VAOIG-21-00960-17.pdf

Introduction
"The VA Office of Inspector General (OIG) conducts financial efficiency reviews to assess the
oversight and stewardship of funds used by VA healthcare facilities and to identify opportunities
to achieve cost efficiencies. To promote best practices, OIG review teams identify and examine
financial activities that are under the healthcare facility’s control and can be compared with those
VA healthcare facilities that are similar in size and complexity.
6
This review focused on the Marion VA Medical Center in Marion, Illinois. The OIG team
assessed the facility’s effectiveness in four areas:
I. Medical/Surgical Prime Vendor-Next Generation (MSPV-NG) program utilization.
The MSPV-NG program provides a collection of contracts with selected prime vendors
that enables VA to streamline supply chain management for an array of medical, surgical,
dental, and select prosthetic and laboratory supplies. The program achieves long-term
savings by using a just-in-time logistics approach.7 VA medical facilities are required to
use MSPV-NG contracts for products that are available through the program, which
appear on a list called a formulary. The VA Medical Supplies Program Office (MSPO)
recommends that if the medical supplies that facilities wish to buy are on the formulary,
each medical center should purchase at least 90 percent of those supplies from the
program’s assigned prime vendor.8 The OIG review team examined whether the facility
met Veterans Health Administration (VHA) goals for utilizing the program.
II. Purchase card usage and oversight. The team examined whether the facility’s purchase
card program ensured compliance with policies and procedures that reduce the risk of
error, fraud, waste, or abuse. The review focused on the consideration of contracts for
commonly purchased products (strategic sourcing) to provide optimalsavings to VA.
III. Open obligations oversight. Open obligations are not considered closed or complete and
have a balance associated with them, whether undelivered or unpaid. These obligations
should be reviewed by the healthcare system finance office to ensure that time frames are
6 The Veterans Health Administration uses a facility complexity model that classifies itsfacilities at levels 1a, 1b,
1c, 2, or 3, with level 1a being the most complex and level 3 being the least complex. Marion is rated as a 2, medium
complexity facility.
7 The just-in-time method is an inventory strategy in which materials are only ordered and received as they are
needed.The OIG is aware that the VA announced its plans to eliminate the MSPV program within VA by
September 2023 and to purchase medical supplies fromthe Defense Logistics Agency’s MSPV catalog. As a result
of this decision, several contractors who provide medical supplies under VA’s MSPV filed civil suits in US federal
court. These cases are pending. However, the pendency of litigation related to the transfer of VA facilities to use the
DLA MSPV contract versus the VA MSPV contract does not, at this time, affect either the substance or
recommendations in this report.
8 Medical Supplies Program Office, “The Formulary Utilization Metric: A Deep Dive Explanation,” accessed
May 6, 2021, https://vaww.va.gov/plo/docs/mspo/mspvFormularyUtilizationMetricOverview.pdf.
Financial Efficiency Review of the Marion VA Medical Center in Illinois
VA OIG 21-00960-17 | Page 2 | December 16, 2021
correct (i.e., performance period beginning and ending dates are accurate); open balances
are accurate and agree with source documents (e.g., receiving reports, invoices, and
payments); and obligations without activity in the past 90 days are valid and should
remain open. The review team assessed whether the facility performed monthly reviews
and reconciliations to ensure sampled obligations with no activity for more than 90 days
were valid and should remain open, and whether changes to obligations’ end dateswere
supported by evidence.
IV. Pharmacy operations and cost avoidance. The review team assessed whether the
facility complied with policies and used cost and performance data to track progress
toward goals, improve pharmacy program operations, and identify and correct problems."...