[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                     VENDORS IN THE OR_VA'S FAILED
                     OVERSIGHT OF SURGICAL IMPLANTS

=======================================================================

                                HEARING

                               BEFORE THE
              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                      WEDNESDAY, JANUARY 15, 2014

                               __________

                           Serial No. 113-49

                               __________
                               
                                                                                        
                               
       Printed for the use of the Committee on Veterans' Affairs
       
       
       
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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

DOUG LAMBORN, Colorado               MICHAEL H. MICHAUD, Maine, Ranking 
GUS M. BILIRAKIS, Florida, Vice-         Minority Member
    Chairman                         MARK TAKANO, California
DAVID P. ROE, Tennessee              JULIA BROWNLEY, California
BILL FLORES, Texas                   DINA TITUS, Nevada
JEFF DENHAM, California              ANN KIRKPATRICK, Arizona
JON RUNYAN, New Jersey               RAUL RUIZ, California
DAN BENISHEK, Michigan               GLORIA NEGRETE McLEOD, California
TIM HUELSKAMP, Kansas                ANN M. KUSTER, New Hampshire
MIKE COFFMAN, Colorado               BETO O'ROURKE, Texas
BRAD R. WENSTRUP, Ohio               TIMOTHY J. WALZ, Minnesota
PAUL COOK, California
JACKIE WALORSKI, Indiana
DAVID JOLLY, Florida
                       Jon Towers, Staff Director
                 Nancy Dolan, Democratic Staff Director

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                    MIKE COFFMAN, Colorado, Chairman

DOUG LAMBORN, Colorado               ANN KIRKPATRICK, Arizona, Ranking 
DAVID P. ROE, Tennessee                  Minority Member
TIM HUELSKAMP, Kansas                MARK TAKANO, California
DAN BENISHEK, Michigan               ANN M. KUSTER, New Hampshire
JACKIE WALORSKI, Indiana             BETO O'ROURKE, Texas

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.
                            C O N T E N T S

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                                                                   Page

                      Wednesday, January 15, 2014

Vendors in the OR--VA's Failed Oversight of Surgical Implants         1

                           OPENING STATEMENTS

Hon. Mike Coffman, Chairman......................................     1
    Prepared Statement...........................................    38
Hon. Ann Kirkpatrick, Ranking Minority Member....................     3
    Prepared Statement...........................................    40

                               WITNESSES

Mr. Randall Williamson, Director, Health Care GAO................     5
    Prepared Statement...........................................    42

Accompanied by:

    Mr. Wayne McElrath, Director, Forensic Audit and 
        Investigative Services GAO

Mr. Roscoe Butler, Assistant Director for Health Care National 
  Veterans Affairs and Rehabilitation Commission, The American 
  Legion.........................................................     6
    Prepared Statement...........................................    54

Mr. Philip Matkovsky, Assistant Deputy Under Secretary for Health 
  for Administrative Operations Department of Veteran Affairs....    22
    Prepared Statement...........................................    59

Accompanied by:

    Dr. Thomas Lynch, Assistant Deputy Under Secretary for Health 
        Clinical Operations Department of Veteran Affairs

                   MATERIALS SUBMITTED FOR THE RECORD

Questions for the Record.........................................    60

Questions and Responses for the Record...........................    62

Letter to Eric K. Shinseki from Chairman, Mike Coffman...........    68


     VENDORS IN THE OR--VA'S FAILED OVERSIGHT OF SURGICAL IMPLANTS

                              ----------                              


                      Wednesday, January 15, 2014

              U.S. House of Representatives
                    Committee on Veterans' Affairs,
       Subcommittee on Oversight and Investigations
                                                   Washington, D.C.

    The subcommittee met, pursuant to notice, at 10:02 a.m., in 
Room 334, Cannon House Office Building, Hon. Mike Coffman 
[chairman of the subcommittee] presiding.
    Present: Representatives Coffman, Lamborn, Roe, Huelskamp, 
Benishek, Walorski, Kirkpatrick, and Kuster.

         OPENING STATEMENT OF THE CHAIRMAN MIKE COFFMAN

    Mr. Coffman. Good morning. This hearing will come to order. 
I want to welcome everyone to today's hearing titled, ``Vendors 
in the OR--VA's Failed Oversight of Surgical Implants.'' This 
hearing examines serious problems with the tracking and 
handling of surgical implants within the VA and follows through 
on procurement issues revealed in a previous hearing by this 
subcommittee.
    According to multiple sources VA medical centers have 
allowed surgical implant vendors to participate in hands on 
treatment administered to veterans. Based on my staff's initial 
findings I asked GAO to investigate these allegations regarding 
veteran healthcare and to determine what policies are currently 
in place. GAO substantiated that several veterans had received 
skin grafts that had been applied directly by skin graft 
vendors. GAO found that VHA requires each medical facility to 
develop its own policy on vendor access resulting in varying 
degrees of specificity regarding their participation in patient 
care.
    These findings raise serious questions about the extent of 
vendor involvement in patient care at VA facilities and the 
lack of clear guidance regarding vendor access. VA's own 
consent form as well as industry best practices state that 
vendor representatives may be present to provide technical 
advice but may not physically participate in the procedure. 
However, GAO's investigation confirms that these policies are 
being unevenly applied or unenforced. Clearly, national 
guidance and oversight is necessary to protect veterans who 
undergo surgical implant procedures.
    There are also significant problems with how VA handles and 
tracks surgical implants in veterans. Previous VA OIG audits 
criticized the VHA for weak internal controls that jeopardize 
VA's ability to identify and notify patients in the event of 
FDA product recall. According to GAO's report released on 
Monday these concerns remain and have not been remedied. For 
some clinical specialties, including gastroenterology, 
interventional radiology, and pulmonary, identifying 
information on implants was not tracked in any system. It is 
troubling to consider that for these specialties VHA was unable 
to verify that the items purchased were actually implanted in 
the patients for whom they were intended.
    In 2008 VA began developing the Veterans Implant Tracking 
and Alert System, VITAS, to track and retrieve identifying 
information including the lot and serial number of surgical 
implants placed in patients VHA-wide. Unfortunately according 
to GAO this system's development was suspended at the end of 
the fiscal year 2012 due to data reliability challenges and as 
of December, 2013 development of VITAS has not resumed limiting 
VHA's ability to identify and locate patients who have received 
implants.
    Additionally GAO's report shows that VA has failed to make 
sufficient progress with prosthetic procurement reform. In a 
May 30, 2012 hearing this subcommittee revealed that VA medical 
centers and VHA regional network contract officers misused 
waiving authority to spend nearly $3 billion on open market 
purchases of prosthetics, including surgical implants, rather 
than procure them through competitive contracts including those 
with businesses on the federal supply schedule. As a result of 
the hearing VA acknowledged that there are often several 
options available for implants and that disadvantaged veteran 
owned small businesses and others offering these products were 
being unfairly excluded from consideration. VA indicated that 
it would implement reforms so that noncompetitive and sole 
source purchases would require justification on a case by case 
basis.
    GAO's report does contain some good news. VA has made some 
progress with obtaining national committed use contracts for 
non-biological implants, such as artificial joints, cardiac 
pacemakers, heart valves, and coronary stints. Use of these 
national committed use contracts is the most favored method of 
procurement for implants under the Federal Acquisition 
Regulations. However GAO also reported that no such contracts 
have been negotiated for biological implants, such as skin and 
bone grafts. Moreover contrary to a memorandum dated May 23, 
2012 from Assistant Deputy Under Secretary Matkovsky GAO found 
biological implants were rarely ordered from the federal supply 
schedule at each VA medical center it visited. According to GAO 
overuse of the waiver process continues. It reported that none 
of the medical centers it visited procured surgical implants in 
compliance with waiver requirements for open market purchases.
    Finally it is most disappointing to note that while VA and 
VHA now have procurement oversight components, GAO reported 
that they have failed to impose corrective actions for these 
deficiencies.
    In conclusion, VA must continue to implement reforms so 
that medical centers procure surgical implants that meet 
patient needs while also ensuring best value. More importantly 
VA and VHA must pay much better attention to patient safety 
concerns regarding surgical implants. It is way past time for 
VA to develop national policies that set forth the parameters 
for vendor access to treatment facilities and that implement 
sufficient oversight controls. Additionally proper tracking of 
surgical implants is a problem that has been unresolved for far 
too long and it must be remedied post haste.

    [The prepared statement of Chairman Mike Coffman appears in 
the Appendix]

    With that, I now recognize Ranking Member Kirkpatrick for 
her opening statement.

  OPENING STATEMENT OF HON. ANN KIRKPATRICK, RANKING MINORITY 
                             MEMBER

    Mrs. Kirkpatrick. Thank you, Mr. Chairman. I really 
appreciate having this hearing on the purchase and use of 
surgical implants. As we know, it is common for the vendors of 
medical devices to be in the operating room during surgery. But 
it is very uncommon for them to scrub and to touch a patient. 
So I am really interested in the testimony today and in whether 
or not we need to actually, you know, beef up our policies on 
this.
    On Monday the Government Accountability Office released a 
reported entitled, ``VA Surgical Implants--Purchase 
Requirements were not Always Followed at Selected Medical 
Centers and Oversight Needs to be Improved.'' So that is what 
we are concerned about today. The GAO looked at four VA medical 
centers and found that these hospitals did not always follow 
VHA policy regarding documenting open market purchases of 
surgical implants, including obtaining the necessary waivers to 
purchase items not covered by a VA negotiated contract. Last 
year VA instituted a new policy regarding purchases above the 
Federal Acquisition Regulations, FAR, micro purchase threshold 
of $3,000 and below the simplified acquisition threshold of 
$150,000. Medical facility and regional office officials 
attributed noncompliance mainly to insufficient VHA guidance 
and VA staff's inexperience in completing the new requirements.
    This is a familiar litany to members serving on this 
subcommittee. It has been noted before that it does not matter 
how good and thorough the policy and standards are if no one 
follows them and there are seemingly no consequences for 
noncompliance. This is what I would like to explore today, in 
addition to looking at the specific allegations and looking at 
ways to improve the process.
    Surgical implants and the larger issue of medical 
procurement provides us with the classic balancing act of 
patient and provider choice on one hand, and efficiency and 
savings on the other. These are not in my view mutually 
exclusive concepts. But also there are ultimately very few easy 
answers. Should there be a greater level of centralization on 
procurement? Or should we provide greater local autonomy while 
ensuring that the policies are followed? Indeed, how do we 
ensure that VA employees are provided the tools to do their job 
and help our veterans, but are also held accountable if they do 
not comply with established policies?
    On the issue of surgical implants, what policies and 
structures are in place to ensure that VA staff is kept fully 
up to date on advances in the field of surgical implants and 
the availability of different options? While also ensuring that 
VA's contracting efforts are directed toward items that are 
clinically advantageous and necessary for patient care.
    Our decisions regarding which items to include in a VA 
negotiated committed use contract made from the top down or the 
bottom up? And more importantly, are these decisions made 
rigorously and systematically? How effective is the recently 
instituted program executive office and does this effort have 
the staffing level and financial resources to make a difference 
and improve the process?
    GAO reported that VHA spent approximately $563 million on 
surgical implants in fiscal year 2012. That is an increase of 
28 percent over the 2008 levels. I would like to hear from our 
witnesses today regarding the factors that led to this 
increase. It is not clear to me whether the increase is 
primarily due to the practice of open market purchases or to an 
increase in either the costs of surgical implants or an 
increase in their use.
    Patient care and safety is our number one concern. That is 
why I am concerned over allegations that surgical implant 
vendor representatives participated in direct patient care. I 
want to ensure that the VA policies are fully followed in this 
regard while also recognizing that at times vendor 
representatives can have an important role in providing 
technical assistance and education to VA care providers.
    So let us begin the conversation on how best to fix the 
problems before us today and work to improve the VA healthcare 
system and the healthcare it provides to our veterans. Spending 
taxpayer dollars wisely is essential but providing the 
healthcare that veterans have earned and deserve is critical. I 
look forward to hearing from our witnesses today and I yield 
back. Thank you, Mr. Chairman.

    [The prepared statement of Hon. Ann Kirkpatrick appears in 
the Appendix]

    Mr. Coffman. Thank you, Ranking Member Kirkpatrick. I ask 
that all members waive their opening remarks as per this 
committee's custom. With that I invite the first panel who are 
now at the witness table. On this panel we will hear from Mr. 
Randall Williamson, Director of the healthcare team at the 
Government Accountability Office. He will be accompanied by Mr. 
Wayne McElrath, Director of GAO's Forensic Audit and 
Investigative Services Team. We will also hear from Mr. Roscoe 
Butler, Assistant Director for Healthcare with the National 
Veterans Affairs and Rehabilitation Commission at the American 
Legion. Your complete written statements will be made part of 
the hearing record. Mr. Williamson, you are now recognized for 
five minutes.

 STATEMENTS OF MR. RANDALL WILLIAMSON, DIRECTOR, HEALTH CARE, 
  GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY MR. WAYNE 
MCELRATH, DIRECTOR, FORENSIC AUDIT AND INVESTIGATIVE SERVICES, 
   GOVERNMENT ACCOUNTABILITY OFFICE; AND MR. ROSCOE BUTLER, 
 ASSISTANT DIRECTOR FOR HEALTH CARE, NATIONAL VETERANS AFFAIRS 
       AND REHABILITATION COMMISSION, THE AMERICAN LEGION

                STATEMENT OF RANDALL WILLIAMSON

    Mr. Williamson. Thank you. Good morning Mr. Chairman, 
Ranking Member Kirkpatrick, and members of the subcommittee. I 
am pleased to be here today to discuss GAO's recent report on 
VA's purchasing of surgical implants. Surgical implants include 
biological implants, such as skin and bone grafts, and non-
biological implants, such as cardiac pacemakers and artificial 
joints. Today I will address three areas of our work. First, 
VA's compliance with federal purchasing requirements and its 
oversight of surgical implant purchasing; second, VA's ability 
to identify veterans who have had surgical implants that are 
recalled by the manufacturer or the Food and Drug 
Administration; and third, allegations that surgical implant 
vendor representatives participated in direct patient care at 
VAMCs.
    With me today is Wayne McElrath, who directed our 
investigative work on vendor participation in surgical 
procedures at three VAMCs.
    Regarding VA's compliance with purchasing requirements, we 
found through our work at selected VAMCs that VA's surgical 
implant purchase requirements were not always followed. For 
example, when surgical implants are purchased on the open 
market and not through established VA and government negotiated 
contracts where prices have been specifically established, 
VAMCs are required to file a waiver justifying why the item is 
being purchased on the open market. We found that in many cases 
such waivers were not being obtained or had incomplete 
documentation. We also found that in justifying open market 
purchases of surgical implants over $3,000, VAMCs are not 
always preparing a written determination that prices are fair 
and reasonable and/or citing an appropriate rationale for sole 
source award. We found that oversight over surgical implant 
purchases was not robust and allowed these conditions to 
persist at VAMCs.
    Turning now to VA's ability to identify veterans who have 
received recalled surgical implants, we found that VA is 
limited in its ability to systematically identify and locate 
all patients who receive surgical implants, which could be a 
critical factor if an implant is recalled by the manufacturer 
or the FDA because of safety concerns. For example, VA through 
its own studies has found instances at numerous VAMCs where 
data on lot and serial numbers for surgical implants were not 
entered into VA's computerized system for tracking such 
purchases. This limits the VAMC's ability to match veterans to 
implants that they received. Absent the ability to accurately 
track implants to veterans receiving them, VA may be putting 
some veterans at risk in the event that surgical implants are 
recalled.
    In 2008 VA began developing a new tracking system to remedy 
this problem. But VA's efforts to develop such a system are 
currently stalled due to technical challenges and a lack of 
funding.
    Finally, our investigations of allegations received by the 
subcommittee disclosed that in some instances a vendor 
representative supplying surgical implants to one of the three 
VAMCs we investigated was participating in direct patient care 
at that facility. Specifically, at least as recently as August 
2013, a vendor was assisting VA clinicians in applying skin 
grafts or was himself applying skin grafts to several veterans. 
Without proper precautions, allowing a vendor representative to 
participate in direct patient care could compromise veteran 
safety.
    While VA allows vendors to provide technical assistance and 
advice during procedures involving surgical implants, national 
VA policies do not adequately define the degree that vendors 
are allowed to participate in patient care. Rather, VA relies 
on VAMCs themselves to develop their own procedures in this 
regard. Absent definitive national guidelines VAMCs acting 
alone may develop different and inconsistent guidelines and 
controls over vendors, which is exactly what we found at the 
three locations we investigated. For example, two VAMCs 
required background screening for vendors accessing the 
facilities, while the third VAMC did not. Also, at one VAMC, 
written procedures covering vendor access and involvement in 
clinical procedures expressly prohibits vendors from physically 
performing any part of a clinical procedure, whereas written 
procedures for the other two hospitals are silent in this 
regard. Also we found instances where some VAMCs were not 
following their own written procedures.
    While the results of our findings cannot be generalized to 
VA as a whole, they raise serious questions about the extent 
that consistent procedures and controls exist with respect to 
both vendor access to VA facilities and vendor involvement in 
patient care at facilities nationwide. This concludes my 
opening remarks.

    [The prepared statement of Randall Williamson appears in 
the Appendix]

    Mr. Coffman. Thank you, Mr. Williamson. Mr. Butler, you are 
now recognized for five minutes.

                   STATEMENT OF ROSCOE BUTLER

    Mr. Butler. Chairman Coffman, Ranking Member Kirkpatrick, 
and members of the subcommittee, on behalf of our National 
Commander Dan Dellinger and the 2.4 million members of The 
American Legion, I want to thank you for inviting our 
organization here today to this hearing to address our concerns 
with aspects of how VA implements their prosthetic and implant 
medicine program.
    As a member of The American Legion's System Worth Saving 
Task Force, I have been privileged to travel to many VA 
healthcare facilities and see firsthand how programs really 
work in the field. In both my experience working for VA for 
many years and in my travel on behalf of The American Legion, I 
have seen that conditions in the field do not always match what 
the folks inside the Beltway think they are. There are several 
problems with VHA policies and implementation of implant 
medicine healthcare. Most of these problems could be fixed with 
clear written direction from central office and better 
oversight and consequences to enforce compliance.
    First, VA still has a problem tracking surgical implants 
that places veterans at risk. An OIG audit from two years ago 
identified that there are expired surgical devices on VA's 
supply shelves. Further, GAO report and testimony today 
indicated that VA has an inaccurate tracking capability in 
recording the serial numbers of the implant surgical devices. 
The grave concern of The American Legion is that in addition to 
having expired products on the shelves veterans potentially 
could be walking around today with expired surgical implants. 
The American Legion urges Congress to require VA to implement 
an automated tracking system that addresses vulnerabilities by, 
one, initially recording the serial number of a surgical 
implant device when procured and placed into VA's inventory; 
two, record the expiration date; and three, that a record 
tracking flag be put into place to alert VA staff when the 
product is near its expiration date.
    As there remain limitations to VA's current supply 
inventory system and uncertainty surrounding the safety and 
well-being of veterans currently with implantable devices, The 
American Legion urges VA to verify that there are no veterans 
with expired surgical implants and accelerate its timeline for 
implementing a new prosthetic inventory system that includes 
these recommendations.
    Secondly, The American Legion remains concerned that VA 
does not have an official policy on vendors in operating rooms. 
While having vendors in the OR to provide technical advice may 
be medically necessary, it needs to be made crystal clear that 
veterans have consented and received full disclosure that 
strictly adheres to a clear, delineated VA policy. VA has 
admitted that they do not have a specific policy but indicated 
the National Center for Ethics in Healthcare noted that the 
presence of vendors in the operating room is a common practice 
in U.S. healthcare. And when there are broadly accepted 
professional ethics standards pertaining to a particular 
practice VA does not particular reiterate those standards in VA 
policy. Rather it was buried in VA's consent form under the 
number 15, additional information, which states in part the 
representative may provide technical advice but not participate 
in the procedure. The foundation of VA policy should be based 
on and consistent with statutory and regulatory authorities.
    Third, The American Legion has concern about VA making a 
regular practice of circumventing the supply schedule. The 
federal supply schedule exists for a reason and the vendors on 
the schedule have been carefully vetted. Many of them are 
important contracts with veterans and/or small disabled 
veteran-owned business owners. While The American Legion 
recognizes and applauds the need to go off schedule in rare 
circumstances for the medical interests of the patient, it is 
becoming increasingly disturbing that off schedule purchases 
seem to be more the norm than the exception.
    Let us be clear: the medical health of the veteran is the 
single most important factor in any decision about healthcare 
in the system. System Worth Saving visits uncovered doctors who 
choose to go off schedule to order stints for heart surgery 
because they were uncomfortable with the durability of the 
stints on the schedule. In that circumstance you would hope 
that the doctors err on the side of the patient's safety 100 
percent of the time. That said, if doctors are consistently 
going off schedule then either the schedule needs to be 
reformed or the process reformed. No system that is raised on 
circumventing its own process can be considered in anyone's 
best interest.
    Again, thank you for the invitation to speak today and 
keeping a close focus on ensuring veterans get the most out of 
their healthcare system. We would be happy to answer any 
questions you might have.

    [The prepared statement of Mr. Roscoe Butler appears in the 
Appendix]

    Mr. Coffman. Thank you for your testimony. Mr. McElrath, 
was GAO able to determine why vendor representatives were 
allowed to provide potentially inappropriate patient care at 
the VAMC where the allegations were substantiated?
    Mr. McElrath. We were not able to identify one specific 
reason. But some of the rationales that were given were lack of 
staffing, the difficulty of placing grafts on patients without 
having some assistance, and also a lack of knowledge relative 
to the particular VAMC's policies and procedures.
    Mr. Coffman. Mr. Williamson, based on your report please 
elaborate on the challenges in trying to identify veterans who 
may have received a recalled surgical implant?
    Mr. Williamson. Well, currently VA has a prosthetic 
purchasing system, which is used to track surgical implants and 
match them with veterans. VA has done a study of that system 
and found that lot and serial numbers were oftentimes were not 
entered correctly, or not entered at all. And that really is a 
detraction in trying to match veterans with implants.
    Also, clinical services within VA have their own systems. 
Oftentimes, VAMCs or clinical services themselves will design 
systems. They may use spreadsheets, perhaps, kept on a 
computer. The difficulty with those systems is they are not 
standardized, and that information is not shared among VAMCs. 
Have augmenting systems. VA is developing a new system called 
the Veteran Implant Tracking and Alert System, VITAS. And that 
system is designed to centralize tracking of implants.
    The difficulty is it still relies on manual input, and the 
chance of human error is still there. VITAS will have the same 
kind of difficulty in the sense that it is inputted by people. 
A way to get around that is to have a bar coding system where 
you scan the bar code in, and it is put in automatically. And 
that would solve the problem. VITAS is not going that route 
right now.
    Mr. Coffman. Okay.
    Mr. Williamson. So those are the challenges.
    Mr. Coffman. Thank you. Mr. Butler, did you find that VHA 
had clear and consistent policy set forth to ensure a proper 
and ethical procedure when vendors were present during surgery?
    Mr. Butler. We asked VA if they could provide us a copy of 
their policy and their response was that they did not have a 
specific policy. However, the consent was included, the 
authorization was included in their consent form. So that, this 
concerns us that they are using guidance from the National 
Office of Ethics but they themselves have not promulgated a 
standard policy that can be applied consistently across the 
board throughout VA, or VHA.
    Mr. Coffman. Thank you. Ranking Member Kirkpatrick.
    Mrs. Kirkpatrick. Thank you, Mr. Chairman. Mr. Williamson, 
you probably do not know, but the committee knows, that I have 
over 20 years experience in a hospital and I am really 
interested in hearing from our physician members of the 
committee about this. But it is highly unusual for a rep to 
scrub in the OR. And in the instances that you mentioned, did 
the reps scrub?
    Mr. McElrath. The instance that we identified was the 
application of biologics, or skin grafts. The interviews that 
we conducted did not mention the words specifically ``scrubbing 
in.'' But the wound care nurse and the vendor representative 
actually performed the procedure.
    Mrs. Kirkpatrick. So the nurse actually, the clinician 
actually performed the procedure, not the rep?
    Mr. McElrath. No. From the patient care record the wound 
care nurse indicated that the vendor actually applied the skin 
graft.
    Mrs. Kirkpatrick. Okay, that is very disturbing. Can you 
tell us what vendor that was?
    Mr. McElrath. Out of respect for the investigative process 
and the fact that we may be making a referral to the VA Office 
of the Inspector General for further investigation, we would 
respectfully request that we provide that information to your 
committee staff after the hearing.
    Mrs. Kirkpatrick. Thank you, please do. You know, looking 
at the overall goal of cost saving and clinician choice, Mr. 
Williamson, again I would like to know how effective is the 
VHA's Program Executive Office? And do you have ideas for us 
about how to strengthen and utilize that office?
    Mr. Williamson. We did not look at that specific thing in 
general. I know in the past the subcommittee was very concerned 
about the use of Section 81-23 and whether that is being 
overused. And that is certainly something we looked at in our 
examination of the purchases, during our review. We see that 
the use of 81-23 justification is going down. And used 
prudently 81-23 is a good avenue for a physician or a clinician 
to use to provide treatment, the best treatment that he or she 
sees fit for a veteran. But we noted when we looked at the 
justifications for sole source procurement that there is a much 
greater use of emergent and compelling need as the basis of 
sole source purchases as opposed to 81-23 saw a flip flop. The 
81-23, box is not being checked anymore, but rather urgent and 
compelling need is.
    Mrs. Kirkpatrick. You know, and those of us who have 
experience in healthcare know that the medical device industry 
changes quickly. There are always new devices coming out. And 
did you look at the training that the clinicians have in terms 
of educating them on the best products, the best use? Did you 
look at all about adequacy of training?
    Mr. Williamson. Are you talking about the clinicians or the 
vendors?
    Mrs. Kirkpatrick. The clinicians, yes.
    Mr. Williamson. We did not. We have in the past done some 
fairly thorough studies of credentialing and privileging 
systems that both VA and DoD have. We did not look at that 
training during this review.
    Mrs. Kirkpatrick. Mr. Butler, did you look at that at all?
    Mr. Butler. We did not.
    Mrs. Kirkpatrick. You did not. Okay. Mr. Chairman, I am 
going to yield back. I really want to hear from our physicians 
on the committee.
    Mr. Coffman. Thank you, Ranking Member Kirkpatrick. Dr. 
Huelskamp.
    Dr. Huelskamp. Thank you, Mr. Chairman. I am a doctor but 
not a physician, so there will be no confusion here. But I do 
have some questions, particular of the GAO and I apologize for 
my voice this morning. You made some mention to the issue of 
urgency and perhaps timeliness as far as the purchases on the 
open market versus those through the VA purchasing 
requirements? Did you compare cost or quality, or any other 
characteristics? I see you looked at a certain percentage of 
those. I did not know if you had compared the outcomes and the 
cost and such?
    Mr. Williamson. Could you repeat the last part of the 
question again?
    Dr. Huelskamp. You mentioned you compared a few purchases, 
about I believe six percent of a certain subset. Did you look 
at the cost? Was it more or less expensive? Did you look at the 
quality? Was there any timeliness? As far as comparing those 
purchases in those two environments?
    Mr. Williamson. Yes, we did not look at whether they got 
the best price. What we did was rather to focus on the 
documentation and see whether that existed. And in many cases, 
it did not exist to our satisfaction.
    Dr. Huelskamp. Okay. Yeah, and I did not see that in the 
report. That is why I wanted to ask. The follow-up question 
would be, what is the penalty for failing to comply with the 
VHA purchasing requirements?
    Mr. Williamson. Well agencies are also governed by the 
Federal Acquisition Requirements. It is certainly something 
that can cause a reprimand within the agency.
    Dr. Huelskamp. Any evidence that there was any reprimand or 
any penalties for failing to follow up?
    Mr. Williamson. No. A lot of times when waivers are not 
obtained, when the documentation is not obtained, it was not 
followed up on by VA and there was no action plan by VA to 
correct those kind of weaknesses.
    Dr. Huelskamp. Sure. Okay. The next question would be I see 
you are experience at working with the health systems in the 
Department of Defense as well. Could you give a broad 
comparison between VA and the DoD? Do they have these similar 
problems, and are you familiar with that enough to answer?
    Mr. Williamson. We have not looked at similar issues like 
surgical implants in DoD, if that is what you are talking 
about. No, we have not. We did look at how some large 
healthcare systems like Kaiser in the private sector surgical 
are purchasing implants under their contracts. And they are 
much more aggressive than VA in trying to get items under 
contract.
    Dr. Huelskamp. Mm-hmm. But you did not look at the cost 
comparison there?
    Mr. Williamson. No.
    Dr. Huelskamp. Okay. The last question will be for Mr. 
Butler, and I am very concerned about the patient privacy and 
the instances that were repeated here, and it is occurring. But 
what are your suggestions? What should be able to be authorized 
by a patient? If I understood correctly, you believe the 
language that was used probably authorized the vendor to be in 
the care situation. Is that your understanding of what----
    Mr. Butler. No, it does not authorize, the language in 
their consent form does not authorize the vendor to provide 
hands-on care. It authorizes the vendor to provide technical 
advice. But that is a contract between the vendor and the 
patient, it is not a national policy. So we advocate that the 
VA establish a national policy that articulates all of the 
requirements for allowing vendors in the OR. And then use the 
consent form as the agreement between the vendor and the 
patient. We believe that if they have a national policy, as I 
stated, the foundation of VA is predicated upon the statute, 
the regulations, and the policy that VA adopts. And without a 
policy there is no requirement that facilities operate in a 
consistent manner or fashion.
    Dr. Huelskamp. Well thank you, Mr. Butler. I agree as well. 
And I yield back my time, Mr. Chairman.
    Mr. Coffman. Dr. Benishek.
    Dr. Benishek. Thank you, Mr. Chairman. I am a general 
surgeon and I have been in the operating room, you know, lots 
of times. I have never actually seen a vendor, you know, do a 
case. So Mr. McElrath, can you, was this a couple instances of 
some vendor putting on a skin graft? Is that what you are 
saying? Is there any other episodes that you encountered that 
the vendor was involved with a case? Or is it a couple----
    Mr. McElrath. We found two cases where vendors were 
actually involved but there were several instances over a 
period of time. By speaking to clinicians that we interviewed 
during the course of this investigation, we were able to 
identify those records. If the clinicians had not input that 
information directly into that patient record, all we would 
have is witness testimonies. It made it easier for us to 
corroborate their statements because they actually entered into 
the patient record who placed the skin graft.
    Dr. Benishek. Well, you know, it is frankly shocking to me 
that this actually happened. You know, I am a little concerned 
about, you know, standards that come from Washington to every 
VA because all that stuff gets messed with. But it seems to me 
that each hospital should have rules, like the Joint Commission 
on Hospital Accreditation would not go for this. I mean, this 
would not fulfill the accreditation needs of any hospital that 
I know of. And, you know, I think that rule should be developed 
at the hospital. They should be, you know, reasonable rules. 
And I cannot believe that a, you know, something must have been 
wrong. I mean, Mr. Williamson, you said that some of the 
hospitals had no rules about----
    Mr. Williamson. The three we looked at had written 
procedures, but those procedures were inconsistent and they 
left out some of the things that----
    Dr. Benishek. Well in my experience, you know, which is in 
the private sector mostly, but I have had some experience in 
the VA system as well, you know, each hospital is required to 
have a set of rules and procedures, you know, to be accredited 
by the Joint Commission.
    Mr. Williamson. Right.
    Dr. Benishek. You know, which, you know, sets a standard 
for not only the VA but for, you know, private sector hospitals 
which I hope that the VA would be in the same boat. And the VA 
that I worked at, you know, we were inspected. And this type of 
stuff I think would fall out of an inspection, you know, 
immediately if they were aware of it. What can we do? I guess 
really the problem to me is accountability. I mean, nobody at 
the, you know, the problem I come up with again and again in 
this committee is that when errors like this are found, nobody 
seems responsible. There is not one individual that you could 
point to and say this is your responsibility and you need to be 
reprimanded or change your ways, put it in your performance 
review. Has any of that occurred in any of these circumstances 
that you know of?
    Mr. Williamson. You are talking about the vendor?
    Dr. Benishek. Well, no. I am talking about the hospital 
people that allowed this to happen. I mean, you know, you never 
get to a person whose responsibility it was, then they could 
identify, you know, report this place in their performance 
review saying that, you know, they did not comply with the 
rules of the hospital.
    Mr. Williamson. Mm-hmm.
    Dr. Benishek. And, you know, you may be subject to 
termination, you may be subject to disciplinary action. The 
accountability of the administration of the hospital or, you 
know, the upper echelon is always of importance to me. Because 
it seems to never happen where one person gets identified as 
being a problem. And you know, a culture of lackadaisical 
performance seems to be allowed a lot of the time within the 
VA. So as far as you know, has anybody been disciplined or had 
a report placed in their----
    Mr. Williamson. No.
    Dr. Benishek. Well we will ask the VA, too. But I just was 
hoping that maybe you guys could. Let me also ask about this 
vendor, or the purchase of materials. You know, as a surgeon I 
want to work with the materials and the devices that I am 
familiar with.
    Mr. Williamson. Right.
    Dr. Benishek. Okay? So sometimes I would be upset that the 
VA, you know, really want to use this thing which I never 
used----
    Mr. Williamson. Mm-hmm.
    Dr. Benishek.--and I am not comfortable with it. So I want 
to have the implant or, you know, the device that I am 
comfortable with and used to using. And I think that many 
surgeons have that same, you know, preference.
    Mr. Williamson. You are correct.
    Dr. Benishek. But there is no reason why when you come to 
the hospital and set up you can tell them all of what you are 
going to use.
    Mr. Williamson. Mm-hmm.
    Dr. Benishek. And they should be able to set up a plan to 
purchase that, you know, in a price advantageous. And I think 
that is a problem. And I think that is a problem related to how 
this is working here. Because the surgeon comes in, the VA will 
not put it on their formulary for whatever reason, and the guy 
says, ``Well I am not doing the case unless I get the stuff 
that I am familiar with.'' So is there any evidence of that 
happening?
    Mr. Williamson. Well when we went to four different VA 
hospitals across the country to look at this we interviewed 28 
clinicians, and we asked them that very question. Why do you 
choose surgical implants from the open market in many cases 
when these are on contract? And it comes down to, number one, 
the best interest of the patient. In other words, veterans 
sometimes have unique needs and they have implants that best 
suit their treatment needs. The other reason is like you say, 
``what are you comfortable in using?'' ``What have you been 
trained on in terms of the surgical implants?'' Also, other 
reasons include the literature searches that they might have 
access to in terms of the effectiveness of implants and 
contacts with surgical implant vendors.
    Dr. Benishek. Well that does not preclude the ability of 
the VA to enter into contracts with people that provide a 
myriad of different devices. I mean, there are lots of VAs 
across the country. You know, there may be ten different 
devices and, you know, a hundred different surgeons may use 
each one of those differently.
    Mr. Williamson. Right.
    Dr. Benishek. So I do not see how that, that does not 
preclude the ability for the VA to contract with multiple 
providers for the same type of----
    Mr. Williamson. Right.
    Dr. Benishek [continuing]. Implant. And that does not seem 
to happening.
    Mr. Williamson. The key is for VA to get more items under 
contract to get a good price.
    Dr. Benishek. Right.
    Mr. Williamson. And right now we only have nine types of 
items under national committee use contracts that VA has with 
vendors. And one of the things that we recommended was that VA 
take a more aggressive posture in----
    Dr. Benishek. There are only nine?
    Mr. Williamson. There are only nine, all non-biological 
implants.
    Dr. Benishek. Out of the thousands of implants, different 
types of implants available?
    Mr. Williamson. Yes. They are the highest----
    Dr. Benishek. That is a shocking number----
    Mr. Williamson [continuing]. High volume and high cost 
items.
    Dr. Benishek [continuing]. Because that is a very small 
number of the different implants that it happens.
    Mr. Williamson. Right.
    Dr. Benishek. That is a major deficiency that I think you 
have identified here at a high level within the VA. Because 
there should be a thousand different implants on the VA 
formulary. You know----
    Mr. Williamson. Now there are, in addition to the national 
committed use contracts, there are the federal supply schedule 
contracts. And there are a number of both biological and non-
biological surgical implants on the FSS. So there are other 
lists to choose from. But the first choice would be the 
national committed use contracts because those give VA the best 
prices.
    Dr. Benishek. My time is expired. Thank you.
    Mr. Coffman. Congresswoman Walorski.
    Mrs. Walorski. Thank you, Mr. Chairman. Mr. Williamson, I 
just, the information is just shocking. And every time we sit 
in these Oversight Committee hearings with these reports, which 
I very much appreciate, it is just shocking I think to the 
American taxpayers and to all of us who sit here who want to 
provide the absolute finest services to our best and brightest 
servicemen and women and to hear these kind of reports. And I 
guess, you know, one question I have is it just is shocking to 
me that there are national medical device tracking efforts 
already. Would it not behoove the VA to look at something that 
is already in place like the UDI if they obviously have not 
been able to successfully track implants?
    Mr. Williamson. I do not think there is any, I do not think 
that it necessarily would provide the information VA needs on 
surgical implants. I think that the trouble is there is no 
centralized system right now. The prosthetics purchasing system 
has some weaknesses, as I reiterated in my opening remarks. And 
VA is trying to develop a centralized system in addition to a 
number of systems that the surgical services are using on their 
own. So there are two sets of books here.
    Mrs. Walorski. Is there a bar code system set up----
    Mr. Williamson. No.
    Mrs. Walorski [continuing]. In the VA where those implants 
are just bar coded before they----
    Mr. Williamson. Not to my knowledge, no. That would take 
away the human error and that would probably be the best 
system. A system based on bar coding would be a better system.
    Mrs. Walorski. And what about the FDA's UDI system? Or what 
about the American Joint Replacement Registry, AJRR? Or 
something as simple as just having some kind of a standardized 
policy of a scanner where it is literally just scanned into a 
system that tracks?
    Mr. Williamson. Yes, that would be, something that could be 
considered. Again, it is a scanning system. It alleviates----
    Mrs. Walorski. But what happens when, what happens when, 
you know, we see a recall of some specific device that has been 
implanted and it has affected X amount of people? How do they 
know if that is implanted in a veteran?
    Mr. Williamson. Well, you have got to rely on your systems 
that you have already in place and identify through serial 
numbers, lot numbers, medical records, other kinds of things--
--
    Mrs. Walorski. But when human error puts a wrong code or 
wrong----
    Mr. Williamson. I am not saying it is impossible because if 
there was a recall there are existing ways to trace it. 
Certainly going through the medical records. But that is a 
long, laborious project. And it is also subject to human error. 
Would somebody detect it as they are going through all that?
    Mrs. Walorski. Thank you, Mr. Chairman. I yield back my 
time.
    Mr. Coffman. Thank you. Dr. Roe.
    Dr. Roe. I thank the chairman for yielding and thank you 
for this testimony. Let me just, having been involved in a lot 
of devices and having an implantable device in my eye right 
now, and I actually can read your name, something I could not 
do before my device was implanted. I would like to go about how 
the procedure, how this actually works in the private sector. 
And Dr. Benishek alluded to it. Let us say a uterine ablation 
or any other new procedure that comes out, as a surgeon you 
have to go and be trained. There are standards in your hospital 
that require a certain number of hours of training before you 
can do that. And there may be some technical assistance in the 
operating room if you are operating a piece of machinery or 
whatever that you need a vendor there for.
    Mr. Williamson. Mm-hmm.
    Dr. Roe. I completely agree that the vendor has no place in 
actually doing the procedure. You as the surgeon are trained to 
do that procedure. And the technical advice are there are just 
things that come up that happen during the procedure. So I 
certainly understand the need for, and Ms. Kirkpatrick clearly 
pointed it out, these changes are happening at light speed.
    Now I would be very uneasy if I knew that this device in my 
left eye could not be kept up with. If we did not know, that 
there was some reason it could not be tracked. Because as you 
know, and mostly in orthopaedic, that is where most of the 
implants are, that sometimes these fail. And if you find a 
behavior of failure throughout these you would like to be able 
to track down the patients and tell them that, hey, this device 
has some risk to you or could do this. Look out for these 
symptoms. As a physician I would want to be able to inform my 
patients that that happened.
    So the way it worked in our hospital is when the new 
procedure came out you had to have a certain amount of 
training, be certified in that procedure, and then carry out 
that procedure a number of times. And then many times I would 
mentor other people, teach them how to do the procedure. And 
the old saying in years gone by, see one, do one, teach one, 
that has sort of gone by the wayside now.
    You are absolutely right, a system, whether it is bar 
coding, that is the simplest thing in the world. I mean, 
Walmart can tell you how many bars of soap went out of Walmart 
in Tennessee. You ought to be able to keep up with a lens 
implant or a knee implant and find out who they are. That is 
fair, technology is there, it is not new. So I think those 
kinds of things are fairly simple. And I do not believe that we 
have a problem here that can be easily solved with the systems 
that are in place. And maybe it will require a new IT, I do not 
know, Mr. Williamson, whether it will or will not, or whether 
those current systems are available. But this is not new. I 
mean, we have been doing this for 25 years. And we are going to 
continue to do it. And especially as our population ages and 
more and more implantable procedures are done. I mean, how many 
people have you met now that cannot go through an airport 
because they set off a metal detector they have had so many 
devices implanted in them? And we have to have a way to track 
those. Because not all of them are perfect, there is no 
question about it. And the reason it is important to be able to 
track those is because when you find out what those defects are 
it gives the manufacturer and the engineers a chance to improve 
those and make them better for future patients. So I mean, I 
think, Ms. Kirkpatrick, I have learned, I know your background, 
and I certainly believe what we have got here, and I agree with 
Dr. Benishek, I am not sure we need a national policy. But each 
hospital, that is fairly simple stuff. And I will yield to 
anyone who wants to respond. Mr. Butler, I read your testimony 
and agree with much of it. But again, this is not reinventing 
the wheel.
    Mr. Butler. If I may?
    Dr. Roe. Yes, sir?
    Mr. Butler. With regard to your comment about the national 
policy, the local hospitals develop their local policies based 
upon the national guidance from the central office. So if they 
do not have national guidance from central office, their local 
policies may be inconsistent from one facility to the next. So 
there needs to be consistency across all the VA healthcare 
system. And that consistency comes from the national guidance 
provided by the program office out of DC.
    Dr. Roe. I certainly, I cannot argue with that, some 
consistency. The other thing that I think we get into is 
surgeons. And I get this. You know, I like a certain type of 
suture. Is it vicryl? Is it chromic? Is it whatever? Do I like 
staples? Do I like this particular staple? I mean, those things 
change so fast and there needs to be some consistency because 
error rates go down when you have, there is no question, when 
you have a policy and a procedure that you go through just like 
taking an airplane off. We learned that in our operating room, 
that the more consistent that you could do it and the more 
frequently you did it the same way, the less errors there were. 
But there ought to be some latitude because not everybody falls 
under the bell-shaped curve, as Dr. Benishek clearly pointed 
out. And what you are familiar and used well and had good 
success with. So procuring that, and I understand if you have 
got ten surgeons the procurement officer in a VA cannot procure 
ten different types of suture for that when it really does not 
make any difference on the long term outcomes and the data will 
prove that. And this should be data driven and not just cost 
driven. And I think unfortunately what happens a lot of times 
these things are cost driven and not data driven.
    I would yield back my time.
    Mr. Coffman. Thank you, Dr. Roe. Mr. Lamborn from Colorado.
    Mr. Lamborn. Thank you, Mr. Chairman. And I want to thank 
you for having this important hearing and for your work on this 
issue. So I appreciate that.
    Mr. Williamson, your report noted that the fair and 
reasonable price determination was not completed for a number 
of open market purchases that you reviewed and not properly 
documented in other cases. Does this mean that the VHA was 
overpaying for surgical implant purchases from the open market?
    Mr. Williamson. Not necessarily. We did not look at, the 
cost itself. Rather we just looked at the documentation that 
existed to support that. But it does certainly make it more 
likely that the fair and reasonable price was not obtained. 
Even when we looked and examined documentation when there was 
an explanation, sometimes the explanation was not too good. For 
example the language might say that it was based on prior 
prices. And yet the prior prices were not delineated. So, it is 
just a statement and nothing more. Another case we found for 
example, was a case of a bone graft that was supposed to cost 
$6,000 and the fair and reasonable price determination was 
based on a price range of other bone grafts that ranged from 
$3,000 to $20,000. And, on the basis of that range, the VA 
staff person determined that the $6,000 bone graft was fair and 
reasonable. That is probably not the precision that you would 
want in determining the reasonableness of that $6,000 bone 
graft. So even when the documentation was there, it was not 
very good in many cases.
    Mr. Lamborn. Okay, thank you. And Mr. Butler, I have a 
question for you. In your testimony you indicated that the 
American Legion is utilizing a System Worth Saving Task Force. 
Can you please elaborate on the task force and what it found 
regarding implant tracking?
    Mr. Butler. Well in 2003 our Past National Commander Ron 
Connelly, when he was the Commander, went out and visited over 
60 VA healthcare facilities looking at the quality of care and 
access within the VA healthcare system. As a result of that at 
our national convention a resolution was adopted that the 
System Worth Saving Task Force continue those site visits. So 
every year the American Legion System Worth Saving Task Force 
identifies a theme. This year our theme is a ten-year look back 
at the VA healthcare where we are visiting 15 VA healthcare 
facilities and we are looking at the access, the quality of 
care that is provided to America's veterans.
    So with regard to your question about what findings we 
found as it relates to implants, we have not really focused, 
that has not been the focus of our attention. But we are 
beginning to, since this was a part of the hearing, as we go 
out on our site visits we are beginning to ask those questions 
in terms of procurement and so forth to see what systems and 
what concerns veterans have. When we go out to a site visit we 
have a town hall meeting with veterans and we bring those 
veterans in so that they can tell us what are the concerns and 
the issues they have. So we are asking veterans what concerns, 
issues they might have so that we can when we meet with the 
medical centers we can address those intelligently to find 
what, to get their response to those issues. So as we are 
continuing our site visits we are beginning to focus on those 
questions.
    Mr. Lamborn. Okay. I appreciate your work and the American 
Legion's work on that. And Mr. Williamson, I have a follow up 
question. Does ``open market'' mean the possibility that items 
are not Trade Agreement Act compliant?
    Mr. Williamson. Not necessarily. No, I do not think so on 
that one. If I understand your question right.
    Mr. Lamborn. Yeah, what I am trying to get at is there 
potential that there are gray market products that the VA is 
using?
    Mr. Williamson. There is always that potential, although we 
did not, notice that when we did our work.
    Mr. Lamborn. Okay. I appreciate that. Mr. Chairman, I yield 
back.
    Mr. Coffman. Thank you, Mr. Lamborn. Mr. Williamson, what 
are the implications of low compliance with waiver requirements 
for purchasing surgical implants from the open market?
    Mr. Williams. Two things come to mind here. One is an 
accountability factor. The waiver requirements are there for a 
reason, to make sure that people go through a thoughtful 
process, that clinicians go through a thoughtful process when 
they choose open market items. And that is one factor. The 
other factor is that the information that VA can glean from a 
waiver, has a connection to national contracts, establishing 
more national contracts. For example, VA gets information on 
high volume, high use items, through the waiver process, that 
are being purchased on the open market. VA can use that data to 
identify items that they should pursue under a national 
contract. So that is a very important part of having good solid 
waiver information.
    Mr. Coffman. Okay. And Mr. Williamson, your report 
identified shortcomings in VA and VHA oversight of surgical 
implant purchasing. How do you think that oversight could be 
improved?
    Mr. Williamson. Well, one of the things that both VA and 
VHA have done is to perform separate studies looking at 
surgical implant purchasing they came up with basically a 
number of the same findings that we did. The difficulty was 
that when they identified areas of noncompliance and talked to 
VAMCs about them it was more in an advisory capacity, a 
disclosure category, as opposed to doing something about it. 
And one would expect, and what we expect when we recommend 
something to somebody, is that they come back with an action 
plan or something of that nature to make sure it happens.
    Mr. Coffman. And Mr. Williamson, you know, finally your 
report discussed low compliance with waiver requirements for 
purchasing surgical implants from the open market. Why were 
facilities not fully compliant?
    Mr. Williamson. There were a couple of reasons. As you 
know, VA is implementing a new system for surgical implants and 
purchases over $3,000. Over the last year or so it has been a 
major effort with VAMCs across the country. People that we 
asked in the VAMCs about why they did you not prepare waivers 
or why are these not on file told us that the higher priority 
was to get this new system in place. And that was one of the 
reasons. Also as other members have alluded, to physicians who 
practice in VA facilities often have outside practices. They 
may be working at VA part-time. And so they are not always as 
familiar with the waiver rules. And those are basically the two 
reasons that we heard when we asked that question.
    Mr. Coffman. Thank you, Mr. Williamson. Ranking Member 
Kirkpatrick.
    Mrs. Kirkpatrick. Thank you, Mr. Chairman. Dr. Roe, I agree 
with you that we should try to solve this problem within the 
existing policies that we have. However, Mr. Chairman and the 
committee, if it is the consensus of the committee that we need 
a new policy I think we need to be very careful that we protect 
that local control. Because doctors, as you stated and Dr. 
Benishek as well, we want our physicians to have the tools that 
they are comfortable with because ultimately our goal is the 
best patient care possible for our veterans. So I think we have 
to be careful and keep that in mind and give our physicians, 
men and women, the best tools that are available so that they 
can deliver the best patient care.
    That said I would like the panel's thought about this idea. 
When a vendor's rep crosses the line and actually touches a 
patient in the OR, would it not be more effective just to 
terminate the contract with the vendor? Terminate the contract?
    Mr. Williamson. That is certainly a possibility. And again, 
if you really want to enforce the idea that vendors, have no 
hands on treatment ability in VA hospitals, there have got to 
be some fairly stringent requirements and penalties in place. I 
can probably think of a number of things in terms of improving 
the whole access process for vendors in VAMCs. It starts with 
getting them to sign in at the police office when they arrive. 
We found, for example, that at one facility we looked at the 
log in the police office that vendors were supposed to complete 
in had not had an entry since 2011. And we knew that vendors 
had been in there many times. So there are a number of things 
in the whole access process that need to be addressed, it is 
not just in the operating room or during procedures it is the 
whole access that needs to be changed.
    Mrs. Kirkpatrick. And maybe the procurement process, making 
sure that those contracts have some clause in there that if a 
rep actually touches the patient their contract is terminated. 
Mr. Butler, do you have any opinion on that?
    Mr. Butler. Well, you know, there may be provisions already 
in the contract that covers that. They have to look back at the 
contracts and see specifically what the contract states. And I 
would agree that if there are not any particular provisions 
that allow that, that there needs to be something. Because that 
is a violation of what the veteran consented. The veteran, 
based upon the current consent form the veteran did not consent 
for the vendor to participate in the surgery. So clearly that 
is a violation of the agreement between the veteran and the 
clinician.
    Mrs. Kirkpatrick. Right. You know, and my interest is not, 
you know, again, it is making sure we have got the best patient 
care possible for our veterans. But let us do not make the 
physician's job more difficult. You know, let us look at the 
vendor who actually violated that consent form.
    Back to the bar code and the tracking, Mr. Williamson, does 
not the VA track medication by bar code already? I mean, is 
there not a system----
    Mr. Williamson. I believe so, but I am not sure of that.
    Mrs. Kirkpatrick. Okay. Again, I think we should look at 
what is working within the VA system. I am pretty sure they 
track medications. I do not know why they cannot track medical 
devices. Thank you, Mr. Chairman.
    Mr. Coffman. Thank you, Ranking Member Kirkpatrick. Dr. 
Benishek.
    Dr. Benishek. Thank you, Mr. Chairman. I did not really 
touch upon the other issue that we are talking about and that 
is the tracking. Some of the other members did. But frankly I 
just cannot believe that that does not happen either. I mean, 
like Dr. Roe mentioned it has been going on in the private 
sector for 25 years. And you know, you know, constantly with 
every device that I know of comes with a sticker with a bar 
code on it. And you put it in the chart, you know, so that it 
is thoroughly documented, you know, what device is in which 
patient. And I just cannot believe that this goes on. And it 
brings me back to my same question I had, and that is the 
accountability of when these errors occur. What can we do 
better to identify, you know, the people who manage this system 
and to make them accountable for these errors? Do any of you 
have an idea about that?
    Mr. Williamson. Well, keep in mind that people, are looking 
at a surgical implant package and there are numbers all over 
the package. Given that, there can be a very innocent 
transposition of numbers. It is not something intentional, it 
may not be done a lot, but it does happen and there are enough 
cases happening that it leads one to have concern if a recall 
occurs.
    Dr. Benishek. Oh, I understand that errors can occur, you 
know, among the OR scrub nurse, or the circulating nurse. But, 
you know, that is uncommon. I mean, and I think, you know, a 
procedure like with a sticker where there is not going to be a 
transposition of numbers because you are going to be placing 
the sticker that came with the device in the patient's chart--
--
    Mr. Williamson. Right.
    Dr. Benishek [continuing]. And in some kind of a hospital 
tracking system and scanned into the computer, that happens all 
the time. But making sure that that system is in place is 
somebody's job. And that is what concerns me about, you know, 
the VA in general, that nobody seems to be accountable for 
things like this when we bring them up in these committees. I 
mean, we have issues like this that come up with in the VA all 
the time and we never get down to, you know, whose job it was 
to do that? And, you know, are they being, getting the right 
oversight?
    Mr. Williamson. That is probably a good question for VA. I 
would think that the IT people should be all over that. But 
again, I think that is a question that you should address to 
VA.
    Dr. Benishek. Well I am going to let Dr. Roe talk as well. 
Thank you.
    Mr. Coffman. Thank you, Dr. Benishek. Ms. Walorski. Dr. 
Roe.
    Dr. Roe. I guess the question that I have now is we have 
identified the problem. It is pretty simple, really. And the 
question is what recommendations would you all have? And I 
agree with Ranking Member Kirkpatrick. You want to make sure 
that the job I have when I go in the operating room is as easy 
as possible. I think some of the, Dr. Benishek, who is a 
general surgeon, touching this about who is accountable is that 
he knows who is accountable when they put the knife in his 
hand, it is him.
    Mr. Williamson. Right.
    Dr. Roe. And he does not have to look anyplace but the 
mirror. And with the VA system we continually try to find out 
well whose job was it that was to prevent this? I think that is 
a little bit of your frustration as I, and mine also. But I 
guess very simply what recommendation would you all have for 
us? This is a fairly simple problem to solve. And we do need 
these folks. And Ms. Kirkpatrick may have hit on something. If 
you cannot go back in the OR, that is the death penalty. I 
mean, for a vendor that is the death penalty for them. And that 
company cannot do that. And you do need, when you get these new 
devices many of them are, procedures I mean, are highly 
technical. And until you have a real sense of familiarity with 
them, you know, everybody is going to do their first procedure 
at some point in time, whether it is, it may be some variation 
of what you have been doing. But when new techniques come out, 
you are going to learn those techniques, but somebody has got 
to be the first one. And you know, hopefully it goes well, and 
you need assistance with that. So we do not want to stop that 
certainly. But there is, I do not see any reason to ever have a 
vendor having any hands on with a patient. I just cannot 
conceive of a situation where you would need to do that. Can 
you, Dan?
    Dr. Benishek. No.
    Dr. Roe. Okay, I do not either. And so let me yield to you 
all. And give us two or three things that we need to do, and 
let us get this done.
    Mr. Williamson. Well with regard to that, a national policy 
governing the hands on treatment of veterans I think, is 
important, as Mr. Butler has said, a national policy or 
national procedure as a template is needed for the VAMCs so 
they are not all going out and doing their own thing. And as I 
said in my opening remarks, we found variation and 
inconsistency in that regard. Now, you have heard throughout 
the questions and answers and in my opening remarks the word 
``accountability.'' And accountability for oversight and 
accountability for properly preparing a waiver and other 
requirements that go into purchasing. That word is important 
throughout any of the recommendations we make. There has got to 
establish accountability people to do what they are supposed to 
do. And it varies as far as where accountability lies. 
Sometimes it is the clinician, sometimes it is the procurement 
folks. In other cases, it is people in Washington, DC.
    Dr. Roe. So the policies would be a reliable, repeatable 
tracking system for any implantable device.
    Mr. Williamson. Mm-hmm.
    Dr. Roe. Fairly simple technology now, should be able to 
take care of that easily. Number two, there should not be any 
vendor contact with, direct patient care, I should say. To 
advise you about how to use a particular piece of technical 
equipment, that is what they are there for. To turn this device 
this way, you have seen other surgeons do that. I certainly 
have used them very successfully in the operating room. But no 
direct patient contact. And then I think thirdly the 
procurement is a little different issue because it does get 
into, and I do see, like I said if you have got ten different 
surgeons, and we all think we are absolutely right every time. 
You know that. And that our way is the best way. And so I do 
understand some standardization. But I think at least those two 
things we could agree on today and implement those things and I 
think would solve most of these problems.
    Mr. Williamson. That makes sense.
    Dr. Roe. Okay. I yield back.
    Mr. Coffman. Thank you, Dr. Roe. Mr. Lamborn of Colorado.
    Mr. Lamborn. Thank you. Just a quick comment, I have a 
plant in my district and I toured it recently and they do 
marvelous work creating these amazing implantable devices, 
everything from little pins and screws to large bone grafts, 
apparatuses, and things like that. And it is just amazing the 
amount of work and engineering and experience that goes into 
one of those. And I just think that they have been a wonderful 
partner in working with the VA and the medical field at large 
to improve the lives and the prognosis of patients who have all 
kinds of, and veterans who have all kinds of medical 
difficulties. So I just want to make sure that no one ends up 
blaming them or in case the VA has procedures that need to be 
improved. So let us not lose our focus. I mean, this is the VA 
that we need to have in front of us. And we are really making 
sure their procedures are up to speed and that the 
accountability with the VA is what it should be. So I just 
wanted to make that clarification. Mr. Chairman, I yield back.
    Mr. Coffman. Thank you, Mr. Lamborn. And I want to thank 
the panel so much for your testimony. And let us see, you are 
now excused. I now invite the second panel to the witness 
table. Our second panel, we will hear from Mr. Philip 
Matkovsky, Assistant Deputy Under Secretary for Health for 
Administrative Operations at the Veterans Health 
Administration. He will be accompanied by Dr. Thomas Lynch, 
Assistant Deputy Under Secretary for Health Clinical Operations 
at the Veterans Health Administration. Your complete written 
testimony will be made part of the hearing record. Mr. 
Matkovsky, you are now recognized for five minutes.

   STATEMENT OF MR. PHILIP MATKOVSKY, ASSISTANT DEPUTY UNDER 
SECRETARY FOR HEALTH FOR ADMINISTRATIVE OPERATIONS, DEPARTMENT 
OF VETERANS AFFAIRS; ACCOMPANIED BY DR. THOMAS LYNCH, ASSISTANT 
    DEPUTY UNDER SECRETARY FOR HEALTH CLINICAL OPERATIONS, 
                 DEPARTMENT OF VETERANS AFFAIRS

                 STATEMENT OF PHILIP MATKOVSKY

    Mr. Matkovsky. Mr. Chairman, Ranking Member Kirkpatrick, 
and members of the committee, thank you for the opportunity to 
appear before you this morning to discuss the Department of 
Veterans Affairs' practices regarding the use, tracking, and 
procurement of surgical implants at VA medical centers. I am 
accompanied today by Dr. Thomas Lynch----
    Mr. Coffman. Make sure that your microphone is on, could 
you do that? Is it on?
    Mr. Matkovsky. I believe it is. Perhaps it is not 
functioning? Can you hear me now?
    Mr. Coffman. The light is on now.
    Mr. Matkovsky. All right. I am sorry about that.
    Mr. Coffman. That is all right.
    Mr. Matkovsky. I am accompanied today by Dr. Thomas Lynch, 
Assistant Deputy Under Secretary for Health for Clinical 
Operations. The Veterans Health Administration has made 
significant changes in the last three years to the way we 
procure surgical implants and prosthetic appliances for 
veterans. These changes are intended to improve procurement, 
performance, and accountability while ensuring effective 
healthcare delivery for veterans. Beginning in fiscal year 2012 
and concluding at the end of fiscal year 2013, we transitioned 
purchasing of surgical implants and prosthetic appliances 
valued at greater than $3,000 to warranted contracting officers 
in our procurement organization. VHA's procurement--sorry about 
that. Sorry about that again. VHA's procurement organization 
hired and provided specialized training to contracting staff to 
ensure procurements are properly executed consistent with both 
clinical requirements and federal and VA policies and 
regulations. We believe these changes strengthened our 
procurement performance.
    Throughout the transition our main focus was ensuring 
orders were completed timely and in concert with clinicians' 
prescriptions. With the transition now complete we continue to 
monitor timeliness and accuracy and we are now auditing 
procurement quality and increasing our use of negotiated 
contracts for sourcing implants and prosthetic appliances. As a 
result of the transition our acquisitions above micro purchase 
limits are now recorded in ECMS, our contract managing system, 
and the federal procurement data system.
    Our quality audits of these procurements have led to 
changes in procedures and ordering templates as well. 
Continuous QA reviews will begin in this fiscal quarter to 
provide detailed oversight of our ordering process. These 
reviews will focus on sourcing practices and will be used to 
improve our utilization of existing national contracts, improve 
training, and identify further opportunities to place biologics 
and implants on additional contracts. In fiscal year 2014 we 
will evaluate establishment of competed additional national 
contracts that will be directly informed by our clinical 
leadership to ensure we are emphasizing clinical quality, 
patient safety, and value.
    VHA is currently updating and finalizing our policy for 
prosthetics procurement. Once promulgated this new directive 
will provide comprehensive and clear guidance to VA medical 
center staff on how to order prosthetics.
    We are still reviewing the recently released GAO report on 
surgical implants. Prior to receiving the GAO report VA had 
initiated a number of reforms to acquisition. Any further 
opportunities identified by GAO to enhance our acquisition 
procedures will be considered in our ongoing process.
    The presence of vendors in the operating room is a common 
practice in healthcare settings. There are broadly accepted 
professional standards pertaining to the presence of vendors in 
operating rooms from the American College of Surgeons and the 
American Medical Association. Physicians use professional 
judgment to determine when the presence of a vendor in the 
clinical setting improves the safety and effectiveness of 
patient care. Currently VA is working however to develop 
overarching policy regarding the role of vendors. VHA Handbook 
1004.02, entitled Improved Consent for Clinical Treatments and 
Procedures, requires physicians obtain patient signature on a 
consent form before undertaking specific procedures such as 
surgery. This policy requires physicians to discuss the 
contents of this form with patients. The form also states that 
under certain circumstances the presence of a vendor is 
important to the success of the procedure; that prior to the 
procedure the vendor will sign an agreement to strictly adhere 
to the privacy rules; that the vendor may provide technical 
advice but will not physically participate in the procedures; 
and that the vendor will be closely monitored by the VA 
treatment team.
    VHA additionally has a comprehensive recall process that is 
triggered both by our own facilities as well as external 
notices such as the FDA. This process is overseen by our 
National Center for Patient Safety, which monitors all recall 
actions requiring product removal from inventory and 
coordination with patients. At the facility level all surgical 
implants are required to be tracked. Further for certain 
implantable devices such as pacemakers vendors are additionally 
required to ensure medical device tracking to the patient level 
so that individuals may be contacted in the event of a recall 
or a problem with the device they received.
    When a recall is initiated VHA follows a step by step 
process that begins with removing affected products from our 
inventory and that further ensures all mandated actions are 
closed out to 100 percent complete. This process then moves to 
identifying process, notifying patients, monitoring patients, 
and in certain cases performing clinical follow up with 
patients. When recalls do occur we also work with vendors to 
ensure all VA patients involved have been identified.
    Mr. Chairman, we appreciate your support and encouragement 
in identifying and addressing issues regarding the procurement 
of surgical implants at VA medical centers. My colleague Dr. 
Lynch and I are prepared to respond to any questions you may 
have.

    [The prepared statement of Philip Matkovsky appears in the 
Appendix]

    Mr. Coffman. Thank you for your testimony. Dr. Lynch, was 
VHA aware of vendor representatives providing direct patient 
care at VAMCs?
    Dr. Lynch. We were not aware until the GAO report was 
issued.
    Mr. Coffman. Okay. Mr. Matkovsky, what does VA see as an 
appropriate role for vendor representatives in the procedure 
area, be it in the OR, wound care clinic, or any other setting?
    Mr. Matkovsky. We do not see it as providing direct patient 
treatment. I would indicate that in this one case, after we 
found out from the GAO report, we did refer this case to our 
Office of Inspector General ourselves. Consultation, support, 
particularly technical advice regarding new technical implants 
is permissible. But direct patient engagement is not.
    Mr. Coffman. Mr. Matkovsky, what percent of biologic 
contracts are made on the federal supply schedule and the open 
market?
    Mr. Matkovsky. We looked at a couple of these, sir. One of 
them looking at the below threshold, so contract actions below 
$3,000, about 70 percent of those actions are on contract, so 
national contracts, regional contracts. In addition for the 
biologics, I believe there were about $75 million of 
acquisitions in fiscal year 2013. We have not broken out 
separately those that were on contract, not on contract. But I 
believe in the first quarter of fiscal year 2014, our number is 
roughly about 40 percent on national contract, sir.
    Mr. Coffman. Okay. I would very much like you to provide 
that break down to the committee within two weeks. Thank you. 
Ranking Member Kirkpatrick.
    Mrs. Kirkpatrick. Mr. Matkovsky, I appreciate that VA is 
working on policies regarding vendors in the OR. I think the 
concern of this committee is always what is the consequence of 
violating a policy of the VA? What is your thought about 
terminating the contract with the vendor whose rep actually 
touches a patient?
    Mr. Matkovsky. Not to be evasive, Congresswoman, but in 
this case we would have to look at it. If they violated the 
terms of a contract, then an appropriate action would be to 
terminate their contract with the VA. But at a minimum they 
would have performed something in violation of our policy. The 
difference there would be if it is a quality product or a 
product that we have on a committed use contract would we want 
to terminate a contract nationally for the actions of one 
vendor? But it is something we would want to monitor very 
closely.
    Mrs. Kirkpatrick. And I just want to reiterate the concern 
of the committee is that a lack of consequences, good policies, 
but a lack of consequence if the policy is breached. But let me 
go on to the second point. The GAO report states that the 
program executive office identifies items that are frequently 
used and high cost. This implies that that is the only 
mechanism for identifying items to be included in these 
contracts. Is that in fact the case?
    Mr. Matkovsky. That is not the only mechanism, it is one of 
the mechanisms. And I have some numbers from our program 
executive office. It really took effect in fiscal year 2013. By 
the end of fiscal year 2013, I was directly involved in setting 
some of the performance goals for that organization and had 
tied my accountability directly to that success. By the end of 
the fiscal year, in fiscal year 2013, there were roughly 110, 
113 packages developed by that group, the total life cycle 
value of those packages in excess of $2.1 billion estimated. 
What they do is they look at our procurement spend in something 
we called MEDPDB, the medical product database that we share 
with DoD. And we look at the things we buy. And where we do not 
have items on national contract we identify them as 
opportunities. That is one mechanism. It is not the only 
mechanism. Another mechanism we use as we transitioned away, I 
just want to emphasize in a period of about 18 months, we 
removed 1,100 contracting officer warrants from prosthetic 
staff and transitioned that to procurement staff. We now have 
about 378 prosthetics contracts at a regional and local level 
that we did not have before. Those total in a value annual of 
$323 million. So that is a mechanism that allows us to do 
bottom up.
    I believe you had made the comment about top down versus 
bottom up. Where clinician preference is indicated and we can 
find it in buying patterns, we had hoped that this transition 
would allow us to identify those spend patterns as it moves 
into contracting. And then contracting would establish local 
and regional contracts, and then subsequently we would 
establish national contracts. We are evaluating a biologics 
contract. It is going to be a complex contract but that would 
be a national committed use contract like we have with.
    Mrs. Kirkpatrick. Could you--oh, excuse me.
    Mr. Coffman. I am sorry, Mr. Matkovsky? Could you please 
speak a little closer into the microphone? Thank you.
    Mr. Matkovsky. Okay. Sorry.
    Mrs. Kirkpatrick. And could you provide the committee with 
the performance goals and metrics for that system?
    Mr. Matkovsky. I will.
    Mrs. Kirkpatrick. Last question is, you know, you heard Dr. 
Roe say that the medical devices are changing at light speed. 
And what is your system for testing new devices and then 
introducing them to the VA system at large?
    Mr. Matkovsky. I am going to defer to Dr. Lynch for some of 
this. But part of our evaluation process that we run with the 
program executive office, frankly the OAL National Acquisition 
Center for a number of years, had helped VHA in some of this 
work. We get product samples from the vendor community. So 
clinicians who are a member of our selection team are literally 
evaluating products as part of that process. That is different 
than the federal supply schedule mechanism, which is a much 
more top down approach. Not negating the value of either, but 
it would be direct testing of the product offering on the part 
of clinicians and then I will defer to Dr. Lynch for the 
research and evaluation of new technologies.
    Dr. Lynch. Let me just try and comment a little bit about 
the introduction of new technology and the process. I think 
Congressman Roe and Congressman Benishek discussed that 
earlier. The VA does in fact have a very rigid process of 
credentialing providers and introducing new products into the 
VA. Physicians are expected to undergo specific training. This 
is actually specified in our credentialing process. When they 
actually begin to do the process, if appropriate, they will do 
it under supervision for a period of time before they are 
credentialed to perform it widely without supervision. So I 
think we have a process that is very similar to that discussed 
by Congressman Roe in terms of introducing new procedures and 
assuring that there is competence on the part of the physician 
to perform that procedure.
    Mrs. Kirkpatrick. Thank you, and I yield back, Mr. 
Chairman.
    Mr. Coffman. Thank you, Ranking Member Kirkpatrick. Dr. 
Benishek.
    Dr. Benishek. Well that is a great statement there you 
made, Dr. Lynch, about, you know, rigorous rules for 
credentialing. But something is wrong, right? Because I mean, 
some vendors were doing cases. So there is obviously these guys 
were not credentialed to be doing cases in the OR. So there is 
a failure there somewhere, right?
    Dr. Lynch. Let me----
    Dr. Benishek. You would agree that there has been a failure 
if this actually occurred like has been described?
    Dr. Lynch. I absolutely agree that a vendor should not be 
touching a patient. The GAO did not share the specifics of this 
case with us. We have done some background. We think we 
understand what happened and where it happened. It did not 
happen in the operating room. It happened outside of the 
operating room. It happened during the course of a dressing 
change. It was not a skin graft, it was a skin substitute, one 
of the cryopreserved skin covers that are used for wound care. 
And it did not involve a physician. We believe it involved a 
mid-level provider. We have asked our Office of Medical 
Inspector to go in and evaluate that. Regardless of where it 
occurred and regardless of the circumstances let me be very 
clear it should not have occurred. But we do not believe that 
it occurred in the operating room at this time.
    Dr. Benishek. I see. Okay. Well I do not have, I am not 
privy to the details either. So I mean obviously we need to get 
that done.
    Dr. Lynch. But I just wanted to be very clear that this 
does not appear to have been an event that occurred in the OR 
while a patient was asleep or while a patient was under 
anesthesia.
    Dr. Benishek. All right. Well I guess those facts have yet 
to come out. It is just that I want to touch again on the 
accountability part. You know what I mean? How many people are 
in your department, Mr. Lynch? I mean, you are the, or Dr. 
Lynch? You are the Assistant Deputy Under Secretary for Health 
Clinical Operations. So either, I mean, how many people do you 
have working for you?
    Dr. Lynch. Directly I have about 15. Indirectly because of 
the 151 care centers that I oversee, approximately 400 people 
working for us, sir.
    Dr. Benishek. You know that to me is, I am trying to get 
to, I mean I think we have identified the fact that there is 
problems here that should not have happened. My issue is that, 
and you have heard me say it if you listened to the previous 
testimony, I have difficulty with the fact that we never seem 
to identify a person who is responsible for the follow up. And 
I am going to tout my legislation. You know, I have got this VA 
Accountability Act which would actually make the VA identify 
somebody within the VA who is responsible for something that 
did not occur, for example, to an Inspector General report. 
Okay? So that there is actual accountability by a manager if 
they did not comply with a, you know, an IG report. So do you 
ever write performance reviews on any of these people that work 
for you?
    Dr. Lynch. I write the performance reviews for the people 
who report to me directly, yes sir.
    Dr. Benishek. So every year then you write, everybody gets 
a performance review written out?
    Dr. Lynch. My direct reports. Not for everybody across VHA, 
but----
    Dr. Benishek. No, no, but I mean those 15 people that you 
talked about?
    Dr. Lynch. Yes. Yes.
    Dr. Benishek. And those 15 people each have 15 people until 
you get to the 150,000----
    Dr. Lynch. Actually 400. I mispoke when I said 100,000 to 
150,000.
    Dr. Benishek [continuing]. You are talking about?
    Dr. Lynch. Correct.
    Dr. Benishek. From my position here it is tough to get, you 
know, the bureaucracy initial number provided corrected in this 
document of the size that you are talking about with 150,000 
people somewhere below you in the chain of command, to get 
those individuals' performance to improve. Because whenever we 
ask for the name of the person who is responsible for fixing 
this, we do not get the name of a person. We get, you know, a 
vague answer. We can never get down to improving people's 
performance within the bureaucracy. Do you understand what I am 
kind of getting to?
    Dr. Lynch. I understand your frustration. I think though 
you have practiced medicine as I have, and I think you also 
appreciate the complexity of medicine and the interaction 
between individuals, processes, and policies that sometimes 
make it difficult to separate accountability from the person 
and the process. And I think that is the challenge that we 
face. We need to identify people who need to have remediation 
of some form. We also need to be able to identify where our 
processes and our policies interfere with our people performing 
good services.
    Dr. Benishek. Have you ever written a review that 
recommended remediation or performance improvement?
    Dr. Lynch. I have put several individuals on a performance 
improvement plan, yes sir.
    Dr. Benishek. But nobody has ever lost their job, or been 
transferred in that circumstance of those 15 people?
    Dr. Lynch. I have not fired anybody or transferred anybody, 
no sir.
    Dr. Benishek. And how long have been in the position?
    Dr. Lynch. I have been in this position for about a year.
    Dr. Benishek. Okay.
    Dr. Lynch. I have worked in the VA for about 35 years, sir.
    Dr. Benishek. Well, you know, well I admire your service to 
our veterans. I really have a problem with this and I hope that 
the remainder of the staff, we got this VA Accountability Act 
through the committee but I was hoping that you all will tell 
our colleagues on the floor to consider voting for this VA 
Accountability Act so we can improve the accountability of 
people in the VA. I find it very frustrating, Dr. Lynch, about, 
you know, how the performance is. I guess I am way over my 
time, sorry.
    Mr. Coffman. Mrs. Walorski of Indiana.
    Mrs. Walorski. Thank you, Mr. Chairman. Mr. Matkovsky, we 
have learned in the testimony from the previous panel and then 
also just here each VA hospital has its own healthcare industry 
representative credentialing program; We know that; and 
requirements, often creating discrepancies in both the 
requirements and the enforcement from hospital to hospital. And 
you may have alluded to this in your opening remarks but I 
could not hear you real well, where, could you give us an 
update on where you are, where the VA is in establishing a 
single standardized credentialing program for use across the 
system? And I would direct your attention to what is being 
considered right now in my state, the State of Indiana, with 
the Indiana Hospital Association. It has the potential to 
create more consistent enforcement and compliance. After that 
GAO report, could you just give us an update? Where are you in 
coming up with a centralized program?
    Mr. Matkovsky. Sure. I would separate the credentialing and 
privileging question with the vendor policy.
    Mrs. Walorski. Mm-hmm.
    Mr. Matkovsky. And quite frankly we agree with Mr. 
Williamson and Mr. Butler that a national policy would help 
here and that policy sets the guideline and then from that the 
local policies would be derived. We have just begun so I cannot 
give you a specific timeline. But at the direction of the Under 
Secretary, he wants us to look at this and establish some form 
of national guidance.
    Mrs. Walorski. Okay. And then also, as Mr. Lamborn alluded 
to, the VA is a very important customer, partner for the 
medical device industry. Since the implementation of the 
medical device tax a year ago has the VA seen any negative 
impact in terms of VA patient access? Or access to existing or 
any new technologies? And is there a concern going forward 
about access or new technologies as it pertains to the cost of 
the medical device tax?
    Mr. Matkovsky. I do not know that I have the specifics on 
that cost factor. Some of the costs would probably be built 
into the actual provided price to us. But I do not have those 
details. I can get those and come back. We have not seen any 
negative effect at this point to access to medical devices?
    Mrs. Walorski. Could you provide that to the committee?
    Mr. Matkovsky. We will.
    Mrs. Walorski. Thank you. Thank you, Mr. Chairman.
    Mr. Coffman. Mr. Lamborn, Colorado.
    Mr. Lamborn. Thank you, Mr. Chairman. And this question is 
for either one of you. According to the GAO report that we just 
heard from, and I quote, ``a physician who stated that vendor 
representatives were present during the application of skin 
grafts at this VA medical center told us that he did not know 
what the official vendor policy was at the VA medical center, 
and that he was not aware of a VA medical center policy that 
addresses vendor roles.'' It sounds to me like the oversight by 
VA is lacking when physicians have not been informed and made 
aware of VA policy. What are you doing as an overseer within 
the VA to make sure this never happens again.
    Mr. Matkovsky. I think we can do this as a two-part. First 
of all, we went back and looked at all of the medical centers 
to verify that we have policy. We do have policy across the 
board. In this instance this is an individual who, the one that 
we are looking at, there was in fact a policy and it was a 
violation of local policy. I would further, with Congresswoman 
Walorski's comment in my response there, that we will be 
looking at a national policy. Part of the benefit of a national 
policy is that it has certain enforcement authority that gets 
carried with that as well. So the national policy will set the 
frame, local policies will derive from that, training will be 
associated with those policies. I agree wholeheartedly with Mr. 
Butler that that actually is a sound practice. That is what we 
are doing at this point.
    Mr. Lamborn. And doctor, do you have anything to add to 
that?
    Dr. Lynch. I would reinforce what Mr. Matkovsky said. I 
would also emphasize that we have asked our Office of Medical 
Inspector to go in to help us understand why the failure 
occurred so that we can prevent it from happening again.
    Mr. Lamborn. Thank you. And Mr. Chairman, I yield back.
    Mr. Coffman. Thank you, Mr. Lamborn. Dr. Roe, Tennessee.
    Dr. Roe. And Dr. Lynch, thank you for your 35 years of 
medical service to our veterans. I think this is, at least I 
hope that this situation is just an outlier that occurred. And 
at least I am beginning to think that it is. I was reading, it 
is very clear in the VA policy where VA hospitals are teaching 
facilities, which is great, and trainees may participate in or 
observe in treatment/procedures. In certain circumstances the 
presence of a vendor representative or a company representative 
is important to the success of the procedure. That is true. 
Prior to the procedure the representative will sign an 
agreement to strictly adhere to VA privacy rules. And obviously 
that policy was not followed in this circumstance that Mr. 
Lamborn talked about. The representative may provide technical 
advice but will not physically participate in the procedure. 
That is very clear. The representative will be closely 
monitored by the VA treatment team. I mean, that is pretty 
clear policy to me. That is not hard to understand.
    Dr. Lynch. I think VA's position is very clear. I think the 
AMA and the American College of Surgeons have reinforced that 
position. And like Congressman Benishek, I have spent many 
years in the operating room. I have never seen a vendor 
representative scrub on a case. I have seen them there for 
technical information. I have seen them there for calibration 
of the device that is placed. I have never witnessed a vendor 
representative scrub. I think this was an outlier. But I think 
it emphasizes the importance of understanding why it occurred 
so we can assure it does not happen again.
    Dr. Roe. I 100 percent agree with that. And I think your 
evaluation, Dr. Lynch, is correct. Secondly, the tracking 
system I think is something that is not a major obstacle with 
today's technology. It should be fairly simple. Could you 
elaborate on that? Or would you elaborate on that?
    Dr. Lynch. I can tell you what we are doing and what I 
think are several best practices in VA right now. For any 
implant that is placed in the operating room in a VA hospital 
not only is there a sticker placed in the chart, as Congressman 
Benishek recommended or noted, but that information is also 
placed in the patient's electronic medical record by the 
circulating nurse at the time of the procedure. So there is in 
fact a redundant system. Not only do we have information in the 
prosthetic database but, we have information in CPRS, the 
patient information system.
    Dr. Roe. If you had a, as you know some, a number of years 
ago there was a new ceramic hip that fractured. One of my, he 
did not think it was so funny and neither did his mother. He 
put it in his own mother. I would have never done that. I would 
not touch my mother with a ten-foot pole, but anyway he did. 
And well she----
    Dr. Lynch. Would she be too demanding for you, Congressman?
    Dr. Roe. But anyway, it fractured and he had a way because 
of the tracking system to be able to get this out and replace 
it.
    Dr. Lynch. We actually----
    Dr. Roe. The system, do you have that available now? Is 
that up and running and we just do not know about it?
    Dr. Lynch. We have a process in place that is run through 
our National Center for Patient Safety. Any recalls that are 
issued are processed by the National Center for Patient Safety. 
They have representatives at the VISN and facility level that 
they contact when there is a recall. Two steps happen depending 
upon the nature of the recall. The material is removed from the 
shelf so it cannot be placed in a patient. And if it is, 
necessary, we identify the patients through the prosthetics 
database and the operative record and notify the patients of 
the recall and what steps need to be taken to follow them with 
that implant. In most cases, a hip or a pace maker, for 
instance it is usually not removed but the patient is followed 
more closely?
    Dr. Roe. How long does that take?
    Dr. Lynch. I cannot tell you----
    Dr. Roe. And are, because I know the VA dropped the ball 
big time on four or five years, I guess it was almost five 
years ago we talked about the colonoscopies and identifying 
patients, and the VA records. There was a huge dropped ball 
there. Are we sure, do you have systems in place to be sure 
that my lens implant does not, that is recalled, that I am 
notified?
    Dr. Lynch. I am comfortable that we have good systems, 
Congressman. I cannot guarantee you that there might not be 
exceptions. There are always exceptions in healthcare. But I am 
confident that we have good systems. I also feel that we can 
improve those systems. We can make them better by using some of 
the technology that we have developed, as the ranking member 
mentioned, in terms of bar coding for medication. We also bar 
code for transfusions. We need to look at some of the newer 
technology associated with RTLS and bar coding to see if we can 
improve the efficiency of that system. But I am confident that 
in the majority of cases we can identify the individual and 
assure the provider and the patient that they have appropriate 
information regarding the recall.
    Dr. Roe. There have been some whopping failures that I have 
observed since I have been there. One, if you will indulge me 
just a minute, one final question. The procedures and 
techniques, or new devices I should say, that are tested by our 
VA physicians, are they being added to the federal supply 
schedule or not? Or are they purchased on open market 
purchases?
    Mr. Matkovsky. Two answers to that. They would be more 
likely to go into a national contract or a committed use 
contract right now than an FSS. The FSS is somewhat vendor 
driven so the vendor will come and get itself on the schedule 
listing for the most part. But we have a team. I mentioned it 
before. It is broken into a number of different domains, a 
prosthetics domain, a surgery domain, nursing, you name it, and 
looks at our spend pattern and then moves things into committed 
use contracts through that process.
    Dr. Roe. Okay. Thank you, and I yield back. I thank you for 
indulging me.
    Mr. Coffman. Thank you, Dr. Roe. Mr. Matkovsky, recently VA 
unilaterally deleted biologics from VA's federal supply 
schedule contracts, then did an immediate about face by putting 
them back on the schedule. Was this related to the lawsuit 
filed against VA on this issue?
    Mr. Matkovsky. Mr. Chairman, I do not have information on 
that. If I can take that one for the record?
    Mr. Coffman. Very well. Dr. Lynch, vendors performing 
operations on veterans is not only a serious breach of VA 
protocol but also violates the veteran's privacy and thereby 
HIPAA. In accordance with VA's table of penalties at a minimum 
will VA be holding anyone accountable for these failures?
    Dr. Lynch. Mr. Chairman, I cannot comment on that right 
now. It is under investigation. I think we will have a better 
idea of the nature of the accountability once we understand 
what happened. But if appropriate, people will be held 
accountable.
    Mr. Coffman. Mr. Matkovsky, you issued a memorandum on May 
23, 2012 underscoring VHA policy on the purchase of biologics 
that for the last year and a half has been blatantly 
disregarded by VHA employees. Are you concerned that your 
guidance is completely ignored without any repercussions? Or 
was the memo just a hollow attempt to say that you did 
something to address this continued failure to follow the law 
from our hearing in 2012?
    Mr. Matkovsky. No sir, I do not believe it was a hollow 
attempt. I thought we had started at the same time from May 23, 
2012 to September 30, 2013. We removed all of the warrants from 
our prosthetics staff to be able to purchase above the $3,000 
level. That was a significant transition for us. Much of our 
energy went into making sure we got that right. One of the big 
concerns we had at the time, and when we testified at that 
hearing, the hearing before that, and then the subsequent 
hearing, my big concern frankly was the timeliness effect of 
that transition. We would be transitioning the purchasing of a 
prosthetic appliance with a vendor waiting on the other side of 
the transaction. So to complete that most of our energy went 
into that.
    Now we are looking at the procurement compliance. Our 
audits are looking at the appropriate determination of the 
justification for other than full and open. If we are using 
8123 incorrectly our audits will pick that up now. And we will 
make sure we are compliant, sir.
    Mr. Coffman. Ranking Member Kirkpatrick.
    Mrs. Kirkpatrick. Dr. Lynch, Mr. Matkovsky. Thank you for 
being here. I appreciate your efforts in crafting a national 
policy. But I just want to remind you that my district in 
Arizona is a huge rural district. It is bigger than the State 
of Pennsylvania and covers over half the state. And it is 
unique in that we do have a lot of rural veterans. We also have 
25 percent of the population Native American. And you know, I 
am always concerned about a one size fits all policy. And I 
would just like to know how you are addressing the unique 
challenges and needs of our rural veterans and our Native 
American veterans.
    Dr. Lynch. Let me take a first crack at that. We are a 
little bit off topic because I think once we move into rural 
areas we are not talking about surgical procedures, or probably 
not even the involvement of vendors. But we are talking about 
providing services to veterans. And I think the VA has taken 
the lead in telehealth as a means for delivering care, what I 
would term to be point of residence, where the patient is. And 
I think we have made great strides in developing mechanisms by 
which we can treat and interact with patients remotely and 
provide rural veterans the same quality of service that 
veterans are getting in our larger facilities. It began in 
primary care. I think we are now able to deliver specialty care 
services. We have the ability to use stethoscopes and other 
remote monitoring equipment. So that I think we are being 
concerned about the rural veteran.
    I came from Omaha, Nebraska. Our area covered about 70,000 
to 80,000 square miles of Western Iowa and Nebraska. We faced 
some of the same challenges, and we found the use of telehealth 
very effective in delivering that care. The VA is actually now 
looking at newer models which will deliver care directly into 
the patients' homes by connecting physician and patient across 
the internet, so that they can interface directly in the home.
    So I think we are concerned about the rural veteran. We are 
concerned about the veteran that cannot make the trip to our 
facilities. And I think we do have some tools to provide that 
care.
    Mrs. Kirkpatrick. Let me just say I applaud your efforts in 
my district. You know one of my concerns is, though, 
communication between the VA hospitals and those rural veterans 
and Native American veterans. Especially if you have got a 
device recall. So I just hope that you will keep that in the 
forefront of your minds as you go through the development of 
the policy.
    My other question is really process. The GAO report 
indicated that in 2011 the VHA established a program management 
office for prosthetics to identify additional surgical implants 
that could be made available through a national committed use 
contract. However an official told the GAO that the office was 
unable to focus on developing national committed use contracts 
because of staffing constraints. So would you explain to the 
committee how the office is supposed to function? Where in the 
organization structure of VA is it located, VHA? Does it have 
the necessary staffing and financial resources to make a 
difference and improve the process? And do you believe this 
office is capable of performing the duties you have assigned to 
it?
    Mr. Matkovsky. That office is located in VHA's corporate 
office in what we call patient care services. The national 
program director is on board. I think that program is running 
very well. There is a really strong collaboration between 
prosthetics now, logistics, and contracting. We attend 
concurrent meetings every Friday afternoon where we are 
reviewing the prosthetics order timeliness and accuracy. The 
committed use contracts, I gave a number very quickly, but at 
the below $3,000 threshold, these are the transactions that are 
micropurchases typically done on a purchase card by prosthetics 
staff, 70 percent of those transactions are against contracts, 
in excess of the dollar value of those contracts. Those will 
increase.
    Mr. Chairman in further response to your comment about the 
memo from 2012, we have seen an increase, although not where we 
would like it to be, in the use of waivers. And we have to do a 
better job communicating that requirement to the clinical 
community. Also just to make sure people do not think of it as 
a punitive action but as an informative action, to let us know 
what else we need to get on contract.
    I think it is actually a really functioning partnership at 
this point and the leadership team is doing a great job.
    Mrs. Kirkpatrick. Thank you. Thank you very much. I yield 
back.
    Mr. Coffman. Dr. Benishek.
    Dr. Benishek. Thank you, Mr. Chairman. Dr. Lynch, I have 
just a couple more questions about, I know you responded to Dr. 
Roe's question about the tracking. And you know we were 
informed about this VITAS system, the Veterans Implant Tracking 
and Alert System, apparently, which was in the process of 
development. I mean, can you elaborate on what that was? And 
what is the mechanism, are you not using that? Or what is the 
mechanism that you are using that you answered Dr. Roe's 
question in the affirmative. How does that work?
    Dr. Lynch. First of all, VITAS was an attempt to integrate 
the systems we currently have to track implants. It was 
developed and during initial implementation evaluation was not 
found to be functioning properly. So at the moment we have 
pulled VITAS back. We are relying on the National Center for 
Patient Safety (NCPS), who tracks recalls. We are relying on 
their interface with our networks and facilities. We have 
recall coordinators at each of our facilities who work with the 
National Center for Patient Safety to receive the recall, 
assure that any shelf product is immediately removed. The NCPS 
then works with subject matter experts in VA Central Office, 
who will work with the facility and its databases to identify 
any patients who may have had a particular implant placed so 
that we can inform the patient and the provider and be sure 
appropriate actions are being taken.
    Dr. Benishek. Has this actually occurred under your tenure 
there? Have you seen anything that happened that you are aware 
of?
    Dr. Lynch. It has occurred seamlessly. There have been I 
think about 46 recalls over the past year that have been 
mediated by the National Center for Patient Safety. I cannot 
itemize those for you. Thirteen of those involved biologics. 
They were all biologics that were placed in the OR so we should 
have record of the implantation.
    Dr. Benishek. So then that information goes to each 
individual medical center and then they from their list of 
patients figure out if they have done any of those implants? Is 
that how it works?
    Dr. Lynch. What they would do is go back and review the 
appropriate record to see if any of those were implanted in a 
patient and then link that implant to a patient, yes.
    Dr. Benishek. So do you know how, does that take a long 
time then? Or, I mean, is it done on computers? Is that----
    Dr. Lynch. The search is done by computers, yes.
    Dr. Benishek. All right.
    Mr. Matkovsky. And it is also tracked on a web site. So you 
know, an internal system. National Center for Patient Safety 
will issue an alert. It goes to a patient safety officer at the 
VISN who oversees the patient safety officer at the facility. 
And depending on the criticality of the alert notice, there is 
a requirement to have 100 percent compliance by a given date. 
And that date is set by the criticality of the alert.
    Dr. Lynch. And there is a requirement that the medical 
center communicate with the National Center for Patient Safety 
to indicate that the appropriate action has been taken.
    Dr. Benishek. All right. Well I do not know, I just got 
this answer here in response to your answer. Apparently there 
was a source saying that the National Center for Patient Safety 
does not track biologics.
    Dr. Lynch. The National Center for Patient Safety does not 
specifically track the product, the facility does. The National 
Center for Patient Safety, however, does track the recall 
notices for biologics and does pass them through to Central 
Office, the Network, and the facility when appropriate.
    Dr. Benishek. All right. Well I am just----
    Dr. Lynch. In fact there were 13 recalls within I believe 
the past year that did relate to biologics that were managed by 
the National Center for Patient Safety.
    Dr. Benishek. All right. Well that is contradictory to 
somebody else's answer at a previous date, apparently. So----
    Mr. Matkovsky. I think the distinction is that at the 
National Center for Patient Safety they are not keeping the 
list of the individual patient and the implant of that patient. 
That is not NCPS's charge. It is their charge to link to the 
FDR, find an incident from a medical center, and then trigger 
the recall action, set the goal, measure compliance. The 
tracking is done both in CPRS and in the prosthetics that will 
track that. So there are policies that require us to record the 
serial number and associate that with the individual patient.
    Mr. Coffman. Right. And I think, and just to interject for 
a second, I mean, what we have had is testimony and certainly 
evidence in the GAO analysis is that you are not effectively 
tracking this information and that is a problem for patient 
safety. Dr. Benishek, please proceed.
    Dr. Benishek. Actually I am pretty much out of time here, 
so thank you.
    Mr. Coffman. Mrs. Walorski, Indiana.
    Mrs. Walorski. Thank you, Mr. Chairman. Mr. Matkovsky, I 
just wanted to ask a follow up on the issue of the medical 
device tax. The reason I am asking that question and the reason 
I am concerned about it, and I have repeatedly asked the 
question of the VA, is because we have had complaints in my 
district, which is in Northern Indiana, of long waits for 
medical devices, hips, knees. Veterans even asking if they can, 
you know, why the VA cannot refer them to private hospitals, 
refer them to somebody else, get them the treatment because of 
enduring pain. And I posed the question to the VA way back in 
April of last year, of saying, you know, what is this impact 
going to be? Is there going to be an access issue? Which I have 
never received an answer on. But from what I am hearing in my 
district, in my district there is potentially an access issue.
    And the other question I have was on this issue of funding. 
And I reasked the question to the VA back in November on the 
committee and somebody was here representing the VA and they 
said they would get back to us and they never did. I have never 
had an answer in 60 days. And the reason I am reposing the 
question to you today, especially because you are here 
testifying on this specific issue that we are talking about, 
when can you give me, even if the VA's answer is that the 
dollar value is minimal, all I want is the dollar figure the VA 
assigns to the medical device impact. When can I get that 
dollar figure that you guys are assessing to the medical device 
impact? Can you tell me? Because my fear is that if I walk out 
of here today and I do not have some kind of an agreement with 
the VA today, I have waited 60 days, even put the request in 
writing, and we still do not have an answer. When can you 
provide me the answer?
    Mr. Matkovsky. I would say roughly within 30 days. We do a 
forecast out for the prosthetics spend that we perform. And we 
are getting better at forecasting that amount. It is going to 
be somewhat challenging. I mean, we will have to look at how 
much the device tax costs and then do some extrapolation on 
that. But I would say give us 30 days and----
    Mrs. Walorski. So I guess my response to that is I have 
given the VA 60 days, and no response both verbally and in 
writing. Can you provide me with that information by the end of 
the week? By tomorrow, 5:00?
    Mr. Matkovsky. I want to do a good job and make sure we get 
it done right----
    Mrs. Walorski. But my concern is nobody has answered the 
question. We have done everything here. And the complaints that 
I am receiving from veterans who are waiting for these products 
has to lead me to believe if there is an access problem in my 
district is there also a dollar value problem with funds 
available to the VA? And is there a economic impact? So my 
concern is because of the fact that veterans are complaining, 
and the pain that they are in in the meantime, and the issue of 
asking to even go to private hospitals, to go elsewhere, ask me 
if the VA will reassign them?
    Mr. Matkovsky. I will personally commit to you that I will 
make sure we get this answer to you. I would say 30 days. We 
have some concurrence processes and other things that I need to 
go through. So I cannot necessarily commit to those timelines. 
But I will make sure we get it done.
    Mrs. Walorski. Thank you. Thank you, Mr. Chairman.
    Mr. Coffman. Our thanks to the panel. You are now excused. 
Today we have had a chance to hear about many deficiencies 
present in VA's handling, tracking, and procurement of surgical 
implants. I am not convinced that VA has taken the appropriate 
steps to correct these problems, especially considering how 
many of them were addressed in similar hearings this 
subcommittee held nearly two years ago. This lack of progress 
on the part of VA is unacceptable. As such, this hearing was 
necessary to accomplish a number of items. Number one, to 
discover the extent of VA inappropriately allowing vendors to 
participate in hands on surgical procedures. Two, to address 
the absence of an operational tracking system that would VA to 
determine what implants were administered to veterans in case 
of an emergency. Three, to identify the reasoning and effects 
of VA's failure to procure biological implants on the federal 
supply schedule as well as its rampant and incorrect use of 
waivers. Four, to require VA officials to explain their 
inadequate response to these serious problems and determine 
what steps if any are being taken to correct them.
    I ask unanimous consent that all members have five 
legislative days to revise and extend their remarks and include 
extraneous material. Without objection, I would like to thank 
again all of our witnesses and audience members for joining in 
today's conversation. With that, this hearing is adjourned.
    [Whereupon, at 12:03 p.m., the subcommittees were 
adjourned.]
                                APPENDIX

              Prepared Statement of Mike Coffman, Chairman

                      Oversight and Investigations

 Remarks--Vendors in the OR--VA's Failed Oversight of Surgical Implants

                            January 15, 2014

    Good morning. This hearing will come to order.

    I want to welcome everyone to today's hearing titled, 
``Vendors in the OR--VA's Failed Oversight of Surgical 
Implants.''
    This hearing examines serious problems with the tracking 
and handling of surgical implants within the VA and follows 
through on procurement issues revealed in a previous hearing by 
this subcommittee.
    According to multiple sources, VA medical centers have 
allowed surgical implant vendors to participate in hands-on 
treatment administered to veterans. Based on my staff's initial 
findings, I asked GAO to investigate these allegations 
regarding veteran health care and to determine what policies 
are currently in place.
    GAO substantiated that several veterans had received skin 
grafts that had been applied directly by skin graft vendors. 
GAO found that VHA requires each medical facility to develop 
its own policy on vendor access, resulting in varying degrees 
of specificity regarding their participation in patient care.
    These findings raise serious questions about the extent of 
vendor involvement in patient care at VA facilities and the 
lack of clear guidance regarding vendor access. VA's own 
consent form as well as industry best practices state that 
vendor representatives may be present to provide technical 
advice but may not physically participate in the procedure. 
However, GAO's investigation confirms that these policies are 
being unevenly applied or unenforced. Clearly, national 
guidance and oversight is necessary to protect veterans who 
undergo surgical implant procedures.
    There are also significant problems with how VA handles and 
tracks surgical implants in veterans. Previous VA OIG audits 
criticized the VHA for weak internal controls that jeopardize 
VA's ability to identify and notify patients in the event of 
FDA product recall. According to GAO's report, released on 
Monday, these concerns remain and have not been remedied. For 
some clinical specialties, including gastroenterology, 
interventional radiology, and pulmonary, identifying 
information on implants was not tracked in any system. It is 
troubling to consider that for these specialties, VHA was 
unable to verify that the items purchased were actually 
implanted in the patients for whom they were intended.
    In 2008, VA began developing the Veterans Implant Tracking 
and Alert System (VITAS) to track and retrieve identifying 
information--including the lot and serial number--of surgical 
implants placed in patients VHA-wide. Unfortunately, according 
to GAO, this system's development was suspended at the end of 
fiscal year 2012 due to data-reliability challenges, and as of 
December 2013, development of VITAS has not resumed, limiting 
VHA's ability to identify and locate patients who have received 
implants.
    Additionally, GAO's report shows that VA has failed to make 
sufficient progress with prosthetic procurement reform. In a 
May 30, 2012 hearing, this subcommittee revealed that VA 
medical centers and VHA regional network contracting officers 
misused waiver authority to spend nearly 3 billion dollars on 
open market purchases of prosthetics, including surgical 
implants, rather than procure them through competitive 
contracts, including those with businesses on the Federal 
Supply Schedule.
    As a result of the hearing, VA acknowledged that there are 
often several options available for implants and that 
disadvantaged veteran owned small businesses and others 
offering these products were being unfairly excluded from 
consideration. VA indicated that it would implement reforms so 
that non-competitive and sole source purchases would require 
justification on a case by case basis.
    GAO's report does contain some good news: VA has made some 
progress with obtaining national committed use contracts for 
non-biological implants, such as artificial joints, cardiac 
pacemakers, heart valves, and coronary stents. Use of these 
national committed use contracts is the most favored method of 
procurement for implants under the Federal Acquisition 
Regulations. However, GAO also reported that no such contracts 
have been negotiated for biological implants such as skin and 
bone grafts. Moreover, contrary to a memorandum, dated May 23, 
2012, from Assistant Deputy Under Secretary Matkovsky, GAO 
found biological implants were rarely ordered from the Federal 
Supply Schedule at each VA medical center it visited. According 
to GAO, over-use of the waiver process continues. It reported 
that none of the medical centers it visited procure surgical 
implants in compliance with waiver requirements for open market 
purchases. Finally, it is most disappointing to note that while 
VA and VHA now have procurement oversight components, GAO 
reported that they have failed to impose corrective action for 
these deficiencies.
    In conclusion, VA must continue to implement reforms so 
that medical centers procure surgical implants that meet 
patient needs while also ensuring best value. More importantly, 
VA and VHA must pay much better attention to patient safety 
concerns regarding surgical implants. It is way past time for 
VA to develop national policies that set forth the parameters 
for vendor access to treatment facilities and that implement 
sufficient oversight controls. Additionally, proper tracking of 
surgical implants is a problem that has been unresolved for far 
too long and it must be remedied post haste.


     Prepared Statement of Ann Kirkpatrick, Ranking Minority Member

                     COMMITTEE ON VETERANS' AFFAIRS

                     U.S. HOUSE OF REPRESENTATIVES

          SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS HEARING

     Vendors in the OR--VA's Failed Oversight of Surgical Implants

                            January 15, 2014

    Statement of Rep. Ann Kirkpatrick, Ranking Member, 
Subcommittee on Oversight and Investigations

    Thank you Mr. Chairman.
    This morning, the Subcommittee on Oversight and 
Investigations will be looking into VA practices regarding 
purchasing surgical implants. In addition, the Subcommittee 
will be looking into allegations that surgical implant vendor 
representatives had participated in direct patient care.
    On Monday, the Government Accountability Office (GAO) 
released a report entitled VA Surgical Implants: Purchase 
Requirements Were Not Always Followed at Selected Medical 
Centers and Oversight Needs Improvement.
    The GAO looked at four VA medical Centers and found that 
these hospitals did not always follow VHA policy regarding 
documenting open market purchases of surgical implants, 
including obtaining the necessary waivers to purchase items not 
covered by a VA-negotiated contract. Last year, VA instituted a 
new policy regarding purchases above the Federal Acquisitions 
Regulation's (FAR) micro-purchase threshold of $3,000 and below 
the simplified acquisition threshold of $150,000. Medical 
facility and regional office officials ``attributed 
noncompliance mainly to insufficient VHA guidance and VA 
staff's inexperience'' in completing the new requirements.
    This is a familiar litany to members serving on this 
subcommittee. It has been noted before that it does not matter 
how good and thorough the policy and standards are if no one 
follows them and there are seemingly no consequences for 
noncompliance. And this is what I would like to explore today 
in addition to looking at the specific allegations and looking 
at ways to improve the process.
    Surgical implants, and the larger issue of medical 
procurement, provides us with a classic balancing act of 
patient and provider choice on one hand, and efficiency and 
savings on the other. These are not, in my view, mutually 
exclusive concepts, but also, there are, ultimately, very few 
easy answers.
    Should there be a greater level of centralization on 
procurement matters, or should we provide greater local 
autonomy while ensuring that policies are followed? Indeed, how 
do we ensure that VA employees are provided the tools to do 
their jobs and help our veterans but are also held accountable 
if they do not comply with established policies.
    On the issue of surgical implants, what policies and 
structures are in place to ensure that VA staff is kept fully-
up-to-date on advances in the field of surgical implants, and 
the availability of different options, while also ensuring that 
VA's contracting efforts are directed toward items that are 
clinically advantageous and necessary for patient care. Are 
decisions regarding which items to include in a VA-negotiated 
committed-use contract made from the top down, or the bottom 
up, and more importantly, are these decisions made rigorously 
and systematically? How effective is the recently instituted 
program executive office and does this effort have the staffing 
level and financial resources to make a difference and improve 
the process?
    GAO reported that VHA spent approximately $563 million on 
surgical implants in fiscal year 2012, an increase of 28 
percent over fiscal year 2008 levels. I would like to hear from 
our witnesses today regarding the factors that led to this 
increase. It is not clear to me whether the increase is 
primarily due to the practice of open market purchases, or to 
an increase in either the costs of surgical implants or an 
increase in their use.
    Patient safety is our number one concern. That is why I am 
concerned over allegations that surgical implant vendor 
representatives participated in direct patient care. I want to 
ensure that VA policies are fully followed in this regard while 
also recognizing that at times vendor representatives can have 
an important role in providing technical assistance and 
education to VA care providers.
    So let us begin the conversation on how best to fix the 
problems before us today and work to improve the VA health care 
system and the health care it provides to our veterans. 
Spending taxpayer dollars wisely is essential, but providing 
the health care that veterans have earned and deserve is 
critical.
    I look forward to hearing from our witnesses today, and I 
yield back the balance of my time.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 

                 Prepared Statement of Philip Matkovsky

    Mr. Chairman, Ranking Member Kirkpatrick, and members of 
the Committee, thank you for the opportunity to appear before 
you this morning to discuss the Department of Veterans Affairs' 
(VA) practices regarding the use, tracking, and procurement of 
surgical implants at VA medical centers.
    The Veterans Health Administration (VHA) has made 
significant changes in the last 3 years to the way it procures 
surgical implants and prosthetics appliances for the benefit of 
Veterans. These changes are intended to improve procurement 
performance and accountability while ensuring effective health 
care delivery for our Veterans. Beginning in Fiscal Year (FY) 
2012 and concluding at the end of FY 2013, VHA transitioned the 
purchase of surgical implants and prosthetics appliances valued 
at greater than $3,000 to warranted contracting officers in the 
VHA procurement organization. This change strengthened our 
procurement performance for the acquisitions above the micro 
purchase level. Over 1,100 warrants have been pulled back from 
non-contracting officer prosthetics staff. VHA's procurement 
organization has hired and provided specialized training to 
contracting staff to ensure prosthetics procurements are 
properly executed, both systematically and in accordance with 
Federal and VA policies and regulations.
    Throughout this transition period, VHA's procurement team's 
main focus was ensuring that orders were completed timely and 
in concert with clinicians' prescriptions. With the transition 
now complete, VHA continues to closely monitor ordering 
timeliness and accuracy while auditing procurement quality and 
increasing its use of negotiated contracts for sourcing 
surgical implants and prosthetic appliances. As a result of 
this transition, our acquisitions above micro-purchase limits 
are now recorded in our electronic contract management system 
and the Federal Procurement Data System.
    These audits for compliance and procurement quality have 
led to changes in VHA procedures and ordering templates use in 
our electronic contract management system. Further improvements 
to our ordering processes will occur in the near term. Quality 
assurance reviews will begin in this fiscal quarter to provide 
continuous management oversight into ordering processes. These 
quality reviews will focus on the sourcing practices and will 
be used to improve our utilization of existing national 
contracts and our ability to place biologics and implants on 
national contracts. These efforts to establish national 
contracts will be directly informed by our clinical leadership 
to ensure we are emphasizing quality and value.
    VHA is currently updating and finalizing its policy for 
prosthetics procurement. Once published, this new directive 
will provide more comprehensive and clear guidance to VA 
medical center staff on how to appropriately order prosthetic 
appliances to include surgical implants and biologics. VA is 
still reviewing the recently released Government Accountability 
Office (GAO) report titled, ``VA Surgical Implants: Purchase 
Requirements Were Not Always Followed at Selected Medical 
Centers and Oversight Needs Improvement.'' Prior to receiving 
the GAO report, VA had initiated a number of reforms to its 
acquisitions process. Any further opportunities identified by 
GAO to enhance our prosthetics acquisition procedures will be 
considered in our ongoing efforts.
    The presence of vendors in the operating room is a common 
practice in health care. There are broadly accepted 
professional ethics standards pertaining to the presence of 
vendors in operating rooms from the American College of 
Surgeons and the American Medical Association. Physicians use 
their professional judgment to determine when the presence of 
vendors in clinical settings will improve the safety and 
effectiveness of patient care. VHA Handbook 1004.01, entitled 
Informed Consent for Clinical Treatments and Procedures, 
requires that physicians obtain the patient's signature on VA 
Form 10-431 before undertaking specific procedures such as 
surgery. The policy also requires that physicians discuss the 
contents of this form with patients. The form states that under 
certain circumstances the presence of a vendor representative 
is important to the success of the procedure, that prior to the 
procedure the representative will sign an agreement to strictly 
adhere to VA's privacy rules, that the representative may 
provide technical advice but will not physically participate in 
the procedure, and that the representative will be closely 
monitored by the VA treatment team. 38 CFR 1.220. also provides 
additional guidance related to vendors in clinical settings.
    In VA, the consent form that is used for all treatments and 
procedures (VA Form 10-0431a) that patients (or their 
surrogate) must sign prior to undergoing operative procedures, 
contains the following language:
    ``VA hospitals are teaching facilities, and trainees may 
participate in or observe this treatment/procedure. In certain 
circumstances, the presence of a vendor representative (company 
representative) is important to the success of the procedure. 
Prior to the procedure, the representative will sign an 
agreement to strictly adhere to VA's privacy rules. The 
representative may provide technical advice but will not 
physically participate in the procedure. The representative 
will be closely monitored by the VA treatment team.''
    Conclusion
    Mr. Chairman, we appreciate your support and encouragement 
in identifying and addressing issues regarding the procurement 
of surgical implants at VA medical centers. My colleague and I 
are prepared to respond to any questions you may have.

                                 

                        Questions for the Record

           QUESTIONS FROM SUBCOMMITTEE CHAIRMAN MIKE COFFMAN

    Question: 1 Please provide a detailed statement with 
citations to all guidance, including but not limited to 
directives, handbooks, and/or regulations, regarding VA and/or 
VHA policies on access by surgical implant vendor 
representatives to clinical settings where implantation occurs? 
Please also describe any changes that are planned in this 
regard.
    Question: 2 Please provide a detailed statement with 
citations to all guidance, including but not limited to 
directives, handbooks, and/or regulations, regarding VA and/or 
VHA policies related to credentials and other qualifications 
necessary for surgical implant vendor representative 
participation in implant procedures. Please also describe any 
changes that are planned.
    Question: 3 Please describe in detail the oversight and 
enforcement processes that are in place or are planned 
regarding the agreed conditions of informed consent notices 
signed by patient/veterans, including those with respect to 
vendor presence.
    Question: 4 In Mr. Matkovsky's written testimony, he refers 
to 38 CFR Sec. 1.220, as guidance for vendors in clinical 
settings but on its face, this regulation applies to 
pharmaceuticals. Does VA and/or VHA interpret the regulation to 
include surgical implants? If so, please explain. If not, then 
please indicate whether VA and/or VHA plan to promulgate a 
similar regulation for surgical implants.
    Question: 5 Please describe in detail the steps VA and/or 
VHA plan to take to include biological implants on Federal 
Supply Schedule contracts and/or national committed use 
contracts.
    Question: 6 Please describe in detail the circumstances 
under which VA unilaterally deleted biologics from VA's Federal 
Supply Schedule contracts and then did an immediate about face 
to put them back on schedule.
    Question: 7 In a memorandum dated May 23, 2012, Mr. 
Matkovsky indicated that biological implants should be 
purchased on the Federal Supply Schedule. Please indicate 
whether this directive has been followed and provide the 
specific number of such purchases.
    Question: 8 The GAO report states that VHA has a number of 
policy documents and trainings under development that are 
designed to improve compliance with the new purchasing process 
for surgical implants over $3,000. Please give us an overview 
of what these documents and trainings will entail and when you 
expect them to be in place. Also, please describe what steps 
VHA is taking to monitor the timeliness of orders and to make 
the process more efficient.
    Question: 9 Given that VA and/or VHA is making open market 
purchases and not properly documenting them, how does VA ensure 
that it is not violating the Competition in Contracting Act? 
How will VA ensure compliance and hold employees accountable 
for adherence to federal acquisition regulations related to 
future open market purchases?
    Question: 10 GAO found that VA and/or VHA have oversight 
mechanisms in place regarding procurement of surgical implant 
purchases but that corrective action to prevent recurrence of 
poorly documented open market purchases is not pursued. What 
plans does VA and/or VHA have for improvement in this regard?
    Question: 11 Please describe the status of the Veterans 
Implant Tracking and Alert System (VITAS) and VA and/or VHA 
plans and timetables to implement the system. Also, please 
describe how VA and/or VHA expect to overcome the data 
reliability problems that in 2012 prevented VITAS from 
succeeding?
    Question: 12 Please describe the controls that VA and/or 
VHA have in place or plan to implement to prevent implantation 
of expired or contaminated surgical implants and enable the 
identification of patients with such implants for recall 
purposes.

                 Questions and Responses for the Record

QUESTIONS FROM SUBCOMMITTEE CHAIRMAN MIKE COFFMAN AND RESPONSES FROM VA

    Question: 1 Please provide a detailed statement with 
citations to all guidance, including but not limited to 
directives, handbooks and/or regulations, regarding VA and/or 
VHA policies on access by surgical implant vendor 
representatives to clinical settings where implantation occurs? 
Please also describe any changes that are planned in this 
regard.
    VA Response: VHA Handbook 1004.01, Informed Consent for 
Clinical Treatment and Procedures (available at http://
www.ethics.va.gov/ETHICS/docs/policy/VHA--Handbook--1004-01--
Informed--Consent--Policy--20090814.pdf), requires the use of 
the informed consent process and the use of the iMedConsentTM 
software program (or VA Form 10-431a, Consent for Clinical 
Treatment or Procedures when iMedConsentTM cannot be used) for 
procedures performed in and out of the operating room (OR) by 
any provider. Notably, VA's informed consent form specifically 
informs the patient that vendor representatives may provide 
technical advice but will not physically participate in the 
procedures. However, the informed consent process does not 
address vendors who are present in non-procedure areas. 
National level policy regarding vendors is in development.
    VA has issued informal guidance to VA health care 
facilities in the form of two Privacy Fact Sheets titled, 
``Vendor Representatives in Surgical Setting'' (dated December 
2003) and ``Disclosing the Minimum Amount of Protected Health 
Information (PHI) to Vendors Assisting with Implantable Devices 
or Observing Surgery'' (dated September 2007). Both Fact Sheets 
address access to PHI by surgical implant vendor 
representatives in clinical settings. These Privacy Fact Sheets 
are meant to provide VA health care facility Privacy Officers 
with information on the legal requirements under the Privacy 
Act and Health Insurance Portability and Accountability Act 
(HIPAA) for disclosing or sharing PHI with surgical implant 
vendor representatives.

    Question 2: Please provide a detailed statement with 
citations to all guidance, including but not limited to 
directives, handbooks, and/or regulations, regarding VA and/or 
VHA policies related to credentials and other qualifications 
necessary for surgical implant vendor representative 
participation in implant procedures. Please also describe any 
changes that are planned.
    VA Response: There are no national level VA or VHA policies 
related to credentials and other qualifications necessary for 
surgical implant vendor representative participation in implant 
procedures. Consistent with professional ethics standards and 
guidelines promulgated by professional medical societies, the 
policy currently in development will clarify that vendor 
representatives in VA are not allowed to engage in the practice 
of surgery or medical decision making or to be involved in 
direct patient contact during procedures; and that the role of 
vendor representatives is only to provide technical advice and/
or to be involved in the remote calibration or adjustment of 
medical devices to the surgeons and manufacturers' 
specifications. The policy will further clarify requirements 
that vendors must meet before they are allowed to be present in 
clinical settings.
    It is anticipated that the policy should be completed in 
early 2015. In the interim, VA's iMedConsentTM form states that 
vendor representatives may provide technical advice, but they 
will not physically participate in the procedures.

    Question 3: Please describe in detail the oversight and 
enforcement processes that are in place or are planned 
regarding the agreed conditions of informed consent notices 
signed by patient/veterans, including those with respect to 
vendor presence.
    VA Response: VHA Handbook 1004.01 constitutes VHA national 
policy on informed consent. It mandates the use of the 
iMedConsentTM software program or VA Form 10-431a to document 
the informed consent process. This policy applies to procedures 
performed both inside and outside of the OR by a provider. The 
oversight responsibility is assigned to the facility.

    Question 4: In Mr. Matkovsky's written testimony, he refers 
to 38 CFR Sec.  1.220, as guidance for vendors in clinical 
settings but on its face, this regulation applies to 
pharmaceuticals. Does VA and/or VHA interpret the regulation to 
include surgical implants? If so, please explain. If not, then 
please indicate whether VA and/or VHA plan to promulgate a 
similar regulation for surgical implants.
    VA Response: 38 Code of Federal Regulations (CFR) Sec.  
1.220 provides guidance regarding pharmaceutical 
representatives. VA has not interpreted the regulation to apply 
to vendor representatives for surgical implants. As for changes 
that are planned with regard to policy concerning surgical 
implant vendor access, please refer to VA's response to 
question #1 and #2 above.

    Question 5: Please describe in detail the steps VA and/or 
VHA plan to take to include biological implants on Federal 
Supply Schedule contracts and/or national committed use 
contracts.
    VA Response: In the fall of 2012, the Office of 
Acquisition, Logistics, and Construction's National Acquisition 
Center (NAC) attempted to increase the number of biologic 
sources under Federal Supply Schedule (FSS) Group 65 Part II 
Section A (FSS 65IIA) Medical Equipment and Supplies. During 
this process, a review of the FSS Agency Specific clause 
AS1904, Regulatory Requirement Provisions (August 2000), which 
includes CFR Part 800-1200 revealed that human cells, tissues 
and cellular, and tissue-based products (i.e., allografts) 
which as classified under 21 CFR 1271 were believed to be a 
controlled-substance in lieu of a medical device. As such, it 
was then determined allografts should be removed from all FSS 
contracts awarded under 65IIA. During the week of May 31, 2013, 
VA Contracting Officers notified all affected FSS 65IIA 
contractors, via a bilaterally-generated modification, that all 
allografts line items would be effectively removed from their 
respective contracts by June 15, 2013. All FSS contractors were 
given until June 6, 2013, to sign, date, and return the 
bilateral modification. FSS contractors who did not comply by 
June 6, 2013, received a unilaterally-executed modification 
removing allograft products with an effective date of June 15, 
2013.
    After additional fact finding and consultation with VHA and 
the Office of General Counsel, VA determined that the NAC 
misinterpreted the language of AS1904 as it pertained to 
allografts. As a result, effective June 21, 2013, the Deputy 
Assistant Secretary for Acquisition and Logistics directed the 
NAC to rescind its decision to remove allografts from VA's FSS 
and restore all products previously offered by the schedule 
holders.

    Question 6: Please describe in detail the steps VA and/or 
VHA plan to take to include biological implants on Federal 
Supply Schedule contracts and then did an immediate about face 
to put them back on schedule.
    VA Response: VHA performed the following steps to include 
biological implants on national committed use contracts:
    1) Convened a VHA-led panel of experts on February 27, 
2014, to support establishing appropriate national committed 
use contracts for biological implants by; and
    2) Developed and submitted complete requirements 
documentation to the VA Strategic Acquisition Center (SAC) by 
the end of fiscal year (FY) 2014 to support their follow 
through for award of national committed use biological implant 
contracts.

    Question 7: In a memorandum dated May 23, 2012, Mr. 
Matkovsky indicated that biological implants should be 
purchased on the Federal Supply Schedule. Please indicate 
whether this directive has been followed and provide the 
specific number of purchases.
    VA Response: The memorandum communicated requirements to 
both procurement and non-procurement staff to adhere to 
sourcing and waiver processes. The memorandum was not, however, 
a directive. Following the release of the memorandum, VHA 
undertook the full transition of procurements above the micro-
purchase threshold (of $3,000) as indicated below:
Waivers
    The data below identify the number of waivers from FSS 
orders processed through local contracts:
    FY 2012: 10 Waivers approved
    FY 2013: 21 Waivers approved
    Through the first quarter of FY 2014, there are eight 
waivers approved or under review. Waiver requests are typically 
for multiple items on a local contract. VHA is identifying 
improvements to further improve the level of adherence to 
waiver processes. As VHA has transitioned procurements above 
the micro-purchase threshold from prosthetics staff to 
procurement staff, it will be more feasible to improve 
adherence with internal VA policies.
Purchases From FSS Biologics Vendors
    It is difficult to track specific biologics vendors due to 
limitations in VA FSS tracking systems. The data below identify 
general trends for purchases from FSS vendors.

                      FY 2013: Total: $23.2 Million
------------------------------------------------------------------------
     Top 5 Federal Supply Schedule Vendors:
------------------------------------------------------------------------
Avkare.........................................            $14.7 Million
Shire Regenerative.............................             $4.5 Million
Academy Medical................................             $2.4 Million
Advanced Biohealing............................             $1.3 Million
Cotton Medical Group...........................                 $309,000
------------------------------------------------------------------------

    Transition of Warrants: Beginning in FY 2012 and concluding 
at the end of FY 2014, VHA removed procurement authority above 
the micro-purchase from over 1,000 for facility prosthetics 
staff. These duties were transitioned to approximately 200 
warranted Contracting Officers.
    Question 8: The GAO report states that VHA has a number of 
policy documents and trainings under development that are 
designed to improve compliance with the new purchasing process 
for surgical implants over $3,000. Please give us an overview 
of what these documents and trainings will entail and when you 
expect them to be in place. Also, please describe what steps 
VHA is taking to monitor the timeliness of orders and to make 
the process more efficient.
    VA Response: The VHA Procurement Policy Office has drafted 
VHA Directive 1081, Procurement Process for Individual 
Prosthetic Appliances, which establishes procedures for 
procuring prosthetic appliances and sensory aids including 
surgical implants over the $3,000 micro-purchase threshold. 
This directive is undergoing VA's coordination, concurrence, 
and approval process and has obtained almost all required 
concurrences. The directive defines and standardizes the 
processes and policies that VHA Acquisition workforce will 
follow when procuring the specified items. The directive also 
defines the circumstances under which Veteran Affairs 
Acquisition Regulation (VAAR) and Federal Acquisition 
Regulation (FAR) may be cited and other than full and open 
competition procedures utilized. Once approved and published, 
the directive will define the roles and responsibilities of the 
acquisition team members and streamline the procurement process 
to make it more efficient.
    1. Issuing Consignment Agreements: A standard operating 
procedure (SOP) is being developed that provides guidance to 
the acquisition workforce for procuring implantable devices on 
a consignment basis so that the medical centers will have 
instant availability to the different type or model.
    2. Monitoring Timeliness of Orders: VHA has developed a 
dashboard that tracks the timeliness of prosthetic orders by 
the Network Contracting Office. The tool tracks four events in 
the procurement process so when delays happen, the cause can be 
readily identified. These events include the following:

         Consult to electronic Contract Management System 
        (eCMS) Planning Module--This captures the date of the patient 
        consult and the date a Network Contracting Office receives a 
        procurement request.
         eCMS Planning Module to Graphical User Interface 
        Purchase Order (GUI PO)--This captures the date of receipt of a 
        procurement request by the Network Contracting Office and the 
        date funds are committed to support the contract award.
         GUI PO to eCMS Award--This tracks the date that funds 
        are committed and the date the purchase order is awarded by the 
        Contracting Officer.
         Consult to eCMS Award--This tracks the overall time 
        frame from the patient consult to the date the purchase orders 
        are awarded by the Contracting Officer.
    The Network Contracting Office dashboard shows the average 
amount of days for each of the above events. The dashboard is 
robust and allows us to drill down by the types of products 
purchased to identify what may be causing overall timeframes to 
be less than optimal. Network Contracting Offices and Network 
Prosthetics Departments each own part of the process, and there 
are conference calls each week to discuss performance and 
timeliness. Good performers will share best practices, and 
performance outliers are required to describe the actions they 
are taking to reduce timelines. VHA is successfully using this 
dashboard to not only monitor timeliness but also work with 
Network Prosthetics Representatives and Network Contracting 
Officers to improve performance.
    Question 9: Given that VA and/or VHA is making open market 
purchases and not properly documenting them, how does VA ensure 
that it is not violating the Competition in Contracting Act? 
How will VA ensure compliance and hold employees accountable 
for adherence to federal acquisition regulations related to 
future open market purchases?
    VA Response: VA takes several steps to ensure it is not 
violating the Competition in Contracting Act. VHA clinicians 
determine which surgical implants will best meet the clinical 
needs of individual patients. This is not a decision made by 
Contracting Officers. Many times, the manufacturer and size of 
a particular implant is not known until the surgery is being 
performed, and the surgeon observes the internal physical 
characteristics of the patient. Title 38 United States Code 
Sec.  8123, Procurement of Prosthetic Appliances, states, ``The 
Secretary may procure prosthetic appliances and necessary 
services required in the fitting, supplying, and training and 
use of prosthetic appliances by purchase, manufacture, 
contract, or in such other manner as the Secretary may 
determine to be proper, without regard to any other provision 
of law.'' VHA has provided justification templates to our 
acquisition workforce and has an audit program to ensure 
contract files have proper documentation. When a specific 
product is not identified in the physician's consult, 
competition is used by Procurement/Contracting Officers. 
Effective October 1, 2013, VHA transitioned purchasing 
authority for items greater than $3,000 to Contracting 
Officers. This threshold is significant because it denotes the 
micro-purchase limit. For these transactions, VHA performs 
quality assurance reviews to assess compliance of our 
procurement staff.
    Question 10: GAO found that VA and/or VHA have oversight 
mechanisms in place regarding procurement of surgical implant 
purchases but that corrective action to prevent recurrence of 
poorly documented open market purchases is not pursued. What 
plans do VA and/or VHA have for improvement in this regard?
    VA Response: VHA has provided justification and approval 
templates to our acquisition workforce and has an audit program 
to ensure contract files have proper documentation. The 
transition of the procurement workload for open-market surgical 
implant purchases from VA medical center prosthetics 
departments to Network Contracting Offices was completed on 
October 1, 2013. Although it is still early in the transition, 
expectations are the existing guidance and oversight program 
will produce improvements in the documentation of open-market 
surgical implant purchases. The oversight program includes a 
corrective action plan/improvement plan requirement.
    Question 11: Please describe the status of the Veterans 
Implant Tracking and Alert System (VITAS) and VA and/or VHA 
plans and timetables to implement the system. Also, please 
describe how VA and/or VHA expect to overcome the data 
reliability problems that in 2012 prevented VITAS from 
succeeding.
    VA Response: VITAS is designed to track implants (e.g., 
coronary stents, dental, aortic valves, etc.) to include both 
non-biologic and biologic implants. Biologics that are not 
``implanted'' such as wound care products will not be tracked 
by this software solution. VITAS, as designed, will draw on a 
number of registries for source implant device data including, 
but not limited to, the VistA Dental Package, Cardiovascular 
Assessment, Reporting and Tracking (CART) System, and VistA 
Surgery Package. VITAS software, as developed, was undergoing 
Initial Operating Capability (IOC) testing when the developer 
contract concluded prior to VITAS release and implementation. 
If funded for completion, two challenges identified in IOC will 
require resolution. The first challenge identifies the National 
Prosthetics Patient Database (NPPD) as an unreliable resource 
for implant tracking purpose. The proposed solution is to 
replace the NPPD with the VistA Surgery Package as source data 
for surgical implants placed in the operating room. The second 
challenge relates to locating the patient for notification in 
the event of a product recall. VITAS, as designed, queried the 
VA Primary Care Management Module (PCMM) to provide a primary 
care physician as the sole point of contact for recall 
notification. This was identified in IOC testing as a potential 
risk to timeliness of notification since PCMM is currently not 
a comprehensive data source for Veterans receiving care and 
treatment in VA. The solution is for VITAS to provide 
notification to additional providers (e.g., surgeon, 
cardiologist, and dentist) and VHA administrators (e.g., 
facility Chief of Staff) for patient notification in the event 
of a product recall consistent with current VHA policy.
    Question 12: Please describe the controls that VA and/or 
VHA have in place or plan to implement to prevent implantation 
of expired or contaminated surgical implants and enable the 
identification of patients with such implants for recall 
purposes.
    VA Response: VHA Directive 1039, Ensuring Correct Surgery 
and Invasive Procedures, mandates that ``time-outs'' must be 
facilitated by a checklist and occur immediately prior to the 
start of a procedure including verification that the correct 
implant is available, if applicable. An additional step is 
required immediately prior to implantation of the medical 
device. The privileged provider performing the procedure must 
confirm the correct implant with a team member, including a 
``read-back'' of the relevant information. Documentation of the 
correct medical implant must be placed in the patient's 
electronic health record.
    If a potentially contaminated surgical implant is recalled 
by the manufacturer or the Food and Drug Administration, VA's 
National Center for Patient Safety (NCPS) Product Recall Office 
posts a recall notice with a timeline for removal actions to 
affected VA facilities through the VHA Alerts and Recalls 
intranet database.
    Facility Recall Coordinator (FRC) in each facility receive 
the recall notices from the Product Recall Office and work 
daily to remove defective medical products and food through 
assignments made to the Facility Designated Area Specialists 
within each medical center. Through this process, established 
by VHA Directive 2008.080, Recall of Defective Medical Devices 
and Medical Products, Including Food and Food Products, VA 
facilities remove potentially harmful products from inventory 
in a timely and effective manner.
    NCPS' Product Recall Office receives feedback confirmation 
from each FRC that the facility did or did not have the 
affected product in stock at the time of the recall and removed 
any recalled product from inventory. This prevents potentially 
contaminated surgical implants from being used. The Product 
Recall Office monitors compliance to the recall process for 
each facility.

                                 

    January 24, 2014
    The Honorable Eric K. Shinseki
    Secretary, U.S. Department of Veterans Affairs
    810 Vermont Avenue, NW, Washington, DC 20420,
    Dear Mr. Secretary:
    Please provide written responses to the attached questions 
for record for the Oversight and Investigations Subcommittee 
hearing entitled ``Vendors in the OR--VA's Failed Oversight of 
Surgical Implants'' that took place on January 15, 2014.
    In responding to these questions for the record, please 
answer each question in order using single space formatting. 
Please also restate each question in its entirety before each 
answer. Your submission is expected by the close of business on 
February 25, 2014, and should be sent to Ms. Bernadine Dotson 
at [email protected].
    If you have any questions, please call Mr. Eric Hannel, 
Majority Staff Director of the Oversight & Investigations 
Subcommittee, at 202-225-3527.

    Sincerely,

    Mike Coffman, Chairman
    Subcommittee on Oversight & Investigations

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