Summary of Fiscal Year 2020 Preaward Reviews of Healthcare Resource Proposals from Affiliates

The OIG reviewed 31 proposals for sole source healthcare provider contracts in fiscal year 2020 and provided information that VA contracting officers could use to help negotiate fair and reasonable prices. These contracts allow VA to fill, at a fixed price, positions for which it is unable to hire staff. The proposals typically come from VA affiliated schools of medicine or their associated hospitals or physician practice groups. The combined estimated contract value of the 31 proposals reviewed was $209 million. The OIG identified a total of $81 million in potential cost savings for 29 proposals. As of March 2021, VA contracting officers have awarded 25 of the 31 proposals and have sustained over $16 million in cost savings. OIG reviews of the individual contract proposals were not previously published because they contain clinical staff’s sensitive personal data. This report summarizes the OIG’s prior findings and recommendations in three areas: • Costs underlying proposed hourly rates. For 25 of the 27 proposals reviewed that contained hourly rate pricing, the OIG determined that the prices offered to the government were higher than the supported amounts. Frequently occurring issues included unsupported provider salaries, administrative expenses, fringe benefit amounts, or malpractice insurance premiums. • Offered per procedure prices. The OIG reviewed six proposals with per procedure pricing and determined that they all offered prices higher than the properly calculated Medicare rates. • Potential conflicts of interest. The OIG found potential conflicts of interest for VA personnel for 24 of the 31 proposals reviewed. These personnel held faculty appointments at the affiliated institutions and potentially would also have responsibilities such as monitoring performance of the affiliate’s services. In each instance, the OIG recommended the contracting officer request an opinion from VA’s Office of General Counsel on whether these individuals would have a financial interest in the proposal.