[House Report 119-348]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 119-348
=======================================================================
FORCING REAL ACCOUNTABILITY FOR UNLAWFUL DISTRIBUTIONS ACT OF 2025
----------------
October 21, 2025.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
----------------
Mr. Bost, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 3483]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 3483) to amend title 38, to direct the Secretary
of Veterans Affairs to use an information technology system to
detect fraud, waste, and abuse regarding claims for payment
submitted to the Secretary under the Veterans Community Care
Program, having considered the same, reports favorably thereon
with an amendment and recommends that the bill as amended do
pass.
CONTENTS
Page
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Hearings......................................................... 4
Subcommittee Consideration....................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 11
Statement of General Performance Goals and Objectives............ 11
Earmarks and Tax and Tariff Benefits............................. 11
Committee Cost Estimate.......................................... 11
Budget Authority and Congressional Budget Office Estimate........ 11
Federal Mandates Statement....................................... 14
Advisory Committee Statement..................................... 14
Applicability to Legislative Branch.............................. 14
Statement on Duplication of Federal Programs..................... 14
Section-by-Section Analysis of the Legislation................... 15
Changes in Existing Law Made by the Bill, as Reported............ 15
Minority Views................................................... 20
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Forcing Real Accountability for
Unlawful Distributions Act of 2025'' or the ``FRAUD Act of 2025''.
SEC. 2. DETECTION OF FRAUD, WASTE, AND ABUSE IN PROGRAMS OF THE
VETERANS HEALTH ADMINISTRATION.
(a) In General.--Subchapter I of chapter 17 of title 38, United
States Code, is amended by inserting after section 1706A the following
new section (and amending the table of sections at the beginning of
such chapter accordingly):
``Sec. 1706B. Management of health care: detection of fraud, waste, and
abuse
``(a) In General.--To detect fraud, waste, and abuse in programs of
the Veterans Health Administration, the Secretary shall use processes
and systems, including the information technology system described in
subsection (b), to--
``(1) analyze a claim submitted to the Secretary by a health
care entity or provider that furnishes hospital care, medical
services, or extended care services under this chapter; and
``(2) reanalyze a claim, described in paragraph (1) that the
Secretary determines may be fraudulent, after paying such
claim.
``(b) Information Technology System.--The information technology
system described in this subsection shall include the following
functions:
``(1) Continuous monitoring of claims to detect patterns that
may indicate fraud, waste, or abuse.
``(2) Analysis of historical and real-time claims data to
identify and predict potential fraudulent claims.
``(3) Ready-made analytic models to identify and analyze
fraudulent claims.
``(4) Post-payment analysis for overuse of services or other
practices that create unnecessary costs to the Department.
``(5) Integration with existing claims processing systems and
technologies of the Department.
``(6) Logging, storage, analysis, and reports regarding the
nature, frequency, and financial impact of detected fraudulent
claims.
``(7) Identification of, and machine learning that is based
on, patterns of fraudulent claims in order to reduce false
positives and predict new forms of fraud.
``(8) Updates to detect new models of fraud, waste and abuse.
``(9) Any other function determined necessary by the
Secretary.
``(c) Use of Franchise Fund.--To carry out this section, the
Secretary shall use funds from the Department of Veterans Affairs
franchise fund established under title I of Public Law 104-204 (38
U.S.C. 301 note).
``(d) Report.--Not later than two years after the date of the
enactment of the FRAUD Act of 2025, and annually thereafter for five
additional years, the Secretary shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives a report
regarding the operation of the processes and systems under subsection
(a) during the preceding year. Each such report shall include the
determination of the Secretary regarding the following elements:
``(1) The effectiveness of such processes and systems in
detecting fraud, waste, and abuse described in subsection (a).
``(2) The estimated savings to the Department arising from
the use of such processes and systems.
``(3) Any plans to enhance, modify, or add new capabilities
to such processes and systems.''.
(b) Implementation Date.--The Secretary of Veterans Affairs shall
carry out section 1706B of such title, as added by subsection (a), not
later than one year after the date of the enactment of this Act.
SEC. 3. EXTENSION OF CERTAIN LIMITS ON PAYMENT OF PENSION.
Section 5503(d)(7) of title 38, United States Code, is amended by
striking ``November 30, 2031'' and inserting ``January 30, 2034''.
Purpose and Summary
H.R. 3483, the ``Forcing Real Accountability for Unlawful
Distributions (FRAUD) Act of 2025,'' was introduced by
Representative Tom Barrett of Michigan on May 19, 2025. The
bill, as amended, would require the Secretary of the Department
of Veterans Affairs (VA) to implement an information technology
system to detect and prevent fraud, waste, and abuse in health
care claims submitted to VA. The bill would aim to leverage
emerging technology to safeguard taxpayer dollars by ensuring
VA pays only accurate and valid health care claims submitted to
the VA from health care entities or providers. To cover the
cost, the bill includes an offset that would extend the current
limit on pension payments for veterans and survivors living in
Medicaid-covered nursing homes by one year, moving the end date
from November 30, 2031, to October 31, 2034.
Background and Need for Legislation
Section 1: Short Title
This section establishes the short title as the ``Forcing
Real Accountability for Unlawful Distributions Act of 2025'' or
the ``FRAUD Act of 2025.''
Section 2: Detection of Fraud, Waste and Abuse in Programs of the
Veterans Health Administration
VA has long faced challenges in preventing fraud, waste,
and abuse in its health care claims systems. In FY 2024, VA
Office of Inspector General (OIG) reported approximately $2.2
billion in combined improper and unknown payments, about half
of which represented direct financial losses.\1\ While not
every improper payment is fraudulent, the absence of effective
detection tools leaves taxpayer resources vulnerable. For
years, VA relied on the Program Integrity Tool (PIT) to monitor
community care claims, but PIT's fraud detection functions were
taken offline in February 2023 and remain nonfunctional. Since
then, despite repeated Committee inquiries, VA has been unable
to provide data on fraud, waste, and abuse monitoring.
Meanwhile, VA continues to process millions of claims annually
without a working tool to flag abusive billing practices.
---------------------------------------------------------------------------
\1\See Department of Veterans Affairs Office of Inspector General.
(2024). ``A Review of VA's compliance with the Payment Integrity
Information Act for fiscal year 2024'' (Report No. 24-00849-167).
https://www.vaoig.gov/reports/review/review-vas-compliance-payment-
integrity-
information-act-fiscal-year-2024.
---------------------------------------------------------------------------
Recognizing this gap, VA issued a request for information
on January 14, 2025, for fraud detection software capable of
predictive analytics, anomaly detection, and real-time
dashboards. In testimony before the Committee, VA officials
emphasized the importance of broader authority to allow both
pre-payment and post-payment analysis across all claims
systems.
The Committee believes that this section of the bill
directly responds to that need. The section would authorize VA
to acquire and implement modern fraud detection technology
across all health programs, not just community care. The
section would also require VA to use its Franchise Fund to
support the system and mandate reporting to Congress on
effectiveness and cost savings within two years of enactment,
with annual updates for five years. To ensure accountability,
the section includes a sunset after seven years. The Committee
affirms the urgent need to strengthen oversight, reduce waste,
and protect the integrity of VA's financial operations.
Section 3: Extension of Certain Limits on Payments of Pension
Under current law (38 U.S.C. Sec. 5503(d)), the amount of
VA pension paid to a veteran with no spouse or child, a
veteran's surviving spouse with no child, or a veteran's child
who is admitted to a VA or Medicaid sponsored nursing facility
is capped at $90 a month. This section would cover the costs of
the other sections of this bill by extending this pension
limitation from November 30, 2031, to October 31, 2034. Because
they receive government sponsored care in a nursing home, these
pension beneficiaries do not require the full amount of pension
to cover their cost of living. The Committee believes this
short-term extension of the current limit on pension payments
is a reasonable way to cover the costs associated with the
other sections of this bill.
Hearings
On June 11, 2025, the Committee on Veterans' Affairs
Subcommittee on Oversight & Investigations held a legislative
hearing on H.R. 3483 and other bills that were pending before
the subcommittee.
The following witnesses testified:
Ms. Cherri Waters, Acting Deputy Chief Information
Officer; Executive Director, Health Portfolio, Product
Delivery Services, 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;
Dr. Toni Phillips, Chief Nurse Informatics Officer,
Electronic Health Record, Management Information
Office, U.S. Department of Veterans Affairs; Dr.
Jennifer McDonald, Director, Community Care Division,
Office of Audits and Evaluations, Office of the
Inspector General, U.S. Department of Veterans Affairs;
Dr. Edward O'Bryan, MD, MBA, CPE, Chief, Veterans and
Corrections ICCE, Associate Professor of Medicine,
Medical University of South Carolina; Mr. Cole T. Lyle,
Director of the Veterans Affairs & Rehabilitation
(VA&R) Division, The American Legion; Mr. Cody Carbone,
Chief Executive Officer, The Digital Chamber.
Subcommittee Consideration
On July 23rd, the Subcommittee on Oversight and
Investigations was discharged from further consideration of
H.R. 3483.
Committee Consideration
On July 23, 2025, the Full Committee met in open markup
session, a quorum being present, to consider H.R. 3483. During
consideration of the bill, the following amendments were
considered:
An amendment in the nature of a substitute to H.R.
3483 was offered by Representative Tom Barrett to fully
offset the cost of the bill, make technical corrections
to the base text, and expand the purpose of the
information technology system to detect fraud, waste,
and abuse in all VHA programs. The amendment was
approved by a recorded vote of 12 ayes, 11 nays.
An amendment to an amendment in the nature of a
substitute to H.R. 3483 was offered by Ranking Member
Takano of California that removed the requirement that
VA use funds from its Franchise Fund to carry out the
requirements of the bill. Committee Republicans opposed
the amendment, noting that the Franchise Fund is an
established revolving fund already used to support VA
IT modernization. The amendment failed by recorded vote
of 11 ayes, 12 nays.
A motion by Representative Jack Bergman to report H.R.
3483, as amended, favorably to the House of Representatives was
agreed to by a recorded vote, 12 ayes, 11 nays.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, three recorded votes were taken
on amendments or in connection with ordering H.R. 3483, as
amended, reported to the House.
An amendment to the amendment in the nature of a substitute
to H.R. 3483 offered by Mr. Tanko was not agreed to by a
recorded vote of 11 ayes, 12 noes. The names of Members voting
for and against follow:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
An amendment in the nature of a substitute to H.R. 3483
offered by Mr. Barrett was agreed to by a recorded vote of 12
ayes, 11 noes. The names of Members voting for and against
follow:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
A Motion to Favorably Report H.R. 3483, as amended to the
Full House, offered by Mr. Bergman was agreed to by a recorded
vote of 12 ayes, 11 noes. The names of Members voting for and
against follow:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives of H.R. 3483, as amended, are to allow VA
to implement an information technology system using funds from
VA's Franchise Fund to improve the Department's ability to
detect fraud, waste and abuse regarding certain health care
claims submitted to VA for payment.
Earmarks and Tax and Tariff Benefits
H.R. 3483, as amended, does not contain any Congressional
earmarks, limited tax benefits, or limited tariff benefits as
defined in clause 9 of rule XXI of the Rules of the House of
Representatives.
Committee Cost Estimate
The Committee adopts as its own the cost estimate on H.R.
3483, as amended, prepared by the Director of the Congressional
Budget Office.
Budget Authority and Congressional Budget Office
Cost Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
for H.R. 3483, as amended, provided by the Congressional Budget
Office pursuant to section 402 of the Congressional Budget Act
of 1974:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bill would:
Require the Department of Veterans Affairs
(VA) to develop an information technology (IT) system
to detect fraudulent claims for medical services that
are submitted to the agency
Require VA to report to the Congress on the
IT system's effectiveness
Extend the reduction of pensions that VA
pays to veterans and survivors residing in Medicaid
nursing homes
Estimated budgetary effects would mainly stem from:
Implementing the new IT system to detect
fraudulent claims
Reducing VA pension payments
Bill summary: H.R. 3483 would require the Department of
Veterans Affairs (VA) to develop an information technology
system (IT) for the purpose of detecting fraudulent claims for
health care services and report to the Congress on that
system's effectiveness. The bill also would extend the
reduction of pension payments for veterans and survivors who
reside in Medicaid nursing homes.
Estimated Federal cost: The estimated budgetary effects of
H.R. 3483 are shown in Table 1. The costs of the legislation
fall within budget functions 550 (health) and 700 (veterans
benefits and services).
TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 3483
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-----------------------------------------------------------------------------------------------
2025- 2025-
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2030 2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES OR DECREASES (-) IN DIRECT SPENDING
Estimated Budget Authority.............................. 0 23 * 1 * 1 * -39 -48 -15 1 25 -76
Estimated Outlays....................................... 0 6 14 3 1 * * -39 -48 -15 1 24 -77
INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization................................. 0 98 1 1 2 2 2 2 2 2 2 104 114
Estimated Outlays....................................... 0 26 58 12 3 2 2 2 2 2 2 101 111
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.
Basis of estimate: For this estimate, CBO assumes H.R. 3483
will be enacted near the start of fiscal year 2026 and that
outlays will follow historical spending patterns for affected
programs.
Provisions that affect spending subject to appropriation
and direct spending: Section 2 of the bill would require VA to
develop an IT system that would detect fraudulent claims for
medical services that are submitted to the department. The
system would be required to perform several functions,
including analyzing claims for indications of fraud or over-use
of services and estimating the cost of fraudulent claims. The
bill also would require VA to periodically report on the
effectiveness of the system and estimates of the savings
realized from detecting fraudulent claims.
Using information on the cost of developing and maintaining
similar systems at other federal agencies, CBO estimates the
new IT system to detect fraud would cost $128 million. CBO
further estimates that VA would require five full-time
equivalent employees to maintain the system and satisfy the
reporting requirements. Salaries and benefits for each of those
employees would average about $210,000 per year. In total,
implementing the required fraud detection IT system would cost
$138 million over the 2025-2035 period, CBO estimates.
CBO expects that some of the costs of implementing the bill
would be paid from the Toxic Exposures Fund (TEF) established
by Public Law 117-168, the Honoring our PACT Act. The TEF is a
mandatory appropriation that VA uses to pay for health care,
disability claims processing, medical research, and IT
modernization that benefit veterans who were exposed to
environmental hazards. Additional spending from the TEF would
occur if legislation increases the costs of similar activities
that benefit veterans with such exposure. Thus, in addition to
increasing spending subject to appropriation, enacting section
2 would increase amounts paid from the TEF, which are
classified as direct spending.
CBO projects that the proportion of costs paid by the TEF
will grow over time based on the amount of formerly
discretionary appropriations that CBO expects will be provided
through the mandatory appropriation as specified in the
Honoring our PACT Act.\1\ CBO estimates that over the 2025-2035
period, implementing section 2 would increase spending subject
to appropriation by $111 million and direct spending by $27
million.
---------------------------------------------------------------------------
\1\For additional information about estimated spending from the
TEF, see Congressional Budget Office, ``Toxic Exposures Fund--January
2025 Baseline'' (January 2025), https://tinyurl.com/3xjr6d3h.
---------------------------------------------------------------------------
Direct Spending: In addition to $27 million in IT-related
expenses that would be covered by the TEF, the bill would
affect direct spending by reducing pension payments to veterans
and survivors who reside in Medicaid nursing homes. Those net
reductions, discussed below, would amount to $104 million. In
total, the bill would reduce net direct spending by $77 million
over the 2025-2035 period.
Under current law, VA reduces pension payments to veterans
and survivors who reside in Medicaid nursing homes to $90 per
month. That required reduction expires November 30, 2031.
Section 3 would extend that reduction for nearly 26 months,
through January 30, 2034. CBO estimates that extending that
requirement would reduce VA benefits by $10 million per month.
(Those benefits are paid from mandatory appropriations and are
therefore considered direct spending.) As a result of that
reduction in beneficiaries' income, Medicaid would pay more of
the cost of their care, increasing spending for that program by
$6 million per month. Thus, enacting section 3 would reduce net
direct spending by $104 million over the 2025-2035 period.
TABLE 2.--ESTIMATED INCREASES IN DIRECT SPENDING UNDER H.R. 3483
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-----------------------------------------------------------------------------------------------------
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2025-2030 2025-2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pensions and Medicaid:
Estimated Budget PAuthority................... 0 0 0 0 0 0 0 -40 -48 -16 0 0 -104
Estimated Outlays............................. 0 0 0 0 0 0 0 -40 -48 -16 0 0 -104
Information Technology PImprovements:
Estimated Budget PAuthority................... 0 23 * 1 * 1 * 1 * 1 1 25 28
Estimated Outlays............................. 0 6 14 3 1 * * 1 * 1 1 24 27
Total Changes:
Estimated Budget PAuthority................... 0 23 * 1 * 1 * -39 -48 -15 1 25 -76
Estimated Outlays............................. 0 6 14 3 1 * * -39 -48 -15 1 24 -77
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = between zero and $500,000.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays that are subject to those
pay-as-you-go procedures are shown in Table 1.
Increase in long-term net direct spending and deficits: CBO
estimates that enacting H.R. 3483 would not increase net direct
spending by more than $2.5 billion in any of the four
consecutive 10-year periods beginning in 2036.
CBO estimates that enacting H.R. 3483 would not increase
on-budget deficits by more than $5 billion in any of the four
consecutive 10-year periods beginning in 2036.
Mandates: The bill contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act.
Estimate prepared by: Federal costs: Logan Smith; Mandates:
Brandon Lever.
Estimate reviewed by: David Newman, Chief, Defense,
International Affairs, and Veterans' Affairs Cost Estimates
Unit; Kathleen FitzGerald, Chief, Public and Private Mandates
Unit; Christina Hawley Anthony, Deputy Director of Budget
Analysis.
Estimate approved by: Phillip L. Swagel, Director,
Congressional Budget Office.
Federal Mandates Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandate Reform Act, P.L. 104-4 is inapplicable to H.R. 3483 as
amended.
Advisory Committee Statement
No advisory committee within the meaning of section 5(b) of
the Federal Advisory Committee Act would be created by H.R.
3483, as amended.
Applicability to Legislative Branch
The Committee finds that H.R. 3483, as amended, does not
relate to the terms and conditions of employment or access to
public services or accommodation within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Statement on Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee finds that no provision
of H.R. 3483, as amended, would establish or reauthorize a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section would establish the short title of the bill as
the ``Forcing Real Accountability for Unlawful Distributions
Act of 2025,'' or the ``FRAUD Act of 2025.''
Section 2. Detection of fraud, waste, and abuse in programs of the
Veterans Health Administration
This section would amend title 38, United States Code, by
adding a new section 1706B that would require the Secretary of
VA to use an information technology system to detect fraud,
waste, and abuse in claims submitted by health care entities
and providers furnishing hospital, medical, or extended care
services. The system would also be capable of reanalyzing
claims that may be fraudulent after they have been paid.
This section would define the required capabilities of the
information technology system. These functions would include
continuous monitoring of claims; predictive analytics using
historical real-time data; ready-made fraud detection models;
post-payment review for overutilization; integration with
existing VA claims processing systems; logging and reporting of
suspicious activity; machine learning to reduce false
positives, and updates to detect emerging fraud schemes. The
Secretary would be authorized to include any additional
functions deemed necessary.
This section would also require the Secretary to use funds
from the VA Franchise Fund (established under Public Law 104-
204) to implement and operate the fraud detection system.
Additionally, this section would require the Secretary to
submit a report to the Committees on Veterans' Affairs of the
Senate and the House of Representatives beginning two years
after enactment, and annually thereafter for five years. Each
report would be required to include information on the
effectiveness of the detection systems, the estimated savings
to the Department, and any plans to improve or expand the
system.
The authority to carry out this section would cease seven
years after the date of enactment.
Section 3. Extension of certain limits on payment of pension
This section would extend the existing limitation on VA
pension payments to institutionalized veterans without
dependents from November 30, 2031, to October 31, 2034.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
TITLE 38, UNITED STATES CODE
* * * * * * *
PART II--GENERAL BENEFITS
* * * * * * *
CHAPTER 17--HOSPITAL, NURSING HOME,
DOMICILIARY, AND MEDICAL CARE
SUBCHAPTER I--GENERAL
Sec.
* * * * * * *
1706B. Management of health care: detection of fraud, waste, and abuse.
* * * * * * *
SUBCHAPTER I--GENERAL
* * * * * * *
Sec. 1706B. Management of health care: detection of fraud, waste, and
abuse
(a) In General.--To detect fraud, waste, and abuse in
programs of the Veterans Health Administration, the Secretary
shall use processes and systems, including the information
technology system described in subsection (b), to--
(1) analyze a claim submitted to the Secretary by a
health care entity or provider that furnishes hospital
care, medical services, or extended care services under
this chapter; and
(2) reanalyze a claim, described in paragraph (1)
that the Secretary determines may be fraudulent, after
paying such claim.
(b) Information Technology System.--The information
technology system described in this subsection shall include
the following functions:
(1) Continuous monitoring of claims to detect
patterns that may indicate fraud, waste, or abuse.
(2) Analysis of historical and real-time claims data
to identify and predict potential fraudulent claims.
(3) Ready-made analytic models to identify and
analyze fraudulent claims.
(4) Post-payment analysis for overuse of services or
other practices that create unnecessary costs to the
Department.
(5) Integration with existing claims processing
systems and technologies of the Department.
(6) Logging, storage, analysis, and reports regarding
the nature, frequency, and financial impact of detected
fraudulent claims.
(7) Identification of, and machine learning that is
based on, patterns of fraudulent claims in order to
reduce false positives and predict new forms of fraud.
(8) Updates to detect new models of fraud, waste and
abuse.
(9) Any other function determined necessary by the
Secretary.
(c) Use of Franchise Fund.--To carry out this section, the
Secretary shall use funds from the Department of Veterans
Affairs franchise fund established under title I of Public Law
104-204 (38 U.S.C. 301 note).
(d) Report.--Not later than two years after the date of the
enactment of the FRAUD Act of 2025, and annually thereafter for
five additional years, the Secretary shall submit to the
Committees on Veterans' Affairs of the Senate and House of
Representatives a report regarding the operation of the
processes and systems under subsection (a) during the preceding
year. Each such report shall include the determination of the
Secretary regarding the following elements:
(1) The effectiveness of such processes and systems
in detecting fraud, waste, and abuse described in
subsection (a).
(2) The estimated savings to the Department arising
from the use of such processes and systems.
(3) Any plans to enhance, modify, or add new
capabilities to such processes and systems.
* * * * * * *
PART IV--GENERAL ADMINISTRATIVE PROVISIONS
* * * * * * *
CHAPTER 55--MINORS, INCOMPETENTS, AND OTHER WARDS
* * * * * * *
Sec. 5503. Hospitalized veterans and estates of incompetent
institutionalized veterans
(a)(1)(A) Where any veteran having neither spouse nor child
is being furnished domiciliary care by the Department, no
pension in excess of $90 per month shall be paid to or for the
veteran for any period after the end of the third full calendar
month following the month of admission for such care.
(B) Except as provided in subparagraph (D) of this paragraph,
where any veteran having neither spouse nor child is being
furnished nursing home care by the Department, no pension in
excess of $90 per month shall be paid to or for the veteran for
any period after the end of the third full calendar month
following the month of admission for such care. Any amount in
excess of $90 per month to which the veteran would be entitled
but for the application of the preceding sentence shall be
deposited in a revolving fund at the Department medical
facility which furnished the veteran nursing care, and such
amount shall be available for obligation without fiscal year
limitation to help defray operating expenses of that facility.
(C) No pension in excess of $90 per month shall be paid to or
for a veteran having neither spouse nor child for any period
after the month in which such veteran is readmitted for care
described in subparagraph (A) or (B) of this paragraph and
furnished by the Department if such veteran is readmitted
within six months of a period of care in connection with which
pension was reduced pursuant to subparagraph (A) or (B) of this
paragraph.
(D) In the case of a veteran being furnished nursing home
care by the Department and with respect to whom subparagraph
(B) of this paragraph requires a reduction in pension, such
reduction shall not be made for a period of up to three
additional calendar months after the last day of the third
month referred to in such subparagraph if the Secretary
determines that the primary purpose for the furnishing of such
care during such additional period is for the Department to
provide such veteran with a prescribed program of
rehabilitation services, under chapter 17 of this title,
designed to restore such veteran's ability to function within
such veteran's family and community. If the Secretary
determines that it is necessary, after such period, for the
veteran to continue such program of rehabilitation services in
order to achieve the purposes of such program and that the
primary purpose of furnishing nursing home care to the veteran
continues to be the provision of such program to the veteran,
the reduction in pension required by subparagraph (B) of this
paragraph shall not be made for the number of calendar months
that the Secretary determines is necessary for the veteran to
achieve the purposes of such program.
(2) The provisions of paragraph (1) shall also apply to a
veteran being furnished such care who has a spouse but whose
pension is payable under section 1521(b) of this title. In such
a case, the Secretary may apportion and pay to the spouse, upon
an affirmative showing of hardship, all or any part of the
amounts in excess of the amount payable to the veteran while
being furnished such care which would be payable to the veteran
if pension were payable under section 1521(c) of this title.
(b) Notwithstanding any other provision of this section or
any other provision of law, no reduction shall be made in the
pension of any veteran for any part of the period during which
the veteran is furnished hospital treatment, or institutional
or domiciliary care, for Hansen's disease, by the United States
or any political subdivision thereof.
(c) Where any veteran in receipt of an aid and attendance
allowance described in subsection (r) or (t) of section 1114 of
this title is hospitalized at Government expense, such
allowance shall be discontinued from the first day of the
second calendar month which begins after the date of the
veteran's admission for such hospitalization for so long as
such hospitalization continues. Any discontinuance required by
administrative regulation, during hospitalization of a veteran
by the Department, of increased pension based on need of
regular aid and attendance or additional compensation based on
need of regular aid and attendance as described in subsection
(l) or (m) of section 1114 of this title, shall not be
effective earlier than the first day of the second calendar
month which begins after the date of the veteran's admission
for hospitalization. In case a veteran affected by this
subsection leaves a hospital against medical advice and is
thereafter admitted to hospitalization within six months from
the date of such departure, such allowance, increased pension,
or additional compensation, as the case may be, shall be
discontinued from the date of such readmission for so long as
such hospitalization continues.
(d)(1) For the purposes of this subsection--
(A) the term ``Medicaid plan'' means a State plan for
medical assistance referred to in section 1902(a) of
the Social Security Act (42 U.S.C. 1396a(a)); and
(B) the term ``nursing facility'' means a nursing
facility described in section 1919 of such Act (42
U.S.C. 1396r), other than a facility that is a State
home with respect to which the Secretary makes per diem
payments for nursing home care pursuant to section
1741(a) of this title.
(2) If a veteran having neither spouse nor child is covered
by a Medicaid plan for services furnished such veteran by a
nursing facility, no pension in excess of $90 per month shall
be paid to or for the veteran for any period after the month of
admission to such nursing facility.
(3) Notwithstanding any provision of title XIX of the Social
Security Act, the amount of the payment paid a nursing facility
pursuant to a Medicaid plan for services furnished a veteran
may not be reduced by any amount of pension permitted to be
paid such veteran under paragraph (2) of this subsection.
(4) A veteran is not liable to the United States for any
payment of pension in excess of the amount permitted under this
subsection that is paid to or for the veteran by reason of the
inability or failure of the Secretary to reduce the veteran's
pension under this subsection unless such inability or failure
is the result of a willful concealment by the veteran of
information necessary to make a reduction in pension under this
subsection.
(5)(A) The provisions of this subsection shall apply with
respect to a surviving spouse having no child in the same
manner as they apply to a veteran having neither spouse nor
child.
(B) The provisions of this subsection shall apply with
respect to a child entitled to pension under section 1542 of
this title in the same manner as they apply to a veteran having
neither spouse nor child.
(6) The costs of administering this subsection shall be paid
for from amounts available to the Department of Veterans
Affairs for the payment of compensation and pension.
(7) This subsection expires on [November 30, 2031] January
30, 2034.
* * * * * * *
MINORITY VIEWS
H.R. 3483, as introduced, would direct the Secretary to
utilize or procure an IT system to detect fraud, waste, and
abuse in claims submitted for payment under the Veterans
Community Care Program (VCCP). The bill mandates that VA use
VA's franchise fund to pay for the IT system. This bill is
problematic on both policy and funding grounds.
First, the policy to procure a new IT system to detect
fraud is duplicative. Such functionality already exists at the
Department of Veterans Affairs (VA) within the Program
Integrity Tool (PIT), though its use has been paused to resolve
issues with data integrity and accuracy of its claims
assessments. VA has reported that it expects to resume the
tool's efforts of fraud, waste, and abuse oversight, including
the support for investigative activities for VA stakeholders
like the Office of the Inspector General, in October 2025.
While Representative Barrett's amendment in the nature of a
substitute expanded the scope of H.R. 3483 to include
assessments of claims submitted for payment across all programs
within the Veterans Health Administration (VHA), Democratic
Members still view such efforts as duplicative to functionality
currently performed by the PIT. By focusing on restoring these
tasks, and by investing in the IT workforce performing such
restorations and upgrades, VA could see increased efficiency
and expanded use cases to review claims submitted within VHA.
Such efforts towards restoring functionality of an existing
system, rather than starting anew would likely be a more
efficient use of VA's budget and workforce, particularly
considering VA's track record for implementing new IT systems.
Over the last nine months, the Trump administration,
Secretary Doug Collins, and Republicans have turned a blind eye
to the devastation of the Office of Information and Technology.
Such efforts demonstrate a continuous dismantling of VA's
capacity by constantly expanding its portfolio of what it must
take on, without making equitable investments in resources and
staff. For example, the fiscal year 2026 budget cuts OIT's
budget by half a billion dollars--from what many deemed a
``maintenance budget'' in 2025. Further, the Department has
lost over 12% of its highly skilled IT workforce through the
Deferred Resignation Program (DRP), the Voluntary Early
Retirement Authority (VERA), and other attrition. Without this
workforce, VA stands wholly less prepared to modernize its
legacy systems, and less agile to respond to threats and
disruptions when they occur. Ultimately, no portion of this
bill--specifically not the raiding of the franchise fund--will
provide oversight into VA's poor track record of IT
procurement; it will only impair future efforts to modernize
and maintain existing VA systems.
Second, the bill uses an internal VA fund to pay for the
unknown cost of the proposed IT system. At the full Committee
markup on July 23, 2025, Ranking Member Mark Takano (D-CA)
offered an amendment to H.R. 3483 to strike the use of the
franchise fund as the method of paying for the IT system
mandated in the text, which not was not adopted by a vote of 11
ayes and 12 nays.
Franchise funds are a type of revolving fund that VA uses
to provide services to other agencies, like IT services, HR
assistance, or business transaction support, through service
lines called enterprise centers. Some of its centers also serve
VA specific offices and goals, like the training of VA police
through the Law Enforcement Training Center (LETC). Revenue
that is gathered through these operations are then reinvested
into such functions or fed into a capital reserve of less than
4% of its total value--allowing it to operate like a self-
sustaining business entity at the Department.
While Information Technology is one of the intended
business segments of the franchise fund's products and
services, raiding the fund to pay for a system that will not
reinvest its profits back into the fund is not an applicable
use of such services. As the bill is currently laid out, any
revenue earned through the detection of fraud, waste, and abuse
with this system will be routed to the Medical Care Collection
Fund (MCCF), rather than the franchise fund. VA policy lays out
the process for utilizing such reserves, but notes that to
utilize such reserves, the users must dictate a plan to how to
pay back the Franchise Fund; which H.R. 3483 does not
contain.\1\
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\1\U.S. Department of Veterans Affairs, Office of Financial Policy,
Volume XI--Unique Fund Accounts, Chapter 05--Franchise Fund (Jul. 17,
2024).
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Ultimately, if tools are bought or created using the
financial resources of the franchise fund, and its profits are
not continually reinvested into the fund--as H.R. 3483
intends--the reserve would be eaten away, decreasing its
ability to make the necessary improvements it needs to over the
years. Without these improvements, VA may not be able to remain
competitive in the other shared services that VA provides to
agencies, leading those agencies to seek those services
elsewhere and further depleting the franchise fund and that
revenue. At worst, such depletions could lead to service
disruption or a financial collapse, leading to the need for a
congressionally funded bail out.
Democratic Members fundamentally object to the raiding of
the franchise fund, and through this amendment, pushed for the
Majority to undertake the appropriate avenues for funding new
IT projects through the traditional appropriations process.
Mark Takano,
Ranking Member.
[all]