Medical Care Contracts and Agreements

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Program level Payment Integrity results

Sponsoring agency: Department of Veterans Affairs

PROGRAM METRICS

$997 M

in FY 2021 outlays, with a

84.0%

payment accuracy rate

PROGRAM METRICS

$1,051 M

in FY 2022 outlays, with a

92.5%

payment accuracy rate

PROGRAM METRICS

$1,159 M

in FY 2023 outlays, with a

96.1%

payment accuracy rate

PROGRAM METRICS

$1,237 M

in FY 2024 outlays, with a

97.7%

payment accuracy rate

PROGRAM METRICS

$1,333 M

in FY 2025 outlays, with a

93.6%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2021 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2019 - 09/2020


    Confidence interval:

    >90%


    Margin of error:

    +/-5.92

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $11.69 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $11.69 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0.0 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $19.49 M

Additional information

$19.49 M

Unknown Payment Details

VA had lacking or insufficient documentation to validate whether a payment was proper or not.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $128.16 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation

Evaluation of corrective actions

VA continues to prioritize and implement effective corrective actions and mitigation strategies that reduce improper payments agency-wide.

Future payment integrity outlook

Medical Care Contracts and Agreements has established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $1,052.57 M
Current year +1 estimated future improper payments $26.29 M
Current year +1 estimated future unknown payments $78.86 M
Current year +1 estimated future improper payment and unknown payment rate 9.99 %

The program's current year improper payment and unknown payment rate of 15.99 % has not been achieved with a balance of payment integrity risk and controls and does not represent the lowest rate that can be achieved without disproportionally increasing another risk, therefore it is not the tolerable rate.

VA does not have additional program needs.

Additional programmatic information

  • FY 2022 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2020 - 09/2021


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-3.75

Overpayments

Overpayments are within the agency control. The agency has the direct ability to prevent overpayments from occurring by improving efficiencies in the payment processes and simplifying contract pricing. This will allow for more accurate payment certification.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $5.34 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $5.34 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0.0 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

Technically improper payments

While VA confirmed the payment was paid to the right person in the right amount, all laws and regulations were not followed. Specifically, either the order was placed by an unauthorized individual or the contract was missing the proper signature, or a request was not sent to procurement to create a contract. These resulted in technically improper payments.
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $22.21 M

Additional information

$22.21 M

Unknown Payment Details

VA had lacking or insufficient documentation related to the vendor invoice or certification of receipt, inability to validate pricing, or invoice pricing does not reconcile to contract that was required to validate whether a payment was proper or not. The agency was missing documentation which contained key information that would have enabled the agency's ability to discern whether the payment was proper or improper. The missing documentation contained information such as the patient roster, contract price schedule, or despite having a contract price schedule, the invoice price cannot be reconciled to the contract due to lack of detail in the price schedule. For these reasons, we are unable to conclude whether the payment is proper or improper without that documentation.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $50.94 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation

Evaluation of corrective actions

VA performed an effectiveness review in FY 2022 of the actions implemented in FY 2021. The purpose of this review was to assess the appropriateness of corrective actions or mitigation strategies and whether the actions were effectively implemented and prioritized within the agency. The results for the Medical Care Contracts and Agreements program indicated that of the four actions assessed, one was closed and determined to be effective in mitigating the root cause, and three were open and determined that improvements could be made to effectively mitigate the root cause. If improvements could be made, VA conducted a root cause analysis to refine the program's mitigation strategies to ensure they address and reduce root cause(s) of error.

For errors tied to failure to access data/information as well as for errors tied to statutory requirements of program were not met, associated corrective actions or mitigation strategies did not reduce the improper payment amount from FY 2020 to FY 2021. For errors tied to unable to determine whether proper or improper, associated corrective actions or mitigation strategies contributed to a total reduction in the unknown payment amount from $116.34 million in FY 2020 to $78.20 million in FY 2021, or a 33% reduction.

VA will perform an effectiveness review in FY 2023 of the corrective action plans implemented in FY 2022 due to the time needed to implement actions as well as to impact the payment process. Results of this review will be reported in FY 2023.

Future payment integrity outlook

Medical Care Contracts and Agreements has established a baseline.

The Medical Care Contracts and Agreements reduction target is equal to the estimated future improper payment and unknown payment rate. VA establishes reduction targets by setting them lower than the current year improper payment estimates. Reduction targets are a balance between being aggressive and realistic. One thing VA has learned from the many years it has been working to comply with improper payments legislation is that it can take three years from the point an error cause is isolated during testing to develop a corrective action, implement it, and then wait for payments to be made that can then be tested the following year since VA tests and reports improper payments one year in arrears.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $1,134.83 M
Current year +1 estimated future improper payments $28.8 M
Current year +1 estimated future unknown payments $53.48 M
Current year +1 estimated future improper payment and unknown payment rate 7.25 %
Current year +1 estimated future improper payment and unknown payment reduction target 7.25 %

The program's current year improper payment and unknown payment rate of 7.47 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

VA has not determined a tolerable rate due to all requirements for establishing a tolerable rate not yet being met. VA continues to prioritize implementing appropriate corrective actions and mitigation strategies to reduce improper and unknown payments. The program plans to be compliant with the Payment Integrity Information Act of 2019 for FY 2022.

The Medical Care Contracts and Agreements program has not yet determined the tolerable rate. VA is working to determine all requirements for establishing a tolerable rate per Office of Management and Budget guidance before attempting to establish tolerable rates. At this time, VA is not aware of additional program needs.

VA is still working to determine all requirements for establishing a tolerable rate per Office of Management and Budget guidance before attempting to establish a tolerable rate. At this time, VA is not aware of additional program needs.

Additional programmatic information

The Medical Care Contracts and Agreements program continues to prioritize and implement effective corrective actions and mitigation strategies that reduce improper and unknown payments and is expected to achieve compliance with the Payment Integrity Information Act of 2019 for FY 2022. Specifically, from FY 2021 to FY 2022, the Medical Care Contracts and Agreements program decreased its improper and unknown error rate from 15.99% to 7.47% (8.52% reduction) and improper and unknown payments from $159.34 million to $78.49 million ($80.85 million reduction).

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2021 - 09/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-1.96

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Change Process
    Actions taken regarding change process to address overpayments and technically improper payments included identifying remedies for improper and unknown payments. Examples include continued restructuring existing local and national contracts, required secondary level of approval on invoices by contract specialists prior to payment, implemented ordering systems, and rejected invoices that do not comply with contract requirements. Additionally, VA ensured ordering processes were compliant with statute and regulation, thus reducing technically improper payments caused by unauthorized commitments. Actions taken regarding change process included conducting an annual concurrence process to meet with field offices which ensures accuracy of testing results and improves understanding of requirements for future purchases. In addition, VA obtained additional documentation required to determine payment accuracy. These actions were taken to address unknown payments attributed to being unable to determine whether proper or improper to ensure proper payment amounts.
    FY2023 Q4
    Completed
    Training
    Actions taken regarding training included working with various offices to create trainings and distribute instructions to ensure contracts have required signatures. These actions were taken to address overpayments attributed to failure to access data/information and technically improper payments attributed to statutory requirements of the program not met.
    The corrective action was not fully completed this reporting period
    Not Completed
    Change Process
    Actions planned regarding change process include restructuring existing local and national contracts, requiring secondary level of approval on invoices by contract specialists prior to payment, and rejecting invoices that do not comply with contract requirements. Additionally, VA will ensure ordering processes are compliant with statute and regulation, thus reducing technically improper payments caused by unauthorized commitments. VA will also continue conducting an annual concurrence process to meet with field offices, which ensures accuracy of testing results and improves understanding of requirements for future purchases, as well as obtaining additional documentation required to determine payment accuracy. These actions are designed to reduce overpayments attributed to failure to access data/information, technically improper payments were attributed to statutory requirements of program not met, and unknown payments attributed to being unable to determine whether proper or improper. Change process was the best mitigation strategy in order to develop stronger internal controls and mitigate risks within existing payment processes.
    FY2024
    Planned

Overpayments

VA overpayments are within the agency's control and occur when the program failed to access the data/information needed. Specifically, overpayments occur when VA did not pay the correct dollar amount according to the contract. The agency has the direct ability to prevent overpayments from occurring by improving controls in the payment processes and simplifying contract pricing. Medical Care Contracts and Agreements is able to validate the correct payment to be made per the invoice or contract prior to issuing payment. These improvements will allow for more accurate payment validation.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.39 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.39 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0.0 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Within Agency Control Contractor or Provider Status $0.39 M

Overpayment type Mitigation strategies taken Mitigation strategies planned
Overpayments within the agency’s control Change Process, Training Change Process

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

Technically improper payments

VA payments are considered technically improper when the payment was paid to the right person in the right amount but the payment failed to meet all regulatory and/or statutory requirements. While VA confirmed the payment was paid to the right person in the right amount, VA lacked proper delegation for the order placed. Specifically, the ordering officer placed a funded order; however, the required written delegation was not in place at the time of the order. This resulted in technically improper payments for failing to comply with VA Acquisition Regulations sections: Career Development, Contracting Authority, and Responsibilities/General (Part 801.601), Federal Supply Schedules/Ordering Officers (Part 808.470), and Indefinite-Delivery Contracts/Ordering Officers (Part 816.570).
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $19.02 M

Mitigation strategies taken Mitigation strategies planned
Change Process, Training Change Process

Additional information

$19.02 M

Unknown Payment Details

The payments are considered unknown payments when VA had lacking or insufficient documentation to validate the appropriate contract pricing, lack of payment documentation, or lack of documentation related to invoice submittal requirements. Specifically, the agency was unable to determine the appropriate pricing due to the lack of information in the contract price schedule, or insufficient information on the invoice to be able to determine the appropriate amount billed and paid. In addition, the agency was unable to determine if the required invoice submittal documentation was obtained per the contract. Without documentation supporting the appropriate information per the contract or per the invoice, the program is unable to determine whether the amount paid is proper or improper.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $26.31 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation
Other $26.31 M VA is required to validate invoice amounts are in accordance with the contract rate prior to issuing payment. Despite having a contract in place that includes a price schedule, the invoice price cannot be reconciled to the contract price schedule due to lack of detail in the contract price schedule and/or the vendor's invoice. The missing documentation is related to whether or not the billed amount on the invoice is accurate. For example, VA receives an invoice of $10 for a complete blood test lab service but the contract price schedule only indicates a total cost of $300 for all blood lab services. In this scenario, the contract price does not contain sufficient detail to confirm the cost of a complete blood test is $10. For this reason, VA is unable to conclude whether the payment is proper or improper at time of payment without the additional cost details in the contract price schedule.

Mitigation strategies taken Mitigation strategies planned
Change Process Change Process

Evaluation of corrective actions

The Medical Care Contracts and Agreements program continues to prioritize and implement effective corrective actions and mitigation strategies that reduce improper and unknown payments as evidenced by its second consecutive year of reductions. Specifically, from FY 2022 to FY 2023, the Medical Care Contracts and Agreements program decreased its improper and unknown error rate from 7.47% to 3.95% (3.52% reduction) and improper and unknown payments from $78.49 million to $45.72 million ($32.77 million reduction). In FY 2023, VA performed an effectiveness review of the actions developed and implemented in FY 2022. The purpose of this review was to assess the appropriateness of corrective actions or mitigation strategies and whether the actions were effectively implemented and prioritized within the agency. The results for the Medical Care Contracts and Agreements program indicated that of the four actions assessed, one was closed and determined to be effective in mitigating the root cause, and three were open and determined to be correctly designed to mitigate the root cause. If improvements could be made, VA conducted a root cause analysis to refine the program's mitigation strategies to ensure they address and reduce root cause(s) of error.

For errors tied to failure to access data/information, associated corrective actions or mitigation strategies contributed to a total reduction in the improper payment amount from $11.69 million in FY 2021 to $5.34 million in FY 2022, or a 54% reduction. For errors tied to unable to determine whether proper or improper, associated corrective actions or mitigation strategies contributed to a total reduction in the unknown payment amount from $128.16 million in FY 2021 to $50.94 million in FY 2022, or a 60% reduction. For errors tied to statutory requirements of program not met, associated corrective actions contributed did not result in a reduction from FY 2021 to FY 2022.

VA will perform an effectiveness review in FY 2024 of the corrective action plans developed and implemented in FY 2023 due to the time needed to develop and implement actions as well as to impact the payment process. Results of this review will be reported in FY 2024.

Future payment integrity outlook

Medical Care Contracts and Agreements has established a baseline.

The Medical Care Contracts and Agreements reduction target is equal to the estimated future improper payment and unknown payment rate. VA establishes reduction targets by setting them lower than the current year improper payment estimates. Reduction targets are a balance between being aggressive and realistic. One thing VA has learned from the many years it has been working to comply with improper payments legislation is that it can take three years from the point an error cause is isolated during testing to develop a corrective action, implement it, and then wait for payments to be made that can then be tested the following year since VA tests and reports improper payments one year in arrears.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $1,254.98 M
Current year +1 estimated future improper payments $22.02 M
Current year +1 estimated future unknown payments $26.92 M
Current year +1 estimated future improper payment and unknown payment rate 3.9 %
Current year +1 estimated future improper payment and unknown payment reduction target 3.9 %

The program's current year improper payment and unknown payment rate of 3.95 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

VA has not determined a tolerable rate due to all requirements for establishing a tolerable rate not yet being met. VA continues to prioritize implementing appropriate corrective actions and mitigation strategies to reduce improper and unknown payments. The program plans to maintain compliance with the Payment Integrity Information Act of 2019 for FY 2023.

VA has not determined a tolerable rate due to all requirements for establishing a tolerable rate not yet being met. In March 2023, GAO acknowledged VA’s substantial reduction in improper and unknown payments using effective mitigation strategies and corrective actions (GAO-23-106285, IMPROPER PAYMENTS: Fiscal Year 2022 Estimates and Opportunities for Improvement). VA continues to prioritize implementing appropriate corrective actions and mitigation strategies and has adequate funding to implement improvements planned to internal controls, human capital, information systems and other infrastructure, as needed, over VA’s payment processing and procurement systems to continue reducing improper and unknown payments. VA will establish a tolerable rate if all applicable requirements are met.

At this time, VA is not aware of additional program needs. Therefore, VA has not requested additional resources to establish and maintain internal controls to reduce improper and unknown payments to a tolerable rate.

Additional programmatic information

The Medical Care Contracts and Agreements program continues to prioritize and implement effective corrective actions and mitigation strategies that reduce improper and unknown payments as evidenced by its second consecutive year of reductions. Specifically, from FY 2022 to FY 2023, the Medical Care Contracts and Agreements program decreased its improper and unknown error rate from 7.47% to 3.95% (3.52% reduction) and improper and unknown payments from $78.49 million to $45.72 million ($32.77 million reduction). Given the time it takes to implement corrective actions and mitigation strategies, the program expects the continued positive impact of these actions on its FY 2024 improper and unknown payment rate.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2022 - 09/2023


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-1.58

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Change Process
    Actions taken included restructuring existing local and national contracts and rejecting invoices that do not comply with contract requirements. Additionally, VA ensured ordering processes were compliant with statute and regulation. VA also continued conducting an annual concurrence process to meet with field offices, which ensures accuracy of testing results and improves understanding of requirements for future purchases, as well as obtaining additional documentation required to determine payment accuracy. These actions were taken to address overpayments attributed to failure to access data/information, technically improper payments attributed to statutory requirements of program not met, and unknown payments attributed to being unable to determine whether proper or improper. Change process was the best mitigation strategy in order to develop stronger internal controls and mitigate risks within existing payment processes.
    FY2024 Q4
    Completed
    Training
    Actions planned include providing training to individuals who are incorrectly certifying invoices for payment. These actions are designed to reduce overpayments attributed to failure to access data/information. Training was the best mitigation strategy to communicate the importance of consistencies in standard operating procedures.
    FY2025
    Planned
    Change Process
    Actions planned include notifying contracting personnel of incorrect procurement procedures for resolution and updating contract language or rejecting vendor invoices that do not have the required information to validate payment accuracy. These actions are designed to reduce technically improper payments attributed to statutory requirements of program not met and unknown payments attributed to being unable to determine whether proper or improper. Change process was the best mitigation strategy in order to develop stronger internal controls and mitigate risks within existing payment processes.
    FY2025
    Planned

Overpayments

VA overpayments are within the agency's control and occur when the program failed to access the data/information needed. Specifically, overpayments occur when VA did not pay the correct dollar amount according to the contract. The agency has the direct ability to prevent overpayments from occurring by improving controls in the payment processes and simplifying contract pricing. Medical Care Contracts and Agreements is able to validate the correct payment to be made per the invoice or contract prior to issuing payment. These improvements will allow for more accurate payment validation.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $0.65 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.65 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $0.0 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Within Agency Control Contractor or Provider Status $0.65 M

Overpayment type Mitigation strategies taken Mitigation strategies planned
Overpayments within the agency’s control Change Process Training

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

Technically improper payments

VA payments are considered technically improper when the payment was paid to the right person in the right amount but the payment failed to meet all regulatory and/or statutory requirements. While VA confirmed the payment was paid to the right person in the right amount, the purchase was made without a required contract or VA lacked evidence the purchase was made by an authorized individual. Specifically, there was a lack of request for procurement action when a contract was required for purchase or a purchase order was not approved by an authorized individual prior to the purchase which resulted in an unauthorized committment. This resulted in technically improper payments for failing to comply with VA Acquisition Regulations sections: Career Development, Contracting Authority, and Responsibilities/General (Part 801.601), Federal Supply Schedules/Ordering Officers (Part 808.470), and Indefinite-Delivery Contracts/Ordering Officers (Part 816.570).
The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.48 M

Mitigation strategies taken Mitigation strategies planned
Change Process Change Process

Additional information

$0.48 M

Unknown Payment Details

The payments are considered unknown payments when VA had missing or insufficient documentation to validate the appropriate contract pricing or missing documentation related to invoice submittal requirements. Specifically, the agency was unable to determine the appropriate pricing due to the lack of information in the contract price schedule, or insufficient information on the invoice to be able to determine the appropriate amount billed and paid. In addition, the agency was unable to determine if the required invoice submittal documentation was obtained per the contract. Without documentation supporting the appropriate information per the contract or per the invoice, the program is unable to determine whether the amount paid is proper or improper.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $27.11 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation
Other $27.11 M VA is required to validate invoice amounts are in accordance with the contract rate prior to issuing payment. Despite having a contract in place that includes a price schedule, the invoice price cannot be reconciled to the contract price schedule due to lack of detail in the contract price schedule and/or the vendor's invoice. The missing documentation is related to whether or not the billed amount on the invoice is accurate. For example, VA receives an invoice of $10 for a complete blood test lab service but the contract price schedule only indicates a total cost of $300 for all blood lab services. In this scenario, the contract price does not contain sufficient detail to confirm the cost of a complete blood test is $10. For this reason, VA is unable to conclude whether the payment is proper or improper at time of payment without the additional cost details in the contract price schedule.

Mitigation strategies taken Mitigation strategies planned
Change Process Change Process

Evaluation of corrective actions

The Medical Care Contracts and Agreements program continues to prioritize and implement effective corrective actions and mitigation strategies that reduce improper and unknown payments as evidenced by its third consecutive year of reductions. Specifically, from FY 2023 to FY 2024, the Medical Care Contracts and Agreements program decreased its improper and unknown error rate from 3.95% to 2.28% (1.67% reduction) and improper and unknown payments from $45.72 million to $28.25 million ($17.47 million reduction). In FY 2024, VA performed an effectiveness review of the actions developed and implemented in FY 2023. The purpose of this review was to assess the appropriateness of corrective actions or mitigation strategies and whether the actions were effectively implemented and prioritized within the agency. The results for the Medical Care Contracts and Agreements program indicated that of the four actions assessed, one was effective and three were designed effectively in mitigating the root cause.

For errors tied to statutory requirements of program not met, associated corrective actions or mitigation strategies contributed to a total reduction in the improper payment amount from $19.02 million in FY 2023 to $0.48 million in FY 2024, or a 97% reduction. For errors tied to failure to access data/information and unable to determine whether proper or improper, associated corrective actions did not result in a reduction from FY 2023 to FY 2024.

VA will perform an effectiveness review in FY 2025 of the corrective action plans developed and implemented in FY 2024 due to the time needed to develop and implement actions as well as to impact the payment process. Results of this review will be reported in FY 2025.

VA reduced the error rate in this program from 3.95% in FY 2023 to 2.28% in 2024. This resulted in a reduction of $17.47 million by implementing effective corrective actions and mitigation strategies. VA's process for development of corrective actions and mitigation strategies ensures the severity of the error is considered and the action is adequate. VA's corrective actions and mitigation strategies have been evaluated by the Office of Inspector General during their FY 2024 annual audit and determined reasonable with no recommendations for improvement. The overpayments and underpayments were attributed to VA's failure to access data/information. The technically improper payments were attributed to statutory requirements of the program not met. The unknown payments were attributed to being unable to determine whether proper or improper. Actions taken regarding change process included restructuring existing local and national contracts and rejecting invoices that do not comply with contract requirements. Additionally, VA ensured ordering processes were compliant with statute and regulation. VA also continued conducting an annual concurrence process to meet with field offices, which ensures accuracy of testing results and improves understanding of requirements for future purchases, as well as obtaining additional documentation required to determine payment accuracy. Actions planned regarding training include providing training to individuals who are incorrectly certifying invoices for payment.

VA has identified root causes of improper and unknown payments and developed effective corrective actions and mitigation strategies. The cause of overpayments and underpayments were attributed to failure to access data/information, the cause of technically improper payments were attributed to statutory requirements of the program not met, and the cause of unknown payments were attributed to unable to determine whether proper or improper. The majority of overpayments occurred because claims were not paid according to the contract. The majority of technically improper payments occurred due to a lack of request sent for procurement action when a contract was required for purchase. The majority of unknown payments occurred because the invoice pricing did not reconcile to the contract and inability to validate pricing. Change process was the best mitigation strategy in order to develop stronger internal controls and mitigate risks within existing payment processes. Training was the best mitigation strategy to communicate the importance of consistencies in standard operating procedures.

VA updates corrective action plans annually based on testing results, and no less than quarterly throughout the fiscal year, to ensure actions planned are appropriately prioritized and designed to mitigate risks of improper and unknown payments. VA monitors progress and results of implementation on a quarterly basis. Additionally, an effectiveness review is performed annually to measure if an action has reduced or is properly designed to reduce improper and unknown payments for a specific root cause based on a set benchmark. The annual effectiveness review process allows VA to create or update actions as necessary to ensure continued progress in the remediation of improper and unknown payments. If areas for improvement were identified, VA conducted a root cause analysis to refine the program's mitigation strategies to ensure they address and reduce root cause(s) of error. The decrease in the improper payment and unknown payment rate from 3.95% in FY 2023 to 2.28% in FY 2024, and the $17.47 million reduction in improper and unknown payments supports the effective implementation and prioritization of action within the agency.

Future payment integrity outlook

Medical Care Contracts and Agreements has established a baseline.

The Medical Care Contracts and Agreements reduction target is equal to the estimated future improper payment and unknown payment rate. VA establishes reduction targets by setting them lower than the current year improper and unknown payment estimates. Reduction targets are a balance between being aggressive and realistic. One thing VA has learned from the many years it has been working to comply with improper payments legislation is that it can take three to five years from the point an error cause is isolated during testing to develop a corrective action, implement it, and then wait for payments to be made that can then be tested the following year since VA tests and reports improper payments one year in arrears.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $1,308.65 M
Current year +1 estimated future improper payments $1.47 M
Current year +1 estimated future unknown payments $27.97 M
Current year +1 estimated future improper payment and unknown payment rate 2.25 %
Current year +1 estimated future improper payment and unknown payment reduction target 2.25 %

The program's current year improper payment and unknown payment rate of 2.28 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

VA has not determined a tolerable rate due to all requirements for establishing a tolerable rate not yet being met. VA continues to identify and implement appropriate corrective actions and mitigation strategies to further reduce the improper and unknown payment rate. VA has determined these corrective actions and mitigation strategies do not impede the mission and can be implemented cost-effectively within existing budget authority.

VA has not determined a tolerable rate due to all requirements for establishing a tolerable rate not yet being met. In March 2023, the Government Accountability Office acknowledged VA’s substantial reduction in improper and unknown payments using effective mitigation strategies and corrective actions (GAO-23-106285, IMPROPER PAYMENTS: Fiscal Year 2022 Estimates and Opportunities for Improvement). VA continues to prioritize implementing appropriate corrective actions and mitigation strategies and has adequate funding to implement improvements planned to internal controls, human capital, information systems and other infrastructure, as needed, over VA’s payment processing and procurement systems to continue reducing improper and unknown payments. VA is still actively reducing improper and unknown payments within its existing budget authority. VA considers the reduction of improper and unknown payments a critical part of its financial stewardship efforts.

At this time, VA is not aware of additional program needs. Therefore, VA has not requested additional resources to establish and maintain payment integrity.

Additional programmatic information

The Medical Care Contracts and Agreements program continues to prioritize and implement effective corrective actions and mitigation strategies that reduce improper and unknown payments as evidenced by its third consecutive year of reductions. Specifically, from FY 2023 to FY 2024, the Medical Care Contracts and Agreements program decreased its improper and unknown error rate from 3.95% to 2.28% (1.67% reduction) and improper and unknown payments from $45.72 million to $28.25 million ($17.47 million reduction). Given the time it takes to implement corrective actions and mitigation strategies, the program expects the continued positive impact of these actions on its FY 2025 improper and unknown payment rate.

Accountability for detecting, preventing, and recovering improper payments

This program was determined compliant in FY 2024 by the Office of Inspector General and reported improper and unknown payments below required thresholds for a compliance determination in FY 2025. In FY 2025, VA executive managers and program personnel will be focused on prevention and recovery of overpayments as appropriate. This will include various mitigation strategies such as change process. These actions address the root causes of errors found in FY 2024 payment integrity testing. VA’s executive managers to include the Executive Director of Acquisition and program personnel will be held accountable through annual performance criteria contained within their performance plans. Performance criteria will be unique to and inclusive of all their duties. Depending on each employees’ responsibilities, duties can include preventing improper and unknown payments through effective internal controls, recovering overpayments if appropriate, and implementing remediation efforts for known causes of improper and unknown payments. State and local governments are not involved in the execution of this program.

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    10/2023 - 09/2024


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-2.88

Causes

VA overpayments are within the agency's control and occurred when the program failed to access the data/information needed. Specifically,
overpayments occurred when VA failed to validate that the correct dollar amount was billed according to the contract price schedule when certifying the
payment or VA failed to validate the actual number of patients billed on the invoice against the required patient roster documentation. VA technically
improper payments occurred when the payment was paid to the right person in the right amount but the payment failed to meet all regulatory and/or
statutory requirements. While VA confirmed the payment was paid to the right person in the right amount, VA lacked evidence the purchase was made by
an authorized individual. Specifically, a contract was not signed by an authorized individual prior to the purchase, which resulted in an unauthorized
commitment. This resulted in technically improper payments for failing to comply with VA Acquisition Regulations sections: Career Development,
Contracting Authority, and Responsibilities/General (Part 801.601). VA unknown payments occurred when VA had missing or insufficient documentation
to validate the appropriate contract pricing. Specifically, the agency was unable to determine the appropriate pricing due to the lack of information in the
contract price schedule. Without documentation supporting the appropriate information per the contract or per the invoice, the program is unable to
determine whether the amount paid is proper or improper.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $13.87 M
Amount of overpayments outside the agency's control $0.0 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $0.0 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $13.87 M

Underpayment root cause Underpayment amount
Amount of underpayments $0.0 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $1.13 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $69.94 M

Prevention

Actions taken regarding training included VA providing training to individuals who are incorrectly certifying invoices for payment. These actions were designed to reduce overpayments attributed to failure to access data/information. Training was the best mitigation strategy to communicate the importance of consistencies in standard operating procedures. The completion date was April 17, 2025. Actions taken regarding change process included VA notifying contracting personnel of incorrect procurement procedures for resolution and updating contract language or rejecting vendor invoices that do not have the required information to validate payment accuracy. These actions were designed to reduce technically improper payments attributed to statutory requirements of program not met and unknown payments attributed to being unable to determine whether proper or improper. Change process was the best mitigation strategy in order to develop stronger internal controls and mitigate risks within existing payment processes. The completion date was June 26, 2025. Actions planned regarding change process include VA will notify contracting officers and/or contracting officer representatives of improper payment errors and suggest solutions related to claim not paid according to contract and unauthorized commitments to avoid future improper payments made on contracts. VA will also notify contracting personnel of incorrect procurement procedures for resolution and update contract language. These actions are designed to reduce overpayments attributed to failure to access data/information, technically improper payments attributed to statutory requirements of program not met, and unknown payments attributed to being unable to determine whether proper or improper. Change process was the best mitigation strategy in order to develop stronger internal controls and mitigate risks within existing payment processes. The estimated completion date is September 30, 2025. Actions planned regarding training include VA improving contract processes for lab services contracts to ensure payment accuracy. These actions are designed to reduce overpayments attributed to failure to access data/information and unknown payments attributed to being unable to determine whether proper or improper. Training was the best mitigation strategy to communicate the importance of consistencies in standard operating procedures. The estimated completion date is May 1, 2026.
The Medical Care Contracts and Agreements program continues to prioritize and implement corrective actions and mitigation strategies designed to reduce improper and unknown payments. In FY 2025, VA performed an effectiveness review of actions developed and implemented in FY 2024. The purpose of this review was to assess the appropriateness of corrective actions and mitigation strategies and whether the actions were effectively implemented and prioritized within the agency. The results for the Medical Care Contracts and Agreements program indicated that of the three actions assessed, two were effective and one was ineffective. If improvements could be made, VA conducted a root cause analysis to refine the program’s mitigation strategies to ensure they address and reduce root cause(s) of error. For FY 2025, the Medical Care Contracts and Agreements program errors increased in all cause categories and the program experienced a $96.59 million increase in outlays. VA has enhanced the sampling and estimation plan to gain additional insight and implemented a new mitigation strategy to address high risk program areas to ensure they address the root cause(s) of each error. The program continues to update corrective actions to address high risk program areas to ensure they address the root cause(s) of error. VA will perform an effectiveness review in FY 2026 of the corrective action plans developed and implemented in FY 2025 due to the time needed to develop and implement actions as well as to impact the payment process. Results of this review will be reported in FY 2026.

VA updates corrective action plans annually based on testing results, and no less than quarterly throughout the fiscal year, to ensure actions planned or taken are appropriately prioritized and designed to mitigate risks of improper and unknown payments. VA monitors progress and results of implementation on a quarterly basis. Additionally, an effectiveness review is performed annually to measure if an action planned has reduced or is properly designed to reduce improper and unknown payments for a specific root cause based on a set benchmark. The annual effectiveness review process allows VA to create or update actions as necessary to ensure continued progress in the remediation of improper and unknown payments. If areas for improvement are identified, VA conducts a root cause analysis to refine the program’s mitigation strategies to ensure they addressed and reduced root cause(s) of error. VA’s process for development of corrective actions and mitigation strategies ensures the severity of the error is considered and the action is adequate. VA’s corrective actions and mitigation strategies have been evaluated by the Office of Inspector General during their FY 2025 annual audit and determined reasonable with no recommendations for improvement.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Training Change Process, Training
Technically improper payments Change Process Change Process
Unknown payments Change Process Change Process,Training

Eligibility element/information needed Description of the eligbility element/information
Contractor or Provider Status Status or standing of contractor or provider, including recipient eligibility to provide medical services
Financial The financial position or status of a beneficiary, recipient, or their family

Additional information

The Medical Care Contracts and Agreements program continues to prioritize and implement corrective actions and mitigation strategies that reduce improper and unknown payments. Medical Care Contracts and Agreements remains under the 10% compliance threshold established by the Payment Integrity Information Act of 2019 for the fourth consecutive year. VA has enhanced the sampling and estimation plan to gain additional insight and implemented a new mitigation strategy to address high risk program areas to ensure they address the root cause(s) of each error.

Reduction target

6.0 %

VA continues to prioritize implementing appropriate corrective actions and mitigation strategies and has adequate funding to implement improvements
planned to internal controls, human capital, information systems and other infrastructure, as needed, over VA’s payment processing and procurement
systems to continue reducing improper and unknown payments. VA is still actively reducing improper and unknown payments within its existing budget
authority. VA considers the reduction of improper and unknown payments a critical part of its financial stewardship efforts.

At this time, VA is not aware of additional program needs. Therefore, VA has not requested additional resources to establish and maintain payment
integrity.

This program was determined compliant in FY 2025 by the Office of Inspector General and reported improper and unknown payments below required
thresholds for a compliance determination in FY 2026. In FY 2026, VA executive managers and program personnel will be focused on prevention and
recovery of overpayments as appropriate. This will include the mitigation strategy change process. These actions address the root causes of errors found
in FY 2025 payment integrity testing. VA’s executive managers to include the Executive Director, VHA Office of Acquisitions and program personnel will
be held accountable through annual performance criteria contained within their performance plans. Performance criteria will be unique to and inclusive of
all their duties. Depending on each employees’ responsibilities, duties can include preventing improper and unknown payments through effective internal
controls, recovering overpayments if appropriate, and implementing remediation efforts for known causes of improper and unknown payments. State and
local governments are not involved in the execution of this program.

$1.13 M