Failure to Reassess Veterans’ Temporary Disability Ratings Means Millions in Overpayments by VA

by U.S. Medicine

June 8, 2013

By Sandra Basu

WASHINGTON —With a potential billion dollars at stake, the VA is under fire for not addressing overpayments to veterans with temporary disability ratings whose conditions are not re-evaluated in a timely manner.

At a hearing earlier this year, the chairman of a VA Senate subcommittee called it “unacceptable” that veterans who were temporarily rated as 100% disabled were overpaid by VA  when follow-up medical exams were not requested.

These temporary disability ratings are used when veterans with service-connected disabilities undergo surgery or when other specific treatments are needed. The Veterans Benefits Administration (VBA) is then required to request a follow-up medical exam to determine whether to continue the veteran’s temporary rating. Without the exams, veterans continue to receive payments, usually higher, at the temporary rating level, even if they are not at that disability level.

Projections in a January 2011 VA Inspector General’s report estimated that VBA had not correctly processed claims for about 27,500 veterans with temporary 100% ratings since January 1993, resulting in net overpayments of $943 million.

Without “timely corrective action,” the VA IG predicted that VBA could overpay disabled veterans a projected $1.1 billion from 2011 to 2015.

Rep. Jon Runyan, (R-NJ), chairman of the Subcommittee on Disability Assistance and Memorial Affairs, said he continues to be concerned because two new Regional Office audits issued by the OIG as recently as January found that 50% of the temporary 100% disability evaluations reviewed were incorrect.

 “As all of us here today are aware, our nation’s fiscal health is one of this Congress’ top priorities,” he said at a hearing. “Part of this process includes trimming government spending and eliminating government waste.”

Processing Claims

VBA Deputy Undersecretary for Field Operations Diana Rubens suggested the problem was not as bad as characterized by the VA IG. She said in written testimony that the VBA believes the overpayment projection given by the IG of $1.1 billion over the next five years is “significantly overstated.” Furthermore, she said the overall error rate of 15% in the IG’s report also was too high.

“Nevertheless, VBA agrees that significant overpayments were occurring as a result of not timely re-evaluating all cases with 100% temporary ratings,” she explained in written testimony.

Rubens insisted to the subcommittee that VA has made progress in addressing the overpayment problem. VBA identified and fixed a system software problem that had caused many future examination dates to drop out of the system, she explained.

She also said a January OIG audit of two regional offices, which showed that 50% of the temporary 100% disability evaluations were incorrect, was from data prior to the “final full system fix.”

Staff training to reduce the error rate also will continue, according to her testimony.

“We have done a tremendous amount of training and will continue to do that to ensure that the human element is also addressed,” she said.

Problems for Veterans

For a veteran, receiving an overpayment can be “more devastating than never having received the payment in the first place,” said Rick Weidman, Vietnam Veterans of America executive director for policy and government affairs.

“People don’t have the resources to pay it back in most cases. Because they got it and thought they must have deserved it and are entitled to it, therefore the money is gone,” he told lawmakers.

Rep. Dina Titus (D-NV) pointed out the problem was not only with overpayments. She said the VA IG found more than half of the 100% temporary disability evaluations done at the Reno VA Regional Office in her congressional district were incorrectly done and that some  were underpayments.

“We certainly don’t want our veterans to be underpaid,” she said. “For example, we found one veteran with service-connected bone cancer and prostate cancer who was underpaid nearly $10,000 over a period of three years.”



IG Investigation

IG Assistant Inspector General for Audits and Evaluations Linda Halliday told the subcommittee in written testimony that “VBA’s efforts to date have not been fully effective in addressing issues in processing its temporary 100% disability evaluations.”

 Halliday told the subcommittee that VA had agreed to improve the electronic system to ensure that medical exam dates are automatically put into the system and that VARO staff are trained so they take timely action on medical exam reminder notifications.

VBA also agreed to review all temporary 100% disability evaluations and ensure each evaluation had a future examination date entered in the electronic record.

Halliday said, however, that VBA is working to complete the review.

 “We are concerned about the lack of urgency in completing this review, which is critical to minimizing the financial risks of making inaccurate benefit payments,” she said.

In addition, Halliday said the VA IG believes that staff error in handling these claims needs to be better addressed. The VA IG found that human error was behind about 25% of the inaccuracies.

“As long as VBA delays in taking effective action to address this issue, VBA and VA remain at risk of underpaying some veterans and repeatedly overpaying others without proper medical support,” she said.


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