In a House Committee on Veterans’ Affairs markup meeting before the Congressional recess, Rep. Tom Barrett (R-MI) proposed legislation that would increase the VA’s ability to detect fraud and wasteful spending.
00:00I now call up H.R. 3483, the Fraud Act. The clerk shall report the bill.
00:07H.R. 3483...
00:08The act was circulated in advance and pursuant to committee rules. Without objections, a first reading is dispensed with, and the bill is now open for amendment at any point.
00:16I now recognize Representative Barrett for the purposes of offering an amendment to the nature of a substitute.
00:22Thank you, Mr. Chairman. I have an amendment at the desk.
00:24Clerk shall report the amendment in the nature of a substitute.
00:27I ask unanimous consent that further reading of the amendment in the nature of a substitute be dispensed with, and I ask it to be considered base text for the purposes of a markup.
00:37Without objection, so ordered.
00:39I now recognize Representative Barrett for five minutes to speak in support of the amendment in the nature of a substitute.
00:46Thank you, Mr. Chairman, and thank you for your consideration of this legislation today.
00:50The amendment before us in the nature of a substitute would make technical changes to my bill, H.R. 3483, the Fraud Act.
00:59This amendment would expand the purpose of the information technology system to detect waste, fraud, and abuse in all VHA programs instead of just one.
01:09This is specifically designed around community care invoices that are sent to the VA and billing that is done that way.
01:16We would also make technical corrections and provide an offset so this bill is cost-neutral and fiscally responsible.
01:22We made these changes to this bill after hearing testimony from the VA at a recent oversight and investigation subcommittee legislative hearing, bringing light to the need for this legislation.
01:32I appreciate the administration's dedication to combating the problems within the VA.
01:37This bill will save taxpayer dollars from being wasted on fraudulent, inaccurate, or otherwise misleading health care claims that have been submitted to VA.
01:45We've all seen horror stories about billing practices that have been done in a fraudulent way.
01:51Just last year alone, in fiscal year 2024, it's estimated that a total of over $400 million in community care claims was done fraudulently.
02:01So, or improper in other fashions.
02:04This would direct VA to acquire a system designed to monitor third-party claims from health care providers and ensure that the department only pays accurate and complete claims, protecting the VA, veterans, and their health care, taxpayers, and the VA's reputation in the process.
02:21In VA's testimony on the Fraud Act, I was pleased to hear that the department estimates the savings generated from preventing overpayment will more than pay for this technology and fully recover all costs in perpetuity going forward.
02:34This wouldn't just stop bad actors from stealing veteran benefits, but would also save taxpayer money that we can reinvest back into services that veterans deserve.
02:43This legislation will protect the benefits that veterans earn and rely on, ensuring that VA is spending resources appropriately.
02:49VA IT systems must be modernized, and the subcommittee that I'm pleased to chair, the Technology Modernization Subcommittee, will continue finding ways to do that.
03:00I urge my colleagues to support my amendment in the nature of a substitute, and with that, Mr. Chairman, I yield back, and thank you again.
03:05The gentleman kneels back.
03:07I now recognize myself in support of the amendment of VA process billions of dollars in health care claims submitted by private providers every year.
03:18However, VA ineffective and broken fraud monitoring systems have left taxpayer dollars vulnerable to waste, fraud, and abuse.
03:29And without modern tools in place, VA cannot ensure taxpayers' investments is spent properly.
03:36This amendment would ensure VA has the technology to process claims in an honest, accurate, and legitimate manner.
03:43And I urge all members to support it and give VA the tools to move the agency forward.
03:49Do any other members wish to comment on the amendment in the nature of substitute for H.R. 3483?
03:56Thank you, member.
03:57I just have an amendment to the...
03:59Okay.
04:00I now...
04:00Seeing none, I now recognize ranking member Takano to offer an amendment to the amendment in the nature of a substitute to H.R. 3483.
04:09Mr. Chairman, I have an amendment to the amendment in the nature of a substitute to H.R. 3483 at the desk.
04:14The clerk shall report.
04:15Takano, amendment...
04:16I ask unanimous consent that further reading of the amendment is dissensed with and without objection, so ordered.
04:21The gentleman is recognized for five minutes to explain his amendment.
04:24Well, thank you, Mr. Chairman.
04:26And while I appreciate the majority's intent for VA to use an IT system to detect waste, fraud, and abuse, and claims submitted for payment from community care providers,
04:37I offer this amendment to correct a severe defect with the underlying text.
04:44Again, I mean, as with the previous bill, I mean, the intent is something that I'm going to align with.
04:50But in this case, this bill would allow VA to cannibalize the franchise fund to pay for this IT project.
04:59And my amendment seeks to correct this dangerous precedent the majority is attempting to set.
05:04You're going around the pay-fors that we usually use and are attempting to establish a new way to move money around.
05:13However, the franchise funds are a type of revolving fund that VA uses to provide services to other agencies like IT services, HR services, or business transaction support.
05:28The franchise fund operates as a self-sustaining business-like entity at the department, operating with a reserve that VA continually uses to improve the services and business lines of the fund.
05:41The bill, this bill, would attempt to eat away at those reserves to pay for an IT system that performs functionality that VA already has through the program integrity tool.
05:57Let me say that again.
05:58This bill would attempt to eat away at those reserves to pay for an IT system that performs functionality that VA already has through the program integrity tool.
06:08If the reserve is depleted, the franchise fund would not have enough to make the improvements that it needs over the years.
06:20And it may also hurt other shared services that the VA offers to other agencies.
06:26There is no requirement that agencies must use VA services.
06:30So they may just go elsewhere if the need is not met, further depleting the franchise fund and that revenue.
06:40Such depletions could cause service disruptions, and at worst, the fund could collapse, leading Congress to bail it out.
06:50Additionally, the language in this bill takes money from the franchise fund.
06:54Without putting the money it detects and collects from waste, fraud, and abuse claims back into the fund.
07:01The funds collected would instead go into the medical care collection fund.
07:07Essentially, this scheme raids the franchise fund and sets it up for failure.
07:13I view this as an attempt for the majority to find a new way to pay for expensive IT projects they want VA to undertake
07:23instead of advocating for more funding for the agency through the traditional appropriations process.
07:31We will oppose any efforts to use the franchise fund in this way,
07:35and we hope that this does not become a regular tactic of the majority to sidestep the appropriations process.
07:45Now, my question to Representative Barrett is,
07:48I'm interested to hear what VA thinks there would be in terms of savings.
07:56Shouldn't we amend the bill to put that savings back into the franchise fund instead of it going into the medical care collection fund?
08:09That's my question to my colleague.
08:12I yield for the question.
08:13I yield for an answer.
08:15Well, thank you to the ranking member.
08:17I would stipulate that we don't have much oversight of what the franchise fund is used for through the ordinary congressional process,
08:31and this would direct that for this specific purpose.
08:35I don't have strong opinions about where the money collected,
08:39whether it regenerates within that or it's used appropriately.
08:43It's really my intent through this bill to make sure that we are preventing and collecting unfraudulent claims that are brought forward
08:50and that we are adding to the integrity of the process.
08:53The bill was expanded in scope because there were multiple different ways in which these claims are submitted,
09:00and originally it was only going to establish that for one possible avenue,
09:05and we subsequently learned in discussions with the VA that there are multiple different ways that these claims can be submitted.
09:13And we want to make sure that they are capturing as much of the breadth of possible fraudulent claim submissions as there are.
09:23So, again, my question wasn't about oversight over this fund.
09:28It's the fact that the funds collected would go to the medical care collection fund instead of being put back into the franchise fund.
09:38You understand my concerns, our concerns, about the collapse of the franchise fund.
09:45Because of the whole way that it works, you know, that we produce, it's a revolving fund that brings in revenues from the services we provide to other departments.
09:58And this is a potentially unsustainable, an unsustainable practice.
10:03So, look, we stand aligned on what your intent is.
10:10My hope is that we can come to maybe some agreement on how this is funded.
10:17We don't think the appropriations process should be skirted, and that we need to, I don't want to set a new precedent here that would potentially collapse this fund.
10:27I understand.
10:28Great.
10:29So, maybe we can work together on this before it ends up in final form.
10:33Sure.
10:34I appreciate that.
10:35Yeah.
10:36Anyone else taking ready?
10:38Thank you, Mr. Chair.
10:40I agree with the purpose of the base bill as well, absolutely.
10:43But I am strongly opposed also to the use of the franchise fund to support it and strongly support Ranking Member Takano's amendment and points.
10:54Utilizing the franchise fund in this manner would be unprecedented.
10:58The franchise fund is indeed a revolving loan fund.
11:01But the way that this has been set up, there will be no funds revolving back into it and undermines the intention of that fund.
11:09And VA will use money from the franchise fund to procure software to detect waste, fraud, and abuse in community care billing.
11:19However, when they collect payments from the community care providers that are legitimate, that money will go to the medical care collections fund, not back into the franchise fund to repay that utilization.
11:31So, strongly support the intention, believe that we need to be fully transparent about how we're funding these endeavors.
11:37And if money is going in or coming out but not going in, it's going to undermine this very quickly.
11:47It's supposed to be like a business, you know, like any other business, input or revenue in, expenditures out.
11:53If we only have expenditures out, the solvency will be lost and the critical function it supports will also be undermined.
12:01So, thank you.
12:04I yield back.
12:05You need, if you need time, 10 seconds.
12:13The, I was just going to stipulate, I was just reminded that the VA did support that in their testimony,
12:18but I'm not opposed to working on this further to make sure that we, you know, strike the right balance there.
12:25So, thank you.
12:27Anyone else seeking recognition?
12:28I will recognize myself in opposition to the amendment.
12:32I find it ironic.
12:33My colleagues across the aisle are constantly suspicious of VA's action when wanting to remove a provision that creates more transparency.
12:42This amendment would remove a provision that requires VA to use the franchise fund to pay for this bill.
12:49Revolving funds, like the franchise fund, operated with very little oversight since VA has broad guidelines on how they can spend those funds,
12:59and they don't need congressional approval to do so.
13:02This year, VA will take in and spend roughly $2 billion through the franchise fund and will have around $850 million in reserve by the end of the fiscal year.
13:15Directing how the department spends the money is exactly how we should be acting as the authorizing committee.
13:24That is what Representative Barrett's bill does.
13:29So, I'm going to urge my colleagues to reject the amendment and take the responsibility and the authorizing seriously,
13:38show them where we need to take and use the money from,
13:41and does any other member wish to comment on the amendment?
13:45With that, you're seeing none.
13:48The question now occurs on the agreeing to the Takano Amendment and the amendment in the nature of a substitute for H.R. 3483.
13:54All those in favor say aye.
13:57All those opposed, no?
14:00No.
14:00No.
14:01This is your amendment.
14:03I'm just going to say aye.
14:06I would have went with it.
14:07Aye, aye, aye, aye.
14:08Okay.
14:09In the opinion of the chair, the no's have it.
14:12A recorded vote has been requested.
14:18Pursuant committee rules this vote will be postponed.
14:23Are there any further amendments to the nature of a substitute?
14:29We will now move to consider the next bill.
14:34Try to impair the purposes.
14:38Beep.
14:41I'm just going to freeze last week and do it.
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