38 U.S.C. § 7406

(a) (1) The Secretary may establish residencies and internships. The Secretary may appoint qualified persons to such positions without regard to civil service or classification laws, rules, or regulations. (2) For the purposes of this section: (A) The term “internship” includes the equivalency of an internship as determined in accordance with regulations which the Secretary shall prescribe. (B) The term “intern” means a person serving an internship. (b) The Secretary may prescribe the conditions of employment of persons appointed under this section, including necessary training, and the customary amount and terms of pay for such positions during the period of such employment and training. The amount and terms of such pay may be established retroactively based on changes in such customary amount and terms. (c) (1) In order to carry out more efficiently the provisions of subsection (a)(1), the Secretary may contract with one or more hospitals, medical schools, or medical installations having hospital facilities and participating with the Department in the training of interns or residents to provide, by the designation of one such institution to serve as a central administrative agency, for the central administration— (A) of stipend payments; (B) provision of fringe benefits; and (C) maintenance of records for such interns and residents. (2) The Secretary may pay to such designated agency, without regard to any other law or regulation governing the expenditure of Government moneys either in advance or in arrears, an amount to cover the cost for the period such intern or resident serves in a Department facility furnishing hospital care or medical services of— (A) stipends fixed by the Secretary pursuant to paragraph (1); (B) hospitalization, medical care, and life insurance and any other employee benefits as are agreed upon by the participating institutions for the period that such intern or resident serves in a Department facility furnishing hospital care or medical services; (C) tax on employers pursuant to chapter 21 of the Internal Revenue Code of 1986, where applicable; and (D) an amount to cover a pro rata share of the cost of expense of such central administrative agency. (3) (A) Any amounts paid by the Secretary to such central administrative agency to cover the cost of hospitalization, medical care, or life insurance or other employee benefits shall be in lieu of any benefits of like nature to which such intern or resident may be entitled under the provisions of title 5, and the acceptance of stipends and employee benefits from the designated central administrative agency shall constitute a waiver by the recipient of any claim such recipient might have to any payment of stipends or employee benefits to which such recipient may be entitled under this title or title 5. (B) Notwithstanding subparagraph (A), any period of service of any such intern or resident in a Department facility furnishing hospital care or medical services shall be deemed creditable service for the purposes of section 8332 of title 5 . (4) The agreement with such central administrative agency may further provide that the designated central administrative agency shall— (A) make all appropriate deductions from the stipend of each intern and resident for local, State, and Federal taxes; (B) maintain all records pertinent to such deductions and make proper deposits of such deductions; and (C) maintain all records pertinent to the leave accrued by such intern and resident for the period during which such recipient serves in a participating facility, including a Department facility furnishing hospital care or medical services. (5) Leave described in paragraph (4)(C) may be pooled, and the intern or resident may be afforded leave by the facility in which such person is serving at the time the leave is to be used to the extent of such person’s total accumulated leave, whether or not earned at the facility in which such person is serving at the time the leave is to be afforded.