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 Today, Rep. Morgan Luttrell (R-Texas), the Chairman of the House Committee on Veterans’ Affairs Subcommittee on Disability Assistance and Memorial Affairs, delivered the following opening remarks, as prepared, at the start of the subcommittee’s oversight hearing to look at the Department of Veterans Affairs (VA) Medical Disability Examination Office’s (MDEO) financial incentive management policies and practices, specifically including whether VA has properly measured and applied financial incentives for contracted vendors of VA medical disability exams on behalf of veterans. Today’s hearing comes after a recent GAO report found that MDEO wrongly awarded millions of dollars in financial incentives in 2024 to vendors who did not meet performance standards – directly impacting the overall disability compensation benefits process for veterans.

The subcommittee will come to order.

The Chair may declare a recess at any time.

Good morning, everyone.

Thank you to all our witnesses for being here today.

This morning, the Subcommittee is conducting oversight on one of the Veterans Benefits Administration’s most critical offices for supporting and overseeing the disability claims process – the Medical Disability Examination Office, or MDEO.

This is the office responsible for managing contractors who conduct medical disability exams for veterans nationwide.

Those exams form the foundation of the medical evidence used by VBA to evaluate a veteran’s claim for disability compensation.

If an exam is wrong, incomplete, inaccurate, or delayed, the veteran might not receive the benefits they earned from their service.

That’s what we are focused on today. Accuracy, accountability, and positive outcomes for veterans.

When a veteran files a claim for disability compensation, the VA is responsible for helping the veteran prove their eligibility for benefits.

For years, the VA relied heavily on its own clinicians at VA medical centers to perform these exams.

As demand increased, the VA turned to vendors to help handle the workload to ensure quicker processing rates and shorter wait times.

Today, more than ninety percent of all exams are done by contractors.

Sourced out to four major contractors, these multi-year contracts cover more than nine million exams and a multi-year budget ceiling of over 13 billion dollars.

That’s an enormous operation, and it demands serious oversight.

A contracted medical examiner uses a Disability Benefits Questionnaire, a DBQ, to document the veteran’s symptoms and medical findings.

MDEO, the VA office responsible for exam oversight, ensures DBQs meet quality standards, that vendors are held accountable, and that the taxpayers’ investment is delivering for veterans.

According to a recent report from the GAO, that might not have happened over the last several years at the rate we’d expect.

GAO found that MDEO wrongly awarded millions of dollars in financial incentives in 2024 to vendors who did not meet performance standards.

Those incentive payments are based on five key metrics:

Production, customer satisfaction, exam quality, timeliness in scheduling, and timeliness in completion.

When vendors meet or exceed the metrics, they can earn a bonus but also face financial penalties for falling short.

However, the GAO found that MDEO used a manual process to calculate these incentives, which had no standardized check, or formal written procedure, to verify the accuracy of payments.

Because of this, MDEO miscalculated performance scores and overpaid vendors by millions of dollars.

GAO even found cases where staff entered the wrong percentage entirely.

This led to $2.2 million in overpayments to exam vendors.

Simply put, the office charged with maintaining quality assurance in disability claims for veterans did not consistently apply those same standards to its own financial data.

GAO recommended MDEO to develop written procedures and automated verification tools.

MDEO claims they have started doing that. It is a good first step, but is something that should have existed from the start.

The GAO also found that MDEO has fallen short in meeting its own schedule for special focus reviews, known as SFRs.

These reviews are supposed to happen every two years for complex claim types, such as traumatic brain injury, military sexual trauma, and Gulf War Illness.

These are the cases most prone to error, where exam quality can make or break a veteran’s claim.

Two reviews are overdue, and the third still doesn’t have a start date.

When asked why, MDEO claims they have “competing priorities.”

Let me be perfectly clear: if there’s one area where you can’t cut corners, it’s in cases involving brain injuries or trauma.

Without those reviews, MDEO has no way to know if it’s previous corrective actions are working, or if the exam quality is improving.

There is no time to waste when it comes to proper support for veterans living with these injuries.

Without understanding if exam quality is improving, it also means MDEO can’t update examiner training or identify and correct DBQ errors.

The same errors keep happening, leaving some veterans with delays or incorrect decisions.

This is a systematic failure, and one I take seriously.

The GAO also identified entirely new areas for improvement, suggesting that MDEO gather more feedback from the field.

Contracted examiners told GAO they often have no direct line of communication with the VA.

Instead, they’re told to send feedback through their vendors.

That might sound harmless, but it means MDEO is often unaware of the day-to-day issues that impact exam quality.

One examiner told GAO that different vendors have conflicting instructions on how to fill out the same DBQ.

Therefore, depending on which contractor a veteran is scheduled with, their exam might be completely different, even though it’s for the same condition.

That kind of disconnect undermines trust in the system, and most importantly, hurts veterans.

MDEO is the office responsible for ensuring exam consistency.

To their credit, MDEO says they’re developing a direct feedback line, so examiners can raise issues directly with the office.

That’s a positive step, but it’s overdue.

A pattern of manual errors, missed reviews, and broken communication is very concerning.

These issues point to a broader issue within MDEO - a lack of proactive oversight.

We need a proactive VA, not a reactive one.

So, here’s what we would like to understand today:

Why is MDEO struggling to meet its own internal standards?

What changes are being made to modernize its quality assurance system?

And how can Congress help ensure that the next time the GAO reviews this office, we’re hearing about improvements?

We have a strong panel here to help answer those questions and I look forward to working with the Trump Administration to get results for veterans.

With that, I yield to Ranking Member McGarvey.