H.R. 5723, Fraud Reduction and Undercovering Deception in VA Disability Exams Act

H.R. 5723 would modify efforts by the Department of Veterans Affairs (VA) to detect and prevent fraud. The bill also would require VA to perform audits and report to the Congress.

Direct Spending

The bill would temporarily authorize the VA Inspector General to deposit appropriated funds into accounts held at nonfederal financial institutions while conducting undercover investigations into improper or fraudulent payment of veterans’ benefits. In addition, any proceeds and increases in recoveries from that new authority could be temporarily held in those same accounts; Any funds remaining at the conclusion of an investigation would be deposited in the Treasury. VA would be required to audit and report on the use of undercover investigations. The authority to use nonfederal accounts when conducting undercover investigations would expire after three years.

Those proceeds and recoveries would be classified as offsets to direct spending. CBO estimates that authorizing VA to use nonfederal accounts during investigations would increase recoveries, and thus reduce direct spending by less than $500,000.

Spending Subject to Appropriation

The bill would impose auditing and reporting requirements on the VA Inspector General and on VA. Using information about the cost of similar efforts, CBO estimates those activities would cost less than $500,000 over the 2026-2031 period. Such spending would be subject to the availability of appropriated funds. Those requirements include quarterly financial audits of undercover investigations closed during the previous quarter and annual reports to the Congress. The bill also would require VA to identify any fraudulent submissions of Disability Benefit Questionnaires (DBQ) and report annually to the Congress on fraud involving those questionnaires. (DBQs are standardized forms used by physicians when performing examinations that are used to determine veterans’ eligibility for disability compensation from the department.)

Finally, H.R 5723 would require VA to enable its benefit claims processors to report fraudulent DBQs to the VA Inspector General and would further require VA to notify claimants when information submitted in a DBQ is insufficient to process a claim. According to VA, its claims processors already identify and report fraudulent DBQs as part of the existing procedures, and current law requires VA to notify and assist claimants when the evidence they provide is insufficient to decide a claim for benefits. Because VA currently satisfies those requirements, implementing those provisions would not affect the federal budget.

The CBO staff contact for this estimate is Logan Smith. The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.