Sole Source Contracting Between VA and Health Care Providers
VA facilities have the authority to enter into contractual agreements with medical schools and affiliates to share medical resources and to receive funds for the use of such resources.
The information on this webpage addresses many of the issues related to the development and management of medical sharing contracts.
Sole Source Contracting with Affiliated Institutions - December 1, 2008
Audit of VHA Noncompetitive Clinical Sharing Agreements - September 29, 2008 - VA Office of Inspector General
Health Care Resources Contracting - Buying - Title 38 U.S.C. 8153
Health Care Resource Sharing Authority - Selling
Joint Acquisition of Medical Equipment
Conflict of Interest Aspects of Contracting for Scarce Medical Specialist Services, Enhanced Use Leases, Health Care Resource Sharing, Fee Basis and Intergovernmental Personnel Act Agreements (IPAS)
Sharing Use of Space
New Alignment of Contract Legal Counsel Responsibilities
Step-by-Step Process for Receiving Medical Services in Accordance with VA Directive 1663
Healthcare Resource Decision Trees
Quality Assurance Surveillance Plan (QASP) Template
Evaluation of VHA Sole-Source Contracts with Medical Schools and Other Affiliated Institutions
VHA Prosthetics and Clinical Logistics Office:
Betty "Charlie" Benmark, CPCM
Frequently Asked Questions
Contracting for Health Care Resources
When must a health care resources contract be competitively awarded?
All Health Care Resources contracts, that do not require the acquisition of the services of Affiliated University faculty members to perform the services of the contract, must be awarded competitively when two or more providers that can fulfill VA contract requirements of the health care resource are available.
When do health care resources contracts require a pre-award audit?
All Health Care Resources contracts awarded non-competitively that exceed the dollar thresholds defined in VA Directive 1663 require a pre-award audit by the Office of Inspector General (OIG) to be completed within the timeframe set forth in this Directive. When unusual and compelling urgency requires immediate contract award and performance, an audit must be performed post-award.
All non-competitive initially signed proposals valued at $500,000 or more require a pre-award audit by the OIG, prior to beginning price negotiations, except as set forth in the following.
(VA Directive 1663 Para. 2. d. & Para. 4 b. (8)(a)(b), (9))
May an affiliate include an allowance for profit in a sole-source contract for work performed at the affiliate?
Profit is discouraged because these contracts are non-competitive, and the medical school receives other benefits through its affiliation with VA. The Affiliate derives significant benefits from the affiliation agreement such as VA's training of residents at VA medical centers.
What monitoring procedures must be used by the VA to ensure contract compliance?
Monitoring procedures must be able to demonstrate through time and attendance logs, operating room records, minutes of meetings or other appropriate electronic records, that VA has received services called for under the contract. This description must identify the VA official(s) by title to be designated as the Contract Officer Technical Representative, who is responsible for verifying contract compliance.
When should sole-source awards with affiliates be considered?
Sole-source awards with affiliates must be considered the preferred option whenever education and supervision of graduate medical trainees is required (in the area of the services contracted). The contract cost cannot be the sole consideration in the decision on whether to sole source or to compete.
What determines fair and reasonable pricing?
While complying with all applicable laws and regulations, the price basis for acquiring health care resources should be as flexible as possible. At a minimum this should include the direct purchasing of provider time (by FTE or by hour) and health care services (cost per procedure or relative value unit (RVU)-based contracts), as appropriate. Similarly, VHA should be allowed to use the same reimbursement methodologies as other government agencies, such as the Centers for Medicare and Medicaid (CMS), Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), or TRICARE.
Contracts should be based on market prices as assessed by appropriate local and regional market analyses. Contracts should not exceed applicable Medicare rates unless there is adequate justification documented in the contract file.
Additional requirements for contract physicians (such as administrative activities, supervision of trainees, on call availability, rounds, etc.) and/or additional contract requirements (such as credentialing, technology infrastructure, etc.) may be examples of potential justifications for exceeding the Medicare rate. Medicare itself acknowledges the additional costs of providing medical education through the Indirect Medical Education supplement provided to teaching hospitals.
Conflict of Interest
What specific activities are prohibited to VA physicians or clinicians who have a financial interest in a contract with an affiliated medical school?
NOTE: These prohibitions also apply to any non-affiliated entity in which a VA employee has a financial interest.
What specific activities are permissible by VA physician or clinician who has a financial interest in a contract with an affiliated medical school?
(VHA Handbook 1660.3 Para. 7)
Joint Acquisition of Medical Equipment
Who must review and approve proposals for the Joint Acquisition of Medical Equipment?
(VHA Handbook 1660.2 Para. 4, d, e)
May new lithotripters and Positron Emission Tomography (PET) be purchased under the Joint Acquisition of Medical Equipment program?
No. However, upgrades for lithotripters and PETs previously purchased under this program can be considered by the medical center or VISN.
Who owns the title to equipment jointly purchased?
Title to the equipment will be jointly held by each sharing partner.
May VA transfer jointly owned equipment to another VA facility?
Where programmatically appropriate and economically feasible, and with the consent of the sharing partner, a VISN Director may upgrade and transfer equipment purchased under this program to any other location in VHA that has appropriate workload volumes and requirements.
May sharing partners use their own resources to make capital improvements to existing VHA space?
Yes. However, VA Central Office must approve the proposed VA medical center-sponsored non-recurring maintenance or partner-sponsored capital improvements in advance.
May construction program funds be used to renovate existing VHA space that is to be used solely by the sharing partner?
No. Neither major nor minor construction program funds may be used.
May a sharing partner sublet the use of VHA space obtained through a use of space sharing agreement?
No. Not under any circumstances.
Can supplies be included in a proposal for sharing the use of space?
Usually, no. However, providing supplies may be considered only if the supply component is a minor portion of the total cost to the sharing partner.