Government Accountability Office reviewing VA implant procurement (AGAIN)

Jan 21, 2024

Following recent communications with leaders of the Senate and House committees on Veteran Affairs, the Government Accountability Office (GAO) has inititated an investigation into VA procurement practices.  

GAO previously investigated implant procurement at the VA in 2014 (Full GAO report below).  To summarize the results of the 2014 investigation, as presented to the House of Representatives committee January 15, 2014, GAO had not addressed previous concerns and VA was non-compliant with procurement regulations require a waiver to be obtained for open market purchases over the micro-purchase limit of $3,000.  GAO also found VA had substantial lapses in documentation of surgical implants purchased leading to data errors limiting the ability to identify what implants were implanted in patients.  This is a critical issue as it limits ability to contact patients when surgical implants are recalled due to safety concerns.  

The results of the 2014 GAO report to Congress are striking in that it appears none of the concerns raised in 2014 have changed in 2023.  Not addressed by the GAO report is the price VA is paying for implants.  

Patriot Orthopedics & Spine has provided members of the Senate and House Committee on Veteran Affairs with data demonstrating VA is paying, on average, 250% of the price paid for identical surgical implants by private and public healthcare organizations.  Change is needed now.  VA can save over $300 Million dollars every year on surgical implants.  We cannot wait until another GAO report 10 years from now shows nothing has changed...

Patriot Orthopedics and Spine is actively working with Congressional leaders and VA leaders to change the way VA procures surgical implants.

If you want to help, call your federal elected officials and ask them to support efforts to change the way VA purchases surgical implants. 

Cheers,

NATE

[email protected]

This is the accessible text file for GAO report number GAO-14-271T 
entitled 'VA Surgical Implants: Shortcomings in Implant Purchasing and 
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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Oversight and Investigations, Committee on 
Veterans' Affairs, House of Representatives: 

For Release on Delivery: 
Expected at 10:00 a.m. EST: 
Wednesday, January 15, 2014: 

VA Surgical Implants: 

Shortcomings in Implant Purchasing and Tracking: 

Statement of Randall B. Williamson: 
Director, Health Care: 

GAO-14-271T: 

Chairman Coffman, Ranking Member Kirkpatrick, and Members of the 
Subcommittee: 

We are pleased to be here today to discuss our work on the purchase 
and tracking of surgical implants at Department of Veterans Affairs 
(VA) facilities. VA's Veterans Health Administration (VHA) is one of 
the largest purchasers of surgical implants, which include biological 
implants, such as skin and bone grafts, and non-biological implants, 
such as cardiac pacemakers and artificial joints. VHA spent about $563 
million on surgical implants in fiscal year 2012, an increase of 28 
percent since fiscal year 2008. Surgeons and other clinicians at VA 
medical centers (VAMC) determine veterans' needs for surgical 
implants, request the implant of their choice for purchase, and 
perform the clinical procedures to implant the items. While VA has 
negotiated competitive contracts for a variety of implants, VAMCs or 
VHA's regional network contracting offices (NCO) can purchase a 
specific surgical implant requested by a clinician from the open 
market with appropriate clinical justification, rather than purchasing 
a similar item through a VA-negotiated competitive contract.[Footnote 
1] Upon purchase, identifying information is recorded, such as the 
serial and lot numbers of the item, which can be used later to 
identify veterans who received a particular implant if one is recalled 
by a manufacturer or the Food and Drug Administration due to safety 
concerns. 

At a May 2012 hearing of this subcommittee, concerns were raised about 
the extent to which VAMCs and NCOs purchase surgical implants from the 
open market without appropriate justification, as well as VHA's 
oversight of surgical implant purchases.[Footnote 2] More recently, 
members of Congress raised concerns about VHA's ability to identify 
patients who received a surgical implant that was subjected to a 
recall and raised allegations about vendor representatives providing 
direct patient care to veterans at three VAMCs. My remarks today will 
address the following two areas: (1) VAMC compliance with VHA 
requirements for documenting surgical implants purchased from the open 
market, and VA and VHA oversight of compliance with these 
requirements; and (2) VHA's ability to identify veterans who received 
an implant that is being recalled by the manufacturer or the Food and 
Drug Administration. My remarks on surgical implant purchasing and 
VHA's ability to identify veterans who received recalled implants are 
based on our report, released earlier this week, entitled VA Surgical 
Implants: Purchase Requirements Were Not Always Followed at Selected 
Medical Centers and Oversight Needs Improvement.[Footnote 3] For this 
report, we visited four VAMCs that serve large veteran populations and 
assessed compliance with VHA requirements by reviewing a diverse 
selection of 257 surgical implant purchases from different vendors. 
The purchases we reviewed represented from about: 

6 percent to about 83 percent of the applicable purchases at each VAMC 
in the first 6 months of fiscal year 2013[Footnote 4]. While these 
results cannot be generalized to all VAMCs, they provide insight into 
VAMC and NCO compliance. We also interviewed officials from VA, VHA, 
and from four networks, which oversee VAMCs, and reviewed pertinent 
statutes, regulations, and VA and VHA documents. Furthermore, we 
reviewed agency documents and interviewed VA and VHA officials on 
VHA's processes for tracking surgical implants placed in patients. Our 
work was performed in accordance with generally accepted government 
auditing standards. Further details on our scope and methodology are 
included in our report. 

GAO also investigated an allegation that surgical implant vendor 
representatives had participated in direct patient care at three 
VAMCs. The results of our investigation are summarized in appendix I. 
Our investigative work was conducted from February 2013 to January 
2014 in accordance with standards prescribed by the Council of the 
Inspectors General on Integrity and Efficiency, as further detailed in 
appendix I. During our investigation, we conducted field interviews, 
performed document reviews, and reviewed relevant policies and 
procedures relative to the allegations presented. 

We provided VA with a draft of this statement. VA provided one 
technical commented, which we incorporated. 

Surgical Implant Purchase Requirements Were Not Always Followed at 
Selected VAMCs, and VA and VHA Oversight Needs Improvement: 

Our work at four VAMCs found that these VAMCs did not always follow 
VHA requirements for documenting open-market purchases of surgical 
implants. Specifically: 

* None of the four VAMCs fully complied with VHA requirements for 
obtaining waivers required for open-market purchases of surgical 
implants because they were focusing on other priorities or lacked 
awareness of the requirements, among other factors.[Footnote 5] 

* None of the four VAMCs fully complied with additional VHA 
requirements for documenting open-market purchases that are part of a 
new process VHA implemented in fiscal year 2013 for surgical implant 
purchases above the Federal Acquisitions Regulation's micro-purchase 
threshold of $3,000 and below its simplified acquisition threshold of 
$150,000.[Footnote 6] VAMC and regional office officials attributed 
noncompliance mainly to insufficient VHA guidance and VA staff's 
inexperience in completing these requirements.[Footnote 7] 

* Three of the four VAMCs did not comply with a VHA requirement 
pertaining to agreements with vendors that provided surgical implants 
to them on consignment. Under a consignment agreement, the vendor 
maintains vendor-owned items at the VAMC, and the VAMC purchases only 
the items actually used. A consignment agreement may be useful when 
the requirement for a surgical implant is immediate and it is not 
possible to predetermine which of several types or models are 
required. These agreements, which clinicians likely established to 
ensure timely access to implants, did not comply with a VHA 
requirement that consignment agreements must be authorized by a VHA 
contracting officer. 

The lack of full compliance with these requirements limits VHA's 
ability to determine why VAMCs are purchasing surgical implants from 
the open market and VHA's ability to ensure that it is paying a fair 
and reasonable price for surgical implants. To improve compliance with 
VHA requirements, in our report, we recommended that the Secretary of 
Veterans Affairs take several actions, including providing clear 
guidance to VAMCs on when and how to complete required waivers, 
establishing internal controls to ensure VAMCs' compliance with waiver 
requirements, and providing additional training on how to properly 
document open-market purchases over $3000.[Footnote 8] VA concurred 
with our recommendations and noted that VHA's Procurement and 
Logistics Office will emphasize the waiver process through webinar 
trainings and standard operating procedures guidance, and it will 
develop a checklist for documentation of open-market surgical implant 
purchases over $3,000. 

In addition, we found that VA and VHA's oversight of surgical implant 
purchases to detect and correct instances of noncompliance needs 
improvement. Specifically: 

* Although VA and VHA have recently begun conducting oversight of 
surgical implant purchases over $3,000 to assess compliance with VHA's 
new requirements, VHA officials told us that they have not ensured 
that corrective action has been taken to address identified 
noncompliance because of poor communication between VA and VHA and 
insufficient staffing to follow up on identified issues. VA's Office 
of Acquisition and Logistics did not provide VHA with information on 
the VAMCs at which noncompliance was identified, according to a senior 
VHA official. The official also explained that VHA's policy is largely 
intended to be consultative in nature and that VHA's Procurement and 
Logistics Office is not sufficiently staffed to ensure that corrective 
action is taken. 

* Moreover, VHA assesses each VAMC's performance on metrics 
established for surgical implant purchasing, such as the extent to 
which VAMCs purchased surgical implants from a national committed-use 
contract or obtained a waiver allowing clinicians to use an 
alternative item. However, as of November 2013, VHA did not have a 
policy governing how any identified deficiencies should be addressed 
and the corrective actions necessary for VAMCs and VHA's regional 
networks to take. Absent such a policy, the degree of monitoring and 
corrective actions taken varied among the four networks we visited. 
Network prosthetics officials at two of the four networks told us that 
they regularly monitored the results from VHA's assessments and took 
steps to ensure that VAMCs address identified deficiencies, such as 
correcting data-entry errors. In the other two networks that did not 
ensure that VAMCs address deficiencies, VHA's metrics identified a 
relatively high rate of noncompliance with surgical implant purchases 
from VA-negotiated national committed-use contracts. In one of these 
networks, this noncompliance included a high percentage of purchases 
missing serial numbers or lot numbers, which has potentially 
significant patient safety and cost implications. 

Without ensuring that noncompliance with purchasing requirements or 
deficiencies in performance measures are appropriately addressed, VA 
and VHA run the risk of these issues recurring or continuing. To 
address this shortcoming, our report recommended that VHA revise 
existing guidelines to require that VAMCs and NCOs document the 
measures they are taking to address noncompliance and report their 
progress (via corrective action plans) in achieving those measures 
through the VHA and VA management chains of command.[Footnote 9] VA 
concurred with our recommendation and stated that VHA will require 
documentation of measures taken to address noncompliance identified in 
audits. 

VHA Is Limited in Its Ability to Identify and Locate Patients Who 
Receive a Surgical Implant: 

We also noted that VHA is limited in its ability to identify and 
locate patients who receive an implant, which is particularly 
important in the event of a recall by the manufacturer or the Food and 
Drug Administration because of safety concerns. For example, VA has 
noted instances across its health care system where lot numbers and 
serial numbers for such purchases were not entered into the 
prosthetics purchasing system and has initiated corrective actions, 
although these actions appear stalled as of December 2013.[Footnote 10] 

Specifically, in 2008, VA's Office of Information Technology began 
developing the Veterans Implant Tracking and Alert System (VITAS), 
which was designed to track and retrieve identifying information--
including the lot and serial number--of surgical implants placed in 
patients VHA-wide. VITAS was developed to address identified 
shortcomings in VHA's existing ability to track surgical implants. 
According to VHA, these shortcomings include the following: 

* The lot number and serial number of items implanted in patients is 
not always entered into the prosthetics purchasing system by 
purchasing and procurement staff, as required. 

* While VHA clinicians from most specialties track identifying 
information of items implanted in their patients using standalone 
systems or spreadsheets that are particular to the clinicians' 
specialties, VA found that information on surgical implants recorded 
in these systems is neither standardized nor is it shared across 
VAMCs. Furthermore, VA found that identifying information on surgical 
implants used in certain clinical specialties, including 
gastroenterology, interventional radiology, and pulmonary, is not 
tracked in any system.[Footnote 11] 

According to VA and VHA officials involved in the development of 
VITAS, this system's development was suspended as of the end of fiscal 
year 2012 due to data-reliability challenges stemming from inaccurate 
or missing entries in the prosthetics purchasing system and 
interoperability challenges between VITAS and other VHA systems that 
store information on surgical implants. VA and VHA are in the process 
of reevaluating VITAS; however, as of December 2013, VA and VHA had 
not decided whether to resume the development of VITAS. As a result, 
VHA's ability to identify and locate patients who received an implant 
remains limited. 

Chairman Coffman, Ranking Member Kirkpatrick, and Members of the 
Subcommittee, this concludes my statement. I would be pleased to 
respond to any questions that you may have. 

For questions about this statement, please contact Randall B. 
Williamson at (202) 512-7114 ([email protected]). Individuals making 
key contributions to this testimony and the report on which it is 
based include Wayne McElrath, Director; Gary Bianchi, Assistant 
Director; Kim Yamane, Assistant Director; Ashley Dixon; Cathleen 
Hamann; Julie Spetz; and Michael Zose. 

[End of section] 

Appendix I: Patient Care Provided by Vendor Representatives at 
Department of Veterans Affairs Medical Centers (VAMC): 

This appendix summarizes the results of the investigative work we 
conducted to review an allegation that surgical implant vendor 
representatives had participated in direct patient care at three VAMCs 
by applying skin grafts to patients or debriding patients' wounds. We 
visited the three VAMCs at which the alleged actions had occurred and 
interviewed clinical staff, such as physicians, and nonclinical staff, 
including hospital administrators, to determine whether vendor 
representatives had participated in direct patient care, and, if so, 
the circumstances under which the direct patient care occurred. At 
each of the three VAMCs, we also reviewed documentation, such as VAMC 
vendor policies and clinical progress notes, which document patient 
care episodes. Furthermore, we interviewed vendor representatives who 
provided skin graft products to these VAMCs. The findings from these 
three VAMCs are not generalizable to other types of surgical implants, 
to other clinicians, or to other VAMCs. We did not identify the 
frequency of vendor representatives participating in the provision of 
direct patient care for all types of surgical implants at the VAMCs we 
visited, or for the Veterans Health Administration (VHA) as a whole. 
We conducted this investigative work from February 2013 to January 
2014 in accordance with standards prescribed by the Council of the 
Inspectors General on Integrity and Efficiency. 

Results of Investigation: 

We were able to affirm that, in some instances, vendors were 
participating in direct patient care at one of the three VAMCs we 
investigated, as recently as August 2013. At the two other VAMCs, we 
were unable to affirm these allegations. Specifically, several 
clinicians at one VAMC stated that vendor representatives applied skin 
grafts to patients or assisted Department of Veterans Affairs (VA) 
clinicians with the application of skin grafts on multiple occasions. 
Patients' clinical progress notes we obtained from this VAMC confirmed 
that a vendor representative had applied skin grafts to several 
patients or assisted in the application of the grafts. One physician 
assistant who disclosed that a vendor representative had occasionally 
assisted in the application of skin grafts stated that vendor 
representatives may have assisted with this procedure because the VAMC 
lacked available clinical staff to provide such assistance. A 
physician who stated that vendor representatives were present during 
the application of skin grafts at this VAMC told us that he did not 
know what the official vendor policy was at the VAMC, and he was not 
aware of a VAMC policy that addressed vendor roles. 

Our review indicates that VA allows vendor representatives who supply 
an implant to be present during a surgical procedure--in which an 
implant is placed in a veteran--and to provide technical assistance to 
the clinical staff. We also found that VHA's policy governing vendor 
access to VAMCs and involvement during clinical procedures is broad in 
nature. It requires each VAMC to develop its own procedures on vendor 
access and does not provide guidance on what these procedures should 
entail. Based on the written procedures we reviewed and interviews 
with officials at the three VAMCs we visited, we found varying degrees 
of specificity in current local procedures governing vendor access and 
participation in patient care. For example: 

* At two VAMCs, officials stated that the local procedures require 
background screening (for possible criminal history) for vendor 
representatives who are present in clinical areas; the third VAMC had 
no such requirement. 

* At one VAMC, written procedures also prohibited vendors from 
providing direct patient care, specifying that "vendors will not 
'scrub in' or physically perform any part of a procedure"; the other 
two VAMCs had no such prohibition. 

Moreover, we found that the VAMC where we affirmed that vendors were 
participating in direct patient care was not in compliance with its 
written procedures covering vendor access to the facility. According 
to an official from the VAMC director's office, no documentation was 
on file regarding vendor qualifications, training, and other 
certifications and competencies for the vendor representatives who are 
present in clinical areas at this VAMC. This is not in compliance with 
the VAMC's procedures that require that such information must be 
maintained on file for all vendor representatives who are present in 
clinical areas at the VAMC. 

Our findings on vendor involvement in patient care at the three VAMCs 
we visited cannot be generalized to VHA as a whole. However, our 
findings raise questions about the extent of vendor involvement in 
patient care at other VA facilities. Accordingly, we plan to refer the 
specific cases we found on vendor involvement in direct patient care 
to the VA Office of the Inspector General for further investigation if 
deemed appropriate. 

[End of section] 

Footnotes: 

[1] VA negotiates national, regional, and local competitive contracts 
with vendors for all types of items--including surgical implants. 
Items that are not purchased from these contracts are referred to as 
open-market purchases. There are 21 NCOs throughout VHA's health care 
system that manage the contracting activities of the VAMCs within each 
of VHA's 21 Veterans Integrated Service Networks. These networks 
oversee the day-to-day functions of VAMCs that are within their 
network. 

[2] Purchasing Perspective: VA's Prosthetics Paradox, Before the 
Subcomm. on Oversight and Investigations of the H. Comm. on Veterans' 
Affairs, 112th Cong. (2012). 

[3] GAO, VA Surgical Implants: Purchase Requirements Were Not Always 
Followed at Selected Medical Centers and Oversight Needs Improvement, 
[hyperlink, http://www.gao.gov/products/GAO-14-146] (Washington, D.C.: 
Jan. 13, 2014). 

[4] The range in percentages is the result of large differences in the 
number of open-market purchases at each VAMC. 

[5] VHA policy stipulates that all open-market purchases of non-
biological implants require a waiver approved by the VAMC Chief of 
Staff when a comparable item would have been available through a VA-
negotiated national committed-use contract. At two of the VAMCs we 
visited, VHA data indicated that waivers were not being completed for 
open-market purchases of non-biological implants when a comparable 
item would have been available through a national committed-use 
contract. At the other two VAMCs, we selected 20 and 30 purchases for 
which VHA data indicated that such waivers were on file and reviewed 
whether those waivers were on file and whether they were complete. All 
open-market purchases of biological implants require a waiver by VHA's 
Procurement and Logistics Office when a decision is made to purchase 
an item from the open market rather than from a Federal Supply 
Schedule contract. At each VAMC, we selected 20 to 30 purchases of 
biological implants that, based on VHA data, appeared to have been 
purchased from the open market for review. For the open-market 
purchases, we assessed whether a waiver was obtained for those 
purchases, and if so, whether the waiver was complete. 

[6] We reviewed between 15 and 28 purchases over $3,000 at each VAMC 
we visited. 

[7] If a clinician requests a surgical implant over $3,000 from the 
open market, the following are required: (1) a statement affirming 
that the vendor's price was fair and reasonable and the basis for this 
determination; and (2) a justification for other than full and open 
competition that cites the legal authority for purchasing a surgical 
implant where the VAMC solicited only one source in making the open-
market purchase. 

[8] [hyperlink, http://www.gao.gov/products/GAO-14-146]. 

[9] [hyperlink, http://www.gao.gov/products/GAO-14-146]. 

[10] The prosthetics purchasing system is used to record the purchase 
of all prosthetics, including surgical implants. 

[11] According to VA, for these clinical specialties VHA was unable to 
verify that the items purchased by the prosthetics department were 
actually implanted in the patients for which they were purchased. 

[End of section] 

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