Inspector General: VA Overpaid $807M for Vet Substance Abuse Care
Many Department of Veterans Affairs facilities offer residential substance use disorder treatment for veterans. This treatment, while not offered at every VA facility, is an important part of veteran care where these services are available.
Inspector General: VA Overpaid $807M for Vet Substance Abuse Care
According to the Office of the VA Inspector General, the VA operates some 250 treatment programs across the United States. However, in 2025, the VA needs, according to the Office of the Inspector General, to reform its billing procedures, as in some cases, there was “no rate control” for certain services. Over a 2-year period, the agency overpaid to the tune of $807 million.
How does that break down? According to the VA OIG report under the heading “Amount Reimbursed in Excess of TRICARE’s Residential Treatment Center Rates” the agency overpaid by $447,578,672 in 2023 and by $359,044,309 in 2025. That’s the amount of OVERPAYMENT, not the total amount of the payments rendered.
The VA OIG conducted an analysis using data from 2023 and 2024, designed to help the Veterans Health Administration “determine whether additional actions are warranted to address significant cost concerns
and potential issues related to patients’ length of stay and the quality of care for residential substance use disorder treatment provided under Community Care Network (CCN) contracts.”
That process uncovered that “…The billing methodology used under these contracts for substance use disorder treatment has led to the VA paying more for these services than it would have if they had been reimbursed at the rate paid for by another federal health benefits program. In addition, the OIG has identified patient care concerns that may merit further oversight.”
This report is yet another in a long pattern of issues related to VA healthcare treatment, billing, and benefits.
Background
The Department of Veterans Affairs uses community care programs to help qualifying veterans get specialized services like residential substance use disorder treatment.
The Office of Inspector General (OIG) functions as an independent watchdog for the VA. The OIG audits these programs to prevent fraud, waste, and abuse of management. A 2025 OIG report put the community residential treatment program under scrutiny, revealing significant issues that impact both taxpayer dollars and the quality of care veterans receive.
The OIG investigation identified overpayments as being caused by a flawed billing system lacking basic cost controls. The report highlighted the inconsistent quality of care. Community providers were not being held to the same accreditation standards as in the VA’s own facilities.
The report also lists specific clinical issues, including questionable treatment durations and medication practices that could put veterans at risk. These findings suggest a critical need for stronger oversight of the VA’s community partners.
Below, our Frequently Asked Questions (FAQ) guide addresses some of the findings of the OIG report.
FAQ: VA Overpaid $807M for Vet Substance Abuse Care
What was the main finding of the VA Inspector General report from September 17, 2025?
The report found serious problems with the VA’s community residential substance use disorder treatment program. These issues included excessive costs and poor oversight of the quality of care provided to veterans.
How did the VA overpay for these services?
The VA used a “percentage of billed charges” payment system instead of a fixed-rate schedule. This created a system without price controls, allowing providers to bill inflated costs. The OIG estimated the VA overpaid by about $807 million over two years.
How did the billing problem go unnoticed for so long?
The report points to a lack of oversight and an automated payment system that reimbursed the TPAs without verifying that the charges were appropriate or based on established contract rates. The system relied on the TPAs to pay providers correctly.
What were the primary concerns about the quality of care?
VA clinicians raised concerns about the length of treatment, the types of medications prescribed, and the lack of quality control. They reported that community providers’ practices did not always align with the VA’s standards for effective care.
What was the problem with the duration of treatment?
The VA authorized 45-day stays, but clinicians noted that community providers often kept veterans for the full period, even when not clinically needed. This suggests treatment plans were not tailored to individual needs.
Were there specific concerns about medications?
VA staff reported that veterans returned from community programs with prescriptions for benzodiazepines. These are addictive drugs the VA typically avoids using in substance use disorder treatment because they can increase the risk of relapse.
What was the issue with provider accreditation?
The VA’s own residential programs must be accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF). The community providers were not required to meet this same standard, creating a two-tier system with inconsistent quality.
What steps has the VA taken to fix these problems?
The VA has modified its contract with one of its two main administrators to enforce proper billing codes and a set fee schedule. This is intended to bring costs under control for that part of the network.
What did the OIG recommend the VA do next?
The OIG urged the VA to apply these new financial controls across the entire system. It also recommended the VA listen to its own clinical staff to improve the quality of care and outcomes for veterans in these programs.
Who are the third-party administrators (TPAs) mentioned in the report?
The TPAs are private companies the VA contracts with to manage the network of community providers. Their responsibilities include processing and paying claims for care on behalf of the VA.
Was the problem the same with all community providers?
The report identified systemic issues but noted that the VA’s initial fix was targeted at one of the two main TPAs. This suggests that while the problems were widespread, the contracts and practices of the TPAs were a key factor.
What is the risk if these issues are not fully addressed?
If not fixed, the VA risks continued financial waste, which diverts funds from other essential veteran services. More importantly, it risks sending veterans to community programs that provide substandard or potentially harmful care, undermining the goal of the program.
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
