Understanding Improper Payments in VA Community Care: A 98% Reduction

VA Community Care Improper Payments: 98% Reduction & What It Means for Veterans

VA Community Care improper payments have been reduced by 98% since 2020, dropping from $7.5 billion (78% of program outlays) to $608 million (2.4% of outlays) in fiscal year 2025, even as total Community Care spending more than doubled from $9.5 billion to $25 billion over the same period . The Government Accountability Office (GAO) confirmed this reduction in a July 2026 report, noting that VA developed and implemented processes to identify root causes of improper payments and corrective actions to address them . Despite this progress, GAO found that VA still lacks a comprehensive fraud risk assessment for the Community Care program, leaving it vulnerable to fraud .

Quick Facts

What Are VA Community Care Improper Payments?

VA Community Care improper payments occur when the VA reimburses contractors that manage community care for outdated claims, incorrect reimbursement rates, payment amounts that don’t match what was authorized, or bills that exceed authorized care <span class=””>. Sometimes these improper payments may be related to fraud .

Why This Matters for Veterans

VA Community Care is the program that allows Veterans to receive care at non-VA healthcare facilities when services aren’t available at VA facilities, wait times are too long, or travel distances are excessive . About 3 million Veterans received care through this program in FY2024 . Improper payments don’t directly affect Veteran care, but they represent taxpayer dollars that could otherwise support more services or benefits for Veterans.

Root Causes of Improper Payments

The primary drivers of improper payments include :

• Untimely claims – Claims not submitted within required timeframes

• Lack of proper authorization – Services provided without required VA authorization

• Incorrect reimbursement rates – Payments that don’t align with contracted rates

• Provider mismatches – Payments to providers not listed on authorizations

• Incorrect fee schedules – Reimbursements at the wrong Medicare or VA fee schedule rate 

The 98% Reduction: VA’s Progress

Since 2020, VA has achieved a dramatic reduction in improper payments through a series of corrective actions :

Sources: PaymentAccuracy.gov, GAO reports 

Note: The 2024 error rate was 1.9%, but the 2025 rate rose slightly to 2.4% as spending continued to grow .

How VA Achieved This Reduction

VA officials told the GAO they reduced improper payments by addressing broader system and policy issues, including payment processing errors and eligibility problems that followed the establishment of the nationwide program under the 2018 MISSION Act . Key actions included:

1. Developing processes to identify root causes of improper payments 

2. Implementing corrective action plans that adequately address identified root causes 

3. Strengthening oversight of timely filing rules<span class=””> 

4. Creating system logic to flag claims when the provider on the claim does not match the provider on the authorization 

5. Conducting post-payment reviews and establishing bills of collection for overpaid claims 

VA officials said they would further address issues in the next round of Community Care contracts expected to be awarded in 2026 .

Remaining Concerns: Fraud Risk Assessment Gap

Despite the substantial progress, the GAO found a critical gap: VA has not conducted a comprehensive fraud risk assessment for the Community Care program<span class=””> .

What GAO Found

For fiscal years included in GAO’s review:

• VA developed and implemented a process to identify and assess the root causes of improper payments ✅

• VA developed, implemented, and monitored corrective action plans that adequately address root causes ✅

• VA has NOT conducted a comprehensive fraud risk assessment that identifies inherent risks, assesses likelihood and impact, determines risk tolerance, evaluates controls, and documents a fraud risk profile ❌ 

What This Means

The GAO report stated: “While VA has taken steps to identify and assess fraud risks, these efforts do not meet the key elements of a fraud risk assessment and have not resulted in a comprehensive fraud risk assessment for the program, leaving it vulnerable to fraud” .

Examples of Fraud Risks

The GAO noted specific examples of fraud in Community Care:

• February 2026: A home health care company submitted fraudulent claims for $100,000 in services that were never provided 

• Provider settlement: A provider agreed to pay $3.7 million to resolve charges of fraudulently billing VA for services that were not medically necessary 

Unauthorized Dental Procedures: $325.5 Million in Improper Payments

The VA Office of Inspector General (OIG) identified a specific area of improper payments: unauthorized dental procedures in Community Care<span class=””> .

What the Audit Found

Between FY2022 and FY2025, VA will make approximately $325.5 million in improper payments for 847,800 unauthorized dental procedures . This includes:

Source: VA OIG Report 23-00749-171 

Why This Happened

Third-party administrators (TPAs) who process claims on VA’s behalf did not identify unauthorized dental procedures because contract language contradicted VHA referral guidance . The TPAs only reviewed claims to ensure procedure codes were within approved Standardized Episodes of Care (SEOCs), not that they matched specific authorized procedures .

What VA Is Doing About It

The VA OIG made five recommendations, all of which have been closed :

• Notify and remind community dentists of preauthorization requirements

• Conduct expanded postpayment reviews to identify and recover payments

• Monitor VA dentists to ensure they include required procedure codes on referrals

• Review contract language to clarify claims adjudication responsibilities

• Enable automated payment systems to deny payment for unauthorized procedures

Eligibility Determination Errors: $1.7 Billion Per Year

A separate VA OIG audit found that VA may have unnecessarily spent about $1.7 billion annually by sending Veterans to outside providers when VA facilities may have been able to provide care .

Key Findings

• 25% of 1.4 million Veterans referred to community care during the review period did not meet eligibility requirements 

• 38% of 4.8 million Veterans<span class=””> who received care directly from VA did not have documented evidence showing they had been assessed for community care eligibility 

• The problems were caused by scheduling system limitations and guidance that didn’t align with the MISSION Act 

VA’s Response

VA concurred with both OIG recommendations and submitted corrective action plans, including a review of facility scheduling processes expected to be completed by June 2027 .

Community Care Network Payment Accuracy

A VA OIG audit of Community Care Network (CCN) payments found that most payments were accurate :

Source: VA OIG Report 23-00748-28 

Overpayment Causes

Despite high accuracy, estimated overpayments of $105.1 million (Optum) and $73.4 million (TriWest) occurred because :

• VA did not reimburse TPAs at the correct Medicare rate (~$57.5M for Optum, ~$43.7M for TriWest)

• VA did not reimburse at the applicable VA fee schedule rate (~$5.4M for Optum, ~$2.2M for TriWest)

• No applicable Medicare or VA fee schedule rate was available (~$42.1M for Optum, ~$27.4M for TriWest)

Duplicate Medicaid and VA Payments

The HHS Office of Inspector General has launched an audit to identify duplicate Medicaid fee-for-service and VA Community Care payments . Medicaid is the payer of last resort—if a Medicaid enrollee has another source of coverage, that source must pay first . Phase 1 will audit states with large veteran populations receiving community care; Phase 2 will calculate a nationwide error rate <span class=””>.

Common Questions

Q: What are VA Community Care improper payments?

Improper payments occur when VA reimburses contractors for claims that are outdated, have incorrect reimbursement rates, exceed authorized care, or lack proper authorization . These are generally payment errors, not fraud, though some may involve fraudulent claims .

Q: How much has VA reduced improper payments in Community Care?

VA reduced improper payments from $7.5 billion (78% of outlays) in 2020 to $608 million (2.4%) in 2025—a 98% reduction .

Q: Is VA Community Care still at risk for improper payments?

Yes. While VA has made significant progress, GAO found that VA hasn’t conducted a comprehensive fraud risk assessment, leaving the program vulnerable to fraud . VA has concurred with GAO’s recommendation to address this.

Q: How much does VA spend on Community Care?

VA Community Care outlays grew from $9.5 billion in 2020 to $25 billion in 2025 . The program serves approximately 3 million Veterans annually .

Q: What causes improper payments in VA Community Care?

Root causes include untimely claims (not submitted on time), services lacking proper authorization, payments not aligned with contracted rates, provider mismatches, and incorrect fee schedule use .

Q: Are Veterans affected by improper payments?

Veterans generally aren’t directly affected by improper payments. These are payment errors between VA and contractors, not overcharges to Veterans. However, improper payments mean taxpayer dollars aren’t used as efficiently as possible for Veteran services <span class=””>.

Q: Did the Program Integrity Tool pause impact Community Care?

Yes. The Program Integrity Tool, used to bill Veterans and private insurers for copayments, was paused from February 2023 to July 2024 due to data integrity issues. This may result in Veterans receiving copayment bills that are over a year old as billing resumes .

Q: What does GAO recommend VA do next?

GAO recommends VA conduct a comprehensive fraud risk assessment of the Community Care program that aligns with leading practices in the Fraud Risk Framework. VA concurred with this recommendation .

Q: What were the unauthorized dental procedure improper payments?

VA OIG estimated $325.5 million in improper payments for 847,800 unauthorized dental procedures from FY2022-2025, primarily due to major treatment plan changes without authorization and referrals lacking specific procedure codes .

Q: How accurate are Community Care Network payments overall?

Very accurate. OIG audits found 98.6% accuracy for Optum payments ($5.1 billion) and 99.8% accuracy for TriWest payments ($4.4 billion) over multi-year periods .

Key Takeaways

• VA reduced Community Care improper payments by 98% since 2020, from $7.5 billion (78% error rate) to $608 million (2.4% error rate) in FY2025 .

• Community Care spending more than doubled during the same period, from $9.5 billion to $25 billion, making the reduction even more significant .

• GAO found VA has not conducted a comprehensive fraud risk assessment for the Community Care program, leaving it vulnerable to fraud .

• VA OIG identified $325.5 million in improper payments for unauthorized dental procedures from FY2022-2025 .

• VA may be unnecessarily spending ~$1.7 billion annually by sending Veterans to community providers when VA facilities could provide care <span class=””>.

• Community Care Network payments are highly accurate overall (98.6-99.8%), but overpayments still occurred due to incorrect fee schedule use .

• VA concurred with GAO’s recommendation to create a fraud risk framework, with completion expected by March 2028 .

• Duplicate Medicaid and VA payments are being investigated by HHS OIG to identify and recover improper payments .

• VA is updating system logic and contract language to flag claims where the provider doesn’t match the authorization and clarify standard episode of care claims processing .

• Program Integrity Tool issues impacted VA’s ability to bill Veterans and insurers for copayments from February 2023 to July 2024 .

Official Resources

• PaymentAccuracy.gov – VA Community Care: paymentaccuracy.gov/program/va-va-community-care

• GAO Report GAO-26-107946: gao.gov/products/gao-26-107946

• VA OIG Report 23-00749-171 (Dental): vaoig.gov/reports/audit/unauthorized-community-care-dental-procedures-risked-improper-payments

• VA OIG Report 23-00748-28 (CCN Payments): vaoig.gov

• VA Community Care Program: va.gov/communitycare

• VA MISSION Act: va.gov/communitycare/mission-act