The Veterans Health Administration paid out $10 million more than it should have in 2020 for prosthetic devices such as artificial limbs, according to a new audit released Friday.
According to an investigation by the VHA’s inspector general, “internal weaknesses” in the agency’s prosthetics programs led to overpayments to vendors and missed opportunities for cost savings.
The IG’s audit found that almost $320 million — about 9% of the total prosthetic spending in 2019 — went toward equipment to veterans from vendors outside the agency. Investigators wanted to see if VHA officials were paying “reasonable prices” when they reimbursed the vendors.
But the VHA never set any pricing guidelines for prosthetic devices that come from outside vendors. The investigators used obtainable Medicare rates to estimate if the vendors were charging “reasonable” rates. From October 2019 by March 2020, the VHA was overbilled on more than 41,000 transactions out of about 112,600 orders, according to the report.
“Purchasing agents simply reimbursed vendors at the billed amount. Medical facilities paid vendors varying amounts for the same items, some of them unreasonable,” the investigators said in their study.
Officials with the agency’s Prosthetic and Sensory Aids Service (PSAS) said it wasn’t their responsibility to monitor laws and regulations. They relied on the advice of the Office of Regulatory and Administrative Affairs or the Office of General Counsel.
Ensuring that VA hospitals and clinics reimburse vendors for prosthetic devices at a “reasonable price” could save the agency up to $20 million per year, according to the inspector general’s report.
Agency officials said corrective action was already underway to address oversight issues.
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