Watchdog: Veterans system may have overpaid for $257M in prosthetics

The Veterans Health Administration (VHA) may have overpaid for more than a quarter of a billion dollars in prosthetics in 2015 by inappropriately using government-issued charge cards, according to a new watchdog report.

The Department of Veterans Affairs (VA) Office of Inspector General (OIG) found that VHA staff from fiscal 2012 to 2015 sometimes used government purchase cards to buy prosthetics instead of using contracts. Staff also “did not ensure fair and reasonable prices were paid” for the prosthetics, according to the Sept. 29 report.

As a result, the government may have overpaid for $256.7 million in prosthetics purchases in 2015.

The OIG looked into the way the VHA bought prosthetics after they received a complaint in May 2015 that administration staff had inappropriately used government purchase cards to buy commonly used prosthetics. 

The VHA defines a prosthetic as any device that supports or replaces the loss of a body part or function; the category includes artificial limbs, heart valves, hearing aids, hip replacements and pacemakers.

The VHA bought nearly $2 billion worth of prosthetics using purchase cards in fiscal 2015.

OIG also found that VHA staff not authorized to make prosthetics buys that cost more than $3,500 did so anyway. 

Typically, VHA staff should have a specific authority to use purchase cards, which have a preset amount on them ranging from $3,500 into the millions. The cards are intended to help the VA buy things faster.

“A purchase card is similar to a credit card and has a preset monetary limit used to pay for goods or services for official VA use,” a VA spokesman told The Hill.

“VA purchasing staff can use these cards when ordering supplies, such as prosthetic items, using established contracts to place purchase card orders,” he said.

But of the roughly 87,100 VHA prosthetic buys made with purchase cards in fiscal 2015, 61 percent, or $520.7 million worth, were “improper payments,” the watchdog found. 

“VHA did not have reasonable assurance that VA medical facilities used taxpayer funds efficiently when procuring prosthetics,” the report states.

VA OIG Audit Manager Earl Key, who worked on the report, said VHA staff would buy prosthetics then ask individuals with purchase cards to make the payment. 

VHA officials told the OIG’s office they did so because they were trying to ensure the veterans received what they needed. 

Key said this was a standard practice of VHA and management “understood this was occurring.”

“To some degree, there was obviously a need for this item, but VHA didn’t have sufficient controls in place to ensure they were procured properly,” Key said.

He added that no one has been held accountable, but VHA officials “were considering it.”

Since the audit, administration officials “have started to put controls in place,” and the OIG will continue to review the VHA over the next year. 

Should VHA staff not implement recommended controls, “they increase their risk for improper payments and unauthorized commitments totaling about $2.6 billion over a five-year period,” according to the OIG report.

“VHA spends quite a bit of funds on prosthetics. We’re not saying that all of the $500 million was wasted, we’re just saying that they spent this without following the policy. They did get $500 million in prosthetics for what they purchased,” Key said.