An audit of the Veterans Health Administration's private health care program books finds the department failed to spend $1.9 billion – or 40 percent – of the $4.8 billion designated for non-VA care in fiscal 2013.
Also, from Oct. 1, 2013, through March 31, 2015, medical center administrators overestimated the funds they needed to pay for outside care for veterans by $543 million, leaving that amount unavailable for patient care, according to a new Veterans Affairs Office of Inspector General report.
The finding follows numerous reports that VA has mishandled disciplinary actions against administrators involved in scandals, a slow rollout of its $10 billion to provide care in the private sector through the Veterans Choice program and a nationwide problem involving long waits for medical care.
The VA IG said the failure occurred because VA administrators have not provided medical directors with the tools they need to estimate costs and that medical center staff were not required to adjust estimated costs routinely to reflect actual costs.
"We recommended that the Under Secretary for Health improve cost estimation tools, update system software to ensure unused funds can be 'deobligated,' require facilities to adjust cost estimates … and monitor VA medical facility obligation estimates," wrote Gary Abe, acting assistant general for audits and evaluations.
VA Secretary Robert McDonald asked Congress last year to allow the department to shift money from the Veterans Choice program to other VA programs, saying administrators needed flexibility in spending money on VA and private or community health care.
Congress agreed to allow VA to use about $3.3 billion in Choice program funds to cover other account shortfalls.
Rep. Jeff Miller, chairman of the House Veterans Affairs Committee said the audit indicates that the department has a management problem, not a money problem.
"If VA's job was mismanaging money, it would have a near-perfect record of achievement," Miller said. "Yet despite this and other high-profile budgetary failures, all too often the department's knee-jerk response to challenges is to ask taxpayers for more money."
A veterans advocacy group that has been pressing for a complete overhaul of the VA health system, including partial privatization, said Tuesday that the IG audit "shows the department is not truly invested in giving veterans more options."
"This report makes clear that in addition to relying on faulty budget projections, the VA failed to provide oversight for the program, to the likely detriment of nearly 80,000 veterans," Concerned Veterans for America press secretary John Cooper said.
In a response to the audit, Under Secretary for Health Dr. David Shulkin said he concurred with the recommendations made by the auditors, and he attached a plan of action.
Veterans issues have been a focus of the administration -- transitions from military service, employment and homelessness.
On Wednesday, McDonald will travel to Boston to highlight several notable VA research efforts and collaboration on VA mental health.
McDonald will visit the Million Veteran Program, an initiative designed to study service-related conditions, the VA Brain Bank and the Jamaica Plain VA Medical Center, where he'll present an award to VA National Center for PTSD behavioral science director Terence Keane for his work in the field of traumatic stress.