OIG: VA EHR Implementation Cost Estimate Off by $2.5B

The Department of Veterans Affairs’ (VA) $4.3 billion health IT infrastructure estimate for its 10-year EHR implementation project was an underestimation, according to an Office of Inspector General (OIG) audit.

The audit team evaluated two health IT infrastructure cost estimates from the Office of the Electronic Health Record Modernization’s (OEHRM), one from December 2018 and one from a May 2019. Both estimates came in at about $4.3 billion.

However, the OIG audit revealed that the infrastructure estimate for the EHR implementation was inaccurate. The OIG determined that VA did not report $2.5 billion in other critical IT infrastructure upgrade costs to Congress.  

The $2.5 billion in costs are for IT infrastructure upgrades that VA’s OIT and VHA are expected to fund. OEHRM officials said that they believed the omitted costs were outside their office’s reporting responsibility. However, neither OIT nor VHA reported the costs to Congress.

The audit team pointed out that these costs should have been disclosed by OEHRM. The Veterans Benefits and Transition Act of 2018 requires the VA Secretary to submit quarterly reports that include life-cycle cost estimates to Congress, and VA and GAO guidance requires that life-cycle cost estimates include all costs, regardless of funding source.

“This lapse in reliable reporting occurred because certain IT infrastructure upgrade costs are assumed by VA’s Office of Information and Technology (OIT) and the Veterans Health Administration (VHA), and there were inadequate procedures for determining if a cost-estimate update is needed in the office’s congressionally mandated reports and, if so, when this update should occur,” the audit explained.

The audit also revealed that VA did not complete an independent cost estimate as required by VA financial policy. This independent estimate stands to ensure the accuracy of the program cost estimate.

“It is likely that an independent cost estimate would have revealed many of the issues found during this audit and allowed OEHRM to take earlier action to improve the reliability of its estimates,” the audit team wrote.

“This report makes clear the Electronic Health Record Modernization program needs strong oversight by VA and Congress to ensure it delivers reliable support to Department medical staff and the veterans they serve,” Jon Tester, chairman of the Senate Veterans’ Affairs Committee, said in a statement about the audit.

“While Secretary McDonough has taken positive steps to get this program back on track, the Senate needs to confirm a VA Deputy Secretary to help manage this effort, protect taxpayer dollars, and deliver for all veterans,” he continued. “This project is critical to the future of our veterans’ healthcare, and I look forward to hearing directly from VA next week on their plans to make sure it is implemented correctly.”

Following a bipartisan push from Tester and Ranking Member Jerry Moran, the VA announced a strategic review of the EHRM program in March.

On July 14, Tester will lead a full Committee hearing to review VA’s roll-out of the EHRM program and hear directly from officials on the outcome of their strategic review.