Audit of Community-Based Outpatient Clinic Contracts

Report Information

Issue Date
Report Number
24-00900-230
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Audit
Report Topic
Contract Integrity
Major Management Challenges
Healthcare Services
Recommendations
12
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary

The OIG conducted this audit to determine whether VHA national program offices provided effective oversight of contracted community-based outpatient clinics (CBOCs). The audit team found the offices did not effectively oversee contracted CBOCs because oversight ended after vendors were awarded contracts to acquire, furnish, and run the clinics. This left VHA without national oversight of the effectiveness of the contracts. VHA’s policies governing contracts for CBOCs did not incorporate all responsibilities required of a VHA program office: identifying emerging national issues, communicating with internal and external stakeholders, managing quality and compliance, and evaluating program effectiveness and efficiency. The policy omissions limited program offices’ ability to identify and implement solutions for national issues, such as contractors not meeting performance metrics, start-up (construction) costs keeping small businesses from competing for contracts, staff having to manually create patient rosters (monthly lists of patients for which contractors can invoice VA), and medical centers (which were supposed to oversee CBOC operations) not appointing adequately certified contract monitors. The problems the OIG audit team documented may have adversely affected care provided to veterans—sampled CBOCs provided healthcare services that scored below VHA’s overall performance metrics—and created administrative challenges for VA medical centers and contracting offices.

The audit team also found that, contrary to federal acquisition requirements, contract templates did not give contracting officers the option to include performance incentives. Without effective means to hold contractors accountable for performance, the contracting officers and VA medical centers accepted and paid in full for services that did not meet requirements.

The OIG made 12 recommendations, including to delegate program office oversight responsibilities, monitor contractor compliance with the contracts, develop consistent procedures for patient rosters, and work with the VA Office of General Counsel on start-up costs and incentives.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Review and update VHA Directive 1660.07, “Medical Sharing/Affiliate National Program Office,” to delegate all required program office responsibilities for the community-based outpatient clinic contracts throughout the program’s life cycle to an appropriate headquarters-level office or collaboration of offices, as defined in VHA Directive 1217, “VHA Operating Units” and VA’s Acquisition Lifecycle Framework.

No. 2
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Develop and implement procedures for a headquarters-level office to monitor overall compliance with contract requirements and use the results to reassess program policies or contract requirements.

No. 3
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Develop a formal feedback process, such as a program life cycle review process, for contracting officers and contracting officer representatives, medical facilities, and contractors who work on community-based outpatient clinic contracts to provide lessons learned, issues encountered, and other feedback about establishing new clinics and the performance at the clinics.

No. 4
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Conduct an assessment of contractor compliance with all active community-based outpatient clinic contracts, then evaluate whether the community-based outpatient clinic contract performance metrics are measurable, reasonable, and attainable.

No. 5
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Coordinate with the Office of General Counsel to determine whether creating a separate contract line item from the operational costs for contracted community-based outpatient clinics to pay start-up costs, including construction costs, would assist in the administration of these contracts and increase competition among contractors; then update the community-based outpatient clinic performance work statement template to reflect any change made as a result of this consideration.

No. 6
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to Veterans Health Administration (VHA)

Assess how medical centers create and maintain the billable roster for community-based outpatient clinic contracts; based on the results, develop and implement efficient, accurate, and consistent procedures for developing and maintaining the billable rosters.

No. 7
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to Veterans Health Administration (VHA)

Coordinate with the VA medical centers that have VA-contracted community-based outpatient clinics to conduct a risk assessment to evaluate the responsibilities, time requirements, and qualifications of community-based outpatient clinic contracting officer representatives; then publish clear guidance or recommendations for facilities to make sure they have appropriately experienced, trained, and certified staff to oversee the performance of community-based outpatient clinic contracts.

No. 8
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Assess the certification levels of the CORs assigned to all CBOC contracts and make recommendations to the medical centers for assigning appropriately experienced CORs or to provide any additional training or assistance to existing CORs, if necessary.

No. 9
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Develop and implement procedures to require VA medical centers and contracting offices to verify that the Office of Information Technology can meet start-up requirements for new community-based outpatient clinic locations as part of the contract review process.

No. 10
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Review and evaluate how contracting offices rated community-based outpatient clinic contractors in the Contractor Performance Appraisal Reporting System, and if necessary, develop and disseminate additional guidance or training to contracting offices to help them appropriately rate community-based outpatient clinic contractors in accordance with the performance metrics and the broad categories in the Contractor Performance Appraisal Reporting System.

No. 11
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to Veterans Health Administration (VHA)

Determine whether positive and negative performance incentives should be used for community-based outpatient clinic contracts to motivate the contractors to provide high-quality health care, in accordance with FAR 37.6, FAR 16.202, and FAR 16.402-2.

a. If performance incentives are appropriate for community-based outpatient clinic contracts, ensure the Medical Sharing/Affiliate Office coordinates with the Office of General Counsel to develop and implement measurable, reasonable, and defensible positive and negative performance incentives.

b. If performance incentives are not appropriate for community-based outpatient clinic contracts, ensure the Medical Sharing/Affiliate Office and each network contracting office documents in the contract files the reasons why performance incentives are not used to the maximum extent practicable, in accordance with FAR 16.402-2 and FAR 37.6.

No. 12
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Develop and implement procedures to identify, evaluate, and incorporate commercial practices and contract types into the community-based outpatient clinic contract requirements templates before publishing updated versions, in accordance with 38 U.S.C. § 8153 and FAR part 10; the procedures should evaluate whether the contract payment structure for community-based outpatient clinic contracts is consistent with current commercial practices.