Rep. Morgan Luttrell, chairman of the House Committee on Veterans’ Affairs Subcommittee on Disability Assistance and Memorial Affairs, addressed concerns about the Department of Veterans Affairs (VA) Medical Disability Examination Office’s (MDEO) management of financial incentives for contracted vendors during an oversight hearing. The hearing was prompted by a recent Government Accountability Office (GAO) report that found MDEO had improperly awarded millions in financial incentives to vendors who failed to meet performance standards in 2024.
Luttrell emphasized the importance of accuracy and accountability in the disability claims process. "This is the office responsible for managing contractors who conduct medical disability exams for veterans nationwide," he said. He noted that these exams are critical as they form the basis for evaluating veterans' eligibility for disability compensation.
The VA has increasingly relied on outside vendors to perform medical disability exams due to rising demand, with over ninety percent now conducted by contractors under multi-year contracts totaling more than $13 billion and covering nine million exams.
According to Luttrell, "A contracted medical examiner uses a Disability Benefits Questionnaire, a DBQ, to document the veteran’s symptoms and medical findings." He explained that MDEO is tasked with ensuring quality standards are met and holding vendors accountable.
The GAO report highlighted significant shortcomings. "GAO found that MDEO wrongly awarded millions of dollars in financial incentives in 2024 to vendors who did not meet performance standards," Luttrell stated. These incentive payments are based on metrics such as production, customer satisfaction, exam quality, and timeliness. However, GAO found that MDEO used manual processes without standardized checks or formal procedures, leading to miscalculations and $2.2 million in overpayments.
"Because of this, MDEO miscalculated performance scores and overpaid vendors by millions of dollars," Luttrell said. The lack of automated verification tools contributed to errors such as staff entering incorrect percentages.
The GAO recommended that MDEO develop written procedures and automated verification tools—a step which MDEO has reportedly begun implementing. Luttrell acknowledged this but added it should have been established earlier.
Another concern raised was the failure to complete scheduled special focus reviews (SFRs) for complex claim types like traumatic brain injury or Gulf War Illness—cases where exam quality is especially important. Two reviews are overdue while a third lacks a start date due to what MDEO described as “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," Luttrell said.
He also cited communication gaps between contracted examiners and VA officials as identified by GAO. Examiners often have no direct line to VA; instead feedback must go through their vendor companies, resulting in inconsistent instructions across different contractors.
"One examiner told GAO that different vendors have conflicting instructions on how to fill out the same DBQ," Luttrell reported. This inconsistency can lead to varying outcomes for veterans with similar conditions depending on which contractor conducts their exam.
MDEO has indicated plans to create a direct feedback line from examiners—a move Luttrell called positive but overdue.
"A pattern of manual errors, missed reviews, and broken communication is very concerning," he concluded. He questioned why MDEO struggles with internal standards and asked what changes are being made toward modernization.
Luttrell ended his remarks by expressing hope for improvements: "We need a proactive VA, not a reactive one."
