Many Healthcare Providers Lose VA Retention Bonuses

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Many Healthcare Providers Lose VA Retention Bonuses

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By Sandra Basu
WASHINGTON — In response to congressional criticism and an Inspector General’s report last year, VA has restricted use of retention bonuses across its health system, in effect reducing compensation for more than 6,700 employees.

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The bonuses are intended to help facilities retain high-quality employees, attract candidates in fields with short supply or even out disparities between salaries in the private sector and those in VA. According to VA policy, officials at each facility must justify, in writing, the reason for a retention incentive and the amount.

The VA’s IG report released in November 2011 found a lack of justification in the majority of bonuses they examined, questioning 80% of 120 incentives across VHA and 79% of 30 handed out by VA Central Office. The awards ranged from amounts as low as $260 to as high as $43,733.

The vast majority of the retention bonus terminations that have taken place this year, 6,671, affected employees who are not top executives. In addition, 63 of 96 bonuses were also eliminated for senior executive service officials or equivalents.

Healthcare professionals, such as physicians, pharmacists and nurses, have borne the brunt of those cuts, and the double whammy of the loss of retention bonuses and a federal promised.

Critics of the actions said the retention bonus terminations were made with little explanation and without much input from staff or supervisors.

Sam Aldi, RN, a nurse perfusionist at the Manhattan VA Medical Center, got word in September that the retention incentive he had received for the last eight years would be terminated.

This will result in roughly $800 less a month in pay, an amount that makes a significant difference in a city like New York where the cost-of-living is extremely expensive, he told U.S. Medicine, adding, “Believe me, I don’t put this $800 a month in my pocket and go to Bloomingdale’s.”

Aldi, who also serves as a local union representative for National Nurses United, says 50 nurses at the Manhattan VAMC lost their retention incentives.

“As nurses, we are not asking to make more money than anyone else. All we are asking is to make the same as our sister hospitals — the NYU nurses, the Bellevue Hospital nurses,” he said.

 

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Scrutinizing Retention Incentives

With an influx of new veterans requiring care, it is critically important that VA makes sure that providers are adequately paid, American Federation of Government Employees (AFGE) officials told U.S. Medicine.

“We need to make sure that we have the same competitive edge, especially in our clinics, especially for some of these needed specialists,” said MJ Burke, the first executive vice president for AFGE’s National VA Council.

Federal agencies like VA are authorized to offer retention incentives for hard-tofill positions or positions requiring unique qualifications with the understanding that essential employees would likely leave federal employment without them. VA has been under increased pressure by Congress and the IG, however, to scrutinize such payments. Much of the criticism from Congress centered around bonuses for top VA officials.

Rep. Jeff Miller (R-FL), chair of the House VA Committee asked VA Secretary Eric Shinseki last year to suspend VA’s executive bonus program until all concerns have been resolved.

In light of the VA OIG report, I am making that request a second time and encourage VA to stop payment of bonuses until it can be verified that these bonuses are prudent and merit-based.”

VHA said late last year that it expected to review all facility-based retention incentives by September 30, 2012, as well as 100% of all bonuses given to senior executives by November 30, 2011. Those reviews are completed.

Questionable Reasons

According to the VA IG report issued last November, VHA paid nearly $110 million in retention incentives to 16,346 employees located at 162 facilities in FY 2010. The report charged that “at times, VHA awarded retention incentives for questionable reasons, such as increased compensation for employees.” In addition, the report stated that in numerous instances, “documentation to support
retention incentive awards was missing.”

One example cited in the report was a staff nurse at the VA Health Care System, Minneapolis, MN, with an annual salary of $95,237 who also received a group retention incentive of $7,589 in FY 2010.

“The justification stated the employee was likely to leave federal service and had unusually high or unique qualifications; however, no evidence supported or described the employee’s high or unique qualifications,” the report said.

In another example, a nursing assistant at VA Medical Center Hampton receiving an annual salary of $32,359 in FY 2010, also got an annual retention incentive totaling about $1,232.

“Managers incorrectly used a salary survey for licensed practical nurses instead of the salary survey for nursing assistants to justify the retention incentive for this employee. If management had applied the correct salary scale, the employee might not have been eligible for the retention incentive,” according to the IG’s office.

The report also cited six cases at two medical facilities, totaling about $16,000 and $11,000 respectively, where VHA used retention incentives to increase physician salaries as part of employee compensation packages.

“A compensation package outlines agreements on an employee’s annual salary and benefits as terms of employment with the agency. The award process and supporting documentation for increasing
compensation packages did not meet VA’s criteria for retention incentives,” the report stated.

Earlier this year, Carol A. Bonosaro, president of the Senior Executives Association, wrote a letter to Scott Gould, VA’s deputy secretary, questioning how the retention bonus issue was being handled.

“Recently, we have heard disturbing accounts of approved retention bonuses being denied or rescinded with little explanation,” she said in the letter, adding that even top-level VA employees were provided little information on the changes.

Bonosaro said “it appears that any written documentation governing the retention bonuses was handled at the oversight level without any opportunity for much, if any input, from the directors themselves.”

Aldi, meanwhile, said nurses at the Manhattan VA were told that their retention package was terminated because it was “illegal,” even though it had been offered for years. VA spokesperson Josephine Schuda told U.S. Medicine in a written statement that VHA has “leveraged the IG report to develop a sound program and every incentive was carefully scrutinized for a strong justification.

“Policy guidance was developed, a communication strategy was launched, program oversight and training were conducted for all field human resources offices, and VHA established internal control mechanisms and a formal board process for vetting.”

VA now requires annual re-certification of retention incentives and terminates any whose re-certification is not completed. VA also is limiting facility directors to 15% of salary approval on all retention, relocation, and recruitment incentives; more than that will require approval at the Veterans Integrated Service Network or VA headquarters level.

Still, Schuda said that retention incentives “continue to be an option for management officials to use to retain valuable healthcare providers when there is documented evidence to support the need for these incentives and the regulatory requirements are met.”

Aldi questioned why management at his facility did not do more to justify the need for retention incentives for nurses there. “For eight years, they thought it was justified then, all of a sudden it wasn’t,” he said.

Meanwhile, Aldi said he and colleagues from the preoperative nursing staff at the facility have written letters to lawmakers, and even President Obama, seeking help. The letter explains the “enormous” financial impact of the retention incentive termination that results in an average 10% pay cut.

“The cost of living in New York City has been very challenging for each of us every day. This drastic pay cut will result to an unprecedented difficulty to our families,” the nurses wrote.

Aldi said he and his colleagues also wrote that they didn’t understand why the retention bonuses were offered to them in the first place, if they were improper.

“Misuse and noncompliance of the retention package is not the fault of the direct care patient giver. Why then are we penalized for the ineptitude of those who we entrust to manage?” he said, quoting the letter.

Aldi said that the nurses have yet to receive a response to the letter.

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