WASHINGTON -- Despite public outrage over dysfunctional and dangerously run hospitals, a landmark VA reform bill set to be signed Thursday by President Barack Obama will retain some department perks: Hefty bonuses for executives and other employees.
The bill includes a compromise by House and Senate lawmakers allowing the Department of Veterans Affairs to continue handing out up to $360 million in employee performance awards each year as it attempts to overhaul its health care system and ease chronically long patient wait times.
Obama has announced he will sign the legislation Thursday during a ceremony at Fort Belvoir, Va., after overwhelming votes of support in Congress. It will begin the most comprehensive VA reform in decades by expanding access to private care, hiring more medical staff, and streamlining how executives are fired.
The cap on employee performance awards, which totaled $278 million across the department in 2013, was a product of fractious House and Senate negotiations in late July.
House lawmakers led by Rep. Jeff Miller, R-Fla., chairman of the chamber's Veterans Affairs Committee, wanted to completely eliminate VA bonuses due to gross mismanagement, according to committee staff.
In one case, the VA awarded a nearly $63,000 bonus to a Pittsburgh hospital administrator after an investigation in April found his facility failed to prevent a deadly outbreak of legionnaires disease among veterans.
The committee reported in June that about 65 percent of the department's senior executives received bonuses specifically for high performance -- ranging between about $7,000 and $12,000 -- and all were given fully successful performance reviews during last year, even as staff across the country used secret lists to hide the fact hundreds of thousands of vets wait weeks or months for treatment.
Until recently, the VA awarded an average of $400 million per year in total bonuses but began reducing the payments over the last two fiscal years due to congressional scrutiny, committee staff said.
Miller called the VA system of awards "scandalous, even criminal."
But the Senate opposed the elimination of bonuses when Congress called a conference committee in June to hammer out a compromise bill to fix the VA.
Sen. Bernie Sanders, I-Vt., chairman of the Senate Veterans Affairs Committee, contended the VA was essentially good at providing health care once veterans got into the system and pushed for a vast expansion of medical staff and facilities.
The VA's head of human resources testified in June that bonuses are part of the expected compensation of managers including doctors, and are key to attracting the "best and brightest leaders."
After four weeks of fruitless negotiations, the House and Senate conference committee threatened to crumble due to concerns about the overall cost of the bill. Miller and Sanders agreed to come to the table for a final round of emergency talks aimed at striking a middle ground between spending that ranged from $10 billion to $25 billion.
The final $16.3 billion compromise was released days later and included $5 billion to hire more doctors, nurses and other medical staff for the VA health care system.
Also, Sanders had successfully pushed to preserve performance awards for VA employees with the $360 million annual limit, a "more modest cap spread out over a longer period of time," his staff said.
The House would have been unable to reach an agreement with the Senate without the cap, according to House Veterans Affairs Committee staff.
In a final joint statement, lawmakers said the VA should ensure annual performance bonuses are not disproportionately spent on upper management.