Federal Reports

VA spends millions of taxpayer dollars annually on healthcare resources procured without competition from affiliated educational institutions. This review focused on determining the extent of VA’s compliance with the requirement to obtain an Office of Inspector General (OIG) preaward review of healthcare resource proposals from affiliated institutions and the potential monetary impact for any noncompliance. Preaward reviews generally provide VA with pricing recommendations based on the affiliate’s actual expenses of providing the services and are used by VA contracting officers to negotiate fair and reasonable prices for the government and taxpayers. The OIG found VA awarded 227 contracts with a total value of $278.5 million without the required OIG preaward review for contracts above $500,000, which represents 63 percent of the contracts during the 5-year review period. A review of contract files and other sources revealed that contracting officers awarded contracts just below the review threshold and used a series or extended interim contracts to circumvent the review requirements. VA did not consider the monetary value of extending the contract periods when determining the value of the proposals and repeatedly used interim contracts to procure healthcare services without the required OIG preaward review. Additionally, contracting officers did not consistently document that the negotiated price was fair and reasonable, as required. The OIG recommended the Veterans Health Administration executive director for procurement ensure that contracting officers request preaward reviews for all sole-source healthcare resource contracts that exceed $500,000, require an OIG preaward review for all interim contracts that exceed the threshold, and mandate an immediate postaward review for any sole-source contract awarded on an interim basis as an emergency contract.

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The OIG examined whether the VA Office of Community Care accurately reimbursed third-party administrators under the Veterans Choice Program for payments made to community healthcare providers for services to veterans during the audit period. This is the third OIG report on healthcare claims payments under the Choice program. It focuses on claims processed through the Plexis Claims Manager system that were paid from February 21, 2017, through December 31, 2018. The audit team found that the Office of Community Care reimbursed third-party administrators at rates higher than what was typical for the same or similar medical services in a given geographic area. The office could have saved approximately $132.1 million during the period audited if it reimbursed third-party administrators at verifiable usual and customary rates, as required by the governing contract. Additionally, the Office of Community Care did not fully implement prior OIG recommendations to develop effective payment and internal control processes for the Choice program. As a result, the office made about $73 million in overpayments to Choice third-party administrators for medical services provided under the program. These errors were made because the appropriate payment rate was not used. The OIG will continue to monitor all recommendations. The OIG made eight recommendations to the Office of Community Care in this report to prevent and address payment errors under current and future contracts (as the Choice program has ended and other community care programs continue).