2201  Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies for the obligation of payments to academic institutions for disbursement agreements for residents and interns and.

Key points covered in this chapter:

• In accordance with 38 U.S.C. § 7406, VA may establish disbursement agreements with educational institutions to reimburse salary and benefit cost for health profession trainees that rotate to VA facilities;
• In accordance with 38 U.S.C. § 8153, this program is not subject to the Federal Acquisition Regulation (FAR)-based competitive bid process; and
• The use of a miscellaneous vendor code is not permitted for these programs; recipients must be individually vendorized.

2202 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	New policy	OFP	Reorganized chapters	April 2026

2203 Definitions

Obligation – A legally binding agreement that will result in outlays, immediately or in the future. An obligation is a legal liability of the Government against an available appropriation.

Non-Contractual Obligation – Obligations with special statutory authority or other regulatory authority to exempt the obligation from Federal Acquisition Regulations (FAR). There are instances where these obligations may be generally defined as a contract (agreement between two parties), but these obligations do not follow FAR-based procedures.

2204 Roles and Responsibilities

Office of Academic Affiliations (OAA) in the Veterans Health Administration (VHA) is responsible for overseeing VA health profession training programs.

Local Finance Offices are responsible for ensuring the proper processing of disbursement and residency agreements.

2205 Policies

220501 General Policies

1. In accordance with 38 U.S.C. § 7406, VA may enter disbursement agreements between VA medical facilities and affiliated sponsors of accredited residency programs at universities or schools to reimburse direct salary and benefit cost for health profession trainees that rotate to VA facilities.
2. VA may appoint qualified residents and interns and pay them either in advance or in arrears without regard to any other law or regulation governing the expenditure of Government moneys.
3. The disbursement agreements for interns and residents are not subject to FAR/VA Acquisition Regulation (VAAR) requirements because 38 U.S.C. § 8153 specifically states that VA’s Secretary may pay designated agencies (medical schools or their disbursing agents) without using competitive procedures.
4. The medical school/disbursing agent centrally administers salary and benefit procedures for medical and dental residents and interns assigned to a VA facility. VA pays the medical school/disbursing agent.
5. The amount to be obligated for disbursement agreements is the amount entered on the medical school/disbursing agent monthly (or quarterly) schedule. Costs are based on annual VA-approved disbursement rate schedules.
   1. VHA’s Office of Academic Affiliations (OAA) reviews and approves all affiliation agreements and disbursement agreements, including applicable payment rates (which may be updated yearly or more frequently, such as when benefit costs change). OAA also provides guidance and oversight of the process through VHA Directive 1400.05 and their Standard Operating Procedure Guide for Disbursement Agreements.
   2. VA may advance pay the medical school/disbursing agent up to 80% of the amount contained on the monthly or quarterly schedule.
   3. If the medical school/disbursing agent received an advance of funds, this amount is offset against the final approved invoice amount in arrears and the applicable non-Federal advance amount is decreased.
   4. If there was no advance payment, the medical school/disbursing agent is paid the final approved invoice amount in arrears.
6. Local Finance Offices record disbursement agreement obligations when the Designated Education Officer (DEO) signs the monthly (or quarterly) schedule provided by the medical school/disbursing agent containing the proposed resident assignments and associated costs. See VHA Directive 1400.05 for definition and responsibilities of the DEO.
7. In accordance with 31 U.S.C. § 1501, documentation required for disbursement agreements is the medical school/disbursing agent monthly (or quarterly) schedule displaying required VA approval along with the submitter’s approval.
8. Recipients of payments or reimbursements for these programs must be individually vendorized; use of a miscellaneous vendor code is not permitted.
9. Obligations pursuant to this policy must follow the requirements for all government obligations, established for VA in Volume III, Chapter 2 – Obligations.

220502 Integrated Financial and Acquisition Management System (iFAMS)

1. When recording a disbursement agreement in iFAMS, a non-contractual obligation document type Standard Obligation (OSE) must be used.
2. Payment document codes for disbursement agreements will vary based on whether an advance is utilized and whether the Invoice Payment Processing System (IPPS) is used for processing:
   • Payment Authorization (PAE) is used for pre-payment when an advance is utilized or when the regular (non-advance) payment does not utilize IPPS; and
   • IPPS Standard Payment (PAI) is used for regular (non-advance) payments that are processed through IPPS.

220503  Financial Management System (FMS)

1. Obligations for disbursement agreements must use VA Form 1358 approved use #7.
2. VA’s payee for disbursement agreements is a third-party entity that disburses salary payments to health care residents and trainees. VA will pay the third-party entity using electronic funds transfer.

2206 Authorities and References

• United States Code (U.S.C.)
  • 31 U.S.C. § 1501, Documentary evidence requirement for Government obligations
  • 38 U.S.C. § 7406, Residencies and internships
  • 38 U.S.C. § 8153, Sharing of health-care resources
• P.L. 115-182, MISSION Act (Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018)
• P.L. 116-159, Continuing Appropriations Act, 2021 and Other Extensions Act
• VA Financial Policy
  • Volume III, Chapter 2 – Obligations
• VHA Publications
  • VHA Directive 1400.05, Disbursement Agreements for Health Professions Trainees Appointed under 38 U.S.C. § 7406
• VHA Office of Academic Affiliations (OAA)
  • OAA SharePoint Standard Operating Procedure Guide for Disbursement Agreements

2207 Rescissions

None.

Appendix A: Previous Policy Revisions

None.