Audit Reveals VHA Overpaid for Prosthetic Limbs

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.

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