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The U.S. Government Accountability Office (GAO) has called on the U.S. Department of Veterans Affairs (VA) to implement stronger oversight measures after discovering $2.3 million in unearned incentive payments made to contractors responsible for conducting medical disability exams for veterans. The findings highlight the urgent need for a GAO VA exam contractor oversight boost to safeguard taxpayer dollars and ensure exam quality.

In its report, the GAO revealed that the VA’s Medical Disability Examination Office (MDEO) issued incorrect payments during the first quarter of fiscal year 2024. That year alone, contractors performed 3.2 million disability exams at a cost exceeding $5 billion, underscoring the critical role contractors play in the VA’s claims process.

“Our analysis shows there is a risk that additional incorrect payments may have been made in earlier quarters we did not review,” the GAO stated.

The GAO found that manual processes were heavily relied upon to calculate financial incentives for fiscal years 2023 and 2024, with staff entering data into spreadsheets and applying performance measures without formal verification procedures. Although a new spreadsheet and additional tools are being introduced to reduce errors, lapses in oversight allowed the $2.3 million in unearned incentives to go unnoticed.

Despite these challenges, reviews between Q3 2023 and Q4 2024 caught errors that prevented over $6 million in further incorrect payments.

To address these issues, the GAO issued four recommendations:

• Ensure accurate financial incentive calculations and revisit past payments to correct errors.

• Conduct focused reviews of complex disability claim exams, such as traumatic brain injuries, military sexual trauma, and Gulf War Illness.

• Collect direct feedback from examiners to complement input from contractors, veterans, and stakeholders.

• Strengthen overall oversight of exam contractors to ensure accountability and exam quality.

The VA has agreed to formalize its processes, review prior calculations, and begin collecting examiner feedback by September 30. While the VA accepted three of the GAO’s recommendations outright, it agreed “in principle” to conduct additional reviews of complex claims, noting that further resource assessments are underway.

“These corrective steps will help ensure accuracy in incentive payments and reinforce the integrity of the VA’s disability exam process,” the GAO emphasized.

The GAO’s call for a VA exam contractor oversight boost comes as both veterans and taxpayers rely on accurate, fair, and accountable administration of disability claims.