Healthcare Business News

Most VA doctors get performance raises, but GAO finds no criteria for pay hikes

By Joseph Conn
Posted: August 23, 2013 - 7:00 pm ET

Eight out of 10 healthcare providers working in the Veterans Health Administration, the healthcare arm of the U.S. Department of Veterans Affairs, received some form of pay-for-performance bonuses totaling $150 million in 2011. But a federal watchdog agency found no written criteria for the bonuses or any written evaluations justifying them.

The Government Accountability Office visited four VA medical centers and learned that several providers who had been disciplined still received bonus pay, according to a 39-page report, “VA Health Care: Actions Needed to Improve Administration of the Provider Performance Pay and Award Systems.

“It's not really clear what the purpose of (performance pay) is,” GAO healthcare team director Debra Draper said in an interview.

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In fiscal 2011, the VHA spent $150 million on its performance pay program in which 80% of its 22,500 physicians and dentists received a pay bump. That’s $8,049 each, on average. In addition, 20% of VHA providers received a separate “performance award,” with a total payout of another $10 million, or about $2,589 per recipient.

In auditing the performance pay program, the GAO investigators said they were told by VA officials responsible for writing the policy “that the purpose of performance pay is to improve healthcare outcomes and quality, but this is not specified in the policy.”

“Moreover,” the watchdog agency said, the VHA “has not reviewed the goals set by medical centers and (regional) networks and therefore does not have reasonable assurance that the goals make a clear link between performance pay and providers’ performance.”

At the medical centers GAO visited—in Atlanta, Dallas, Seattle and Togus, Maine—auditors looked at the pay records of about 25 providers each, and found “performance pay goals covered a range of areas, including clinical, research, teaching, patient satisfaction, and administration,” according to the report. “At these medical centers, all providers the GAO reviewed who were eligible for performance pay received it, including all five providers who had an action taken against them related to clinical performance in the same year the pay was given. The related provider performance issues included failure to read mammograms and other complex images competently, practicing without a current license, and leaving residents unsupervised during surgery.”

Performance pay is one of three main components of providers’ pay packages at the VA, along with base pay—which includes a component for years of service—and market pay, which takes into consideration a provider’s medical specialty, Draper said.

It’s unlikely that the disciplined employees who received performance bonuses were flukes, according to Draper. “We visited four facilities and there was at least one of these in (each of) the four,” she said. “Basically, it’s become almost an entitlement.”

The GAO said the VA needs to send clearer guidance to its local administrators “on what to document regarding whether a provider’s performance-related action should result in the reduction or denial of the provider’s performance pay.”

The auditors contrasted the lack of specificity in the VHA’s performance pay program with the relative specificity of its smaller performance award program, which clearly states the purpose of its rewards are “to recognize sustained performance of providers beyond normal job requirements.”

The GAO made a series of recommendations on how to tighten up the bonus pay programs, including preparing a clear written statement of its overarching purpose and specifying how supervisors should document that they’ve discussed the policy with providers in a timely manner.

In addition, supervisors should document whether performance-related personnel actions had an impact on providers' achievement of performance pay goals, and as a result, affected performance pay decisions, the GAO said.

In a letter of response by its interim Chief of Staff, Jose Riojas, the VA either concurred in full or in principle with the GAO’s recommendations.

In an e-mail statement, the VA explained why providers subject to disciplinary action could receive performance bonuses.

Those actions “may not reflect a physician’s or dentist’s performance with regard to the pre-established goals that a physician must achieve to receive performance pay,” the statement said. “An isolated case may not support denying performance pay if a physician or dentist meets his or her performance goals. However, it is important that managers consider the degree to which a performance-based or conduct-based action affected the provider’s achievement of performance pay goals and objectives and document accordingly. VA will clarify its policy by October 31, 2013, to ensure that happens.”

Follow Joseph Conn on Twitter: @MHJConn

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