The PACT Act Shell Game: VA Is Hiding the Real Denial Rate — and Here’s Where the Money Is Going
THE GIST
VA claims a 73% PACT Act approval rate. VA’s own Under Secretary confirmed in 2023 that 34% of those approvals — 1 in 3 — are rated at 0%, meaning service-connected but receiving zero dollars in compensation. For hypertension, the most-filed condition, 82.1% of “approvals” pay nothing.
Bronchial asthma: 56% denied. Maxillary sinusitis: 51% denied. Hypertensive vascular disease: 40% denied. For the conditions that hit burn pit veterans hardest, more than half are getting turned away.
A VA OIG audit found that 61% of denied non-presumptive claims contained processing errors — processors skipped legally required steps and denied claims they were not legally permitted to deny.
The Toxic Exposures Fund (TEF) — the mandatory $52.7 billion pot Congress created to pay for PACT Act implementation — is quietly funding 42% of VA’s entire workforce, covering a $6 billion general budget shortfall, and billing routine flu shots to the burn pit account.
VA’s own exam contractors received almost $2.3 million in performance bonuses that VA’s watchdog now says were calculated incorrectly — and VA has yet to recover the money.
Congress called the PACT Act the most significant expansion of veteran benefits in decades. They were right. What they didn’t say — what VA hasn’t said — is that “expansion” and “delivery” are two different things.
Three and a half years in, the VA is running a statistical sleight of hand that would embarrass a first-year auditor. They’re reporting a 73% approval rate that counts veterans receiving zero dollars as “approved,” billing routine healthcare to the toxic exposure fund, and paying performance bonuses to contractors whose work the government’s own watchdog says is riddled with errors.
This is what that looks like up close.
The Number VA Doesn’t Want You to Do the Math On
The VA PACT Act Performance Dashboard, Issue 54 (published January 23, 2026) reports a cumulative approval rate of 73%. VA officials cite this figure in congressional testimony. It leads every press release.
Here’s what it doesn’t tell you.
VA Under Secretary for Benefits Joshua Jacobs confirmed the math himself in a September 2023 press briefing: 34% of all PACT Act approvals — roughly 1 in 3 — were rated at 0%. Service-connected. Zero dollars.
For hypertension, the most-filed PACT Act condition with over 710,000 claims, it’s worse: Jacobs confirmed that 82.1% of hypertension “approvals” are rated at 0%. More than 4 in 5 veterans granted service connection for hypertension receive no monthly compensation.
VA’s defense, offered by Jacobs to the House Veterans’ Affairs Committee, is that a 0% rating establishes a nexus for future secondary claims and opens the door to VA health care. That is technically true. It is also true that a veteran who was told the PACT Act would finally compensate them for what they breathed in Iraq is receiving a letter that says “approved” and a check for $0.00.
The condition-specific denial rates — before you even factor in the 0% problem — tell their own story:
Bronchial asthma: 56% denied (roughly 130,000 veterans out of 231,000 claims)
Maxillary sinusitis: 51% denied (roughly 132,000 out of 257,000)
Hypertensive vascular disease: 40% denied (roughly 284,000 out of 710,000) — and of those “approved,” 82% paid nothing
Those aren’t rounding errors. Those are veterans who breathed smoke and chemicals in Iraq and Afghanistan, came home sick, filed claims Congress specifically designed to cover them, and got turned away — or handed a zero.
Then in February 2026, VA tried to lock this in permanently.
On February 17, 2026, VA published an Interim Final Rule (38 CFR § 4.10) that would have required raters to evaluate conditions based on treated symptoms — meaning if your medication controls your hypertension, VA could rate it at 0% regardless of the underlying severity. The rule was a direct response to Ingram v. Collins, 38 Vet. App. 130 (2025), a CAVC decision that required VA to rate based on symptoms without the ameliorative effects of medication — a ruling that would have forced upward rating adjustments on hundreds of thousands of pending claims.
VA skipped the public comment period entirely, using the interim final rule mechanism to push it through without congressional or public review.
Secretary Collins announced enforcement of the rule would be halted on February 19, 2026 — two days after publication — following immediate backlash from the VFW, American Legion, DAV, and congressional members. The rule was formally rescinded in the Federal Register on February 27, 2026 (Docket No. VA-2026-VBA-0067).
The 0% rating trap is still in legal limbo. VA still counts those ratings as approvals on the PACT Act Dashboard.
And the appeals data confirms the broader picture is getting worse. Senate Veterans’ Affairs Committee Ranking Member Blumenthal’s January 22, 2026 report — Breaking the Pact: Impacts of Trump, DOGE, and Doug Collins’ Ongoing Assault on Veterans — documents that as of July 2025, the number of veterans asking VA to take a second look at their claim increased by 44% because of errors claims processors made. Veterans aren’t filing HLRs because they feel optimistic. They’re filing them because they got denied and they know something went wrong.
The 61% Problem
The VA’s own watchdog documented what “something went wrong” actually means.
VA OIG Report #23-03357-156, published September 30, 2025, audited PACT Act denials for non-presumptive conditions — the claims that don’t fall under a presumptive list and require the VA to develop additional medical evidence under 38 U.S.C. § 1168.
The finding: an estimated 61% of those denials contained processing errors.
Not a handful. Not a statistical blip. Sixty-one percent.
The most common failure: processors denied claims without ever requesting the TERA (Toxic Exposure Risk Activity) medical opinion that federal law requires them to obtain. The opinion exists specifically for cases where a veteran’s condition isn’t on the presumptive list but the evidence still supports service connection. Processors were skipping it entirely, then issuing denials on the basis of insufficient evidence — evidence they were legally obligated to develop but didn’t.
A second OIG review (December 2024/January 2025) found that 45% of reviewed presumptive claims contained a different error: processors ordered unnecessary medical exams for conditions that already qualified under the legal presumption. Those unnecessary exams produced negative medical opinions. Processors then used those negative opinions to override the presumption and deny the claim.
This is not a training gap. This is processors using a broken process to generate denials for claims that should have been granted.
Now ask the question nobody at VA is answering: how many of those veterans appealed?
VBA completed 2.5 million C&P claims in FY2024. VA’s own Monday Morning Workload Report shows the production number; it doesn’t publish the grant/denial split by design. What we know from the documented pattern: a significant share of those decisions were denials, and the majority of veterans who get denied never enter any appeal lane before the one-year deadline expires. They accept the decision and walk away. No Supplemental Claim. No HLR. Nothing. VA’s own appeals reporting has consistently shown that only a fraction of denied veterans pursue formal review — and the number choosing to appeal directly to the Board has been declining, not growing.
The veterans who didn’t walk away won at surprisingly high rates. Supplemental Claims succeed roughly 50% of the time. Higher Level Reviews — the lane specifically designed to catch VA’s own processing errors — succeed 40-50% of the time. The American Legion’s April 9, 2025 Statement for the Record to the House Veterans’ Affairs Subcommittee on Disability Assistance and Memorial Affairs sampled appealed cases and found 42% had Duty to Assist failures where VA simply didn’t do what federal law required. When those cases are appealed, they are frequently overturned.
When you issue a wrongful denial to a population that statistically won’t fight back, you don’t have to fix it. The TEF keeps its money. The contractor keeps its bonus. The veteran loses.
That is the financial logic of guidance fatigue.
Board of Veterans’ Appeals judges are catching it. BVA case A25007526 (January 28, 2025) remanded a hypertension claim because VA had never obtained the TERA medical opinion required by 38 U.S.C. § 1168(a) — despite evidence of toxic exposure at Camp Lejeune and asbestos contact on record. Case A25038912 (April 29, 2025) remanded a surviving spouse’s cause-of-death claim because the medical opinion’s TERA rationale addressed only asbestos — failing to evaluate brake dust, industrial solvents, and other chemicals the VA’s own TERA memo had already conceded were part of the veteran’s exposure as an Army engineering equipment repairman.
The Board is sending these back. The question is why the Regional Offices issued them in the first place.
The OIG and GAO both point to the same answer: guidance fatigue. The adjudication manual was updated so frequently, with instructions spread across so many different sources, that processors couldn’t keep up. The GAO’s January 2026 report (GAO-26-108844) kept VA Disability on the High-Risk List for exactly this reason — not because of claim volume, but because VA “has not demonstrated progress in decision accuracy.”
Now Look at the Money
While veterans were fighting wrongful denials at Regional Offices, something else was happening on the budget side.
The PACT Act created the Toxic Exposures Fund — a mandatory appropriation, not subject to the discretionary caps that govern most government spending. The intent was to wall off PACT Act funding from the annual budget fights that historically short-changed veterans. Congress wanted to make it untouchable.
VA found another use for it.
According to the FY 2026 VA Budget Submission (June 2025) and VA Financial Policy Chapter 06 (published February 6, 2026), the TEF request for fiscal year 2026 is $52.7 billion — a $22 billion increase over FY 2025. Of that, the fund supports 191,433 full-time equivalent positions. That’s roughly 42% of the entire VA workforce, funded through the burn pit account.
The breakdown is instructive:
$1.38 billion for information technology — including infrastructure supporting the Electronic Health Record Modernization rollout, which has been a documented failure for years
$1.4 billion for VBA claims processors’ salaries
$400 million for medical support and compliance — facility administrators, HR, leadership teams
None of that is direct veteran care. None of it is compensation. It’s overhead, billed to the toxic exposure fund because the mandatory classification makes it harder for Congress to cut.
The 84% Proxy: The Part Nobody Is Talking About
Here’s the mechanism that makes it all work, buried in VA Financial Policy Chapter 06.
VA does not track individual toxic-exposure clinical encounters. They don’t record which specific appointments for which specific veterans are PACT Act-related. Instead, they identify all veterans in Priority Group 6 — a group that expanded significantly under the PACT Act — and apply an 84% proxy rate to their total healthcare costs.
What that means in practice: if a Priority Group 6 veteran goes to a VA clinic for a broken ankle, 84% of that visit’s cost is billed to the mandatory Toxic Exposures Fund. Same for a routine blood draw. Same for a prescription renewal that has nothing to do with burn pits or toxic exposure.
The VA’s own financial policy admits the 84% figure is “a broad estimate” derived from a random sample of PG 6 veterans. It is not based on actual tracked TERA clinical costs. It is a placeholder that allows VA to shift discretionary budget pressure onto a mandatory fund that isn’t subject to congressional caps.
The result: money Congress intended to flow to veterans with toxic exposure claims is instead subsidizing VA’s general operations — keeping the discretionary budget artificially low while the mandatory fund absorbs costs it was never designed to cover.
The Contractor Problem Sitting Underneath All of This
It gets worse when you look at who’s conducting the actual medical exams.
VA’s Medical Disability Examination Office contracts with two primary vendors to perform PACT Act-related compensation and pension exams: QTC Medical Services (a Leidos subsidiary) and OptumServe (a UnitedHealth Group subsidiary). Combined, these two contractors are billing the government more than $2.5 billion annually in current task orders.
GAO Report GAO-26-108783 (published November 20, 2025) audited MDEO’s financial controls and found that almost $2.3 million in performance incentive payments — bonuses paid to MDEO’s contracted exam providers for meeting quality benchmarks — were calculated incorrectly in FY 2024. The cause: MDEO had no written procedures for verifying incentive calculations. Staff manually entered data into spreadsheets. The spreadsheets were wrong. The bonuses went out anyway.
VA told GAO it “agrees in principle” to recover the funds. As of the report’s publication, no documented recovery had occurred.
Meanwhile, the GAO found that medical examiners — the actual physicians doing the PACT Act exams — report concerns about conflicting guidance but are blocked from raising those concerns directly to VA. The contractors filter what gets elevated. The contractors are also the ones being paid performance bonuses based on metrics that include exam volume and on-time completion rates.
Think about what that incentive structure produces. A contractor gets paid more for completing more exams faster. The examiner who wants to flag a guidance problem can’t get the message to VA without going through the contractor. MDEO was nine months overdue on required quality reviews for complex claims — including Gulf War Illness and TERA-related PACT Act conditions — as of July 2025.
This is the ecosystem in which 56% of asthma claims are being denied.
The American Legion told Congress directly in April 2025 that VA needs to “leverage its oversight ability to hold contracted examiners accountable.” That recommendation is sitting in the congressional record. Nothing has changed.
A Spring 2026 Industry Day is now on the calendar for the next MDEO contract recompete cycle (SAM.gov notice R499, March 4, 2026). The same contractors will bid. The same oversight gaps will exist unless Congress demands otherwise.
What Accountability Looks Like
This isn’t a story about VA employees doing their best with a difficult law. The OIG and GAO have both handed Congress a roadmap of specific, documentable failures:
A 61% processing error rate on non-presumptive denials. Documented. Sourced. Published in September 2025. Congress has had this report for six months.
A mandatory fund being used as a shadow budget for general administrative overhead. Documented in the VA’s own budget submission and financial policy.
$2.3 million in incorrect contractor bonuses, unrecovered. Documented by GAO. Acknowledged by VA. Unresolved.
The Senate Veterans’ Affairs Committee and the House Committee on Veterans’ Affairs both have jurisdiction over this. They should be requiring:
A full audit of every non-presumptive PACT Act denial issued between May 2023 and the present, reviewed against the § 1168 TERA medical opinion requirement
A detailed accounting of TEF expenditures by actual cost category, not proxy estimation
Recovery of the $2.3 million in contractor overpayments, with a documented timeline
Written procedures for MDEO incentive payment verification before the next contract cycle begins
Veterans who filed PACT Act claims didn’t ask for an accounting seminar. They asked for the benefits Congress told them they had earned. The system failed them by design — through choices made by people with names and titles and budgets.
That’s what this is.
What You Can Do Right Now
If you were denied a PACT Act claim for a non-presumptive condition: Check your decision letter. If it doesn’t reference a TERA medical opinion, there may be grounds for a Higher Level Review on the basis of a Duty to Assist error. Get in front of an accredited VSO or claims agent before the one-year HLR deadline expires. HadIt.com has tracked PACT Act claims issues since the law passed — search the archive here.
If you’re a congressional staffer or policy advocate: OIG Report #23-03357-156 and GAO-26-108844 are your starting points. Both are publicly available. Both name the specific failures. Both recommend remedies VA has not fully implemented.
If you’re a veteran who got a 0% rating: Service connection at 0% is a foothold, not an endpoint. File for an increased rating with current medical evidence. A 0% is not the end of the road.
Take Action
The Senate and House Veterans’ Affairs Committees have jurisdiction over every failure documented in this article. The OIG reports have been on their desks for months. Call them. Write them. Make them explain why these recommendations haven’t been implemented.
Your call script — if you’re a veteran
“I’m a veteran calling about the PACT Act. VA’s own OIG found that 61% of denied non-presumptive claims contained processing errors — processors skipped the legally required TERA medical opinion and denied claims they weren’t legally allowed to deny. The Toxic Exposures Fund Congress created to pay for PACT Act implementation is being used to cover $52.7 billion in VA overhead, including routine flu shots and HR salaries. And VA paid $2.3 million in incorrect contractor bonuses that have never been recovered. I want [Senator/Representative NAME] to demand a full audit of non-presumptive PACT Act denials and a detailed accounting of every dollar spent from the Toxic Exposures Fund. Veterans are being denied benefits they earned and Congress needs to hold VA accountable.”
Your call script — if you’re a civilian or advocate
“I’m calling about VA’s implementation of the PACT Act. Government audits have found serious problems — a 61% processing error rate on denied claims, a $52.7 billion mandatory fund being used as a shadow budget for general operations, and $2.3 million in contractor overpayments that haven’t been recovered. This isn’t a paperwork problem — it’s a pattern of structural failures that are denying veterans the benefits Congress specifically passed a law to provide them. I’m asking [Senator/Representative NAME] to require VA to audit every non-presumptive PACT Act denial and publish a transparent accounting of Toxic Exposures Fund expenditures.”
Who to call
Senate Veterans’ Affairs Committee
Chair: Sen. Jerry Moran (R-KS) — (202) 224-6521
Ranking Member: Sen. Richard Blumenthal (D-CT) — (202) 224-2823
Committee: (202) 224-9126
House Veterans’ Affairs Committee
Chair: Rep. Mike Bost (R-IL) — (202) 225-5661
Ranking Member: Rep. Mark Takano (D-CA) — (202) 225-2305
Committee: (202) 225-3527
Can’t call? Write. Both committees have web contact forms at veterans.senate.gov and veterans.house.gov.
Phone numbers verified March 2026. Confirm current at senate.gov and house.gov.
What to ask for — on the record
A full audit of every non-presumptive PACT Act denial issued since May 2023, reviewed against the § 1168 TERA medical opinion requirement
A line-item accounting of Toxic Exposures Fund expenditures — actual cost categories, not the 84% proxy estimate
Recovery of the $2.3 million in contractor overpayments, with a documented timeline and completion date
Written MDEO incentive payment verification procedures before the spring 2026 contract recompete
Primary Sources
VA PACT Act Performance Dashboard, Issue 54 — January 23, 2026
VA OIG Report #23-03357-156 — Nonpresumptive Conditions Involving Toxic Exposure Under the PACT Act — September 30, 2025
VA OIG Report #24-03127-66 — VA Disability Benefits OIG Reports — March 27, 2025
GAO-26-108844 — VA Disability Benefits: Progress Made but VA Decisions on Veterans’ Claims Continue to Be Based, in Part, on Outdated Criteria — January 14, 2026
GAO-26-108783 — VA Disability Benefits: Implementing GAO’s Recommendations Would Help Improve Quality of Contracted Exams for Veterans — November 20, 2025
VA Financial Policy Chapter 06 — Toxic Exposures Fund Methodology — February 6, 2026
VA FY 2026 Budget Submission — June 2025
Sen. Blumenthal, Breaking the Pact: Impacts of Trump, DOGE, and Doug Collins’ Ongoing Assault on Veterans — January 22, 2026
SAM.gov Notice R499, Notice ID 36C10X26Q0089 — MDEO Industry Day — March 4, 2026
38 U.S.C. § 1168 — TERA Medical Opinion Requirement (Public Law 117-168)
American Legion Statement for the Record, HVAC Subcommittee on Disability Assistance and Memorial Affairs — April 9, 2025
VA Under Secretary Joshua Jacobs press briefing — 0% rating confirmation — September 21, 2023 — Military.com (Patricia Kime)
Federal Register 38 CFR Part 4, Interim Final Rule — Evaluative Rating: Impact of Medication — February 17, 2026
Federal Register, Rescission of Interim Final Rule — February 27, 2026 — Docket No. VA-2026-VBA-0067
Ingram v. Collins, 38 Vet. App. 130 (2025) — CAVC
HVAC Hearing, Rep. Luttrell — Modernizing VA Benefits Structure — January 14, 2026
BVA Decision A25007526 — January 28, 2025
BVA Decision A25038912 — April 29, 2025
I use AI as a research and editing assistant — the same way I’d use a good reference book or a sharp editor. Every word published here is reviewed, verified, and approved by me. The perspective, accuracy, and editorial decisions are mine.
Tbird is the founder of HadIt.com (est. 1997) and a Navy veteran. This publication does not constitute legal advice. For claims assistance, work with an accredited VSO, claims agent, or attorney.
About Tbird’s Quiet Fight
Tbird’s Quiet Fight is investigative journalism and policy analysis focused on VA accountability, veteran benefits, and the people and institutions that shape them. It is published by Theresa Aldrich (Tbird), founder of HadIt.com, one of the longest-running veteran-to-veteran VA claims communities on the internet (est. 1997).
HadIt.com provides free VA disability claims education at hadit.com. The veteran community is at community.hadit.com.
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