WASHINGTON — Two years after a politically embarrassing $1 billion shortfall that imperiled veterans health care, the Veterans Affairs Department is still lowballing budget estimates to Congress to keep its spending down, government investigators say.

The report by the Government Accountability Office, set to be released Friday, highlights the Bush administration's problems in planning for the treatment of veterans that President Barack Obama has pledged to fix. It found the VA's long-term budget plan for the rehabilitation of veterans in nursing homes, hospices and community centers to be flawed, failing to account for tens of thousands of patients and understating costs by millions of dollars.
 

In its strategic plan covering 2007 to 2013, the VA inflated the number of veterans it would treat at hospices and community centers based on a questionably low budget, the investigators concluded. At the same time, they said, the VA didn't account for roughly 25,000 — or nearly three-quarters — of its patients who receive treatment at nursing homes operated by the VA and state governments each year.

"VA's use, without explanation, of cost assumptions and a workload projection that appear unrealistic raises questions about both the reliability of VA's spending estimates and the extent to which VA is closing previously identified gaps in noninstitutional long-term care services," according to the 34-page draft report obtained by The Associated Press.

The VA did not immediately respond to a request for comment.

In the report, the VA acknowledged problems in its plan for long-term care, which accounts annually for more than $4 billion, or 12 percent of its total health care spending. In many cases, officials told the GAO they put in lower estimates in order to be "conservative" in their appropriations requests to Congress and to "stay within anticipated budgetary constraints."

As to the 25,000 nursing home patients unaccounted for, the VA explained it was usual clinical practice to provide short-term care of 90 days or less following hospitalization in a VA medical center, such as for those who had a stroke, to ensure patients are medically stable. But the VA had chosen not to budget for them because the government is not legally required to provide the care except in serious cases.

The GAO noted the VA was in the process of putting together an updated strategic plan. Retired Gen. Eric K. Shinseki, who was sworn in Wednesday as VA secretary, has promised to submit "credible and adequate" budget requests to Congress.

"VA supports GAO's overarching conclusion that the long-term care strategic planning and budgeting justification process should be clarified," wrote outgoing VA Secretary James Peake in a response dated Jan. 5. He said the department would put together an action plan within 60 days of the report's release.

The report comes amid an expected surge in demand from veterans for long-term rehabilitative and other care over the next several years. Roughly 40 percent of the veteran population is age 65 or older, compared to about 13 percent of the general population, with the number of elderly veterans expected to increase through 2014.

In 2005, the VA stunned Congress by suddenly announcing it faced a $1 billion shortfall after failing to take into account the additional cost of caring for veterans injured in Iraq and Afghanistan. The admission, which came months after the department insisted it was operating within its means and did not need additional money, drew harsh criticism from both parties.

The GAO later determined the VA repeatedly miscalculated — if not deliberately misled taxpayers — with questionable methods used to justify Bush administration cuts to health care amid the burgeoning Iraq war. In Friday's report, the GAO said it had found similarly unrealistic assumptions and projections in the VA's more recent budget estimates submitted in August 2007.

According to latest GAO report, the VA is believed to have:

_Undercut its 2009 budget estimate for nursing home care by roughly $112 million. It noted the VA planned for $4 billion in spending, up $108 million from the previous year, based largely on a projected 2.5 percent increase in costs. But previously, the VA had actually seen an annual cost increase of 5.5 percent.

_Underestimated costs of care in noninstitutional settings such as hospices by up to $144 million. The VA assumed costs would not increase in 2009, even though in recent years the cost of providing a day of noninstitutional care increased by 19 percent.

_Overstated the amount of noninstitutional care. The VA projected a 38 percent increase in patient workload in 2009, partly in response to previous GAO and inspector general reports that found widespread gaps in services and urged greater use of the facilities. But for unknown reasons, veterans served in recent years actually decreased slightly, and the VA offered no explanation as to how it planned to get higher enrollment.