[House Report 115-693]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-693
======================================================================
VETERANS AFFAIRS MEDICAL-SURGICAL PURCHASING STABILIZATION ACT
_______
May 21, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Roe of Tennessee, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany H.R. 5418]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 5418) to direct the Secretary of Veterans
Affairs to carry out the Medical Surgical Prime Vendor program
using multiple prime vendors, having considered the same,
report favorably thereon without amendment and recommend that
the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 3
Subcommittee Consideration....................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
Statement of General Performance Goals and Objectives............ 4
New Budget Authority, Entitlement Authority, and Tax Expenditures 4
Earmarks and Tax and Tariff Benefits............................. 4
Committee Cost Estimate.......................................... 4
Congressional Budget Office Estimate............................. 5
Federal Mandates Statement....................................... 5
Advisory Committee Statement..................................... 6
Constitutional Authority Statement............................... 6
Applicability to Legislative Branch.............................. 6
Statement on Duplication of Federal Programs..................... 6
Disclosure of Directed Rulemaking................................ 6
Section-by-Section Analysis of the Legislation................... 6
Changes in Existing Law Made by the Bill as Reported............. 7
PURPOSE AND SUMMARY
H.R. 5418, the ``Veterans Affairs Medical-Surgical
Purchasing Stabilization Act,'' would direct the Department of
Veterans Affairs (VA) to correct problems with its medical-
surgical formulary using input from medical professionals with
relevant expertise rather than administrative staff. This
legislation would also prevent VA from outsourcing the creation
of this formulary. Representative Jack Bergman of Michigan
introduced H.R. 5418 on March 29, 2018.
BACKGROUND AND NEED FOR LEGISLATION
The Veterans Health Administration (VHA) has relied on a
just-in-time supply chain system since the 1990s, after it
abolished its supply depots. The Medical Surgical Prime Vendor
program (MSPV), which began in 2005 in a form recognizable to
its current form, sought to partially standardize the list of
medical and surgical supplies that clinicians nationwide are
permitted to purchase, and to partially outsource the ordering,
storing, inventory management, shipping, tracking, and delivery
tasks formerly performed by VHA employees, in the supply depots
and medical centers. Contractors called ``prime vendors''
perform this work for various regions of the country, whereas
the VHA Logistics Service continues to perform the work that
has not been outsourced, primarily stocking and distributing
supplies once they arrive in the medical center. The prime
vendors obtain the medical and surgical supplies from
suppliers, with whom VHA contracts directly. VHA employees must
utilize the MSPV system, within certain parameters, to purchase
any medical and surgical supplies included in the MSPV product
list. Some purchasing of medical and surgical supplies
continues to occur outside of MSPV, often through government
purchase cards.
In February 2016, VA awarded new prime vendor contracts for
VHA's use reflecting the revamped Medical Surgical Prime
Vendor-Next Generation (MSPV-NG) program. Whereas MSPV, only
modestly limited the list of available medical-surgical
products, MSPV-NG aggressively standardized the list by
creating a medical-surgical formulary. MSPV-NG's objective was
to realize greater savings by buying fewer distinct items in
greater quantity from fewer suppliers while minimizing the
volume of government purchase card usage. The MSPV-NG system
became active in December 2016, but operated simultaneously
with the older MSPV system until April 2017.
In its November 2017 report entitled, ``Veterans Affairs
Contracting: Improvements in Buying Medical and Surgical
Supplies Could Yield Cost Savings and Efficiency,'' the
Government Accountability Office found that MSPV-NG had not met
VHA medical centers' needs and its usage remained far below the
target. This was because the medical-surgical formulary was
developed with limited clinical input, and VA was unable to
award an adequate number of competitive supplier contracts.
In October 2017, VA released an informational notice to
contractors describing the draft vision for a MSPV 2.0 program.
MSPV 2.0 contemplated one prime vendor spanning the United
States, rather than multiple regional prime vendors, which
would be responsible for developing the formulary, selecting
and contracting with suppliers, all distribution, inventory
management, quality control, and all aspects of filling VHA
orders.
In April 2018, VA released a justification and approval
document indicating the Department's intent to modify the
existing prime vendor contracts without providing full and open
competition, in order to restructure again the MSPV-NG program.
The document acknowledged that MSPV-NG has fallen considerably
short of its intended outcomes, and its formulary has not grown
to sufficient size and maturity. The planned restructuring
principally consists of tasking the prime vendors to identify
and, upon receiving approval from VHA, select and enter into
agreements with the suppliers, rather than VA contracting with
the suppliers directly.
The Committee continues to be concerned with the
unsatisfactory state of the medical-surgical formulary,
reflecting inadequate input from clinicians and broken internal
processes, which has rendered MSPV-NG unable to meet VHA
facilities' need to receive the correct medical and surgical
supplies in a just-in-time manner. It is necessary that the
formulary be developed and administered by clinicians who
possess expertise in the specific types of items on which they
work, not logisticians who lack medical expertise or clinicians
with irrelevant expertise. It is also critical to the program's
success that VA not pursue the MSPV 2.0 concept empowering one
national prime vendor, as it would concentrate too much market
power in one company that, given past experience, may be
incentivized to exploit such market power to the detriment of
the suppliers. Additionally, determining the composition of the
formulary is an inherently governmental responsibility that
belongs to VHA, and it would be inappropriate to shift this
function to a prime vendor.
HEARINGS
On March 7, 2018, the Subcommittee on Oversight and
Investigations held a legislative hearing that included a
discussion of a draft bill regarding the Medical Surgical Prime
Vendor (MSPV) program, which would later be introduced as H.R.
5418.
The following witnesses testified:
The Honorable Cathy McMorris Rodgers, U.S. House of
Representatives, 5th District, Washington; Fred Mingo,
Director of Program Control, Program Executive Office,
Electronic Health Record Modernization Program, U.S.
Department of Veterans Affairs, accompanied by Ricky
Lemmon, Acting Deputy Chief Procurement Officer,
Veterans Health Administration, U.S. Department of
Veterans Affairs, John Adams, Director of Corporate
Travel, Office of Management, U.S. Department of
Veterans Affairs, and Katrina Tuisamatatele, Health
Portfolio Director, Office of Information and
Technology, U.S. Department of Veterans Affairs; Louis
Celli, Jr., Director, Veterans Affairs & Rehabilitation
Division, The American Legion; and Scott Denniston,
Executive Director National Veterans Small Business
Coalition.
Statements for the record were provided by:
The Honorable Cathy McMorris Rodgers, U.S. House of
Representatives, 5th District, Washington; and Veterans
of Foreign Wars.
SUBCOMMITTEE CONSIDERATION
There was no Subcommittee markup of H.R. 5418.
COMMITTEE CONSIDERATION
On May 8, 2018, the full Committee met in open markup
session, a quorum being present, and ordered H.R. 5418
favorably reported to the House of Representatives by voice
vote. A motion by Representative Tim Walz of Minnesota to
report H.R. 5418 favorably to the House of Representatives was
adopted by voice vote.
COMMITTEE VOTES
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, there were no recorded votes
taken on amendments or in connection with ordering H.R. 5418
reported to the House. A motion by Representative Tim Walz of
Minnesota to report H.R. 5418 favorably to the House of
Representatives was adopted by voice vote.
COMMITTEE OVERSIGHT FINDINGS
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are to ensure VA corrects known problems
within its MSPV program and to maximize relevant clinical input
when developing its formulary.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
EARMARKS AND TAX AND TARIFF BENEFITS
H.R. 5418 does not contain any Congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI of the Rules of the House of
Representatives.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate on H.R.
5418 prepared by the Director of the Congressional Budget
Office pursuant to section 402 of the Congressional Budget Act
of 1974.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
for H.R. 5418 provided by the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 14, 2018.
Hon. Phil Roe, M.D.,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5418, the Veterans
Affairs Medical-Surgical Purchasing Stabilization Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ann E.
Futrell.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 5418--Veterans Affairs Medical-Surgical Purchasing Stabilization
Act
H.R. 5418 would require the Department of Veterans Affairs
(VA) to use multiple vendors in procuring medical supplies and
ensure that the employees responsible for selecting the
supplies have medical expertise regarding those items. VA
currently uses four vendors to purchase its medical supplies
and employs clinicians on its integrated product teams to
select those supplies. The bill also would require VA to submit
quarterly reports to the Congress identifying the individual
employees at VA who determine which items to purchase for VA's
formulary and describing their medical expertise. CBO believes
that most of the requirements in the bill would codify VA's
existing practice. Therefore, CBO estimates that implementing
the bill would cost less than $500,000 over the 2019-2023
period to prepare the necessary reports for the Congress. That
spending would be subject to the availability of appropriated
funds.
Enacting H.R. 5418 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
CBO estimates that enacting H.R. 5418 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 5418 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Ann E. Futrell.
The estimate was reviewed by Leo Lex, Deputy Assistant Director
for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates regarding H.R. 5418 prepared by the Director of the
Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act would be created by H.R.
5418.
STATEMENT OF CONSTITUTIONAL AUTHORITY
Pursuant to Article I, section 8 of the United States
Constitution, H.R. 5418 is authorized by Congress' power to
``provide for the common Defense and general Welfare of the
United States.''
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that H.R. 5418 does not relate to the
terms and conditions of employment or access to public services
or accommodations within the meaning of section 102(b)(3) of
the Congressional Accountability Act.
STATEMENT ON DUPLICATION OF FEDERAL PROGRAMS
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee finds that no provision
of H.R. 5418 establishes or reauthorizes a program of the
Federal Government known to be duplicative of another Federal
program, a program that was included in any report from the
Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
DISCLOSURE OF DIRECTED RULEMAKING
Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017),
the Committee estimates that H.R. 5418 contains no directed
rulemaking that would require the Secretary to prescribe
regulations.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 of the bill would establish the short title as
the ``Veterans Affairs Medical-Surgical Purchasing
Stabilization Act.''
Section 2. Medical Surgical Prime Vendor Program
Section 2(a) of the bill would require the Secretary of
Veterans Affairs to operate the MSPV program, or any successor
program regarding the procurement of certain medical, surgical,
and dental supplies or laboratory supplies for VA medical
centers, in a manner that involves multiple regional prime
vendors instead of a single nationwide prime vendor.
Section 2(b) of the bill would require the Secretary, in
developing the formulary for the MSPV or a successor program,
to ensure that each VA employee who conducts formulary analyses
or makes decisions with respect to including items on the
formulary has medical expertise relevant to the items for which
the employee conducts such analyses or makes such decisions.
Additionally, this bill would require that, within 30 days of
enactment and quarterly thereafter, the Secretary shall submit
a list to the House and Senate Committees on Veterans' Affairs
that details each employee, their relevant medical expertise,
and the categories of items in the formulary they analyzed or
on which they made decisions.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
If enacted, this bill would make no changes to existing
law.
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