Detection of fraud, waste, and abuse in programs of the Veterans Health Administration

(a) In general Subsection (f) of section 1703D of title 38, United States Code, is amended— (1) in paragraph (1)— (A) by striking paragraph (1) each place it appears and inserting subparagraph (A); (B) by inserting (A) before The Secretary; and (C) by redesignating paragraphs (2) and (3) as subparagraphs (B) and (C), respectively; and (2) by adding at the end the following new paragraph: (2) (A) The Secretary shall use an information technology system to— (i) analyze a claim submitted to the Secretary— (I) by a health care entity or provider that furnishes hospital care, medical services, or extended care services under this chapter; and (II) through the health care claims enterprise solution (ii) detect whether such claim is a fraudulent claim, an overpayment, or other fraud, waste, or abuse. (B) The information technology system under this paragraph shall include the following functions: (i) Continuous monitoring of claims to detect patterns that may indicate fraud, waste, or abuse. (ii) Analysis of historical and real-time claims data to identify and predict potential fraudulent claims. (iii) Ready-made analytic models to identify and analyze fraudulent claims. (iv) Post-payment analysis for overuse of services or other practices that create unnecessary costs to the Department. (v) Integration with existing claims processing systems and technologies of the Department. (vi) Logging, storage, analysis, and reports regarding the nature, frequency, and financial impact of detected fraudulent claims. (vii) Identification of, and machine learning that is based on, patterns of fraudulent claims in order to reduce false positives and predict new forms of fraud. (viii) Updates to detect new models of fraud, waste and abuse. (ix) Any other function determined necessary by the Secretary. (C) To carry out this paragraph, the Secretary shall use funds from the Department of Veterans Affairs franchise fund established under title I of Public Law 104–204 (38 U.S.C. 301 note). (D) Not later than two years after the date of the enactment of the FRAUD Act of 2025 and annually thereafter through the day described in subparagraph (E), the Secretary shall submit to the Committees on Veterans' Affairs of the Senate and House of Representatives a report regarding the operation of such information technology system during the preceding year. Each such report shall include the following elements: (i) The effectiveness of the information technology system in performing the functions described in subparagraph (B). (ii) The estimated savings to the Department arising from the use of the information technology system. (iii) Any plans to enhance, modify, or add new capabilities to the information technology system. (E) This paragraph shall cease to be effective on the day that is seven years after the date of the enactment of the FRAUD Act of 2025. (F) In this paragraph: (i) The term Community Care Network means a network established under section 1703(h) of this title. (ii) The term health care claims enterprise solution means the information technology used by the Secretary to process a claim submitted under this chapter by a health care entity or provider that is not part of a Community Care Network.. (b) Implementation date The Secretary shall carry out the amendments made by this section not later than one year after the date of the enactment of this Act.

(a) In general Subchapter I of chapter 17 of title 38, United States Code, is amended by inserting after section 1706A the following new section (and amending the table of sections at the beginning of such chapter accordingly): 1706B. Management of health care: detection of fraud, waste, and abuse (a) In general To detect fraud, waste, and abuse in programs of the Veterans Health Administration, the Secretary shall use processes and systems, including the information technology system described in subsection (b), to— (1) analyze a claim submitted to the Secretary by a health care entity or provider that furnishes hospital care, medical services, or extended care services under this chapter; and (2) reanalyze a claim, described in paragraph (1) that the Secretary determines may be fraudulent, after paying such claim. (b) Information technology system The information technology system described in this subsection shall include the following functions: (1) Continuous monitoring of claims to detect patterns that may indicate fraud, waste, or abuse. (2) Analysis of historical and real-time claims data to identify and predict potential fraudulent claims. (3) Ready-made analytic models to identify and analyze fraudulent claims. (4) Post-payment analysis for overuse of services or other practices that create unnecessary costs to the Department. (5) Integration with existing claims processing systems and technologies of the Department. (6) Logging, storage, analysis, and reports regarding the nature, frequency, and financial impact of detected fraudulent claims. (7) Identification of, and machine learning that is based on, patterns of fraudulent claims in order to reduce false positives and predict new forms of fraud. (8) Updates to detect new models of fraud, waste and abuse. (9) Any other function determined necessary by the Secretary. (c) Use of franchise fund To carry out this section, the Secretary shall use funds from the Department of Veterans Affairs franchise fund established under title I of Public Law 104–204 (38 U.S.C. 301 note). (d) Report Not later than two years after the date of the enactment of the FRAUD Act of 2025, and annually thereafter for five additional years, the Secretary shall submit to the Committees on Veterans' Affairs of the Senate and House of Representatives a report regarding the operation of the processes and systems under subsection (a) during the preceding year. Each such report shall include the determination of the Secretary regarding the following elements: (1) The effectiveness of such processes and systems in detecting fraud, waste, and abuse described in subsection (a). (2) The estimated savings to the Department arising from the use of such processes and systems. (3) Any plans to enhance, modify, or add new capabilities to such processes and systems.. (b) Implementation date The Secretary of Veterans Affairs shall carry out section 1706B of such title, as added by subsection (a), not later than one year after the date of the enactment of this Act.