Federal Reports

The VA Office of Inspector General (OIG) conducted this inspection to assess the VA Pittsburgh Healthcare System’s stewardship and oversight of funds. This inspection assessed the following financial activities and administrative processes to determine whether appropriate controls and oversight were in place: managerial cost accounting information, open obligations oversight, purchase card use, and supply chain management operations.The OIG found the healthcare system did not consistently use managerial cost accounting information to enhance efficiency, help reduce costs, and make business decisions, and the system’s use did not fully align with federal financial accounting practices.The healthcare system did not fully comply with VA policies on obligations oversight, resulting in an estimated $87,000 that could have been put to better use and about $63,000 from accruals that were not reviewed and canceled in a timely manner. The system could improve management of open obligations by enhancing reviews of inactive obligations and creating an escalation process when services do not provide status of open orders.Concerning purchase card transactions, the OIG estimated the healthcare system may have incurred about $403,000 in questioned costs because of split purchases. The system could improve efficiency by complying with VA policies on split purchases or by considering contracts.Finally, the OIG found the healthcare system’s supply chain management did not ensure days-of-stock-on-hand metrics were met or that supply chain data were accurate. To improve inventory management, the system could strengthen processes and procedures to ensure stock data are recorded correctly and routinely monitored. Facility leaders reported that staffing shortages may have affected local oversight.The OIG made six recommendations to the healthcare system director. The recommendations address issues that, if unattended, may eventually interfere with financial efficiency practices and the stewardship of VA resources.

In line with the Veterans Health Care Act of 1992 (referred to in this report as the public law), the OIG conducts reviews to determine whether certain manufacturers (1) made all their covered drugs available at a discount to the government through a Federal Supply Schedule (FSS) contract and (2) correctly calculated and reported the drugs’ non-Federal Average Manufacturer Price (non-FAMP) on which the discount is based. The law helps ensure the government receives fair prices on pharmaceutical purchases. VA identifies covered drugs as those subject to the law that are commercially sold and approved by the Food and Drug Administration under a new drug application or biological licensing agreement. The reviews are not published because they contain sensitive commercial information.To promote transparency, this report summarizes the 15 reviews the OIG completed in FYs 2022 and 2023 to identify any instances of noncompliance with the public law. In conducting the individual reviews, the OIG teams evaluated non-FAMPs and related ceiling prices, late additions (items not placed on FSS contract within 75 days of being on the market), and failures to offer FSS-required price reductions that would have affected ceiling prices.Cumulatively, the OIG identified approximately $61.2 million in overcharges by manufacturers to the government. This amount includes approximately $27 million resulting from manufacturers’ noncompliance with the public law and about $34.1 million resulting from manufacturers’ violations of the price reduction clause in the FSS contract that were unrelated to the public law. VA has since collected approximately $59.3 million (about 97 percent) of the recommended amount from 11 of the 14 manufacturers. VA does not expect to collect overcharges from one manufacturer that filed for bankruptcy, and overcharges with two other manufacturers remained unresolved during the course of this review.

We found OSMRE was not adequately prepared to expend IIJA funds, and it continues to expend funds without effective processes in place.

To obtain further information about this Classified or Sensitive but Unclassified Report, please contact the OIG Office of Counsel atOIGCounsel@oig.treas.gov, (202) 927-0650, or by mail at Office of Treasury Inspector General, 1500 Pennsylvania Avenue, Washington DC 20005.