For nonsupervisory providers, the reviews consist  of a standard set of measures, including clinical, educational, and  administrative competence; research and development; and personal  qualities, such as dependability. VA’s Performance Pay Policy Has Gaps in Information Needed to Administer Performance Pay

		VA’s Policy Allows Discretion in the Establishment of Performance Pay Goals, but Lacks an Overarching Purpose That the Goals Should Support

VA’s performance pay policy gives VA’s 21 networks and 152 medical  centers discretion in the establishment of performance pay goals for  providers. The  Senate committee report and statements by members of Congress at the  time the bill was passed provided that performance pay would recognize  outstanding contributions to the medical center, to the care of veterans, or  to the practice of medicine or dentistry, and it would motivate providers  and ensure quality of care through the achievement of specific goals or  objectives set for providers in advance.responsible for writing the performance pay policy also told us that the   In addition, VA officials  purpose of performance pay is to improve health care outcomes and  quality; however, these goals are not documented in the policy. Table 1 includes examples of the types of goals established for a mental  health provider at each of the four medical centers we visited. Because VHA has not reviewed the goals that have been set across  medical centers and networks, it cannot have reasonable assurance that  the goals established make a clear link between performance pay and  providers’ performance. In contrast to the performance pay policy, VA’s performance award policy  clearly states the purpose of these awards—specifically, that they are to  recognize sustained performance of providers beyond normal job  requirements as reflected in the provider’s most recent performance  rating. VA policy also lists the measures supervisors are to use to  determine the performance rating for providers in nonsupervisory  positions, such as clinical competence. VHA’s Oversight Is Inadequate to Ensure Compliance with Performance Pay and Award Requirements

VHA does not provide adequate oversight to ensure that its medical  centers are in compliance and remain in compliance with performance  pay and award requirements. VHA’s Workforce Management and  Consulting Office conducts annual Consult, Assist, Review, Develop, and  Sustain (CARDS) reviews, which are consultative reviews that were  initiated in 2011 to assist medical centers in complying with human resources requirements, including performance award requirements.According to VHA officials, the results of these reviews are provided to  the medical centers. CARDS reviews use a standard list of elements to review other  human resources requirements, including performance awards. In addition, the CARDS reviewers do not have the authority to require  medical centers to resolve compliance problems they identify, and VHA  has not formally assigned responsibility to an organizational component  with the knowledge and expertise of human resources issues to do this, a  condition that is inconsistent with internal control standards for control  environment. We found that two of the four VA medical centers we visited  did not always correct problems identified through CARDS reviews. For  example, a May 2011 CARDS review of one of these two medical centers  found that the medical center did not conduct a formal evaluation of its  awards program, as required. A CARDS review of this same medical  center about a year later found the identical problem. All of the providers we reviewed who were  eligible for performance pay in fiscal year 2010 or 2011 received this pay,  including providers who had performance-related personnel actions taken  against them. Recommendations for Executive Action

To clarify VA’s performance pay policy, we recommend that the Secretary  of Veterans Affairs direct the Assistant Secretary for Human Resources  and Administration to take the following four actions to specify in policy:  the overarching purpose of performance pay; how medical centers should document that supervisors have  discussed performance pay goals with providers within the first 90  days of the fiscal year;  that medical centers should document approval of performance pay  amounts and that the approval occurred before the required March 31  disbursement date; and how medical center officials 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. To strengthen oversight of medical centers’ compliance with VA policy  requirements for performance pay and awards, we recommend that the  Secretary of Veterans Affairs direct the Under Secretary for Health to take  the following two actions: ensure medical centers are in compliance with the requirements in the  performance pay and award policies and assign responsibility to a VHA organizational component with the  knowledge and expertise to ensure correction of medical centers’  noncompliance with VA’s performance pay and award policy  requirements, including problems identified during CARDS reviews,  and ensure that medical centers maintain compliance with these  requirements.
Why GAO Did This Study

VHA administers VA's health care system and strives to provide high-quality, safe care to veterans. Concerns continue about the quality of care VHA delivers, but many physicians and dentists, referred to as providers, receive performance-based pay and awards. In fiscal year 2011, about 80 percent of VHA's nearly 22,500 providers received approximately $150 million in performance pay, and about 20 percent received more than $10 million in performance awards. GAO was asked to review VHA's performance pay and award systems. This report examines (1) whether VA's performance pay and award policies ensure appropriate administration of this compensation and (2) VHA's oversight of medical centers' compliance with policy requirements. GAO reviewed documents and interviewed VA and VHA officials about the administration of performance pay and awards and VHA's oversight of the related policy requirements; analyzed data from a random sample of about 25 providers selected primarily from primary care, surgery, psychiatry, and dentistry at each of four medical centers GAO visited that had at least one provider who was the subject of an action related to clinical performance.

What GAO Found

The Department of Veterans Affairs' (VA) performance pay policy has gaps in information needed to appropriately administer this type of pay. The performance pay policy gives VA's 152 medical centers and 21 networks discretion in setting the goals providers must achieve to receive this pay, but does not specify an overarching purpose the goals are to support. VA officials responsible for writing the policy told us that the purpose of performance pay is to improve health care outcomes and quality, but this is not specified in the policy. Moreover, the Veterans Health Administration (VHA) has not reviewed the goals set by medical centers and networks and therefore does not have reasonable assurance that the goals make a clear link between performance pay and providers' performance. Among the four medical centers GAO visited, performance pay goals covered a range of areas, including clinical, research, teaching, patient satisfaction, and administration. At these medical centers, all providers 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 failing to read mammograms and other complex images competently, practicing without a current license, and leaving residents unsupervised during surgery. Moreover, VA's policy is unclear about how to document certain decisions related to performance pay. For example, the policy does not provide clear guidance 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. In contrast to the performance pay policy, VA's performance award policy clearly states the purpose of these awards-- specifically, that they are to recognize sustained performance of providers beyond normal job requirements as reflected in the provider's most recent performance rating.
VA policy also lists the measures, such as clinical competence, that providers' supervisors are to use to determine these providers' performance rating. VHA's oversight is inadequate to ensure that medical centers comply with performance pay and award requirements. VHA's annual consultative reviews, initiated in 2011, help medical centers comply with human resources requirements, including performance award requirements. Recently, these reviews began to also include performance pay requirements, but do not yet include a standard list of performance pay elements to review, which would be needed to ensure consistency of reviews across medical centers. Further, reviewers do not have the authority to require medical centers to resolve compliance problems they identify, and VHA has not formally assigned specific organizational responsibility to ensure medical centers resolve identified problems. As a result, VHA is unable to ensure that reviews consistently identify problems, and that these problems are corrected and do not recur. GAO found that two of the four medical centers visited did not always correct problems identified through these reviews. For example, a May 2011 review of one of these two medical centers found that the medical center did not conduct a formal evaluation of its performance award program, as required. A review of the same medical center about a year later found the identical problem.

What GAO Recommends

GAO recommended that VA clarify the performance pay policy, by specifying the purpose and documentation requirements and that VHA review performance pay goals for consistency with the purpose, and improve oversight to ensure compliance. VA generally agreed with GAO's conclusions and recommendations.