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VA administration use of implants target of federal probe, report says

Pedestrians walk past the U.S. Department of Veterans Affairs (VA) headquarters in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images
Pedestrians walk past the U.S. Department of Veterans Affairs (VA) headquarters in Washington, D.C.

The U.S. Department of Veterans Affairs will be the focus of a congressional hearing, which will address how the VA purchases and administers its surgical implants, CNBC has learned.

According to a draft Government Accountability Office report CNBC has obtained, some VA officials failed to seek the most cost competitive market prices for surgical implants, and the VA is not sufficiently tracking veterans who receive implants, meaning they may not be easily reached in the event of an implant defect or recall.

The report also found VA surgical implant vendors are getting involved in patient care, which goes against industry practices, according to medical experts.

The final report is scheduled to be published Monday, Jan. 13, with a congressional hearing scheduled for Wednesday, Jan. 15.

"The Department of Veterans Affairs is committed to providing the high quality, safe and effective health care Veterans have earned and deserve," said Victoria Dillon, a VA spokeswoman, in an email to CNBC.

"VA welcomes recommendations of the Government Accountability Office (GAO)—and all external reviews—as an opportunity to evaluate our programs and identify areas for improvement. VA concurs with the recommendations made by the GAO and has already changed the process used to purchase surgical implants costing less than $3,000," Dillon said in the email.

Dillon added, "Other changes based on GAO's recommendations, such as increased training for contracting employees, are also underway. VA has established a record of safe, exceptional health care that is consistently validated by independent reviews, organizations such as the Joint Commission."

The Veterans Health Administration, or VHA, is one of the largest purchasers of surgical implants such as skin and bone grafts, cardiac pacemakers and artificial joints. The VHA is part of the Department of Veterans Affairs.

The VHA, which includes 152 hospitals across the country, spent more than half a billion dollars on surgical implants in 2012 alone, according to the draft GAO report.

Marketplace and prices

The GAO raised concerns about how the VA acquires implants in the marketplace and how much it pays for those devices.

The GAO found some medical facilities were not in compliance with policy and procedure when purchasing implants, resulting in limiting the "VHA's ability to determine why VA Medical Centers (or 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," according to the draft report.

The House Committee on Veterans' Affairs told CNBC several months ago that open market purchases often suggest the VA is paying a higher than normal price due to the lack of negotiating power that comes with contracting for bulk purchases.

Documentation

The GAO draft report also found implant purchases are not being accurately documented, including recording serial and lot numbers, so veterans who have had implants can be easily identified in case of an U.S. Food and Drug Adminstration recall or other safety issues.

The GAO report found that the VHA was limited in its ability to identify and locate patients who had received a surgical implant, which, according to the GAO, "has potentially significant patient safety and cost implications."

Patient care

The GAO, according to the draft report, also raised concerns about whether surgical implant vendor representatives also were participating in patient surgeries and procedures.

According to testimony in the draft report, "several clinicians at one VAMC stated that vendor representatives applied skin grafts to patients or assisted the Department of Veterans Affairs clinicians with the application of skin grafts on multiple occasions."

The GAO goes on to say, "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."

Medical experts told CNBC that vendors generally do not get involved in patient care. Rather, vendors are tasked with maintaining inventory, training and proper maintenance of equipment. A surgeon also told CNBC that he brings vendors into the operating room only to see how a skin graft is done. When asked if they ever touch the patient, the surgeon said: "no, not even close."

According to congressional sources, the GAO will ask the VA for a project update annually on the final report's recommendations. The GAO will track VA's progress on those recommendations for up to four years, sources told CNBC.

In November, CNBC aired "Death & Dishonor: Crisis at the VA," a documentary that exposed major problems within the VA health-care system including preventable patient deaths and unsterile conditions at hospitals, while big bonuses were given to officials and administrators.

—By CNBC's Dina Gusovsky. Follow her on Twitter @DinaGusovsky.