VA HEALTH CARE

Actions Needed to 

Improve 

Administration of the 

Provider Performance 

Pay and Award 

Systems

Report to Congressional Requesters

July 2013

GAO-13-536

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-536, a report to 

congressional requesters

July 2013

VA HEALTH CARE

Actions Needed to Improve Administration of the 

Provider Performance Pay and Award Systems

Why GAO Did This Study

VHA administers VA’s health care 

system and strives to provide highquality, 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 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.

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.

View GAO-13-536. For more information, 

contact Debra A. Draper at (202) 512-7114 or 

draperd@gao.gov.
 

Page i GAO-13-536 VA Provider Performance Pay and Awards

Letter 1 

Background 7

VA’s Performance Pay Policy Has Gaps in Information Needed to 

Administer Performance Pay 9

VHA’s Oversight Is Inadequate to Ensure Compliance with 

Performance Pay and Award Requirements 18

Conclusions 21

Recommendations for Executive Action 22

Agency Comments and Our Evaluation 23

Appendix I Performance-Related Personnel Actions and Performance 

Pay Amounts 27

Appendix II Comments from the Department of Veterans Affairs 28

Appendix III GAO Contact and Staff Acknowledgments 34

Tables 

Table 1: Examples of Types of Goals Established for a Mental 

Health Provider at Each of Four VA Medical Centers GAO 

Visited 11

Table 2: Basis for Performance-Related Personnel Action, Action 

Taken, and Performance Pay Amount Received for Five 

Eligible Providers at Four VA Medical Centers GAO 

Visited, Fiscal Years 2010 and 2011 27

Figures

Figure 1: VA Form 10-0432 for Performance Pay 15

Figure 2: Organization of Veterans Health Administration (VHA) 

Offices Involved in Performance Pay and Awards for 

Medical Center Physicians and Dentists 20

Contents 
 

Page ii GAO-13-536 VA Provider Performance Pay and Awards

Abbreviations

CARDS Consult, Assist, Review, Develop, and Sustain

VA Department of Veterans Affairs

VHA Veterans Health Administration

This is a work of the U.S. government and is not subject to copyright protection in the 

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without further permission from GAO. However, because this work may contain 

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Page 1 GAO-13-536 VA Provider Performance Pay and Awards

441 G St. N.W.

Washington, DC 20548

July 24, 2013

The Honorable Patty Murray

Chairman

Committee on the Budget

United States Senate

The Honorable Bernie Sanders

Chairman

Committee on Veterans’ Affairs

United States Senate

The Honorable Michael Michaud

Ranking Member

Committee on Veterans’ Affairs

House of Representatives

The Department of Veterans Affairs (VA) operates one of the largest 

health care systems in the nation and strives to provide high-quality and 

safe care to veterans. One important element of VA’s efforts to sustain 

and increase quality and safety is its pay and award systems. These 

systems, which include evaluating the performance of physicians and 

dentists, referred to in this report collectively as providers, are 

administered by the Veterans Health Administration (VHA), which 

administers VA’s health care system. In 2004, the VA Health Care 

Personnel Enhancement Act established performance pay, an annual 

lump sum payment based on the achievement of specific goals and 

performance objectives, for providers.

1

 

1

Performance pay is one of three components of the pay structure for providers 

established in 2004 by the VA Health Care Personnel Enhancement Act. Performance pay 

is available only to providers. The other two components of the pay structure are base 

pay, which is determined by the number of years of VA service, and market pay, which is 

intended to reflect the recruitment and retention needs for providers and takes into 

account the health care labor market. Performance pay is given annually in a lump sum 

and may not exceed the lesser amount of $15,000 or 7.5 percent of a provider’s combined 

base and market pay. See 38 U.S.C. § 7431. 

In addition to performance pay, 

VA has established monetary performance awards that are available 

Performance pay is common throughout the health care industry and is usually based on 

specific contributions that providers make in improving the quality and efficiency of health 

care delivery.

 
 

Page 2 GAO-13-536 VA Provider Performance Pay and Awards

annually to all staff, including providers, on the basis of annual 

performance reviews. According to data provided by VA, more than 

18,500 or approximately 80 percent, of the nearly 22,500 providers 

received performance pay in fiscal year 2011.2 More than 4,000 

providers, or approximately 20 percent, received performance awards.3

While VHA strives to provide high-quality and safe care to veterans, 

concerns continue to surface about the quality of care it delivers. 

Meanwhile, many providers continue to receive compensation that is tied 

directly to their performance. According to federal standards for internal 

control, part of VHA’s responsibility for administering performance pay 

and awards is to ensure that providers understand the link between these 

sources of compensation and their performance.

For fiscal year 2011, VHA paid providers nearly $150 million in 

performance pay, an average of $8,049 per provider who received the 

pay, and more than $10 million in performance awards, an average of 

$2,587 per provider who received an award.

4

 

2

Not all providers are eligible for performance pay. To be eligible for performance pay, a 

provider must have been employed by VA by July 1 of the fiscal year being reviewed and 

must not leave before September 30 of the same fiscal year. In addition, providers are not 

eligible for performance pay if they are interns, residents, fee-basis employees, fellows, 

research trainees, or a specific subset of providers who work at the Manila Outpatient 

Clinic, which is the only VA facility in a foreign country. Department of Veterans Affairs, 

Pay Administration, VA Handbook 5007, v.32 (Washington, D.C.: Feb. 21, 2008). While 

the approximately 22,500 providers represented in the data do not include residents, they 

include other types of providers who were not eligible for performance pay. However, it 

was not possible for officials from VA’s Human Resources and Information Systems office, 

who provided the data, to determine eligibility from the data. As a result, the proportion of 

eligible providers who received performance pay in fiscal year 2011 is likely higher than 

80 percent.

Furthermore, VHA may 

take action against providers who fail to deliver high-quality, safe health 

3

Not all providers are eligible for performance awards. To be eligible, a provider must 

have a completed annual performance review. In addition, the performance award policy 

says that performance awards are not required and that performance awards may be 

awarded only if the provider receives a performance rating of satisfactory or higher. 

Department of Veterans Affairs, Employee Recognition and Awards, VA Directive 5017, 

v.4 (Washington, D.C.: July 7, 2010) and Employee Recognition and Awards, VA

Handbook 5017, v.9 (Washington, D.C.: July 7, 2010).

4

Federal standards for internal control activities state that performance evaluations, 

supplemented by an effective award system, should be designed to help employees 

understand the connection between their performance and the organization’s success. 

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
 

Page 3 GAO-13-536 VA Provider Performance Pay and Awards

care, including adverse or privileging actions, which we refer to as 

performance-related personnel actions, to address issues related to 

providers’ clinical performance.5

You asked us to evaluate VHA’s performance pay and award systems. In 

this report, we examine the extent to which (1) VA’s policies ensure 

appropriate administration of performance pay and awards; and (2) VHA 

oversees its medical centers’ compliance with policy requirements for 

performance pay and awards.

To examine the extent to which VA’s policies ensure appropriate 

administration of performance pay and awards, we reviewed and 

analyzed relevant VA policy requirements and interviewed officials in VA’s 

Office of Human Resources Management who are responsible for 

developing VA’s policies on performance pay and awards, and officials in 

VHA’s Workforce Management and Consulting Office who are 

responsible for helping medical centers implement these policies.6 We 

also reviewed the Senate Committee Report, Congressional Record 

entries, and hearing transcripts associated with the VA Health Care 

Personnel Enhancement Act of 2004.7

 

5

For this report, we use the term performance-related personnel actions to include any 

action taken against a provider to address clinical performance, including major adverse 

actions, disciplinary actions, and privileging actions for which the medical centers’ 

documentation indicated that the action was related to patient safety or care quality. 

According to VA policy, major adverse actions include suspension, transfer, reduction in 

grade, reduction in basic pay, and termination. Disciplinary actions include 

admonishments, which are official letters of censure for minor deficiencies in competence 

or conduct; and reprimands, which are more severe letters of censure for deficiencies in 

competence or conduct. Department of Veterans Affairs, Employee/Management 

Relations, VA Directive 5021, v.3 (Washington, D.C.: Aug. 28, 2007) and 

Employee/Management Relations, VA Handbook 5021, v.10 (Washington, D.C.: Nov. 8, 

2012), accessed April 17, 2013, http://www.va.gov/vapubs/search_action.cfm?dType=2. 

Privileging actions include reducing, revoking, denying, or failing to renew a provider’s 

privileges. Privileges are the authority granted to a provider by a hospital governing board 

to provide patient care in the hospital and are based on the individual’s license, 

experience, and competence. Veterans Health Administration, Credentialing and 

Privileging, VHA Handbook 1100.19 (Washington, D.C.: Nov. 14, 2008).

We visited four VA medical 

6

VA, Pay Administration, VA Handbook 5007; Employee Recognition and Awards; VA 

Directive 5017; and Employee Recognition and Awards, VA Handbook 5017.

7

See S. Rep. No. 108-357, at 5 (2004); 150 Cong. Rec. S10466-67 (Oct. 5, 2004); 

150 Cong. Rec. H9791-93 (Nov. 17, 2004). Also see Veterans Affairs Physician and 

Dentist Compensation Issues: Hearing before the Subcommittee on Health of the House 

Committee on Veterans’ Affairs, 108th Cong. 61 (2003).
 

Page 4 GAO-13-536 VA Provider Performance Pay and Awards

centers—in Atlanta, Georgia; Togus, Maine; Dallas, Texas; and Seattle, 

Washington—to examine the administration of VA’s performance pay and 

award policies. We selected these medical centers because they were in 

different geographic areas of VA’s 21 networks8 and U.S. Census 

divisions, and had at least one provider who had a major adverse action 

taken against him or her in fiscal year 2010 or 2011, which were the 2 

most recent fiscal years for which data were available.9 We reviewed 

documentation for the providers with performance-related personnel 

actions, which include major adverse actions, during these 2 fiscal years 

in order to determine whether the medical centers gave performance pay 

and awards to these providers and their reasons for doing so. We 

reviewed Standards for Internal Control in the Federal Government to 

identify requirements for effective internal controls related to 

documentation. Specifically, we reviewed federal standards for internal 

control activities, which state that all transactions and significant events 

need to be clearly documented and readily available for examination.10

To examine the extent to which VHA oversees its medical centers’ 

compliance with policy requirements for performance pay and awards, we 

reviewed VA’s policies mentioned in the first objective to identify any 

references to VHA oversight of performance pay and awards. In addition, 

we reviewed Standards for Internal Control in the Federal Government to 

identify requirements for effective internal controls related to oversight. 

Specifically, we reviewed federal standards for internal control 

environment, which state that a good internal control environment 

We interviewed VA and VHA officials in headquarters to obtain their 

expectations for documenting pay and award decisions for providers with 

such actions. We also asked officials at the four medical centers and at 

the related networks how they interpreted specific requirements in the 

performance pay and award policies and how they documented 

compliance with them.

 

8

Each of VA’s 21 networks is responsible for managing and overseeing medical centers 

within a defined geographic area.

9

We used data from VHA’s Workforce Management and Consulting Office to identify 

medical centers with providers who were the subject of major adverse actions. We 

consulted with selected medical centers to confirm this information and request 

information about other performance-related personnel actions taken in fiscal years 2010 

and 2011.

10GAO/AIMD-00-21.3.1.
 

Page 5 GAO-13-536 VA Provider Performance Pay and Awards

requires that agencies’ organizational structures clearly define key areas 

of responsibility. We also reviewed federal standards for internal control 

for monitoring, which state that monitoring should ensure that the findings 

from reviews are promptly resolved and that management should follow 

up on review findings, recommendations, and the actions decided upon to 

ensure that those actions are taken.11 We reviewed VHA’s organizational 

structure to determine the lines of oversight authority. We interviewed 

officials from VHA’s Workforce Management and Consulting Office who 

conduct Consult, Assist, Review, Develop, and Sustain (CARDS) reviews 

of medical centers’ human resources offices to determine medical 

centers’ compliance with VA’s requirements for human resources 

personnel actions.12 For the four medical centers, we reviewed all 

available CARDS reviews since CARDS was established in 2011.13

In addition, to examine VHA’s oversight of its medical centers’ compliance 

with these requirements, we reviewed performance pay and award 

documents for a sample of approximately 25 providers from each of the 

four medical centers we visited for the 2 most recent fiscal years—2010 

and 2011.

We 

interviewed the human resources managers at the four VA medical 

centers and the associated networks to understand their processes for 

ensuring compliance with requirements in VA’s policies for performance 

pay and awards.

14

 

11

Specifically, we selected a random sample of physicians 

primarily from three specialties—primary care, psychiatry, and surgery. 

We also reviewed documents for the supervisors—called service chiefs— 

GAO/AIMD-00-21.3.1.

12We also interviewed the director of VA’s Office of Oversight and Effectiveness, which 

conducts oversight reviews of human resources personnel actions.

13One of the four medical centers had not yet had a CARDS review.

14Our sample size for two VA medical centers was 25 providers for each fiscal year—2010 

and 2011. The third VA medical center had 24 providers who met our criteria in fiscal year 

2010 and 25 providers who met them in fiscal year 2011. The fourth VA medical center 

had 23 providers that met our criteria for each of the fiscal years. The results of our 

analysis cannot be generalized to the four medical centers we visited or across VA’s 

health care system.
 

Page 6 GAO-13-536 VA Provider Performance Pay and Awards

for each of these specialties at each of the four medical centers.15 These 

three specialties are among the most common specialties at most VA 

medical centers. We also selected a random sample of dentists to review, 

as well as the dental service chief and the chief of staff at each medical 

center.16

We conducted this performance audit from April 2012 to July 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

We used VHA data to select the sample; we verified the 

accuracy of these data with each medical center and found the data 

sufficiently reliable for our purposes of selecting a sample. We also 

interviewed the supervisors of the three physician specialties and the 

dental specialty, as well as the chiefs of staff, to understand how they 

implement the policy requirements for performance pay and awards.

 

15The documentation we reviewed is generally contained in providers’ official personnel 

folders, which are not maintained at the medical center after the provider no longer works 

at the medical center. At one medical center, one of the service chiefs was no longer 

working there at the time of our review, so we did not examine that documentation.

We did not review documentation for providers at VA networks or headquarters because 

we focused our review on providers that provide direct patient care and those providers 

are primarily at VA medical centers.

16The chief of staff, who is typically a physician or dentist, oversees all providers, including 

service chiefs, at a VA medical center. The chief of staff may also see patients.

Some of the four medical centers did not have five physicians in each of the three 

selected specialties. In these instances, we randomly selected alternate physicians from 

another specialty. Likewise, some medical centers did not have five dentists who met the 

selection criteria. In these instances, our review of dentists was limited to the number of 

dentists at the medical center that met the criteria. For example, at one medical center we 

reviewed only three dentists, which resulted in a smaller sample.
 

Page 7 GAO-13-536 VA Provider Performance Pay and Awards

Most VA providers—including full- and part-time providers—are eligible 

for performance pay, but they may choose not to participate.17

Performance pay is given annually in a lump sum and may not exceed 

the lesser amount of $15,000 or 7.5 percent of a provider’s combined 

base and market pay, under the statute that defines the elements of 

provider pay.18 However, according to VHA officials, VA headquarters and 

each network and medical center have discretion to set a lower annual 

cap for their providers, and the amounts awarded may also depend on 

VA’s budget. Under the statute, performance pay is given on the basis of 

a provider’s achievement of specific goals and performance objectives, 

referred to in this report as goals. According to policy, performance pay 

goals can be established by medical center and network officials. As a 

result, the goals may be the same for all providers in the network, at a 

particular medical center, or within a particular specialty, or they may vary 

by individual provider. The amount of performance pay depends on the 

extent to which it is determined that a provider met his or her performance 

pay goals. Performance pay goals may include, for example, achieving a 

specific patient panel size, and are required by VA policy to be 

established within 90 days of the beginning of each fiscal year.19 VA’s 

performance pay policy requires medical centers to use form 10-0432 for 

each provider to document the goals and the provider’s achievement of 

them. When completed, the form is given to the medical centers’ 

respective human resources offices, which process the performance 

pay.20

 

17VHA officials told us that providers may opt out of performance pay for personal 

circumstances that would not allow them to devote the effort required to achieve 

performance pay goals, for example, if they are facing health challenges. Officials were 

unable to quantify the number of providers who opt out of performance pay. However, for 

2011 these providers would be included in the 20 percent of providers who did not receive 

performance pay.

1838 U.S.C. § 7431(d).

19Patient panel size is the number of patients for whom a provider is responsible.

20Some medical centers send form 10-0432 to the chief of staff’s or director’s office for 

review prior to sending the form to human resources for processing.

Background 

Performance Pay
 

Page 8 GAO-13-536 VA Provider Performance Pay and Awards

Most providers are eligible for performance awards, although these 

awards are not required.21 The awards are lump-sum payments that are 

made annually and are based on providers’ annual performance reviews. 

VA policy requires that all providers—including full- and part-time 

providers—who have worked at VA medical centers receive annual 

performance reviews. 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. A provider can receive an overall rating 

of unsatisfactory, low satisfactory, satisfactory, high satisfactory, or 

outstanding on an annual performance review. Service chiefs and chiefs 

of staff at VA medical centers, and providers at headquarters and 

networks who are in supervisory positions, also receive annual 

performance reviews based on measures outlined in VHA’s managerial 

performance plan. For nonsupervisory providers, the policy specifies that 

performance award amounts should not exceed $7,500. However, as with 

performance pay, VA headquarters, networks, and medical centers have 

discretion to determine the level of performance that would merit an 

award and the award amount within the $7,500 limit. For example, one 

medical center may grant performance awards to all providers who 

receive an overall performance rating of satisfactory or higher, while 

another medical center may only grant performance awards for an overall 

rating of outstanding, or not give them at all.

VA policy states that VA medical centers may take actions, such as major 

adverse and disciplinary actions, against providers to address and correct 

deficiencies related to providers’ clinical performance.22 These actions 

range in severity from admonishment to termination of employment. In 

addition, VHA also has the option of taking privileging action—that is, 

reducing, revoking, denying, or failing to renew a provider’s clinical 

privileges—against medical center providers to address performance 

deficiencies.23

 

21Prior to July 2010, performance awards were limited at VA medical centers to providers 

in supervisory positions, such as service chiefs and chiefs of staff. As of July 2010, 

supervisory and nonsupervisory providers at VA medical centers also became eligible for 

these awards.

Medical centers have discretion in determining the type of 

22VA, Employee/Management Relations, VA Directive 5021 and Employee/Management 

Relations, VA Handbook 5021. 

23VHA, Credentialing and Privileging, VHA Handbook 1100.19.

Performance Awards

Performance-Related 

Personnel Actions
 

Page 9 GAO-13-536 VA Provider Performance Pay and Awards

action appropriate for each provider’s performance issue. Performancerelated personnel actions may serve as an indication that the provider has 

not delivered high-quality, safe health care.

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 policy, issued in 2005 and revised in 2008, states that 

providers who meet established goals should receive performance pay. 

However, the policy does not provide an overarching purpose that the 

goals should support. VA’s Under Secretary for Health at the time the 

performance pay law was being considered stated in a congressional 

hearing that this pay would recognize providers’ achievements in quality, 

productivity, and support of the overall goals of the department.24 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.25

 

24Veterans Affairs Physician and Dentist Compensation Issues: Hearing before the 

Subcommittee on Health of the House Committee on Veterans’ Affairs, 108th Cong. 61 

(2003) (statement of Robert H. Roswell, Under Secretary for Health, Department of 

Veterans Affairs).

In addition, VA officials 

responsible for writing the performance pay policy also told us that the 

25See S. Rep. No. 108-357, at 5 (2004); 150 Cong. Rec. S10466-67 (Oct. 5, 2004) 

(statements of Senators Specter and Graham); 150 Cong. Rec. H9791-93 (Nov. 17, 2004) 

(statements of Representatives Simmons, Rodriguez, Evans, and Jackson-Lee).

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
 

Page 10 GAO-13-536 VA Provider Performance Pay and Awards

purpose of performance pay is to improve health care outcomes and 

quality; however, these goals are not documented in the policy.26

Officials at the four medical centers we visited differed in their views of 

what constituted appropriate goals for performance pay. The following are 

examples of the factors these officials thought should be considered 

when establishing performance pay goals. According to these officials, 

the goals should

• be objective and measurable,

• measure only clinical achievements,

• recognize performance that is above and beyond expectations, or

• be measured at the individual provider level to ensure that the 

provider has direct control over the achievement of the goals.

As a result of these differing views, our review of the goals established for 

a mental health provider at each of four medical centers we visited found 

similarities as well as differences in the fiscal year 2011 goals.27

Table 1 includes examples of the types of goals established for a mental 

health provider at each of the four medical centers we visited.

For 

example, one medical center used clinical goals exclusively, while others 

used a combination of goal types, such as clinical, patient satisfaction, 

and research. 

 

26The performance pay policy is written by VA’s Office of Human Resources 

Management, with assistance from VHA’s Workforce Management and Consulting Office.

27We sorted the goals we reviewed into five types. Clinical goals include quality, access, 

documentation, and consult issues; patient satisfaction goals include patient satisfaction 

survey results and patient complaints; research goals include training to conduct research 

and publishing articles; teaching goals include teaching and evaluating students, and 

students’ ratings of teachers; and administrative goals include attending committee 

meetings and working on projects.
 

Page 11 GAO-13-536 VA Provider Performance Pay and Awards

Table 1: Examples of Types of Goals Established for a Mental Health Provider at Each of Four VA Medical Centers GAO

Visited 

Type of goal Medical center A Medical center B Medical center C Medical center D

Clinical X X X X 

Patient satisfaction X 

Research X X 

Teaching X X 

Administrative X X 

Source: GAO’s analysis of information provided by four VA medical centers visited.

Note: We sorted the goals we reviewed into five types. Clinical goals include quality, access, 

documentation, and consult issues; patient satisfaction goals include patient satisfaction survey 

results and patient complaints; research goals include training to conduct research and publishing 

articles; teaching goals include teaching and evaluating students, and students’ ratings of teachers; 

and administrative goals include attending committee meetings and working on projects.

VHA officials told us that they have not formally reviewed the various 

goals that have been established by individual medical centers and 

networks to determine the purpose or purposes these goals support. In 

2009, the Principal Deputy Under Secretary for Health asked that a group 

be convened to solicit and compile performance pay goals in order to 

review the types of goals being developed for each physician specialty 

and dental service across VA’s health care system. VHA officials told us 

at the time of our review that they had not yet done this, but planned to 

begin compiling and discussing a list of useful goals sometime in 2013.28

 

28In its comments on a draft of this report, VA stated that in February 2013 it directed a 

committee to conduct a review of policies and controls associated with the administration 

of performance pay. This committee established a workgroup to interview chiefs of staff

nationwide to evaluate challenges with establishing performance pay goals, inconsistent 

application of performance pay, and the overall perceived value of performance pay. 

According to VA, an action plan based on this work was sent to the Under Secretary for 

Health in April 2013. In June 2013 the Under Secretary for Health directed a new task 

force to build upon the work of that committee and make recommendations for ensuring a 

consistent and system-wide process for setting and evaluating performance pay goals and 

granting performance pay. This work will include recommendations for reviewing and 

setting uniform performance pay goals across the system that are aligned to help VHA 

achieve its goals. A final action plan is due to the Under Secretary for Health in August 

2013.

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. This condition is inconsistent with federal 
 

Page 12 GAO-13-536 VA Provider Performance Pay and Awards

standards for internal control activities, which includes management of 

human capital.29

Moreover, in reviewing documentation for selected providers at four 

medical centers, we found that all providers who were eligible for 

performance pay in fiscal year 2010 or 2011 received it, including 

providers who had performance-related personnel actions taken against 

them. Eight providers across the four medical centers had a performancerelated personnel action in fiscal year 2010 or 2011. Five of the eight 

providers were eligible for performance pay, and all five received a 

portion of the pay based on the achievement of their performance pay 

goals during the same fiscal year in which the action was taken.30

• One provider received a reprimand for practicing with an expired 

license for about 3 months (until medical center officials noticed the 

problem). The service chief explained that this provider received 

performance pay because maintaining a current license was not a 

specific performance pay goal and therefore was not a factor that was 

considered. However, providers must possess a current license in 

order to practice medicine or dentistry at a VA medical center.

(See 

app. I for a summary of the circumstances that led to the performancerelated personnel actions, the actions taken, and the amount of 

performance pay received for the five providers.) Following are examples 

of providers we reviewed who received performance pay in the same 

fiscal year that performance-related personnel actions were taken against 

them.

31

 

29

For 

the year in which the reprimand was given, this provider had three 

performance pay goals—to publish one article, which was not 

achieved; to attend 80 percent of meetings; and to contribute to 

improving the service’s bereaved family survey results by 10 percent. 

Because two of the three goals were met, the provider received 

GAO/AIMD-00-21.3.1.

30Of the eight providers who were the subject of performance-related personnel actions in 

fiscal year 2010 or 2011 at the four medical centers visited, three providers were not 

eligible for performance pay during the same fiscal year. Two of the three providers were 

not eligible because they were terminated or resigned before the end of the fiscal year, 

and the third was not eligible because the provider was placed on indefinite suspension 

without pay and was not practicing as of the end of the fiscal year.

31See 38 U.S.C. § 7402(b); and VHA, Credentialing and Privileging, VHA Handbook 

1100.19.
 

Page 13 GAO-13-536 VA Provider Performance Pay and Awards

$7,663 in performance pay, 67 percent of the amount for which the 

provider was eligible.

• Another provider was reprimanded for refusing to see assigned 

patients waiting in the emergency department because the provider 

believed that patients had been triaged inappropriately. As a result, 

wait times increased. Documentation provided by the medical center 

indicated that, of the 98 patients who were triaged to the emergency 

department that day, 15 patients waited for over 6 hours to be seen 

and 9 patients left without being seen. That same fiscal year, this 

provider received $7,500 out of a maximum of $15,000 in 

performance pay. Specifically, this provider had 13 performance pay 

goals, which included becoming a member of a committee, attending 

staff meetings, and ensuring that all provider notes were signed in 

accordance with medical center policy. The provider met 1 of the 

13 goals, which was assigned a weight of 50 percent. This goal was 

not specific to the individual provider, but instead was based on the 

achievements of all emergency department providers; it included 

meeting performance measures, such as maintaining productivity 

despite reduced resources, and adhering to the medical center policy 

for length of stay for patients in the emergency room. Since the 

medical center determined that the emergency department providers, 

which included this provider, met this goal, the provider received 

50 percent of the maximum amount of performance pay. The service 

chief told us that his preference would have been to deny 

performance pay to this provider altogether, but he was told that the 

provider was entitled to the 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 supervisors are to use to 

determine the performance rating for providers in nonsupervisory 

positions, such as clinical competence.
 

Page 14 GAO-13-536 VA Provider Performance Pay and Awards

VA’s performance pay policy is unclear about how to document 

compliance with two requirements—the goal-setting discussion between 

the supervisor and provider and the approval of the performance pay 

amount. For the documentation of goal-setting discussions, the policy 

states that supervisors are to discuss established goals with individual 

providers within 90 days of the beginning of the fiscal year, but it does not 

specify how medical centers are to demonstrate compliance with this 

requirement. VA’s policy specifies that form 10-0432 is to be used for 

documenting performance pay. The form has space at the top for listing 

the goals that a provider must meet to receive performance pay. The form 

includes a signature and date box for the supervisor and for the provider, 

respectively. (See fig. 1, section A.) The VA officials who wrote the policy, 

and VHA officials who are responsible for helping medical centers 

implement it, told us they expect that provider and supervisor signatures 

on the top of the form would indicate that goals have been discussed and 

the date would indicate when this discussion took place. The officials told 

us that this date is to verify that the 90-day requirement was met, but they 

have not documented or provided this guidance to the medical centers.

VA’s Policy Is Unclear 

about Documenting 

Certain Requirements and 

Silent about Documenting 

Performance Pay 

Decisions for Providers 

Who Had PerformanceRelated Personnel Actions
 

Page 15 GAO-13-536 VA Provider Performance Pay and Awards

Figure 1: VA Form 10-0432 for Performance Pay
 

Page 16 GAO-13-536 VA Provider Performance Pay and Awards

Because the policy does not specify how compliance with the 90-day 

requirement should be documented, one of the four medical centers we 

visited did not interpret the policy the way VA and VHA officials did, and 

therefore, did not document compliance with the 90-day requirement 

when administering performance pay. Officials responsible for processing 

the performance pay form at this medical center told us that VA does not 

have a requirement for documenting compliance with the 90-day 

requirement and they do not believe form 10-0432 should be used for this 

purpose. At this medical center, we found that none of the forms we 

reviewed were signed by the supervisor and provider within 90 days of 

the beginning of the fiscal year, and instead all the forms were signed 

after the end of the fiscal year. Officials from the other three medical 

centers said that the form should be signed by the provider and 

supervisor within 90 days, or as soon as possible after the beginning of 

the fiscal year to indicate that the goals have been communicated. 

However, our review of the documentation from these three medical 

centers indicates that their forms were not always signed within 90 days.

For the second documentation requirement, the policy states that the 

performance pay amount must be approved and that performance 

payments for the fiscal year must be disbursed no later than March 31 of 

the following fiscal year, but does not state that the approving official must 

sign form 10-0432 by that date. VA’s policy also states that the supervisor 

should forward form 10-0432 to the designated approving official for 

action. The bottom of form 10-0432 includes a signature and date box for 

an approving official, who is to sign and date the form. (See fig. 1, section 

B.) VA and VHA officials told us they expect that medical centers will not 

disburse performance pay, which they are required to do by March 31 or 

earlier, unless the approving official’s signature and date are on the form. 

However, VA’s policy does not state that the approving official’s signature 

must be dated before March 31.

Because the policy does not specify when the approving official should 

sign the form 10-0432, officials at the four medical centers had not all 

interpreted and implemented the policy the way VA and VHA officials did, 

and the medical centers differed in how they documented approval when 

administering performance pay. For example, one medical center official 

who became responsible for processing these forms in 2011 told us that 

he does not look for the approving official’s signature to be dated by 

March 31. At this medical center, all of the fiscal year 2011 forms 10-0432 

we reviewed were signed by the approving official after March 31, which 

indicates that the payments were made after the required disbursement 

date or that payments were made before they were approved. For fiscal 
 

Page 17 GAO-13-536 VA Provider Performance Pay and Awards

year 2010, when a different official at this medical center was responsible 

for processing the performance pay forms, we found that nearly all of the 

forms were signed by the approving official by March 31. At the other 

three medical centers, we found that some forms were signed by the 

approving officials after March 31 or not at all, even though officials at 

these medical centers told us they strive to meet this date.

Further, VA’s policy lacks a requirement for documenting whether 

performance-related personnel actions had an impact on providers’ 

achievement of performance pay goals, and as a result, how these 

actions affected performance pay decisions, such as reducing or denying 

this pay. Some VHA headquarters officials we interviewed said that 

situations involving providers who had a performance-related personnel 

action would need to be reviewed case by case to determine if the action 

had an impact on whether the provider met established goals, since not 

all performance-related personnel actions would merit reducing or 

denying a provider’s performance pay. These officials told us they 

expected medical center officials to document their review of these 

actions when determining whether to give performance pay to these 

providers. However, these expectations are not explicit in VA’s 

performance pay policy. The documents provided by the four medical 

centers for five providers who had performance-related personnel actions 

did not include documentation that the actions were considered. Some 

medical center officials told us that they did not consider the performancerelated personnel actions when making performance pay determinations, 

while others told us that they did but that they did not document it.

Without a performance pay policy that clearly specifies how to document 

decisions or compliance with requirements, VHA does not have 

reasonable assurance that documentation includes all necessary 

information, a condition that is inconsistent with federal standards for 

internal control activities. In addition, medical centers will likely continue 

to vary in their interpretation of the policy for documenting goal-setting 

within 90 days of the beginning of the fiscal year, and subsequent 

approval of performance pay and the extent to which they document 

compliance with it. As a result, VHA does not have reasonable assurance 
 

Page 18 GAO-13-536 VA Provider Performance Pay and Awards

that medical centers are complying with requirements.32 Furthermore, 

without documentation of whether performance-related personnel actions 

affected performance pay decisions, VHA lacks information about how 

these decisions were made and whether these decisions appropriately 

reflected providers’ performance.

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.33

At the time of our review, VHA’s CARDS reviews did not examine medical 

centers’ compliance with performance pay requirements. The lead 

CARDS reviewer told us that CARDS reviews were beginning to include 

performance pay in 2013.

According to VHA officials, the results of these reviews are provided to 

the medical centers. However, these reviews have limitations and, as a 

result, do not always ensure that medical centers comply and remain in 

compliance with human resources requirements.

34

 

32VA’s performance award policy does not have similar requirements for documenting 

discussion and approval of performance awards. The performance award policy states 

that performance awards are to be approved by a higher-level management official using 

VA form 4659 and must include a complete copy of the employee’s performance appraisal 

or proficiency report and a narrative description of any factors that were considered but 

not described in the appraisal. VA, Employee Recognition and Awards, VA Directive 5017

and Employee Recognition and Awards, VA Handbook 5017.

However, reviewers had not developed a 

standard list of performance pay elements to review, which would be 

needed to ensure consistency in the reviews conducted across medical 

33VA’s Office of Oversight and Effectiveness, in VA’s Office of Human Resources 

Management, also conducts reviews of medical centers’ human resources offices and 

identifies problems with noncompliance with human resources requirements, including 

performance award requirements. However, these reviews are conducted infrequently—

about every 6 to 7 years, according to the director of the Office of Oversight and 

Effectiveness.

34The five CARDS reviewers take turns in the lead CARDS reviewer role on a yearly 

basis. This individual was the lead CARDS reviewer during our review, and as such can 

speak for all of the reviewers.

VHA’s Oversight Is 

Inadequate to Ensure 

Compliance with 

Performance Pay and 

Award Requirements
 

Page 19 GAO-13-536 VA Provider Performance Pay and Awards

centers. CARDS reviews use a standard list of elements to review other 

human resources requirements, including performance awards.35

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.36

 

35The Director of the Office of Oversight and Effectiveness told us that the office began 

reviewing performance pay in 2013, but as with the CARDS reviews, had not developed a 

standard list of elements to review.

The lead CARDS reviewer told us that their reports 

currently indicate that network human resources managers, who typically 

accompany CARDS reviewers on reviews, are to follow up with medical 

centers’ human resources offices to ensure identified problems are 

resolved. However, this reviewer said CARDS reviewers do not have the 

authority to require that this follow-up be done. Further, network human 

resources managers lack the authority to require medical center human 

resources managers to correct identified problems because medical 

center directors, not network human resources managers, typically have 

oversight authority over medical center human resources managers, 

according to VHA officials. Figure 2 shows the organization of VHA 

offices that are involved in performance pay and awards for providers at 

medical centers.

36GAO/AIMD-00-21.3.1.
 

Page 20 GAO-13-536 VA Provider Performance Pay and Awards

Figure 2: Organization of Veterans Health Administration (VHA) Offices Involved in Performance Pay and Awards for Medical 

Center Physicians and Dentists

Notes: Information is from VHA’s July 2012 organization chart and interviews with VHA officials.

a

The network director and the CARDS reviewers do not report directly to the Under Secretary for 

Health. These officials report through other offices in VHA’s chain of command. For example, the 
 

Page 21 GAO-13-536 VA Provider Performance Pay and Awards

network director reports directly to the Deputy Under Secretary for Health for Operations and 

Management.

b

As a result of the limitations with CARDS reviews—the lack of a standard 

list of performance pay elements, as well as the lack of an organizational 

component assigned to follow up on noncompliance and ensure it is 

corrected—VHA is unable to ensure that medical centers correct the 

problems found by the reviews and that problems do not recur, a 

condition that is inconsistent with internal control standards for 

monitoring.

Generally, the applicable network human resources official attends the CARDS review.

37 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. An October 2011 

CARDS review of the second medical center found that the facility was 

not using the required form 4659 for performance awards, and we found 

that the same medical center did not use form 4659 for performance 

awards in fiscal years 2010 and 2011. We also found that another 

medical center was not using form 4659 for performance awards in fiscal 

years 2010 and 2011. Additionally, we found other instances of 

noncompliance at two of the four medical centers. For example, we found 

that one of the medical centers we visited used form 4659 for 

performance awards, but was unable to provide the form for two of the 

five providers who received awards in fiscal year 2011. Further, we found 

that another medical center was unable to provide the required form 10-

0432 for performance pay for six of the providers we reviewed in fiscal 

years 2010 or 2011. Also, for the providers’ forms that were available in 

fiscal year 2010, two forms did not indicate whether the goals were met to 

justify the performance pay amounts, as required by VA policy.

Part of VHA’s responsibility for administering performance pay and 

awards is ensuring that providers understand the link between this 

compensation and their performance, according to federal internal control 

standards. However, VA’s performance pay policy does not state a 

purpose for this pay, and VHA, which administers this pay, has not 

reviewed the performance pay goals that have been established across 

 

37GAO/AIMD-00-21.3.1.

Conclusions 
 

Page 22 GAO-13-536 VA Provider Performance Pay and Awards

VA medical centers and networks. Without stating a purpose for the pay 

and reviewing the goals, VHA cannot determine the purposes these goals 

support, and the relationship between performance pay and providers’ 

performance is unclear. 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. Because VA’s policy is silent on documenting whether 

performance-related personnel actions affected performance pay, none of 

the medical centers provided documentation that these actions were 

considered in making performance pay decisions. As a result, VHA lacks 

information about how these decisions were made and whether these 

decisions reflect providers’ performance. Moreover, because VA’s policy 

does not specify how compliance should be documented for certain 

performance pay requirements, such as discussion of goals and approval 

of amounts, VHA cannot ensure consistent compliance across its medical 

centers.

In addition, oversight of medical centers’ management of performance 

pay and awards is not adequate for VHA to have reasonable assurance 

that medical centers fully comply with requirements. VHA has not 

assigned responsibility to an organizational component to follow up on 

identified problems at medical centers, including problems identified 

during CARDS reviews, to ensure that they are corrected and remain 

corrected. Oversight that does not ensure that identified problems are 

resolved and remain so is inconsistent with federal standards for internal 

control, and may allow compliance problems to persist or worsen.

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

Recommendations for 

Executive Action
 

Page 23 GAO-13-536 VA Provider Performance Pay and Awards

• how medical center officials should document whether performancerelated personnel actions had an impact on providers’ achievement of 

performance pay goals, and as a result, affected performance pay 

decisions.

To ensure that performance pay goals are consistent with the overarching 

purpose that VA specifies for this pay, we recommend that the Secretary 

of Veterans Affairs direct the Under Secretary for Health to review 

existing performance pay goals across VA’s health care system.

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.

VA provided written comments on a draft of this report, which we have 

reprinted in appendix II.38

In response to our recommendations to clarify the performance pay 

policy, VA stated that it concurred with three of them and concurred in 

principle with the fourth. Regarding the overarching purpose of 

performance pay, VA stated that it will coordinate with VHA to develop a 

policy change that will clearly articulate the purpose of performance pay, 

In its comments, VA generally agreed with our 

conclusions and recommendations. 

 

38 VA included two attachments to its comments—a February 11, 2013, memorandum 

from VHA’s Under Secretary for Health to the National Leadership Council Workforce 

Committee regarding VHA use of provider performance pay and a June 20, 2013, 

memorandum from the Under Secretary for Health to members of the VHA Physician and 

Dentist Performance Pay Task Force. Because both attachments restated the actions that 

were being taken as described in VA’s comments, we did not reprint them in the appendix.

Agency Comments 

and Our Evaluation
 

Page 24 GAO-13-536 VA Provider Performance Pay and Awards

which is to ensure and improve the quality of care through the 

achievement of specific goals and objectives. In response to our 

recommendations that VA specify how medical centers should document 

the goal-setting discussion between the supervisor and provider, and the 

approval of the performance pay amount, VA stated that it would revise 

the performance pay policy to include more detailed instructions for 

documenting compliance with these two requirements. In addition, VA 

said it would revise form 10-0432 to include sections for documenting 

compliance with these two requirements.

VA stated that it agreed in principle with our recommendation that medical 

centers should document whether performance-related personnel actions 

had an impact on providers’ achievement of performance pay goals, and 

affected performance pay decisions. VA agreed that medical center 

officials should consider whether a performance-related personnel action 

had an impact on the provider’s achievement of the goals and objectives 

associated with performance pay, but stated that it is inappropriate to 

require the documentation of the decision on form 10-0432. We 

appreciate VA’s commitment to clarify in policy that medical center 

officials should consider performance-related personnel actions when 

making performance pay decisions. We support VA’s flexibility as to 

where to document these considerations, which is why we did not specify 

in our recommendation that form 10-0432 should be used for this 

purpose. However, we continue to believe that if such considerations are 

not documented, VHA lacks information about how these decisions were 

made and whether these decisions appropriately reflected providers’ 

performance, which is inconsistent with federal internal control standards 

for documentation.

To address our recommendation that the Under Secretary for Health 

review the existing performance pay goals across VA’s health care 

system to ensure that performance pay goals are consistent with the 

purpose specified in policy, VA stated that the Under Secretary for Health 

directed a committee on February 11, 2013, to conduct a review of 

policies and controls associated with the administration of performance 

pay, including evaluating challenges associated with establishing 

performance pay goals, inconsistent application of performance pay, and 

the overall perceived value of performance pay. In June 2013, the Under 

Secretary for Health directed a new task force to build upon the work of 

that committee and make recommendations for ensuring a consistent and 

system-wide process for setting and evaluating performance pay goals 

and granting performance pay, including making recommendations for 
 

Page 25 GAO-13-536 VA Provider Performance Pay and Awards

reviewing and setting uniform performance pay goals across the system 

that are aligned to help VHA achieve its goals. 

To address our recommendations to strengthen oversight of medical 

centers’ compliance with VA policy requirements for performance pay and 

awards, VA stated that the Under Secretary for Health established in May 

2013 a task force to develop and provide guidance and methodology for 

performance pay. In addition, VA stated that VHA’s Office of the Deputy 

Under Secretary for Health for Operations and Management will assign 

responsibility to the network directors, in coordination with the network 

human resources managers, network chief medical officers, medical 

center directors, medical center chiefs of staff, and medical center human 

resources managers, for monitoring and enforcing VA’s performance pay 

and award policies, and communicate that responsibility in a 

memorandum. Additionally, the Office of the Deputy Under Secretary for 

Health for Operations and Management will communicate in a 

memorandum to the network directors and human resources managers 

that they should monitor and track CARDS reviews and coordinate with 

the medical center directors and human resources managers to ensure 

proper corrective actions are taken for compliance.

VA also provided a general comment that it considered our definition of 

performance-related personnel actions, defined in footnote 5 of the report, 

to be too broad. Specifically, VA stated that performance actions are 

taken when an employee lacks the skill and ability to perform assigned 

duties, and that in such situations providers are given assistance and an 

opportunity period to perform at an acceptable level of competence. VA 

also stated that if the provider fails to perform at an acceptable level 

during this period, the resulting performance action will be either a 

reduction of privileges or termination. However, VA’s policy on 

employee/management relations states that disciplinary actions—which

include admonishments and reprimands—and major adverse actions—

which include suspension, transfer, reduction in grade, and reduction in 

basic pay, in addition to termination—can be taken to address 

performance or conduct. In addition, VA stated that four of the five 

scenarios listed in appendix I of the report were conduct actions, not 

performance actions. As stated in footnote 5 of the report, we created the 

term performance-related personnel actions to include any action taken to 

address clinical performance—that is, an action that medical centers’ 

documentation indicated was related to patient safety or quality. 

Documentation provided by the medical centers for each of the five cases 

listed in appendix I clearly stated that the actions that were taken against 

the providers were related to patient safety or quality. 
 

Page 26 GAO-13-536 VA Provider Performance Pay and Awards

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the

report date. At that time, we will send copies to the Secretary of Veterans 

Affairs, interested congressional committees, and others. In addition, the 

report will be available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-7114 or draperd@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix III.

Debra A. Draper

Director, Health Care
Appendix I: Performance-Related Personnel 

Actions and Performance Pay Amounts

Page 27 GAO-13-536 VA Provider Performance Pay and Awards

Table 2: Basis for Performance-Related Personnel Action, Action Taken, and Performance Pay Amount Received for Five 

Eligible Providers at Four VA Medical Centers GAO Visited, Fiscal Years 2010 and 2011

Basis for taking performance-related personnel action against

provider and action taken

Performance pay 

amount receiveda Maximum amount eligible for

(dollars) (dollars)

A Professional Standards Board found that a radiologist failed to read mammograms 

and other complex images competently.b The radiologist’s privileges were reduced.c $8,216 $12,000

Surgeon who was supervising residents left the operating room and medical center 

before the surgery was completed, allowing residents to continue the surgery 

without supervision until another surgeon was found to supervise the residents. The 

surgeon was suspended without pay for 14 calendar days. 11,189 15,000

Physician refused to see assigned patients in emergency room because physician 

believed patients had not been triaged appropriately by the emergency department 

nurse. As a result, wait times increased. According to documentation provided by 

the medical center, 15 patients waited more than 6 hours to be seen, and 9 patients 

left without being seen. The physician was reprimanded. 7,500 d 15,000

Physician could not be reached when he was required to be available, which 

delayed patient care. Physician engaged in inappropriate behavior that had a 

negative impact on the patient care environment. The physician “yelled” at other 

staff, and the outbursts were regularly witnessed by patients, contributing to an 

atmosphere of fear and poor morale in the emergency department. The physician 

was suspended for 3 days with pay and received a letter of alternative discipline. 10,529 e 12,640

Physician practiced with expired license for 3 months until the medical center 

discovered the situation. The physician was reprimanded. 7,663 d 11,495

Source: GAO summary of Veterans Health Administration information.

a

Performance pay amount received was based on providers’ achievement of performance pay goals 

for that fiscal year.

b

Professional Standards Boards are boards of peers that make recommendations concerning 

appointments, promotions, and other personnel actions. One function of these boards is to conduct 

reviews of providers’ performance and conduct during the probationary period (the 2-year period of 

initial employment at the Department of Veterans Affairs [VA]) and make recommendations for 

whether to retain or separate providers with alleged performance or conduct deficiencies.

c

Privileges are the authority granted to a provider by a hospital governing board to provide patient 

care in the hospital and are based on the individual’s license, experience, and competence. Medical 

centers can reduce, revoke, deny, or fail to renew a provider’s privileges on the basis of deficiencies 

in professional performance.

d

A reprimand is an official letter of censure to a provider for deficiencies in competence. Reprimands 

can also be issued for acts of misconduct. A reprimand is a more severe disciplinary action than an 

admonishment, which is an official letter of censure to a provider for minor deficiencies in competence 

or conduct.

e

Appendix I: Performance-Related Personnel 

Actions and Performance Pay Amounts 

VA officials did not provide documentation of the letter of alternative discipline but indicated that it 

was probably a reprimand. We included this case in our sample based on documentation provided by 

the medical center, which indicated that the action was closed in fiscal year 2010.
Appendix II: Comments from the Department 

of Veterans Affairs

Page 28 GAO-13-536 VA Provider Performance Pay and Awards

Appendix II: Comments from the Department 

of Veterans Affairs

Note: Page numbers in 

the draft report may differ 

from those in this report.
Appendix II: Comments from the Department 

of Veterans Affairs

Page 29 GAO-13-536 VA Provider Performance Pay and Awards
Appendix II: Comments from the Department 

of Veterans Affairs

Page 30 GAO-13-536 VA Provider Performance Pay and Awards
Appendix II: Comments from the Department 

of Veterans Affairs

Page 31 GAO-13-536 VA Provider Performance Pay and Awards
Appendix II: Comments from the Department 

of Veterans Affairs

Page 32 GAO-13-536 VA Provider Performance Pay and Awards
Appendix II: Comments from the Department 

of Veterans Affairs

Page 33 GAO-13-536 VA Provider Performance Pay and Awards
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 34 GAO-13-536 VA Provider Performance Pay and Awards

Debra A. Draper, (202) 512-7114 or draperd@gao.gov

In addition to the contact named above, Mary Ann Curran, Assistant 

Director; Elizabeth Conklin; Kaitlin McConnell; Elizabeth T. Morrison; 

Lisa Motley; and Christina Castillo Serna made key contributions to this 

report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(291026)
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