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Audit Of VA's Choice Act Finds Nearly $90 Million In Improper Payments Over Two Years

Pills resting on a stack of money.

An audit by the VA Inspector General has found "tens of millions of dollars" in improper payments under the Choice Act.

The VA Inspector General recently reported that their ongoing audit of VA payments made under the Choice Act has uncovered evidence of nearly $90 million in overpayments to TriWest Healthcare Alliance and Health Net Federal Services in just two years. These companies serve as middlemen between the VA and civilian doctors who treat veterans.

Lack Of VA Oversight

When the Choice Act began in 2014, the VA paid nearly $10 billion to contract with TriWest Healthcare Alliance and Health Net Federal Services as payment middleman, nobody else bid on the contract.

Under the contract civilian doctors were supposed to bill the middlemen who:

  • checked for duplicate payments
  • made sure private insurance shouldn't pay for the treatment
  • verified the validity of charges (no charging Uncle Sam $10,000 for an aspirin)

If the billing was proper, the middlemen were supposed to pay the doctor and then bill the VA.  VA would then double check the billing to ensure all was all good before issuing any payments back to the middleman. The VA was also supposed to make sure the middlemen billed the VA the same amount that the doctor originally billed for the services, something the IG audit found wasn't happening.

Apparently all that auditing didn’t exactly happen as it was supposed to.

Who's Watching The Henhouse?

Since the Choice Act was so wildly popular, the VA got way behind in making payments, the middlemen screamed for their money, and the VA made an adjustment to their payment process. In 2016, to speed up payments, the VA agreed to an "expedited payment" or "bulk payment process". Basically the middleman could send the VA one bill and the VA would pay it before any audit was done - never a good business practice!

Under this modification the VA was supposed to conduct a “post-payment” audit to make sure tax dollars were spent correctly. But more than 18 months after the modification, no formal audit had begun. The VA says they are going to hire (yep) a private contractor to do the audit in the next nine months, maybe.

The Choice Act contract also said the middlemen should notify VA if they receive any overpayments and repay those overpayments immediately. Well in July of this year TriWest told the VA that it had received nearly $35 million in improper payments, VA has yet to collect the money.

But Wait, There's More

One of the middlemen handling VA payments, TriWest Healthcare Alliance is reportedly under investigation for possible wire fraud and misuse of government funds.

Earlier this year, anonymous allegations were made on an internet job board that TriWest was manipulating the system to unethically make money off of veterans and the VA. While these comments were disputed by TriWest, apparently a grand jury is investigating them.

Also in 2011, TriWest paid $10 million to settle a Justice Department lawsuit that alleged the company "systematically defrauded" TRICARE. TriWest lost the TRICARE contract and nearly went out of business. Three years later TriWest got the Choice contact with the VA worth $4.4 billion, that contract has been expanded and is now good until September 2018.

What Will The Future Hold?

VA is asking Congress to create the Coordinated Access and Rewarding Experience (CARE) act to replace its Choice Act. The CARE act will supposedly come with automated computerized billing and more audit controls. Of course, it will also greatly expand the ability of veterans to get medical care from civilian physicians, even letting veterans go to walk-in clinics free-of-charge for minor medical issues. We will have to wa

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