FRAUD Act of 2025

Summary

Amends title 38 to require the Secretary of Veterans Affairs to use an information technology system to detect fraud, waste, and abuse in the Veterans Health Administration's programs.

Utilizes processes and systems to analyze and reanalyze claims submitted by healthcare entities under Veterans Community Care Program for potential fraud.

Includes continuous monitoring, data analysis, analytic models, and post-payment checks in the IT system to identify and predict fraudulent claims.

Ensures integration with existing claims processing systems, log storage, analysis, machine learning to reduce false positives, and updates to detect new fraud models.

Directs use of funds from the Department of Veterans Affairs franchise fund to implement these systems.

Requires the Secretary to report annually on the system's effectiveness, savings achieved, and system enhancement plans to Congressional Veterans' Affairs Committees.

Mandates implementation within one year of enactment.

Requires the Secretary of Veterans Affairs to use IT systems to detect fraud in Veterans Community Care claims.

A BILL To amend title 38, to direct the Secretary of Veterans Affairs to use an information technology system to detect fraud, waste, and abuse regarding claims for payment submitted to the Secretary under the Veterans Community Care Program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

This Act may be cited as the “Forcing Real Accountability for Unlawful Distributions Act of 2025” or the “FRAUD Act of 2025”.

Requires the Veterans Health Administration to use IT systems to detect and analyze fraudulent healthcare claims.

SEC. 2. Detection of fraud, waste, and abuse in programs of the Veterans Health Administration.

(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):

Ҥ 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.

Requires the Secretary of Veterans Affairs to report on fraud detection systems' effectiveness and savings annually.

“(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.

SEC. 3. Extension of certain limits on payment of pension.

Section 5503(d)(7) of title 38, United States Code, is amended by striking “November 30, 2031” and inserting “January 30, 2034”.