Billing and reimbursement of services provided by VAMCs to externally sponsored research grants
NAVREF prepared this analysis to advise members regarding (1) the recent memo from VA ORD (attached) that specifies rates for billing VAMC services on research awards at the Medicare rate less 10%, as well as (2) questions from the field regarding such billings. We considered situations that might occur at NPCs, taking into account the ORD memo, the VHA Handbook, the OMB Uniform Guidance and the new FASB pronouncement on contributed services.
We deal with the following questions:
· Can a NPC reimburse a VAMC for clinical services provided to patients on NPC-administered research grants?
Per Handbook 1200.17: (b)(2) “Reimbursement. NPCs may reimburse VA for salaries and other costs incurred by VA in the conduct of VA-approved research projects or education activities.”
· Which services can be billed, and which cannot?
MRIs and similar tests and studies provided to research grants can be billed but not certain other medical services.
Per “background” in ORD memo: "VA Research and Education Non-Profit Corporations (“NPCs”) administer clinical research studies sponsored by non-VA entities, including industry. There are currently more than seventy (70) NPCs across the nation, many of which participate in the same clinical trials. These studies often include the use of VA clinical services, such as laboratory tests (e.g. blood counts and urinalyses), radiologic studies (e.g. chest X-rays and CT scans), and other diagnostic tests (e.g. EKGs, echocardiograms, pulmonary function tests). Each VA is to be reimbursed for only those tests that are performed outside of the “customary care” as described in VHA Handbook 1200.17, as authorized by Title 38.”
Per 38 CFR 17.102: "Except as provided in § 17.101[ [which details types of charges for medical care, not research], charges at the indicated rates shall be made for Department of Veterans Affairs hospital care or medical services . . . as follows...:
(g) Furnished for research purposes. Charges will not be made for medical services, including transportation, furnished as part of an approved Department of Veterans Affairs research project, except that if the services are furnished to a person who is not eligible for the services as a veteran, the medical care appropriation shall be reimbursed from the research appropriation at the same rates used for billings under paragraph (b) of this section."
Per 38 U.S. Code § 1701 - Definitions: "(6)The term “medical services” includes, in addition to medical examination, treatment, and rehabilitative services, the following:
(A) Surgical services.
(B) Dental services and appliances as described in sections 1710 and 1712 of this title.
(C) ) Optometric and podiatric services.
(D) ) Preventive health services.
(E) Noninstitutional extended care services, including alternatives to institutional extended care that the Secretary may furnish directly, by contract, or through provision of case management by another provider or payer.
(F) ) In the case of a person otherwise receiving care or services under this chapter—
(i) wheelchairs, artificial limbs, trusses, and similar appliances;
(ii) special clothing made necessary by the wearing of prosthetic appliances; and
(iii) other supplies or services as the Secretary determines to be reasonable and necessary.
(G) Travel and incidental expenses pursuant to section 111 of this title.
(H) Chiropractic services."
Diagnostic procedures such as MRIs are not covered by that definition and so may be billed to research grants.
· Is the VAMC required to bill for such services?
No. We are not aware of a law or regulation that would require that investigator effort, or tests and studies like MRIs, must be billed. The memo says only that "Each VA is to be reimbursed for only those tests that are performed outside of the “customary care” as described in VHA Handbook 1200.17, as authorized by Title 38.” This doesn’t say it must be reimbursed.
The question may be moot in the future. The VA is implementing Cerner electronic health record, and the system may dictate that VAMC’s account for all services by billing or other actions. The Nonprofit Program Office recommends that when your site goes live, you spend time with those individuals entering the data into the Cerner PowerTrials system to avoid being overbilled or underbilled.
· What rates should the VAMC use in such billings?
Medicare less 10%, once the rates are incorporated into Cerner EHR.
Per the cover letter on the ORD memo: "At the December 12, 2019, Nonprofit Program Oversight Board meeting, the board voted to use the Medicare Rate minus 10% for research-related tests performed outside of “customary care” after reviewing the National Pricing Recommendation from the Charge Delineation Work Group. It may take some effort and training of those involved in clinical trials to assure that the billing takes place at the appropriate rate for each test or study.
· If there is a billing, which appropriation should get the credit—research or medical care?
The appropriation for medical care.
Per Handbook 1200.17: “A VA medical facility may retain and use funds provided to it by an NPC. Such funds must be credited to the applicable VA appropriation account and available for account purposes without fiscal year limitations as provided for in 38
Per the cover letter to the recent ORD memo: 2. Accordingly, VA Medical Center’s (VAMC) shall be reimbursed by the Office of Research and Development for only those
research-related tests, as part of sponsored clinical trials, that are performed outside of the “customary care” as described in VHA Handbook 1200.17, VA Nonprofit Research and Education Corporations Authorized by Title 38 U.S.C. These funds may also be accepted by VAMC’s without fiscal year limitations.”
· Can the NIH and other federal sponsors pay for research services provided by the VAMC?
Yes. There is no restriction in the NIH Grants Policy Statement on charges for services from federal entities. NIH and other federal sponsors have not raised objections to NPCs including reimbursement for services provided by VAMCs (purely for research purposes) in their project budgets. Charges for salaries (e.g., an hourly rate for a specialist) are limited by GPS 17.3 and 17.6, however.
· If the research project is administered by a NPC or by an academic affiliate, is the NPC or the affiliate required to reimburse the VAMC service by service in order to bill the sponsor?
No, a service-by-service reimbursement is not required. However, the NPC should be able to demonstrate (i) that a service took place, (ii) that, if billed by the VAMC, the charge was priced at no more than Medicare less 10% rate, and (iii) that money was flowing in and out of an agency account held for the VAMC and not simply accumulating on the NPC’s balance sheet.
In accordance with applicable rules, regulations and sponsor policy, NPCs should make all reasonable efforts to work with VAMCs to facilitate billing the NPCs for research- related costs on sponsored projects and to establish systems to ensure that the NPCs liability to the VAMCs is captured in a productive and compliant manner. In the event that the VAMCs do not bill the NPCs for research costs incurred on sponsored awards, a recommended practice is for the NPC to create a liability account to be used at the discretion of the VAMC and in accordance with applicable rules, regulations and policies.
· What if the VAMC donates the service to the NPC-administered award? Are such donations appropriate?
For effort, per VHA Handbook 1200.17:
"11 PROVIDING AND FUNDING ADMINISTRATIVE AND RESEARCH SERVICES
b. Reimbursement and Compensation Related to Approved Research Projects or Education Activities.
(1) VA Employees. VA employees may be assigned as part of their VA duties to work on VA-approved research projects or education activities for which an NPC is the flexible funding mechanism.
(2) Reimbursement. NPCs may reimburse VA for salaries and other costs incurred by VA in the conduct of VA-approved research projects or education activities. A VA medical facility may retain and use funds provided to it by a[n] NPC."
For services, per VHA Handbook 1200.17
11. a. “Use of VA Resources or Time to Support Management or Other Operations of an NPC. (5) VA Resources that Incidentally Further NPC Purposes. The NPC may receive any incidental benefits that result from VA employees using VA resources to carry out their official duties to promote VA research and education missions. The VA medical facility also may provide the NPC with space for its activities.”
So, as noted above, VAMC employees may work on VA-approved NPC projects, and there appears to be no requirement for billing or reimbursement. The VA may also donate “incidental” services.
· Must the NPC report the contribution of such services on its statement of activities?
Per FASB (ASU) 2020-07 § 958-605-50-1B "An entity (NFPs and business entities) that receives contributed services shall describe the programs or activities for which those services were used, including the nature and extent of contributed services received for the period and the amount recognized as revenues for the period. Entities are encouraged to disclose the fair value of contributed services received but not recognized as revenues if that is practicable. The nature and extent of contributed services received can be described by nonmonetary information, such as the number and trends of donated hours received or service outputs provided by volunteer efforts, or other monetary information, such as the dollar amount of contributions raised by volunteers. Disclosure of contributed services is required regardless of whether the services received are recognized as revenue in the financial statements.”
· Would that contribution then be recognized as an expense?
Yes, if it is recognized as a cost by the NPC.
· Could effort or services contributed by the VAMC be charged to a federal sponsor?
Per the OMB Uniform Guidance:
§ 200.434 Contributions and donations.
(a) Costs of contributions and donations, including cash, property, and services, from the non-Federal entity to other entities, are unallowable.
(b) The value of services and property donated to the non- Federal entity may not be charged to the Federal award either as a direct or indirect (F&A) cost.
· Could effort or services contributed by the VAMC be charged to a non-federal sponsor under a CRADA, for example?
Yes, there is no such requirement in the Uniform Guidance that applies to CRADAs, but as noted above, an NPC might not want to include such charges in the award budget when they had no intention of paying for them.
· How would services contributed by the VAMC be treated in the NPC’s indirect cost proposal?
If indirect, they would be excluded from the pool, since under Uniform Guidance §
200.434 (a) and (b) they are unallowable; if direct, under § 200.434 (e), they would be in the base if “material” in value and “significant” to the calculation.
Per OMB Uniform Guidance § 200.434
(e) The following provisions apply to nonprofit organizations. The value of services donated to the nonprofit organization utilized in the performance of a direct cost activity must be considered in the determination of the non-Federal entity’s indirect cost rate(s) and, accordingly, must be allocated a
proportionate share of applicable indirect costs when the following circumstances exist:
(1) The aggregate value of the services is material;
(2) The services are supported by a significant amount of the indirect costs incurred by the non-Federal entity.