Review of Alleged Mismanagement of Non-VA Fee Care Funds at the Phoenix VA Health Care System

The Phoenix Health Care System (HCS) allegedly experienced a budget shortfall at the end of FY 2010 due to mismanagement of their Non-VA Fee Care Program. We substantiated that the Phoenix HCS experienced an $11.4 million budget shortfall, 20% of the Non-VA Fee Care Program funds for that year. The shortfall was due to the lack of effective pre-authorization procedures. They also lacked adequate procedures to obligate sufficient funds to pay for all fee care services processed during this period, over $56 million. In addition, HCS staff did not determine if the patients could receive services in a VA inpatient facility to avoid using the Non-VA Fee Care program. Since the discovery of the budget shortfall, the HCS has initiated several corrective actions to reduce the risk of future shortfalls and strengthen the management of their Non-VA Fee Care Program.