Senate Passes VA MISSION Act; Eliminates Federal Contractor Status for Some Long-Term Care Providers

On May 23, 2018, the U.S. Senate passed a comprehensive bill called the U.S. Department of Veterans Affairs Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 or the VA MISSION Act of 2018 (H.R. 5674), which authorizes the use of Department of Veterans Affairs (VA) provider agreements for “extended care” providers, including nursing facilities among others. The act, which the U.S. House of Representatives recently approved, also covers hospital care and medical service providers. President Trump is expected to sign the legislation into law.

This legislation would remove from authorized provider agreements certain obligations that previously dissuaded many long-term care providers from entering into contracts with the VA.  While participation in Medicare and Medicaid (which are considered grants) does not make participating providers federal contractors, other types of contracts can subject providers to many onerous obligations, such as the preparation of affirmative action programs, the federal contractor minimum wage requirement (which is much higher than the Fair Labor Standards Act’s minimum wage requirement), and compliance with several executive orders signed by former president Obama that imposed legal obligations on federal contractors, such as paid sick leave. Participation in a VA contract also currently subjects the provider to the McNamara-O’Hara Service Contract Act, which requires compliance with costly prevailing wage and benefit packages for employees providing services to veterans in covered facilities.

Once effective, the VA Mission Act would eliminate these additional burdens and insulate participants in provider agreements, referred to in the legislation as “Veterans Care Agreements,” from being considered federal contractors. The legislation provides that covered providers will be subject to the same affirmative action moratorium as is applied to TRICARE contractors and subcontractors in Directive 2014-01 of the Office of Federal Contract Compliance Programs. The legislation states that the referenced moratorium cannot be altered or rescinded until May 19, 2019. (As noted in a recent article on our blog by Leigh Nason and Hera Arsen, the moratorium was recently extended by the Department of Labor until May 7, 2021.)

Long-term care providers are obviously excited about this legislation, but according to VA staff, providers would have to wait at least a year so that the VA could implement regulations and make the new provider agreements available. The legislation itself states that the effective date of the legislation would be the later of “(1) the date that is 30 days after the date on which the Secretary of Veterans Affairs submits the report required under section 101(q)(2) of the Veterans Access, Choice, and Accountability Act of 2014 . . . or (2) the date on which the Secretary promulgates regulations pursuant to subsection (c),” which requires that those regulations be issued not later than one year after the enactment of the Act. It appears that the second effective date would likely be the one that would apply.