The Department of Veterans Affairs (VA) Office of Audits and Evaluations (OAE) issued an audit report from the Office of Inspector General (OIG) on March 8 that showed the Veterans Health Administration (VHA) overpaid for veterans' prosthetic limbs in 2010.
House Veterans Affairs Committee Chairman Jeff Miller (R-FL) requested that OIG evaluate the management of VHA procurement practices and costs paid for prosthetic limbs.
The VA spent $53.7 million on prosthetic limbs in fiscal year 2010. In that year, contract vendors provided 4,000 prosthetic limbs, at a cost of $49.3 million, and VHA prosthetic labs fabricated almost 1,500 prosthetic limbs for $4.4 million.
The average cost for limbs purchased from contract vendors was approximately $12,200, while the average cost for VHA-fabricated limbs was about $2,900.
The OAE examined data from 3,933 payments made to vendors and revealed that 915 (23%) included overpayments totaling about $2.2 million, or 4% of the $49.3 million paid to vendors. On average, the VHA overpaid roughly $2,352 for each of these prosthetic limb payments.
According to the report, the VHA could continue to overpay approximately $8.6 million over the next 4 years if the agency does not strengthen its controls and oversight.
To that end, the OAE made the following recommendations to the VHA:
- Strengthen controls over the process for reviewing vendor quotes, purchase orders and verification of invoices and costs charged by prosthetic limb vendors;
- Improve guidance issued to certified prosthetists for their review of vendor quotes;
- Initiate collection actions to recover funds overpaid to vendors.
The Under Secretary for Health is expected to address the recommendations by Sept. 30, 2012.