip. It is a lot of data but we are
utilizing all tools that are available to us to work through it
quickly. We have already seen our collections increase as Mr.
DelBene was referring to in his statement.
Mr. Rosendale. Sure, sure. Believe me, we are going to get
into that a little bit later because there is a huge difference
between collecting 100.7 percent of what you anticipated to
collect as opposed to collecting 100.7 percent of what is
actually obligated to you, a large, large void there
Dr. Bradley, how does the VHA use PIT to prevent improper
payments including fraud and waste?
Ms. Davis-Bradley. The Program Integrity Tool helps to
identify issues in a pre-payment setting so to prevent bad
payments from exiting VA. We also use it for post-payment
analytics to understand trends and potential fraudulent waste,
wasteful, or abusive billing.
Mr. Rosendale. Dr. Bradley, the improper payments, how many
are overpayments, duplicate payments, or payments that
otherwise are incorrect versus procedural compliance issues,
which does not really cause a financial change?
Ms. Davis-Bradley. We have to do a lot of analytics to
identify to, kind of, extrapolate what percentage is. I can
tell you that only $22 million per year on average is duplicate
payments.
We, though, in partnership actually with OIG, U.S.
Department of Health and Human Services (HHS), Centers for
Medicare and Medicaid Services (CMS), do identify schemes,
trends related to fraud, waste, abuse, to make sure that we
understand the various percentages across the healthcare
sector.
Mr. Rosendale. Okay. If you could get for us, okay, the
difference between how much of it is fraud, waste, and abuse,
and actually there is a financial obligation, if you will, that
is paid or due to be paid, and how much of it is just, like, an
administrative, or again, some kind of a compliance issue so
that we can see the difference in that.
Dr. Bradley, what are the advantages in having the
community care claims data all in one place to identify
duplicate or incorrect payments?
Ms. Davis-Bradley. Well, what is great about having it all
in one place, we are able to identify not only duplicate
payments across payment systems, we are also able to look at
specific providers across all systems to identify their total
amount of, kind of, exposure that they provide to VA. That is
the picture that it gives us.
Mr. Rosendale. Okay. When was the last time your office or
anyone else was able to use data from PIT to scan for fraud and
waste?
Ms. Davis-Bradley. The last time we really did that was
when the Program Integrity Tool was up and running, but we have
been scanning for fraud, waste, and abuse in the upstream
payment system. We have continued to do those same analytics.
They have been more manual and labor-intensive, but we have
still been able to do them over the past year and a half.
Mr. Rosendale. Okay. Thank you very much.
I will now yield to Ranking Member Cherfilus-McCormick for
5 minutes of questioning.
Ms. Cherfilus-McCormick. Thank you, Mr. Chairman.
Thank you to our witnesses for being here. I want to start
off by really zoning in and focusing on the impact of the pause
on our veterans. OIG's advisory memorandum noted that in some
cases veterans' outstanding copays may date back to care that
is over a year old but did not quantify the impact that these
delayed bills may have had on our veterans.
Does the VA have a data on the number and amount of copays
that are outstanding due to the Program Integrity Tool pause?
Ms. Duke. While we do not yet have an estimate because we
are still waiting for the data that we did not have access to
during the PIT pause, I can tell you that historically first
party collections for community care are a very small portion
of what we collect. In 2022 it was $31 million and in 2023 it
was $40 million, so it is a small amount.
I want to emphasize that this is only certain veterans.
Those who are service-connected or eligible for VA care on the
basis of income are exempt from copayments, as well as certain
other categories of veterans.
Ms. Cherfilus-McCormick. Well, I understand that the number
amount might seem small, but what our veterans who actually
have to do the copays----
Ms. Duke. Understood.
Ms. Cherfilus-McCormick [continuing]. we are trying to
understand the impact on them. Will we be able to get that
data? Do you have any plans for the future to actually collect
the data to find out how it is going to impact an individual?
Ms. Duke. As we process and determine what individual
veterans owe we work very closely with the veterans in question
to make them aware of their rights and work with them on what
is necessary.
The other thing I will mention is that as we bill first
party we also are going to bill the third-party and to the
extent that those veterans have private insurance that we are
able to collect from, that can mitigate or eliminate the
veteran's first party responsibility as well.
We would always make that available. Even if the collection
from the insurance company comes years later, we would issue
that refund to the veteran upon collection.
Ms. Cherfilus-McCormick. Will we be able to get that data?
Ms. Duke. As we process through the data that comes through
PIT we will keep you posted on the average debt that veterans
own, yes.
Ms. Cherfilus-McCormick. Thank you. Why are we even
discussing collecting these copayments before VA understands
the impact that this will have on our veterans?
Ms. Duke. Legally we are limited in what we can offer
veterans in terms of relief. We do maximize the utilization of
what we have available legally. We try to make it as easy a
process. We work closely with the debt management center and
use the authorities that you have provided to the secretary.
As we have seen delayed payments incurring greater
responsibility on our veterans, we have begun exploring whether
there is a regulatory fix that would make us able to
proactively extend relief to veterans in a way that currently
legally we are not able to do. We are exploring that right now
in coordination with our general counsel.
Ms. Cherfilus-McCormick. Much like the pharmacy copay issue
VA has been dealing with since the first go-live of the
electronic health records modernization project, I am worried
about veterans receiving massive bills for care that was
provided over a year and a half ago. Has VA given any thought
to waiving this debt?
Ms. Duke. As I said, we explored what was feasible within
our authorities and determined that we needed additional
regulatory authority to be able to waive the debt as
proactively as we would like. That said, we offer veterans many
opportunities to work with us individually, particularly
reaching out to the small population who have particularly
large debt that they have accrued over time.
Ms. Cherfilus-McCormick. I remain extremely concerned that
VA is moving forward with charging those veterans without
understanding the full impact of these bills. I understand the
VA's desire to collect on these bills after such a lengthy
pause, but we must keep in mind how this could impact the
veterans, many of whom are on a fixed income.
I just want to stress again that I want to make sure that
we are actually taking the steps to protect our veterans and
understanding their position and putting them first and making
sure that an unexpected bill of any amount may impact the
veteran's budget for the month.
Sometimes we should not take one just because we have
neglected our IT system, and I do not want that burden to fall
onto our veterans, especially since there might be more bills
that are compounding on them as we are going through our IT
modernization.
I yield back.
Mr. Rosendale. Thank you very much.
I will now recognize Representative Mace for 5 minutes
questioning.
Ms. Mace. Thank you, Mr. Chairman.
The Program Integrity Tool, or PIT system, was shut down
for approximately 18 months while the VA struggled to find its
way to a partial solution, and this only happened after this
committee got involved. At a minimum, taxpayers deserve an
explanation and what happened and why the VA took so long to
get all of this sorted out.
My first question today is for you, Mr. DelBene. How much
did the PIT cost to develop and then operate for 10 years?
Mr. DelBene. Thank you for the question. I do not know that
I have the 10-year number. Our annual budget was around $5
million for the PIT.
Ms. Mace. Okay. Also, for the first 5 months of the
shutdown the contractor was making server, operating system,
and data base upgrades to PIT. Were these successful?
Mr. DelBene. They were.
Ms. Mace. You testified that you raised issues with the
contractor's quality of work resulting in new contractor
leadership and a larger team. Did you terminate the contract or
simply let it expire?
Mr. DelBene. We did not terminate the contract. I made a
judgment decision that it was better to get them working on the
problem with a larger team with the commitment to the Chief
Executive Officer (CEO) of Science Applications International
Corporation (SAIC), and that is the direction we took.
Ms. Mace. Okay.
Mr. DelBene. That is what resulted in us being able to
effectively bring it back online. I would also say, without in
any way minimizing the work that they did that caused these
problems, they were very diligent in helping us fix the
problems once this was raised to their attention.
Ms. Mace. You remove the senior executive in charge of the
project because he or she was not, quote, ``engaged enough.''
What does that mean?
Mr. DelBene. I believe that if even no matter how large
your portfolio of systems is you should understand each of them
intimately so that you understand when things are off the
rails. I did not believe that this executive had that mindset,
and so we moved him to another position. He subsequently left
the VA.
Ms. Mace. Okay. No one was fired or anything like that as
has been----
Mr. DelBene. He was removed from this job.
Ms. Mace [continuing]. removed. Okay. When did this happen?
Mr. DelBene. I will have to get back to you on the precise
date, but it was part of this reset process that caused that.
Ms. Mace. Okay. Then when did you personally get involved
with fixing the PIT?
Mr. DelBene. I got involved, I believe it was probably
March or April. I can get back to you on a specific date. I
will say since I learned of it I have met weekly with the team
and I am very----
Ms. Mace. Do you know roughly when that was?
Mr. DelBene. I am sorry?
Ms. Mace. Do you know roughly?
Mr. DelBene. In the spring and I can give you the exact
date----
Ms. Mace. Spring of this year?
Mr. DelBene. Yes. This executive alerted me to it and I
said I have got to dig deeper to----
Ms. Mace. Why not sooner, I guess? You just found out about
it in the springtime?
Mr. DelBene. That is the first I heard about it.
Ms. Mace. Okay.
Mr. DelBene. I dug in the minute I heard about it.
Ms. Mace. Okay. Do you take any responsibility for this
mess?
Mr. DelBene. I do. I think that anything that is under my
watch is my responsibility.
Ms. Mace. Okay.
Thank you, Mr. Chairman, and I yield back. I appreciate it.
Mr. Rosendale. I now recognized the gentleman from Texas,
Mr. Self.
Mr. Self. Thank you, Mr. Chairman.
Mr. DelBene, first question, on page three of your written
testimony, apparently last month you have a new contractor that
is working on the support, the development, and sustainment of
the PIT moving forward. Please assure me that this
subcontractor or this contractor is not attached to Microsoft?
Mr. DelBene. It is this contractor is in no way attached to
Microsoft.
Mr. Self. Thank you. I will tell you, Mr. DelBene, we now
have--this is the fourth major significant action, well no. It
is at least the fourth and I can think of a couple more that we
tend to uncover over time.
We have the critical skills incentive issue. We have got
the $15 billion. We have got the sexual harassment scandal. We
have got the ongoing electronic records. Now, we have got this
issue.
I would just ask in a rhetorical question, how many more of
these issues do we have to come out from the leadership of VA?
I will also tell you they all hurt veterans because the impact
of each of these major, significant issues filter down to the
treatment that our veterans get or do not get or payment that
they get or do not get.
I am almost, to use a World War I term, shell-shocked over
the numbers of issues that are coming out of the leadership of
the Veterans Administration.
Dr. Bradley, I understand that you believe that upstream
controls are more effective in preventing waste, fraud, and
abuse. Do you have any figures to back up that belief?
Ms. Davis-Bradley. In general, it is much more effective to
prevent a bad payment from leaving the door than, kind of, a
pay and chase model. It is in general that you want to be able
to identify, for example, an upstream issue where the location
of service does not match a procedure code, like, you cannot
have a surgery at home.
These are all controls that if we can prevent the payment
and not have to discover it after the payment has been made,
you have never spent the money.
Mr. Self. Okay. I am less concerned about that. I
understand. I mean, that is reasonable. I would be more
concerned with having to claw money back from our veterans
because that is where they get hurt.
I have heard Ms. McDonald. Dr. McDonald, excuse me. You
testified that you, and I think it was not in your written
testimony that I could find, you testified that part of the
problems were incorrectly entered data. Did I hear that
correctly?
Ms. McDonald. Correct.
Mr. Self. Yet, the information that we were given was it
was defective logic code. Now, that is two different issues, so
which is it?
Ms. McDonald. We can only speak on what we heard when we
were working on the MAM from VHA officials. I think they could
probably give you more information on the details of what all
of the errors were. It is our understanding that beyond the
initial issues that were discovered, the three types of issues
with the Program Integrity Tool, there were 18 issues
identified once they took the PIT offline and then did a deeper
dive into what was going on with the data accuracy and
integrity issues.
Mr. Self. Okay, great, great point. What was first alerted,
logic code or improperly entered data, because that is either a
human error or a code error.
Ms. McDonald. I think VA would have to address what they
first identified. In terms of our knowledge of it, we first
became aware that there might be issues with the Program
Integrity Tool data when our investigators were using data from
the Program Integrity Tool and data from the third-party
administrators for the community care network data claims to
look at investigations for a specific provider and the data was
not matching.
They were unsure which source data was inaccurate and why
it was not matching and started to have conversations with OIC
and VHA about that.
Mr. Self. Okay. I think Mr. DelBene wants to address that.
Mr. DelBene. Yes, thank you for the opportunity. The
process that the PIT utilizes is something called ETL, with
extract, transact, or transform, and load, which means that the
logic code actually results in data errors once the ETL has
occurred. They were really two sides of exactly the same thing.
We ended up with issues which were around the logic code in
the ETL process resulted in data that was improper or incorrect
within the data base.
We also ended up in situations where a particular file
could go through the ETL process twice and cause an ingestion
of data in a second time so you get duplicates. They are just--
they are related to one another.
Mr. Self. Okay. Have you considered, and I have got a very
short period of time here, the intelligence community can help
you with this. Have you considered consolidating the multiple
data bases, I think you are calling them, that all feed into
the PIT?
Mr. DelBene. We have we have not considered that. I think
it would cause a greater dependency on a single system and
complexity to actually try to bring those together at this
point in time. What we are investigating is whether we can
streamline the entire pipeline from those sources all the way
to revenue operations.
Things go into the PIT, then they go into a corporate data
warehouse before they get picked up for transaction by revenue
operations. We are looking at holistically of how we can
improve and modernize the system to get rid of those
complexities.
Mr. Self. Okay, thank you.
I yield back, Mr. Chair.
Mr. Rosendale. Thank you very much, Representative.
Dr. McDonald, as you stated in your remarks and according
to your report, how many community care claims did VA pay out
during the first 13 months of the PIT shutdown? How much money
does that represent?
Ms. McDonald. VA paid about 40 million claims in the first
12 months and that represented about $28.6 billion. That was
from February 1, 2023 to February 1, 2024.
Mr. Rosendale. Okay, thank you. Dr. McDonald, you did not
estimate how much waste or fraud there was in those payments
during the 13-month period, but the improper payment rate for
community care is 4.9 percent. One-tenth of 1 percent is worth
$28.6 million.
Is it fair to say the improper payments were probably in
the hundreds of millions of dollars?
Ms. McDonald. We did not calculate an estimate for fraud,
waste, and abuse or improper payments. Our estimates were
focused on the revenue collection side, so I cannot speak to
that amount.
Mr. Rosendale. Okay.
Ms. Duke, according to the OIG's report, you missed $665
million in billings during the 13 months they examined and $55
million each month after that. During all 18 months that PIT
was shut down that works out to about $940 million of missed
revenue. Is that figure accurate?
Ms. Duke. The calculation is correct.
Mr. Rosendale. Okay.
Dr. McDonald, is $940 million an accurate estimate?
Ms. McDonald. It is accurate based on the methods we used
to estimate it. Correct.
Mr. Rosendale. Ms. Duke, how do you reconcile all that
missed revenue with Mr. DelBene's statement that you collected
100.7 percent of planned collections through February 2024?
Ms. Duke. What I would say is our team utilized the time
when PIT was down to go back over previous claims that had been
settled out in some cases where we did not take advantage of
the full legal window to bill third parties that we had
available.
In some cases we thought the claims were too old, but
legally we have up to 6 years to bill and a lot of our
providers are willing to pay. We went back over those claims to
look for lost opportunity of revenue.
Furthermore, we continued to buttress our efforts in our
first and third-party collections for VA direct care, which is
the larger part of the revenue that we collect and utilize.
Mr. Rosendale. Again, we get back to this planned
collections and not actually opportunity of revenue in your
words. My words, receipts that are actually due.
Dr. McDonald, do we know what that void is, okay what that
space is? The difference between this claim that we say we have
collected 100.7 percent of this revenue as opposed to what is
actually due?
Ms. McDonald. As far as we are aware, we have not seen any
of those 40 million claims being assessed and then billed to
private insurers yet, but it is our understanding that VA
started running data from the Program Integrity Tool for
revenue collections for those claims as of July 2024.
We have not assessed that yet. We have not seen any actual
data on whether claims have gone to private insurers yet for
that set of claims.
Mr. Rosendale. Ms. Duke, do you believe that you will ever
be able to collect all the revenue that is actually due?
Ms. Duke. I believe we will be able to collect what is due
to the extent that it was delayed as a result of PIT. I cannot
commit to a hundred percent of the collection any more than in
any year I can.
From a resources perspective to the extent that we offset
our resource request of appropriations based on collection
activity, I can commit that we will fully recognize the
collections necessary for us to even out across the two fiscal
years of 2024 and 2025. We will collect. It will just be
delayed.
Mr. Rosendale. We are talking about $940 million, okay, and
you are saying that that can be attributed to the PIT
shortfall, if you will.
Ms. Duke. And the delay.
Mr. Rosendale. You are telling me we are going to be able
to collect all $940 million?
Ms. Duke. To the extent, yes. I am comfortable that we will
realize collections.
Mr. Rosendale. When do you believe that you will be able to
accomplish that by?
Ms. Duke. I do not know if it will happen in the next
couple of years. It kind of depends on how quickly we are able
to ingest the data and our team can turn it around.
As the data comes through we assess whether or not it is
billable. I do not know whether the first chunk of data coming
through represents more billable claims or non-billable claims.
Mr. Rosendale. Then what we----
Ms. Duke. We will continue on it.
Mr. Rosendale [continuing]. what we are faced with is this
shortfall that we really do not know what it is. It is
obligations that are due to the VA but you do not know when you
are going to be able to collect them. They are sitting in the
coffers of the insurance, the vast majority of it is sitting,
again, in the coffers of those insurance companies and their
stockholders are the ones benefiting from that, not our
veterans getting that revenue back into the system to help
them.
I will yield to Ranking Member Cherfilus-McCormick.
Ms. Cherfilus-McCormick. Thank you, Mr. Chairman.
The VA has responsibility to inform our veterans of why
they have a copay and with that responsibility I wanted to know
what are you communicating to our veterans in an explanation
and educating them on why they owe this copay?
Ms. Duke. When we send out the notification of the
statement of earnings, we include a lot of background
information on what it was due to and the dates of service that
are associated with it. We also include links a lot of times to
all of the services that are available. They can log on and
find out more information, appeal for relief at that time. We
share a lot of information that is available.
Ms. Cherfilus-McCormick. You also have a responsibility to
have the information spread for a reasonable amount of time.
How much time are you allocating to educate and to tell the
veterans on why they actually owe this money?
Ms. Duke. When we issue the statements we communicate very
clearly and work with them to have a reasonable amount of time.
In the case of delayed billing such as this, we try to reach
out ahead of actually issuing the statements to communicate,
and then we will have softer touch for those who have larger
requirements.
Ms. Cherfilus-McCormick. What does that window look like?
Are you giving them a month in advance notice so you tell them
the month, you know, hey, you owe this money. It is going to be
due the following month. What does that timeframe look like?
Ms. Duke. I will have to follow up, but what I would say is
that we are very soft about the due dates, particularly when it
comes to a longer bill. It is not, like, 30 days or we will be
knocking on your door.
Ms. Cherfilus-McCormick. I want to understand that VA
maintains a 6-year timely filing window for private insurers.
Does that same window extend for billing veterans for copays?
If not, what does VA policy say about deadlines for collecting
debt for our veterans?
Ms. Duke. There is no time limit on the veteran's debt, but
because we have other abilities to work with them we will
extend a payment plan as far into the future as is necessary.
Ms. Cherfilus-McCormick. I had a, you know, with the other
modernization issues that we have come across and there has
been other instances where veterans might have back payments.
Have you guys taken a look at it to make sure that the
compounding effect is not devastating certain veterans?
Ms. Duke. We certainly are looking, particularly across
VHA. We look at the combined statement for the veterans and
have a full understanding of their requirements.
What I would say is we have worked very closely with the
veterans, the Veterans Experience Office (VEO), and also with
our Office of Mental Health to make sure that when we do reach
out and provide these communications we are doing it in a
veteran-centric way.
Ms. Cherfilus-McCormick. Is that analysis being done before
or after? The reason why I am asking about the timeliness of
it, is it that the veteran may be home and they get all these
bills saying, hey, you have a copay for these past years. There
was another glitch that we had and you owe money here again.
Or is it are they going to just get all these bills and be
told that they have all these copays, or are you analyzing it
in some way saying, well, this veteran may have three different
copays because of three different glitches and so we are now
putting them in a different space so we can work it out
individually. Is it before or after?
Ms. Duke. I would say it is before where we have the
combined veteran statement, but I will follow up to make sure
that we are looking specifically to ensure that we have a
softer touch with those veterans who have significant
requirements.
Ms. Cherfilus-McCormick. Please do because my concern, as I
keep stressing, is that I want to make sure that our veterans
are not at home feeling overwhelmed that they are getting all
these bills and it is saying that, hey, we had a mistake but
now you owe us all this money, especially when you are on a
fixed income. I would never want anyone to be in that
situation.
Ms. Duke. I would say that is why we are looking into
regulatory relief so that we do not even have to reach out in
those situations.
Ms. Cherfilus-McCormick. Ms. Duke, the Republicans have
made some assertions that the delay in the collections for
community care bills have contributed to VA's nearly $15
billion shortfall.
How does the VA classify those overdue collections? How
would their eventual collection affect this shortfall?
Ms. Duke. Plainly, there is no part of the VHA $12 billion
shortfall that is the result of delayed revenue.
We did dip into our planned carryover a little bit more
than we expected this year to, again, cover requirements
because there were delayed payments. As I said when we expect
to collect fully next year we did not put that effect in our
request for additional resources.
Ms. Cherfilus-McCormick. Mr. McDonald, I understand. Dr.
McDonald. I understand that OIG is performing some oversight on
the budget shortfall within both the VHA and Veterans Benefits
Administration (VBA). Can you share more about the scope of
this project?
Ms. McDonald. Yes. We have started two different projects.
One is a review to determine the factors and conditions that
resulted in VHA's request for nearly $12 billion in
supplemental funding for VHA in 2025. One is to look at the
factors and conditions that resulted in VBA's request for
nearly $3 billion for 2024.
Those have both started and are ongoing as of right now.
Ms. Cherfilus-McCormick. Thank you. I yield back.
Mr. Rosendale. Thank you very much, Ranking Member.
I now recognize Representative Self.
Mr. Self. Thank you, Mr. Chairman.
Ms. Duke, what is the average amount of time it takes to
collect every dollar, a dollar for non-connected care after the
care is delivered? What is your average?
Ms. Duke. I would have to get back to you on that.
Mr. Self. Yes. I would like to know because you just said
that it does not represent a significant amount of the $12
billion.
You have 6 years to bill, correct?
Ms. Duke. Correct.
Mr. Self. Do insurance companies have a statute of
limitations on what they will accept?
Ms. Duke. A couple of our insurance companies who we work
with we have contracts that predate the legislative
permissiveness bill for the 6-year period. In those cases we
have been honoring the contract and working with them to see if
we can continue to extend it, but it is not industry standard
but it is appropriate given the way in which we do our billing
because we bill as though it were care provided in our direct
care system.
Mr. Self. I think you just said that they do not accept
your bills.
Ms. Duke. They accept our bills. They will push back to the
extent that there is a contractual disconnect with what is----
Mr. Self. Do they pay the bills?
Ms. Duke. We work with them through our general counsel to
seek that.
Mr. Self. What percentage of the bills do they pay?
Ms. Duke. I would have to get back to you on that.
Mr. Self. I really want to know that. That may be something
we need to examine legislatively if it is a significant amount.
Dr. McDonald, so in 2022 your office found that VHA did not
submit over half of the billable claims before the filing
deadline, carrying a huge amount of--how many recommendations
did you have on that issue?
Ms. McDonald. We had three recommendations from that report
from 2022.
Mr. Self. How many have closed?
Ms. McDonald. All three are still open. We paused assessing
the recommendations during the PIT pause because we need the
PIT to be up and running for revenue collections to be able to
assess the VHA's responses to the recommendations.
Mr. Self. When do you expect to start review?
Ms. McDonald. We do not have to wait until all 40 million
claims are processed. We expect to be able to start assessing
them once we know that Revenue Operations is billing private
insurers. We have to wait until that link is made and see how
that is working to see if the recommendations have been
implemented.
Mr. Self. You are not doing any review at this time of
these three open recommendations?
Ms. McDonald. Not right now.
Mr. Self. Okay. Ms. Duke, the factors you consider when you
estimate medical collections in your budget, what factors do
you consider?
Ms. Duke. We have an econometric model that looks at
historical success in terms of our first and third-party
collections and we look at the amount of care that we expect to
deliver in the year. Based on that we develop an estimate for
what we will be able to collect against our existing----
Mr. Self. Is that a subset of PIT?
Ms. Duke. The PIT is the way in which we gather the data to
issue the bills, but based on what we have billed through PIT
in the past is how we make the projections that we use in our
budget formulation.
Mr. Self. You have budgeted for the coming or the Fiscal
Year we are in $4.4 billion, right?
Ms. Duke. Correct.
Mr. Self. When do you expect to collect?
Ms. Duke. would say we actually expect to collect more than
that because we will work our way through the delayed
collections from 2024 and utilize overtime and contract and
hopefully some more staff to work more quickly through revenue
than what we had originally expected.
Mr. Self. Okay. Mr. Chairman, I yield back.
Mr. Rosendale. Thank you, Representative Self.
Ms. Duke, I am going to attempt to get to the bottom of the
delayed medical collections and your budget shortfall. I
continue to hear this information that one does not impact the
other, but I do not see how in the world that that can be.
First of all, how much are the medical collections that are
delayed from Fiscal Year 2024 to 2025?
Ms. Duke. How much is the delay?
Mr. Rosendale. What is the value----
Ms. Duke. We do not----
Mr. Rosendale [continuing]. of those collections that have
not been, that you are projecting that they are not going to be
collected from 2024 to 2025?
Ms. Duke. We have provided additional resources to the
field out of our carryover to offset what they perceived as
lost collections, but we actually are on target to come close
to our collections goal for the year.
Mr. Rosendale. You initially told us $700 million in July.
Ms. Duke. That was----
Mr. Rosendale. Would you like to revise that number?
Ms. Duke. That is the impact of the PIT delay. At the same
time that the PIT was delaying first and third-party
collections in the community care world, we have been utilizing
our ability to try to maximize and increase collections from
the direct care system.
Mr. Rosendale. Okay. You have been trying through the
direct care system. You initially told us that number was going
to be $700 million. Would you like to revise that number?
Ms. Duke. That is the estimate of what was not collected as
a result of PIT being down. I would say that is not the total
difference from our expected returns in our collections
activity for the year.
Mr. Rosendale. Would you like to revise that number?
Ms. Duke. What I would say is that on average monthly
collections within the VA are between $300 million and $400
million, not necessarily during the PIT, but the change
healthcare did cause us to reduce monthly collections to right
around $150 million. Now we are actually above that $400
million moving forward for what we expect to receive for the
remainder of the fiscal year.
Mr. Rosendale. Again, that is all great, fine, and good,
but how does that impact that $700 million? Is that still your
target? Do you think that that is still going to be the
shortfall? Do you think it is going to be more than that? Do
you think it is going to be less than that?
Ms. Duke. What I would say is, and I apologize for the
confusion, collections is a time mushy, kind of, world where
the issue is----
Mr. Rosendale. I understand. Again, because this is where
we continue to have this conversation about what is actually
obligated to the VA and what you were targeting that you think
reasonably you can collect.
There is not really any other business in the world that
functions that way. You either have receipts due and you are
going to be able to collect them or you are not going to be
able to collect them. To come into this room and say we are
collecting 100 percent of what our projection is, you can make
that projection number whatever you choose to. That is very
disingenuous and dishonest to the committee.
Mr. DelBene, you can roll your eyes and make faces, but you
can make that projected number anything that you choose to. You
have obligations and so what we were trying to determine is how
this is all impacting----
Mr. DelBene. If I may?
Mr. Rosendale [continuing]. the budget. No, you cannot. I
am moving on.
Ms. Duke, when I asked Dr. Elnahal about this issue last
week he characterized it not as a budgetary issue but more of a
cash-flow issue.
Ms. Duke. That is correct.
Mr. Rosendale. Well, it is correct but there is revenue
that is due and if it is not being collected by the VA then
that has a direct impact on your budget.
He also said, ultimately, the cash in the bank account is
lower than we had hoped and expected because of the collection
issues between PIT and the change healthcare incident.
Ms. Duke, basic question, are you requesting supplemental
appropriations to make up for these delayed collections?
Ms. Duke. No. We are not.
Mr. Rosendale. If we have this additional revenue then, and
I have got a statement here that you all just provided
yesterday, and nowhere in there does it reflect that. It does
not show the shortfall, nor does it show the revenue that you
are anticipating to collect. Where is that silo? Where is that
account being managed? It is basically, from my standpoint
because it is not reflected in here, it is being utilized as
some kind of a slush fund. Whatever you get you can redirect.
Whatever you do not get you do not have to claim, and meanwhile
you have made your budget request on these forms, not
reflecting all of the information about what your income and
what your obligations are.
Ms. Duke. The president's budget for 2025 was transparent
about the fact that we expected to have significant carryover
both in base and Toxic Exposures Fund (TEF) resources from 2024
into 2025 to offset our expected requirements in----
Mr. Rosendale. Did you have that revenue carryover?
Ms. Duke. That is where we see the impact of the PIT tool.
We expect that we will carry over less than what we had
expected from 2024 into 2025. We did not increase our request
for additional resources because we expect to make up that lost
carryover via collection activity in 2025, and that is the
cash-flow that Dr. Elnahal was referencing.
Mr. Rosendale. Again, it is not reflected in those numbers,
the revenue nor the obligation is not being reflected in the
statement. As far as I can tell from my standpoint this is a
mystery account that you that not accounting for.
Ms. Duke. We just----
Mr. Rosendale. I will now yield time to Mrs. Cherfilus-
McCormick to ask questions.
Ms. Cherfilus-McCormick. Assistant Secretary DelBene, did
you have any comments that you wanted to make on this?
Mr. DelBene. Thank you. Thank you very much. The only thing
I wanted to clarify is that the projection of collections,
which I had in my opening speech, which also Laura Duke
referred to, would have been projected ahead of time. There is
no, kind of, moving that number to what fits our fancy.
That projection was made at the beginning of the year and
we achieved that number. Thank you for letting me clarify.
Ms. Cherfilus-McCormick. Thank you.
Ms. Duke, did you have anything you wanted to say?
Ms. Duke. I will just note that the estimate of collections
is what we provide so that when we request resources in the
president's budget we do not double dip. We want to be clear
regarding what we need from Congress to provide care to
veterans, and we reduce that amount by what we expect to
collect.
Sometimes we collect more, sometimes we collect less, but
that is intended to help you do your job in terms of providing
appropriations to us in our need.
Ms. Cherfilus-McCormick. Thank you.
In our accountability hearing last week, Inspector General
Missal actively discussed the challenges that IG faces in
conducting oversight of certain elements of the community care,
like wait times and quality of care.
As I understand it, VHA's Office of Integrity and
Compliance utilizes data from the PIT to support investigations
performed by OIC and U.S. Department of Justice (DOJ) and
provide necessary oversight of community care claims.
Dr. Davis-Bradley, while the PIT has been down, how have
you been able to support the work of detecting fraud, waste,
and abuse in community care claims?
Ms. Davis-Bradley. We have had a lot of opportunity to look
up into the upstream payment systems. As soon as it became
clear that the Program Integrity Tool was not going to be
coming online as quickly as we had hoped, we started, kind of,
building data queries, data polls to look into the upstream
payment systems to do the same types of analytics that we have
always done, looking pre and post-payment to identify
potentially fraudulent, wasteful, or abusive billing in our
payments.
Ms. Cherfilus-McCormick. There has been some indication
that VA may not continue to utilize PIT for fraud, waste, and
abuse detection efforts. Is that true?
Ms. Davis-Bradley. We are trying, and we have had lots of
conversations with CMS over the past year to better identify,
kind of, what they are doing. They are about 5 years more
mature than we are in some of our processes and so what we are
trying to do is learn from other Federal agencies to make sure
that we have the best system and processes in place to ensure
that we are detecting the most amount of fraud, waste, and
abuse.
Ms. Cherfilus-McCormick. Dr. McDonald, how has the data you
have received from these upstream systems been sufficient for
your oversight efforts?
Ms. McDonald. We have not received any data from the
upstream systems that are being used.
Ms. Cherfilus-McCormick. How could VA and these third-party
administrators improve their systems and reports for detecting
fraud, waste, and abuse until PIT is able to be fully
functional again?
Ms. McDonald. It is my understanding that different uses
were implemented, like the upstream systems, but I am not
familiar with the specifics. I think Dr. Davis-Bradley would
probably be better able to talk about the specifics there.
Ms. Cherfilus-McCormick. What information would you need?
What data would you need so you can conduct sufficient
oversight?
Ms. McDonald. I think for us what was lost with the Program
Integrity Tool being offline was really for the fraud, waste,
and abuse side for our investigators because that was a
repository where claims data, paid claims data, came in from
multiple different systems.
They were able to use it for data analytics to look at
fraudulent provider behavior and to look across programs. Then
they were also able to use it as a data source for their
investigations to bring to trial. Without that, they have had
to use other data sources that have taken more time and more
effort for them to get the other data from the other sources.
That is been a loss for them while it has been offline.
Ms. Cherfilus-McCormick. Mr. DelBene, a March briefing VA
spoke to the need to establish a long-term roadmap and
modernization plan for the community care revenue pipeline.
What progress has VA made in developing this roadmap and plan?
Mr. DelBene. At this point, we have been focused on the
repair of the PIT and so I would say we have only had
conversations about what the requirements are from the various
stakeholders, which would be VHA and revenue operations and
Office of Integrity. We have not got to the point where we have
actually plotted a way forward.
The next step and the thing that we are deeply engaged in
right now, in addition to getting it fully loaded with data for
revenue operations is putting back the fraud, waste, and abuse
algorithms or reports, more accurately, that ran on top. That
is the focus right now.
Ms. Cherfilus-McCormick. Thank you. I yield back.
Mr. DelBene. If I may, just for 1 second?
Ms. Cherfilus-McCormick. Go ahead.
Mr. DelBene. Let me pass it just for, I know we only have a
few seconds, but to Cheri to see if she had some additional
things she would comment on in terms of the efforts on the
pipeline?
Ms. Waters. Thank you very much. What I will say is that we
are focused heavily on looking at an end-to-end picture of the
community care system, as well as the revenue operations as
part of the overall restoration.
We are working with members of both Dr. Bradley's team and
Ms. Duke's team to understand the best possible sources that we
can provide and how to not only restore the functionality of
PIT but build a future system that will be better for all of
their needs.
Ms. Cherfilus-McCormick. Thank you. I yield back.
Mr. Rosendale. Thank you very much.
Representative Self.
Mr. Self. Thank you, Mr. Chairman.
Ms. Duke, given your exchange with the chairman, how much
do you need to undershoot your projections before you do ask
for supplemental help?
Ms. Duke. What I would say is this year, given where we
were seeing the number of veterans coming in for care post-
Sergeant First Class Heath Robinson Honoring Our Promise to
Address Comprehensive Toxics (PACT) Act and given the
increasing demands, both in the community and in the direct
care system, looking at how we were executing this fiscal year,
that was when my leadership made the decision to come forward
and communicate the need for additional resources to continue
delivering care at that pace.
Mr. Self. Okay. I believe that the White House requested
the $12 billion in the Toxic Exposure Fund. Is that correct?
Ms. Duke. That is correct.
Mr. Self. To close the shortfall. Do you believe that
anyone in VA has adequately explained the shortfall?
Ms. Duke. I would defer to you on whether or not we could
provide additional information.
Mr. Self. Do you think you have adequately explained the
shortfall today?
Ms. Duke. We are always ready to answer additional
questions.
Mr. Self. Now, reminding you that you are under oath, the
Toxic Exposure Fund was created to pay for costs under the PACT
Act. Is every dollar in your supplemental request a result of
the PACT Act?
Ms. Duke. The Toxic Exposure Fund authorizes resources to
care for veterans who have toxic exposure, whether or not those
veterans are eligible for care as a result of the PACT Act. I
can commit to utilizing the full $12 billion request for the
care of veterans with toxic exposures in 2025.
Mr. Self. There has been some concern on this committee
that the fund has been improperly used in some cases, so I
appreciate your assurance.
With that, Mr. Chairman, I yield back.
Mr. Rosendale. Thank you very much, Representative Self.
Ms. Duke, you indicated in July that the VHA is requesting
$2.65 billion in the supplemental appropriations to make up for
funds that you had planned to carry over unspent from Fiscal
Year 2024 to 2025.
You provided a breakdown of the shortfall yesterday and it
does not seem to include that at all. Are you still requesting
supplemental appropriations to make up for the planned
carryover that is no longer available?
Ms. Duke. Yes we are, Congressman. If you look at the
difference between the budget and the revised estimate, the
fact that we are obligated--we anticipate obligating more funds
in 2024 than what the budget had projected. That difference is
where we will dip into the carryover, so to speak.
Mr. Rosendale. How do the delayed medical collections
relate to the unspent carryover?
Ms. Duke. The unspent carryover will be lower than what was
expected, but we deducted that impact due to collections in the
supplemental request because, as I said, we expect to collect
in 2025.
We are only requesting additional resources for the early
spend carryover that is not due to collections but that is due
to operations, delivering additional care in the community, and
in the direct care system.
Mr. Rosendale. You are not, again, so we are not accounting
for that shortfall at all?
Ms. Duke. In our request no, we are not because, as I said,
we will expect to collect it fully in 2025.
Mr. Rosendale. Okay. If those collections do not take
place, okay, what do we do then?
Ms. Duke. Well, in that case we would look for additional
efficiencies and implement some of the activities that we
articulated would be necessary if we do not receive the $12
billion.
Mr. Rosendale. We are going to take resources from other
areas around the VA? Again, this goes directly to my argument.
We are going to go and remove resources from other areas of the
VA that should be delivering these services to our veterans to
make up for the shortfall for the insurance companies that we
are supposed to be collecting from.
Ms. Duke. We do not anticipate that that will be necessary
because, as mentioned, we already have the data feed and we are
working our way through the backlog caused by PIT. We
anticipate being able to resume and meet our collections target
by the end of Fiscal Year 2025.
Mr. Rosendale. Previously you just stated to me that it
could take several years before you actually catch up to the
amount of revenue that is due, that is obligated to the VA, did
you not?
Ms. Duke. We have available 6 years. That does not mean it
will take 6 years to recover funds.
Mr. Rosendale. I understand, but your statement was it
could take us several years to catch up on these collections.
Those are your words.
Ms. Duke. Yes.
Mr. Rosendale. During that time period then we are going to
be----
Ms. Duke. We will need----
Mr. Rosendale [continuing]. and again in your words,
``directing resources from other areas of the VA in order to
take up for the shortfalls that we do.'' Or you will be coming
back to this body and requesting another supplemental.
Ms. Duke. Or we will meet our collections targets via other
means as we have done throughout the Fiscal Year while PIT has
been down.
Mr. Rosendale. Your targets, but that is not, again, we
have already had this conversation. Your targets are a far cry
difference than what is the actual obligation to the VA. We
still get back to the same issue and that is we have all of
these due receipts. The vast majority is from insurance
companies and instead of having these collections and getting
this revenue back into VA to help to deliver our benefits, you
yourself in your own words said, ``We will have to direct other
resources from other portions of the VA to make up for that
shortfall,'' because your shortfall is not reflected in this
statement that you just provided for this committee yesterday.
Those are your statements.
Ms. Duke. The budgeted expected returns is what we identify
as necessary to meet veterans' needs in 2025. If we
successfully collect that, as we hope we will----
Mr. Rosendale. ``If we successfully collect that.''
Ms. Duke. That is true in any fiscal year, sir.
Mr. Rosendale. Yes. Okay. All right. It looks as if I have
no one here to continue questioning with me so we are going to
wrap this up. Where is my, okay, there we go.
I want to thank the witnesses for joining us today. I think
we have been able to bring some of this information forward to
show that we still have major collection problems. I just do
not know how else we can describe it.
I would urge my colleagues in both parties in the House as
well as the Senate to give every element of the VA's budget
shortfall the attention and scrutiny that it deserves because
we are not getting that information.
We looked at just two aspects today and found answers to
many of the questions but also discovered many others. We are
all focused on ensuring that our veterans receive the care and
benefits that they have earned, but we also know that VA's
struggles with budgeting and management have existed for many
years and will not be resolved overnight. I for one do not
believe this is the last shortfall that the VA will find in
itself or the last supplemental appropriation that Congress
will be asked to provide.
I ask unanimous consent that all members have 5 legislative
days to revise and extend the remarks and include extraneous
material, and without objection, so ordered.
This hearing is adjourned.
[Whereupon, at 10:28 a.m., the subcommittee was adjourned.]
=======================================================================
A P P E N D I X
=======================================================================
Prepared Statements of Witnesses
----------
Prepared Statement of Kurt DelBene
Good morning, Chairman Rosendale, Ranking Member Cherfilus-
McCormick, and distinguished Members of the Subcommittee. Thank you for
the opportunity to testify on VA's efforts to rebuild the Program
Integrity Tool (PIT). I am accompanied by Ms. Cherri Waters, OIT's
Executive Director, Health Portfolio, Software Product Management, and
my colleagues from the Veterans Health Administration (VHA), Ms. Laura
Duke, Chief Financial Officer, VHA, and Dr. Tracy Davis Bradley,
Executive Director, Office of Integrity and Compliance (OIC).
VA's PIT serves as a centralized repository for Community Care
billing data, used for detecting fraud, waste, and abuse, as well as
for third-party billing. Originally designed to identify duplicate
payments, the tool's uses and sources grew organically over time to
meet a much wider variety of needs. In recent years, following major
legislative and VA policy changes, an increasing number of Veterans
have accessed Community Care paid for by VA. VA has experienced
significant growth in Community Care authorizations, with a 45 percent
rise in Veterans accessing community care since Fiscal Year (FY) 2019.
Simultaneously, there has been growth in enrollment and use of family
member programs, leading to increased spending on care outside VA.
Although these increases were not the primary drivers that led to
errors in PIT, they were an exacerbating factor.
PIT data users expanded over the past decade including internal VA
offices such as VHA Revenue Operations and external law enforcement
agencies like the Office of Inspector General (OIG) and Department of
Justice. As part of the PIT's realignment under VHA's Division of
Program Integrity in OIC in December 2022, VA identified the need to
significantly enhance staffing and resource support for this critical
tool. Due diligence completed on the PIT by OIC, in partnership with
OIT in January and early February 2023, confirmed known errors and led
to the detection of issues with its data base code logic that caused to
data inaccuracies.
After consultation with VA OIG, OIT, and VHA Finance leadership,
OIC made the decision to pause the use of the PIT in February 2023 and
worked with OIT to identify and fix data errors. Given the importance
of the PIT to OIG criminal investigations and VHA financial operations,
OIT, in close collaboration with OIC and Revenue Operations,
immediately pushed for a high degree of discipline and rigor in
restoration efforts. VA notified Congress and OIG immediately of the
need and reasons for the PIT pause, and the Department has been
proactive through the process to notify Congress and OIG of issues
hampering progress. OIT and VHA worked together to resolve data issues
and ensure priority business processes were brought back online first
to avoid unacceptable financial impacts.
Rebuild Efforts
In April 2023, OIT worked on a hybrid approach to restore data
while also making server, operating system, and data base upgrades
necessary to bring the systems into compliance. This work was done
through the established contract vendor who supported PIT sustainment
and enhancements. Server upgrades that started at the beginning of the
PIT shutdown were completed in July 2023. While the team encountered
additional data processing and validation issues, remediation efforts
and data loading began in August 2023. During this time, OIT and VHA
provided OIG with numerous updates on progress.
Finding that our senior leadership needed to be more engaged during
the rebuild process, I made the difficult, but necessary, decision to
replace a senior OIT executive with a new executive leader.
Additionally, the project team stood up weekly Chief Information
Officer-level PIT status briefings, so that I could provide direct
oversight. We also raised issues with the contractor's quality of work,
resulting in new contractor leadership and a larger team, increasing
the overall engineering rigor of the project. With these changes, we
re-affirmed the project priorities that included building confidence
through successful delivery of incremental functionality of the PIT,
ensuring all data were accurate and validated, and developing a longer-
term data processing strategy and timeline.
Revenue Operations, within VHA's Office of Finance, progressively
resumed community care third-party billing in June 2024 as incremental
data sources were validated and restored. On July 30, 2024, Revenue
Operations was able to process community care claims from that office's
data sources, initially covering the period from March 2023 to May
2024. Despite the delays, the restoration of Revenue Operations ensures
this revenue will eventually be collected.
The PIT is currently operational for billing, and ongoing efforts
are focused on restoring the entire PIT data set, and on re-
establishing its functionalities to support OIC oversight and fraud,
waste, and abuse investigations. Data is being imported sequentially
and is expected to be completed in Fiscal Year 2025, at which time,
daily processing will resume.
The Way Forward
The PIT rebuild is progressing steadily, with significant
advancements in restoring the remaining data sources. Looking ahead, VA
is shifting toward ensuring high-quality business and systems
operations, envisioning efficient future workflows, and securing long-
term support for the system. To achieve these goals, we are taking the
following actions:
First, we are working to guarantee data quality and prevent errors
through robust validation processes. OIC, Revenue Operations, and OIT
are creating a collaborative data quality and governance strategy to
identify and resolve systems issues more efficiently in the future. Our
goal is to streamline issue resolution and explore long-term
alternatives to the current PIT system.
Second, OIT has completed a contract transition that will support
the development and sustainment of the PIT moving forward. This is
crucial to securing the best team for ongoing maintenance and new
development to ensure the long-term success of the PIT. The transition
began in August 2024 when a new vendor took over contractor support of
the PIT ensuring a seamless continuity of expertise.
Last, we are improving collaboration as we design modern and
efficient workflows for both Revenue Operations and fraud, waste, and
abuse detection efforts. The rebuild efforts, while systematic and
thorough, hampered OIT's business partners, OIC and Revenue Operations.
The PIT developed under the former Office of Community Care, and it is
now time to step back and envision what revenue and fraud detection
systems VA should build to support high-quality operations moving
forward.
Impact to Fraud, Waste, and Abuse Capabilities and Alternatives Efforts
While the PIT has been offline since February 2023, OIC has
maintained robust oversight of VA's community care programs through a
variety of alternative activities and initiatives. For example, OIC
refers potentially fraudulent providers to OIG, manages VHA's Recovery
Audit Contract, identifies ineligible providers, identifies and
mitigates gaps in internal controls in source systems, performs claims
analysis to detect inappropriate billing, and responds to Veteran
complaints through the OIC HelpLine.
During this period, OIC made significant progress in identifying
opportunities to improve processes and address technological gaps. OIC
collaborated with OIT to address several PIT defects, including out-of-
order claims data ingestion, faulty inpatient claims processing line of
code, and remediating duplicate claim creations in the PIT post-January
2022. VA also implemented an interim solution to make historical data
available to support VHA's mission. Additionally, OIC developed a
comprehensive roadmap for enhancing fraud, waste, and abuse detection
capabilities based on industry best practices. This includes near-term
steps to improve OIC's intake and resolution of fraud, waste, and abuse
complaints from Veterans.
Looking to the future, OIC is taking a proactive approach to mature
its oversight capabilities, informed by a full-scale risk assessment of
historic and current PIT activities completed in July 2023. OIC is also
enhancing its fraud awareness training for staff, restructuring the
office to optimize new functions and strengthening coordination with
key VA stakeholders. Through these efforts, we are confident that VA
will emerge with even more robust systems and processes to safeguard
taxpayer dollars and ensure the highest quality care for the Nation's
Veterans.
Impact to Revenue Operations
During the period when the PIT was unavailable, VA continued
generating community care-related revenue by processing pre-existing
working inventory, which includes the community care workload that
existed before the PIT went offline, and by reprocessing previously
denied claims. Additionally, VA improved productivity in billing and
collecting for regular VA-based care. As a result of these efforts,
total collections were performing at 100.7 percent of the fiscal year-
to-date Expected Results target through February 2024.
VA's OIG estimated that $665 million in community care revenue was
impacted by the PIT issue. While VA concurs with OIG's estimates on the
community care workload backlog, we expect that most of this revenue,
though delayed, will ultimately be collected. The Medical Care
Collections Fund line item in the President's Budget for FYs 2024 and
2025 is $4.269 billion and $4.390 billion, respectively. VA expects to
collect at least $8.66 billion cumulatively over these 2 fiscal years
after recovering from the PIT impacts.
VA continues working closely with contracted third-party payers to
update agreement language that accurately reflects the 6-year timely
filing period authorized by Federal law. The number of contracted
payers adhering to the 6-year timely filing limit increased from 37 to
53 in Fiscal Year 2023, accounting for more than 70 percent of total
third-party collections. Non-contracted payers make up approximately 11
percent of total third-party collections; VA is committed to ensuring
that these non-contracted payers honor the 6-year timely filing limit
as required by Federal law. Less than 19 percent of total third-party
collections came from contracted payers with more restrictive filing
timeframes in their agreements. VA will continue pursuing agreement
updates with these payers to bring them into compliance with the 6-year
standard.
Conclusion
The journey of PIT has been one marked by challenges, resilience,
and significant progress. With the right leadership and team in place,
VA has made significant progress in resolving defects and bringing the
PIT back online incrementally while modernizing workflows in Revenue
Operations and adjusting to alternative methods in fraud, waste, and
abuse detection.
The Department has formed a cross-functional team to both resolve
the issues of the PIT and to chart a course toward more robust systems
support for our community care business processes and oversight. VA
remains committed to a full recovery of the PIT and will continue
providing this subcommittee updates on its progress. Our commitment to
rebuilding the PIT and strengthening its capabilities demonstrates our
dedication to upholding integrity, efficiency, and effectiveness within
VA. As the rebuild effort shows, we will continue prioritizing critical
systems, developing proactive roadmaps, strengthening technical
expertise, and fostering contractor accountability to safeguard the
long-term health of essential information technology systems like the
PIT.
Chairman Rosendale, Ranking Member Cherfilus-McCormick, and Members
of the Subcommittee, thank you for the opportunity to present this
testimony today. I appreciate your commitment to addressing the
pressing challenges we face in our digital transformation efforts. I
recognize that our continued collaboration to prioritize and overcome
these challenges enhances the care and benefits provided to our
Veterans, and I look forward to answering your questions.
Prepared Statement of Jennifer McDonald
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statements for the Record
----------
Questions for the Record Submitted for the U.S. Department of Veterans
Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. Department of Veterans Affairs' Response to Questions for the
Record
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]