Follow-Up Review of the Accuracy of Special Monthly Compensation Housebound Benefits

The Veterans Benefits Administration (VBA) compensation program provides monthly tax-free, service-connected benefits to veterans as compensation for the effects of disabilities caused by diseases or injuries incurred or aggravated during active military service. Special monthly compensation (SMC) recognizes the severity of certain disabilities or combinations of disabilities by paying additional benefits, such as housebound entitlement. In a September 2016 report, the VA Office of Inspector General (OIG) found that VBA incorrectly processed about 27 percent of high-risk cases for veterans receiving compensation at the housebound rate. The OIG conducted this review to determine whether VBA effectively implemented the recommendations from the 2016 OIG report and found that VBA has not improved the accuracy of processing high-risk SMC housebound cases that were active as of September 24, 2020. In fact, VBA continues to have an estimated 27 percent error rate, resulting in about $165 million in improper payments. This occurred, in part, because VBA leaders did not establish adequate governance to effectively implement the OIG’s September 2016 recommendations and failed to make system-level changes to improve the accuracy of the claims process. Without improvements in oversight, accountability, monitoring, and the information system, VBA risks continuing to make improper payments, potentially wasting taxpayer dollars and subjecting veterans to undue financial hardship if overpayments must be repaid. The OIG made six recommendations. The acting under secretary for benefits should review all active high-risk SMC housebound cases and conduct ongoing periodic reviews, update and monitor SMC housebound training, ensure system enhancements are created and cannot be bypassed, and correct all processing errors identified by the review team and report the results to the OIG.