Senior VA Health Executives Could Earn More Money Under Department Proposal

Senior health care executives at the Veterans Affairs Department could earn more money, but also could be fired more easily under draft legislation that Secretary Bob McDonald has sent to Capitol Hill.

The proposal would create a new personnel system under Title 38 for senior executives in health care leadership at the department, with new rules on hiring, setting pay and disciplining those accused of poor performance or misconduct. Those employees, who would include senior medical directors within the Veterans Health Administration and the Veterans Integrated Service Network, could receive compensation as determined by the secretary up to the president’s annual salary (currently $400,000) and would be subject to a new performance management system for determining bonuses and job ratings. The secretary would review the minimum and maximum market rates for basic pay for senior health care executives at least once every two years.

Affected senior executives also would lose their current Title 5 rights to appeal disciplinary actions against them, such as removal, to the independent Merit Systems Protection Board. Instead, their appeals would be handled internally at the VA by an executive appeals board made up of three career senior health care executives at the department. The secretary would have the final say over the type of punishment meted out, including firing, suspension and demotion. Employees subject to the most serious penalties could appeal the internal board’s decision to U.S. District Court.

The proposal, which could be included in an omnibus legislative package on veterans’ issues that will be unveiled this spring, aims to give the secretary more authority to recruit and retain talented health care professionals to the department -- and, if necessary, discipline those executives more quickly. McDonald, in a March 23 letter to Vice President Joseph Biden and House Speaker Paul Ryan, R-Wis., said he needs greater flexibility to hire and fire “to ensure that VA can operate as a values-based high performance organization rather than a compliance-focused underperforming bureaucracy.”

Right now, roughly 190,000 of the department’s 300,000-plus workforce falls under Title 38, including doctors, nurses and other categories of health care workers. Between 60,000 and 70,000 of those employees are considered “pure” Title 38, meaning they do not have the same standard MSPB appeal rights that Title 5 employees have. Hybrid Title 38 employees, including social workers, pharmacists and psychologists at the VHA, have the same rights to appeal adverse actions to MSPB as Title 5 employees have. The separate title and the two tracks within it emerged as a way to help the VA secretary fill certain jobs faster through the federal hiring process. 

McDonald’s legislative proposal would treat senior health care executives as “pure” Title 38.

The VA’s draft legislation also would amend the disciplinary process for all other non-health care senior executives in the 2014 Veterans’ Access, Choice and Accountability Act “to specify the burden of proof and level of deference the Merit Systems Protection Board must afford VA’s senior executive accountability actions,” stated the department’s analysis of the proposed changes. It would direct MSPB to issue a decision on non-health care senior executive appeals within 30 days, instead of the current 21-day deadline, and require the board “to defer to agency actions that are supported by substantial evidence, lawful and within the tolerable bounds of reasonableness, and would authorize MSPB to mitigate the penalty imposed by the agency in certain limited circumstances,” the analysis said.

The proposed change to the 2014 law is a reaction to three recent appeals cases in which MSPB ruled in favor of the employees. The agency overturned two demotions and one firing that the department had recommended for three senior executives, in part because the administrative judges believed the punishments were too harsh and that they did not have the authority to offer a less severe penalty. The decisions, which the VA and many lawmakers were not happy about, have raised questions about the intent of Congress in passing the 2014 law, implementation of the law by VA and MSPB, and the preservation of constitutional due process rights afforded to Title 5 federal employees.

McDonald’s formal legislative proposal is a scaled-back version of a draft document circulated among VA leadership, lawmakers, and other stakeholders earlier this year that discussed moving all the department's senior executives, roughly 350 employees, from Title 5 to Title 38. 

In a Feb. 18 email to VA senior executives, McDonald said that “running VA like a business requires more flexibility than we currently have in the way we appoint, onboard, assign, develop, appraise, pay, and—if necessary—discipline executives.” He added that one way to do that could include shifting those employees from Title 5 to Title 38. “At the Feb. 10, 2016, House Committee on Veterans' Affairs hearing on the president's fiscal year 2017 budget request, I addressed the idea of a legislative change to make all VA career senior executives Title 38 employees,” McDonald wrote in the email. 

The Senior Executives Association had blasted the VA’s idea to convert the department’s entire SES corps into Title 38 employees. Jason Briefel, interim SEA president, said in February that such a move “will surely lead to the politicization of the delivery of care and benefits throughout the entire VA workforce, as these at-will executives will now serve at the complete pleasure of the political arm of the VA.”

In the last month, VA moved away from proposals that would have shifted the entire SES corps out of Title 5 and into Title 38.

The leadership of the House and Senate Veterans’ Affairs committees has been working since December on a big veterans’ omnibus package that includes various items, including changes to the hiring and firing of VA employees, as well as provisions to improve vets’ health care and other benefits. Senate Veterans’ Affairs Committee Chairman Johnny Isakson, R-Ga., has said he wants to get it passed and to President Obama before Memorial Day in May.

In his letter to Biden and Ryan, McDonald said the VA “faces unprecedented demands for health care services,” and those challenges require the department to “re-examine” how it operates and implement new programs to meet veterans’ needs.

“As a result, VA is in the midst of a radical transformation to improve its relationship with and service to veterans and their families,” he wrote. “The sustainability of this transformation is dependent upon the career VA leaders who provide executive level leadership for VA’s health care facilities and programs.”