oversight

Pay and Benefits: Comparative Analyses of Federal Physicians' Compensation

Published by the Government Accountability Office on 1997-09-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Honorable
                 Constance A. Morella
                 House of Representatives


September 1997
                 PAY AND BENEFITS
                 Comparative Analyses
                 of Federal Physicians’
                 Compensation




GAO/GGD-97-170
                     United States
GAO                  General Accounting Office
                     Washington, D.C. 20548

                     General Government Division

                     B-276378

                     September 15, 1997

                     The Honorable Constance A. Morella
                     House of Representatives

                     Dear Ms. Morella:

                     This report responds to your request for information on pay and benefits
                     of physicians employed by the federal government and in the private
                     sector to be used in considering reauthorization of the Federal Physicians
                     Comparability Allowance Act (5 U.S.C. 5948). The authority to enter
                     agreements to pay physicians comparability allowances (PCA) under this
                     act is currently due to expire on September 30, 1997. This act permits
                     federal agencies that are experiencing problems in recruiting and retaining
                     physicians to provide PCAs to physicians who are paid under title 5 of the
                     U.S. Code. On July 18, 1997, the Director of the Office of Personnel
                     Management (OPM) transmitted a report on PCAs to the President of the
                     Senate and the Speaker of the House of Representatives recommending a
                     3-year extension of agencies’ authority to enter into PCA agreements with
                     employees.


                     As of September 1996, there were over 25,000 full-time physicians
Background           employed by the federal government. (See appendix IV.) Most of the
                     physicians paid under title 5 were with the Departments of Health and
                     Human Services (HHS) and Defense (DOD).1 Physicians paid under title 37
                     were with HHS’ Public Health Service Commissioned Corps or on military
                     duty. Physicians paid under title 38 were with the Department of Veterans
                     Affairs (VA). Although not eligible to receive PCAs under title 5, physicians
                     paid under titles 37 and 38 are eligible to receive other types of special pay
                     for physicians. Also, under a delegation of authority from OPM, some HHS
                     physicians who receive basic pay under title 5 are eligible to receive
                     special pay under title 38.


                     As we agreed with you, our principal objectives were to (1) compare
Objectives, Scope,   amounts paid2 to federal physicians under title 5 with amounts paid to
and Methodology      physicians under other sections of the U.S. Code and with physicians in

                     1
                      A small number of federal physicians work for such organizations as the Tennessee Valley Authority
                     or the Central Intelligence Agency or are in the Foreign Service. These physicians are paid under other
                     titles of the U.S. Code and are also eligible for PCAs.
                     2
                      For the purpose of this report, we defined amounts paid to physicians as “physicians’ pay,” which was
                     the total of basic pay plus any special pay or PCAs that were available only to physicians. Basic pay is
                     defined in appendix III.



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the private sector; (2) determine what other types of pay and benefits
federally employed physicians receive; and (3) identify ongoing efforts by
federal agencies that affect or have the potential to affect physicians’ pay.
In addition to the primary comparisons required by our objectives, we also
developed additional analyses of physicians’ compensation, which are
discussed in appendix I.

In our previous report on federal/private sector pay comparisons,3 we
noted that experts in labor market analysis suggested that federal/private
compensation comparisons that focus exclusively on pay may be
misleading. A more complete analysis of total compensation would be
needed to consider factors such as differences in pay plans and job
responsibilities, federal restrictions limiting amounts of either basic or
special pay, working conditions, job satisfaction, and risks of being laid
off. This would apply to comparisons among federal positions as well.
Because much of this information was not available from studies of
physicians’ pay and because of the time constraints for completing this
review, we only obtained pay-type information for federal and private
sector physicians and did not assess these other factors. In addition, as
agreed, we did not evaluate the significance of recruitment or retention
problems upon which PCAs are based. Therefore, we did not attempt to
make conclusions or recommendations on the sufficiency, size, or
continued need for PCAs under title 5.

On the basis of our preliminary work, we agreed to obtain physicians’ pay
and benefit information for full-time federal physicians paid under titles 5,
37, and 38 of the U.S. Code. In doing our work, we interviewed officials
from HHS, DOD, VA, OPM, and the Office of Management and Budget (OMB) to
obtain descriptive information on the various types of pay and benefits
that physicians received and on recent actions that affect or have the
potential to affect physicians’ pay. HHS, VA, DOD, and the Commissioned
Corps provided us with payroll information, which we used to make our
comparisons. Unless otherwise stated, except for military physicians,
federal physicians’ pay data in this report are for calendar year 1996. We
did not verify the pay information we obtained. Our scope and
methodology are described in greater detail in appendix III.




3
 Federal Personnel: Federal/Private Sector Pay Comparisons (GAO/OCE-95-1, Dec. 14, 1994).



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                   We also purchased and reviewed several studies on physicians’
                   compensation that were prepared by private consulting firms.4 These
                   studies contained pay information for physicians in various medical
                   specialties who were employed primarily in group practices, health
                   maintenance organizations (HMO), and hospitals. Except for pay data for
                   physicians in various medical specialties, these studies did not contain
                   information that would allow us to compare the pay of the private sector
                   physicians with the pay received by federal physicians.

                   We requested comments on a draft of this report from the Secretaries of
                   HHS, Defense, and VA, and the Directors of OPM and OMB. The agencies’
                   comments are discussed at the end of this letter. We performed our review
                   from December 1996 to August 1997 in accordance with generally
                   accepted government auditing standards.


                   The average5 annual pay for HHS physicians6 paid under title 5 was
Results in Brief   (1) 17 percent less than the average for HHS physicians who received
                   special pay under title 38, (2) 21 percent less than the average for VA
                   physicians paid under title 38, (3) 4 percent greater than the average for
                   Commissioned Corps physicians, and (4) 23 percent greater than the
                   average for physicians in the military.

                   The average pay for title 5 HHS physicians was $101,660. For HHS physicians
                   who received PCAs, average pay was $104,730 compared with $79,485 for
                   those who did not receive a PCA or special pay under title 38. The average
                   pay for DOD physicians paid under title 5 was $86,760. For DOD physicians
                   receiving a PCA, average pay was $89,710. For VA physicians and HHS


                   4
                    We purchased studies prepared by Hospital & Healthcare Compensation Service (HHCS); Sullivan,
                   Cotter, and Associates, Incorporated (Sullivan); American Medical Group Association (AMGA); and
                   Medical Group Management Association (MGMA). Two of these organizations cautioned users of their
                   reports that the data provided by responding medical practices may not be representative of all
                   physicians or all medical groups because the data were not based on a random sample of medical
                   practices.
                   5
                    In this report, the word “average” refers to the mean. We recognize that the use of medians is
                   preferred because they are not subject to distortions that may occur in averages when extremely high
                   or low values are included in a data set. However, we used averages because they were only slightly
                   different from the medians and because the medians were not available for all federal physician groups
                   we compared. We also rounded all dollar amounts to the nearest 5 or 0.
                   6
                    For the purpose of this report, unless otherwise cited, information on physicians paid under title 5
                   was based on amounts paid by HHS and DOD to physicians who both did and did not receive PCAs.
                   According to OMB data, HHS employed approximately 1,363 of the 2,402 title 5 government physicians
                   in fiscal year 1996. Because of time constraints, other than selected data on title 5 physicians with
                   DOD, we elected not to obtain detailed pay data on physicians paid under title 5 who were with
                   non-HHS agencies.



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physicians who received special pay under title 38, average pay was
$128,540 and $122,555, respectively. Average pay for physicians in the
military (Army and Air Force) and the Commissioned Corps, both of
whom were paid under title 37, was $78,250 and $97,770, respectively.

In general, physicians paid under titles 37 and 38 were eligible for and
received more types and higher amounts of special pay than HHS and DOD
physicians receiving PCAs under title 5. The average PCA for HHS physicians
was $15,760, and the average PCA for DOD physicians paid under title 5 was
$12,505. Average special pay amounts for VA and HHS physicians receiving
title 38 special pay were $39,585 and $38,950, respectively. Average special
pay amounts for physicians in the military and the Commissioned Corps
were $35,190 and $43,260, respectively.

For selected medical specialties, our comparisons of pay information from
studies of private sector physicians’ pay with the pay of federal physicians
who were paid under titles 37 and 38 showed that private sector
physicians were generally paid more. In some specialties, private sector
physicians were paid considerably more. Pay information for HHS
physicians paid under title 5 was not available by medical specialty. These
physicians were not eligible for specialty pay, per se, but were eligible for
PCAs based on determinations that significant recruitment and retention
problems existed.

In addition to basic pay and physicians’ special pay, federal and private
sector physicians were eligible for employer-provided nonwage
compensation (e.g., retirement and health and life insurance benefits).
Some federal physicians also received other types of pay based on factors
such as hours of duty, special skills, or places of work. Physicians in the
military and the Commissioned Corps were generally entitled to
supplements to basic pay in the form of tax-free allowances for
subsistence and housing. Appendix I contains information on these other
benefits.

Regarding ongoing efforts that affect or have the potential to affect
physicians’ pay, we identified two recent initiatives. Since November 1993,
OPM has delegated authority to HHS, DOD, and the Department of Justice
allowing them to provide title 38 special pay to their physicians. As of
May 1997, HHS was the only agency to have used this authority. Also, VA is
currently exploring the feasibility and appropriateness of linking
physicians’ pay with performance.




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                                             We used several measures—averages, medians, and percentiles—to
Analyses of                                  portray and compare the pay federal physicians received under titles 5, 37,
Physicians’ Pay                              and 38. Our principal analyses consisted of comparisons of (1) physicians’
                                             pay—a combination of basic and special pay, (2) basic pay, (3) special pay,
                                             and (4) federal and private sector physicians’ pay for selected medical
                                             specialties.


Federal Physicians’ Pay                      When measured by the average, physicians’ pay for HHS physicians who did
Comparisons                                  not receive title 38 special pay was less than physicians’ pay of HHS and VA
                                             physicians who received special payments under title 38. In contrast,
                                             average physicians’ pay of HHS physicians exceeded the average pay of
                                             military and Commissioned Corps physicians who were paid under title 37.
                                             Table 1 shows, for government physicians paid under titles 5, 37, and 38,
                                             average amounts of basic and special pay combined. Where available, we
                                             also included information on maximum pay, medians, and pay at the 25th
                                             and 75th percentiles.


Table 1: Annual Physicians’ Pay for Federal Physicians in Selected Agencies
Groups of physicians by pay titles           25th percentile         Median                      Average 75th percentile          Maximum
HHS title 5                                             $89,540            $102,640              $101,660       $113,255           $148,400
HHS title 5 receiving PCAs                               94,150             104,350               104,730         117,310            147,705
DOD title 5                                                  N/A                 N/A               86,760             N/A                 N/A
DOD title 5 receiving PCAs                                   N/A                 N/A               89,710             N/A                 N/A
HHS title 5 receiving title 38 special pay              111,290             133,200               122,555         145,645            167,440
VA title 38                                             118,845             128,910               128,540         139,090            186,700
Commissioned Corps title 37                                  N/A                 N/A               97,770             N/A                 N/A
Military physicians title 37                                 N/A                 N/A               78,250             N/A            151,230a
                                             Note: N/A indicates that data were not available.
                                             a
                                              For military physicians, the maximum amount paid was not based on actual payroll information
                                             but was based on DOD pay tables and information on special pay provided by a program official.

                                             Source: GAO analysis of physicians’ pay data provided by federal agencies.



                                             According to DOD officials, the majority of military physicians do not make
                                             the military a career and usually leave active military duty after fulfilling
                                             all required service obligations for education and training. Approximately
                                             70 percent of the physician force is evenly distributed between the O-3




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                                             (entry level) and O-4 ranks.7 This skews the presentation of “average
                                             salaries” of military physicians to relatively low amounts.


Federal Basic Pay                            Similar to total physicians’ pay, basic pay—one component of physicians’
Comparisons                                  pay—was the highest for HHS and VA physicians and lowest for physicians
                                             in the military. HHS physicians paid under title 5 and VA physicians paid
                                             under title 38 had average basic pays of $87,815 and $89,350, respectively.
                                             Average basic pay for physicians paid under title 37 was $43,110 for
                                             physicians in the military and $54,510 for Commissioned Corps physicians.

                                             Average basic pay received by physicians paid under titles 5, 37, and 38 of
                                             the U.S. Code is shown in table 2. Where available, maximum basic pay
                                             authorized or received by these physicians as well as median pay amounts
                                             and amounts paid to physicians at the 25th and 75th percentile are also
                                             shown.


Table 2: Annual Basic Pay for Federal Physicians in Selected Agencies
Groups of physicians by pay titles           25th percentile        Median                       Average 75th percentile                 Maximum
HHS title 5                                             $79,005              $87,265              $87,815             $98,315             $148,400
HHS title 5 receiving PCAs                               79,760               88,345               88,970               98,680             130,250
DOD title 5                                                  N/A                  N/A              77,685                   N/A            102,620
DOD title 5 receiving PCA                                    N/A                  N/A              77,205                   N/A            101,615
HHS title 5 receiving title 38 special pay               80,135               91,375               83,605               98,680             110,670
VA title 38                                              90,090               90,090               89,350               90,090             123,100
Commissioned Corps title 37                              41,355               48,520               54,510               71,600               98,290
Military physicians title 37                                 N/A                  N/A              43,110                   N/A            104,240a
                                             Note: N/A indicates data were not available.
                                             a
                                              For military physicians, the maximum amount paid was not based on actual payroll information
                                             but was based on DOD pay tables.

                                             Source: GAO analysis of basic pay data provided by federal agencies.




Federal Special Pay                          For physicians receiving special pay—the second component of
Comparisons                                  physicians’ pay—average PCAs received by physicians under title 5 were
                                             lower than special pay received under titles 37 and 38. Large differences in
                                             average special pay to physicians—over $20,000—existed between HHS
                                             physicians who received PCAs ($15,760) and VA physicians and HHS

                                             7
                                             In the Army and the Air Force, the O-3 rank is a Captain and the O-4 rank is a Major. In the Navy, the
                                             O-3 rank is a Lieutenant and the O-4 rank is a Lieutenant Commander.



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                                             physicians who received special pay under title 38 ($39,585 and $38,950,
                                             respectively). The average PCA of HHS physicians ($15,760) was also lower
                                             than the average special pay received by military and Commissioned
                                             Corps physicians, $35,190 and $43,260, respectively. Table 3 shows special
                                             pay averages for federal physicians. Where available, maximum special
                                             pay received by these physicians as well as the medians and amounts paid
                                             to physicians at the 25th and 75th percentile are also shown.


Table 3: Annual Special Pay for Federal Physicians in Selected Agencies
Groups of physicians by pay titles           25th percentile       Median                   Average       75th percentile        Maximum
                                                                                                                         a
HHS title 5 receiving PCAs                              $12,065           $16,615            $15,760              $20,000          $20,000a
DOD title 5 receiving PCAs                                   N/A               N/A               12,505              N/A             20,000
HHS title 5 receiving title 38 special pay               30,060             44,075               38,950            50,365            63,000
VA title 38                                              29,500             39,000               39,585            48,295            84,485
Commissioned Corps title 37                                  N/A               N/A               43,260              N/A                   N/A
Military physicians title 37                                 N/A               N/A               35,190              N/A             79,500b
                                             Note: N/A indicates that data were not available.
                                             a
                                              The maximum authorized annual PCA amount is shown. In several cases, payroll records
                                             included PCA payments for an additional pay period in 1996, thereby showing PCA payments in
                                             excess of the maximum.
                                             b
                                             Based on DOD program information.

                                             Sources: GAO analysis of information provided by federal agencies.



                                             Unlike HHS and DOD physicians who received only PCAs, physicians paid
                                             under title 37 and 38 were eligible to receive several types of special pay.
                                             However, not all physicians can receive each type of special pay. Table 4
                                             shows, for the five different types of special pay paid under title 37, the
                                             number of Commissioned Corps and military physicians that received
                                             each type of special pay, the average amount of special pay received, and
                                             authorized maximum special pay amounts. Table 5 shows the authorized
                                             maximum amounts for each of the seven types of special pay paid under
                                             title 38 as the actual data were not readily available. Each type of special
                                             pay is described in more detail in appendix II.




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Table 4: Types and Amounts of Special
Pay Received by Military and                                                                                                 Authorized
Commissioned Corps Physicians                                                                                Average          maximum
                                                                                         Number               amount         special pay
                                        Type of special pay         Agency              receiving            received           amount
                                        Board certified             Militarya                5,071             $3,595              $6,000
                                                                    Corps                    1,171               4,300
                                        Variable                    Military                 8,872               7,860             12,000
                                                                    Corps                    1,458               8,735
                                        Additional                  Military                 6,593             15,000              15,000
                                                                    Corps                    1,309             14,930
                                        Incentive                   Military                 5,790             17,385              36,000
                                                                    Corps                    1,128             14,805
                                        Multiyear                   Military                 2,011               9,745             14,000
                                                                    Corps                      879             10,310
                                        a
                                         Numbers and amounts reported for military physicians are based on Army and Air Force payroll
                                        information.

                                        Sources: GAO analysis of special pay data provided by the Commissioned Corps and the Army
                                        and Air Force.



Table 5: Authorized Maximum Special
Pay Amounts Under Title 38                                                                                        Authorized maximum
                                        Types of special pay                                                      special pay amounts
                                        Length of service                                                                         $25,000
                                        Scarce specialty                                                                           40,000
                                        Board certified                                                                              2,500
                                        Geographic location                                                                        17,000
                                        Exceptional qualifications                                                                 15,000
                                        Responsibility                                                                             45,000
                                        Full time                                                                                    9,000
                                        Note: In a draft of this report, we presented information provided to us by VA on the number of
                                        physicians receiving each type of special pay and the average amounts received. At VA’s
                                        request, we deleted these data by specific type of special pay because, upon further review, VA
                                        noted that automated pay system records do not contain complete information for individual
                                        special pay components.

                                        Source: VA.



                                        Special pay received by individual physicians paid under titles 37 and 38
                                        could differ significantly because not all physicians received the same
                                        types or amounts of special pay. PCAs received by title 5 physicians varied
                                        less because PCAs may not exceed $20,000. In 1996, of the 1,193 full-time




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                         HHS  physicians8 who had a full year of service, 830 received only PCA pay;
                         113 received only physicians’ special pay under title 38; and 135 received
                         both types of special pay, but not at the same time during the year. Of the
                         full-time physicians, 115, or less than 10 percent, did not receive PCAs or
                         title 38 special pay.


                         HHS and DOD physicians paid under title 5 were not eligible for specialty
Comparison of            pay per se. Instead, these physicians could be eligible for PCAs based on
Federal and Private      agencies’ determinations that significant recruitment and retention
Sector Physicians’ Pay   problems existed for categories of physicians. According to PCA
                         regulations (5 C.F.R. 595.103(b)), categories of physicians include those
for Selected Medical     doing direct care, research, physical examinations, and administration of
Specialties              medical or health programs.9 Federal physicians paid under titles 37 and
                         38 and some HHS physicians eligible for title 38 special pay could receive
                         special pay based on their certifications as specialists by one of the
                         recognized American Medical or Osteopathic Specialty Examining Boards.
                         Such special payments included board-certified pay, incentive and
                         scarce-specialty pay, and multiyear special pay.

                         In selected medical specialties in which large numbers of federal and
                         private physicians practiced (general surgery, internal medicine,
                         psychiatry, and family practice), our comparison of pay information from
                         studies of private sector physicians’ pay and the pay of federal physicians
                         who were paid under titles 37 and 38 showed that private sector
                         physicians were generally paid more. In other specialties (e.g., thoracic
                         surgery, radiology, and anesthesiology), private sector physicians were
                         paid considerably more, based on information from these studies.

                         Figure 1 shows for VA, DOD, Commissioned Corps, and private sector
                         physicians the median or average pay for selected medical specialties (see
                         table 6 for detailed dollar amounts).




                         8
                          We excluded HHS physicians in administratively determined pay plans from our analysis of HHS data
                         because most of these physicians were research fellows at the National Institutes of Health (NIH) and
                         their duties were different from other full-time HHS physicians.
                         9
                          Appendix II contains descriptions of these categories.



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Figure 1: Federal and Private Sector
Physicians’ Pay by Selected Medical
Specialties                            Physicians' pay
                                       240,000


                                       210,000


                                       180,000


                                       150,000


                                       120,000

                                                                    AAA
                                                                    AAA
                                                                    AAA
                                        90,000                      AAA                                        AAA
                                                                    AAA
                                                                    AAA                     AAA
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                                                                                                                                       AAA
                                                                    AAA                     AAA                AAA                     AAA
                                                                    AAA
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                                        60,000                      AAA
                                                                    AAA                     AAA
                                                                                            AAA                AAA
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                                                                    AAA                     AAA                AAA                     AAA
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                                                                    AAA                     AAA                AAA                     AAA
                                        30,000                      AAA
                                                                    AAA                     AAA
                                                                                            AAA                AAA
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                                                                                                                                       AAA
                                             0                      AAA                     AAA                AAA                     AAA
                                                  General surgery           Internal medicine     Psychiatry         Family practice
                                                  Physician specialty

                                                         MGMA

                                                         AMGA

                                                         Sullivan

                                                         HHCA
                                                         Veterans Affairs
                                                          Commissioned Corps
                                                  AAAA
                                                  AAAA AA
                                                       AA
                                                  AAAA
                                                  AAAAAA
                                                       AA Military
                                                          Median pay for HHS physicians receiving PCAs

                                       Note: Average pay for title 5 physicians was not available by specialty. Average pay information
                                       was the only information available for VA and Commissioned Corps physicians (Commissioned
                                       Corps data were not available for general surgery). For military physicians, DOD estimated
                                       average amounts paid to physicians in each specialty based on pay table data and program
                                       information on amounts of special pay provided to physicians in these specialties. Medians are
                                       used for private sector pay.

                                       Source: GAO analysis of information provided by VA, the Commissioned Corps, DOD, and private
                                       sector studies of physicians’ pay.




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Table 6: Federal and Private Sector Physicians’ Pay by Selected Medical Specialties
Physicians’ specialty                        MGMA         AMGA      Sullivan        HHCS                   VA         Corps        Military
General surgery                           $216,560      $211,735       $206,360        $170,000      $138,710           N/A      $100,960
Internal medicine                          139,320        137,000        141,245           133,030    121,925     $100,850          82,400
Psychiatry                                 132,480        137,210        133,830           120,000    128,910       101,305         88,510
Family practice                            129,150        129,415        136,370           120,000    117,410        97,930         84,575
                                          Note 1: N/A indicates data were not available.

                                          Note 2: Information on average pay was the only information available for VA and Commissioned
                                          Corps physicians. For military physicians, DOD estimated average amounts paid to physicians in
                                          each specialty based on pay table data and program information on amounts of special pay
                                          provided to physicians in these specialties. Medians are used for private sector pay.

                                          Source: GAO analysis of information provided by VA, the Commissioned Corps, DOD, and private
                                          sector studies of physicians’ pay.



                                          For other selected medical specialties—thoracic surgery, radiology, and
                                          anesthesiology—private sector physicians’ pay greatly exceeded the
                                          average pay of VA and military physicians. Comparisons of amounts paid to
                                          private sector physicians and VA and military physicians for these selected
                                          specialties are shown in figure 2 (see table 7 for detailed dollar amounts).




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Figure 2: Physicians’ Pay for VA,
Military, and Private Sector Physicians
                                          Physicians' pay
in Thoracic Surgery, Radiology, and
Anesthesiology Specialties                400,000

                                          360,000


                                          320,000


                                          280,000


                                          240,000

                                          200,000


                                          160,000


                                          120,000
                                                                                                 AAA
                                                                                                 AAA                         AAA
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                                           80,000
                                                                                                 AAA
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                                           40,000                                                AAA
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                                                                                                 AAA                         AAA
                                                                                                 AAA
                                                                                                 AAA                         AAA
                                                                                                                             AAA
                                               0                                                 AAA                         AAA
                                                      Thoracic surgery           Radiology                  Anesthesiology
                                                      Physician specialty


                                                             MGMA

                                                             AMGA
                                                             Sullivan

                                                             HHCS
                                                              Veterans Affairs
                                                     AAAA
                                                     AAAA AAA
                                                          AAA
                                                     AAAA AAA
                                                     AAAA
                                                     AAAAAAA
                                                              Military
                                                          AAA

                                          Note: We did not present Commissioned Corps information because of the small number of
                                          physicians in these specialties. For military physicians, DOD estimated average amounts paid to
                                          radiologists and anesthesiologists based on pay table data and program information on amounts
                                          of special pay provided to physicians in these specialties. VA amounts are averages, whereas
                                          medians are used for private sector pay.

                                          Source: GAO analysis of information provided by VA, DOD, and private sector studies of
                                          physicians’ pay.




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Table 7: Physicians’ Pay for VA, Military, and Private Sector Physicians in Thoracic Surgery, Radiology, and
Anesthesiology Specialties
Physicians’ specialty                 MGMA              AMGA          Sullivan           HHCS                VA                       Militarya
Thoracic surgery                  $281,235             $385,125           $325,290           $231,450            $150,035                   N/Ab
Radiology                          247,505              231,705            216,335             160,680            149,160             $109,495
Anesthesiology                     240,665              218,000            177,150             165,800            142,905                105,765
                                             a
                                            For military physicians, DOD estimated average amounts paid to radiologists and
                                           anesthesiologists based on pay table data and program information on amounts of special pay
                                           provided to physicians in these specialties. VA amounts are averages, whereas medians are
                                           used for private sector pay.
                                             b
                                              N/A indicates that data were not available because DOD groups its thoracic surgeons with
                                             surgeons in other specialities.

                                             Source: GAO analysis of information provided by VA, DOD, and private sector studies of
                                             physicians’ pay.



                                             In general, federal physicians’ pay is limited by (1) amounts provided
                                             under basic pay schedules, (2) maximum authorized special payment
                                             amounts, and (3) legislation stating that total pay cannot exceed specified
                                             executive pay levels. Private sector physicians’ pay would not generally be
                                             subject to these types of constraints.


                                             Other compensation for which physicians may be eligible included
Other Types of                               (1) nonwage compensation, such as health and retirement benefits;
Benefits, Pay, and                           (2) premium pay, such as overtime; (3) incentive pay for hazardous duty;
Allowances                                   (3) other types of special pay, such as diving pay; (4) tax-free allowances,
                                             such as subsistence and housing; and (5) miscellaneous benefits, such as
                                             base exchange privileges.

                                             For the agencies that we reviewed, the cost of nonwage compensation
                                             (retirement and health and life insurance benefits) ranged from about
                                             19 percent of basic pay for HHS physicians paid under title 5 to about
                                             40 percent of basic pay for physicians in the military. In the private sector
                                             studies that we reviewed, comparable information on nonwage
                                             compensation was generally not available for the physicians studied.

                                           Some federal physicians paid under titles 5 and 37 also received other
                                           types of pay that were unrelated to their classification as a physician but
                                           related more to hours of duty or special skills possessed. For example,
                                           some HHS physicians paid under title 5 received overtime pay, which
                                           averaged $3,100 (see table I.4), and some physicians in the military



                                             Page 13                    GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                        B-276378




                        received aviation career incentive pay averaging about $4,000 annually
                        (see table I.5).

                        In addition to nonwage compensation and these other types of pay, most
                        physicians in the military and the Commissioned Corps received tax-free
                        allowances, the most common of which were for housing and subsistence.
                        Housing allowances averaged over $8,000 and subsistence allowances
                        averaged about $1,800. Because these allowances were not subject to
                        federal income tax, military and Commissioned Corps physicians also had
                        an additional tax advantage.10

                        Even though the amounts of these other types of benefits, premium and
                        incentive pays, and allowances were sizeable in some cases, we did not
                        include them in our primary analysis because the cost of some benefits
                        could not be readily quantified and because of the time constraints for
                        completing our analysis. Appendix I contains additional details on these
                        other types of compensation.


                        We identified two recent actions that affect or have the potential to affect
Agencies’ Actions       physicians’ pay. One involved a delegation of the use of certain title 38
Affecting Physicians’   personnel authorities to several agencies whose physicians are paid under
Pay                     title 5. The other involved VA’s exploration of the feasibility of recognizing
                        physicians’ performance in establishing a new pay system.

                        In November 1993, following an OPM study that identified problems in
                        recruiting and retaining individuals in health care occupations, OPM
                        delegated, under 5 U.S.C. 5371, the authority contained in certain title 38
                        personnel provisions to HHS, DOD, VA,11 and the Department of Justice. The
                        provisions that were delegated related directly to pay rates and systems,
                        premium pay, position classification, and hours of work.12 The purpose of
                        this delegation was to give these departments additional flexibilities to
                        maintain quality health-care staffs. As of May 1997, HHS was the only
                        agency to have used this expanded authority to provide special pay to its

                        10
                          The amount of tax advantage received depends on family size and the amount of basic pay. For
                        example, with a family of three, a physician in the O-5 pay grade with 2 years of service with basic pay
                        of $39,809 would have a tax advantage of $2,101 and with 18 years in the service and basic pay of
                        $56,034 would have a tax advantage of $4,630, according to January 1996 military compensation pay
                        tables.
                        11
                         OPM’s delegation to VA does not involve physicians’ special pay or other compensation for
                        physicians.
                        12
                         OPM’s delegation regarding special pay pertains only to physicians at grades below the Senior
                        Executive Service and Executive Schedule levels.



                        Page 14                      GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
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                     physicians. Information on how HHS used this title 38 pay authority showed
                     that, based on average pay, HHS physicians paid under title 38 earned
                     $17,825 more than HHS physicians receiving PCAs.

                     According to an HHS official, HHS agencies’ use of title 38 pay authorities
                     has enabled HHS to remain reasonably competitive with salary levels in the
                     private sector. Another HHS official said that budgetary constraints have
                     limited the number of physicians who can receive title 38 special pay and
                     have forced HHS to concentrate on positions for which recruitment and
                     retention have historically been difficult. For example, the FDA has focused
                     its efforts on providing title 38 special pay to supervisors and team leaders.

                     Another action that has the potential to affect physicians’ pay involved VA.
                     VA indicated that some thought was being given to changing the manner in
                     which its physicians are paid. In 1995 and 1996, a task force appointed by
                     VA’s Under Secretary for Health met to discuss the development of a new
                     pay system for physicians and dentists. The task force’s objectives were to
                     design a pay system that used a total salary concept that continued to
                     consider local pay markets along with a new incentive pay component to
                     reward exceptional performance and productivity.

                     VA officials told us that, as of July 1997, the Veterans Health Administration
                     was continuing to examine issues dealing with types of information
                     available regarding local market pay and how to measure and link clinical
                     performance and total salaries. Instead of physicians being automatically
                     entitled to special pay by virtue of their length of service, geographic
                     location, or medical specialty, the system under discussion would consider
                     the local market, an individual’s performance and experience, and other
                     relevant factors in determining physicians’ pay. VA officials also told us
                     that, because of the complexity of physicians’ pay, modifications to the
                     present system—which would require legislative action—are in the early
                     stages of study.


                     HHS and VA provided written comments on a draft of our report. DOD’s
Agencies’ Comments   Deputy Director for Manpower and Support, Health Services and
                     Readiness Support, Office of the Assistant Secretary of Defense for Health
                     Affairs, and OPM’s Chief, Compensation Administration Division, Office of
                     Compensation Policy, provided oral comments on our draft report on
                     August 18 and 20, 1997, respectively. DOD, OPM, and VA said they generally
                     agreed with the report’s contents. The agencies’ comments, which were
                     essentially technical in nature or to clarify points, have been incorporated



                     Page 15               GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
B-276378




where appropriate. OMB was unable to provide official comments on our
draft report within the timeframe we requested. However, we discussed
and resolved comments of a technical nature with OMB staff familiar with
physicians’ pay issues and made changes to the report where appropriate.


We are sending copies of this report to the Chairmen and Ranking
Minority Members of interested congressional committees; the Secretaries
of HHS, Defense, and VA; and the Directors of OPM and OMB. Copies will be
made available to others on request.

Major contributors to this report were Larry Endy, Ed Tasca, Wayne
Barrett, and Jessica Botsford. Please contact me at (202) 512-9039 if you
have any questions concerning this report.

Sincerely yours,




Michael Brostek
Associate Director
Federal Management and
  Workforce Issues




Page 16              GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Page 17   GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Contents



Letter                                                                                                     1


Appendix I                                                                                                22
                         Federal Physicians’ Pay by Years of Service                                      22
Additional Analyses of   Federal Physicians’ Pay by Position                                              24
Federal and Private      Other Compensation                                                               25
Sector Physicians’
Compensation
Appendix II                                                                                               32
                         Types of Special Payments to Physicians                                          32
Descriptions of          Roles of Federal Physicians                                                      36
Special Payment
Provisions and Roles
of Federal Physicians
Appendix III                                                                                              41

Objectives, Scope,
and Methodology
Appendix IV                                                                                               46

Number of Full-Time
Federal Physicians
(September 1996)
Tables                   Table 1: Annual Physicians’ Pay for Federal Physicians in                         5
                           Selected Agencies
                         Table 2: Annual Basic Pay for Federal Physicians in Selected                      6
                           Agencies
                         Table 3: Annual Special Pay for Federal Physicians in Selected                    7
                           Agencies
                         Table 4: Types and Amounts of Special Pay Received by Military                    8
                           and Commissioned Corps Physicians
                         Table 5: Authorized Maximum Special Pay Amounts under Title                       8
                           38
                         Table 6: Federal and Private Sector Physicians’ Pay by Selected                  11
                           Medical Specialties




                         Page 18              GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
          Contents




          Table 7: Physicians’ Pay for VA, Military, and Private Sector                   13
            Physicians in Thoracic Surgery, Radiology, and Anesthesiology
            Specialties
          Table I.1: VA, HHS, and Commissioned Corps Average Physicians’                  23
            Pay by Years of Service
          Table I.2: Average Federal Physicians’ Pay by Position                          25
          Table I.3: Types of Private Sector Employer-Provided Benefits                   28
          Table I.4: Other Types of Pay Received by HHS Physicians (1996)                 29
          Table I.5: Examples of Other Pay Received by Physicians in the                  30
            Military
          Table I.6: Allowances Received by Military and Commissioned                     31
            Corps Physicians
          Table II.1: PCAs by Agency (Fiscal Year 1996)                                   33
          Table II.2: Length-of-Service and Special Pay Amounts for VA                    34
            Physicians Paid Under Title 38
          Table II.3: Number of Physicians by Category and Number                         37
            Receiving PCAs (Fiscal Year 1996)
          Table III.1: Information on Private Sector Studies                              43

Figures   Figure 1: Federal and Private Sector Physicians’ Pay by Selected                10
            Medical Specialties
          Figure 2: Physicians’ Pay for VA, Military, and Private Sector                  12
            Physicians in Thoracic Surgery, Radiology, and Anesthesiology
            Specialties
          Figure I.1: VA, HHS, and Commissioned Corps Average                             23
            Physicians’ Pay by Years of Service
          Figure I.2 Average Federal Physicians’ Pay by Position                          25




          Page 19             GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Contents




Abbreviations

AMGA       American Medical Group Association
CDC        Centers for Disease Control
C.F.R      Code of Federal Regulations
COLA       Cost-of-living allowance
CSRS       Civil Service Retirement System
DOD        Department of Defense
FDA        Food and Drug Administration
FERS       Federal Employees Retirement System
HHCS       Hospital & Healthcare Compensation Service
HHS        Department of Health and Human Services
HMO        Health Maintenance Organizations
IHS        Indian Health Service
MGMA       Medical Group Management Association
NIH        National Institutes of Health
OMB        Office of Management and Budget
OPM        Office of Personnel Management
PCA        Physicians Comparability Allowance
U.S.C.     United States Code
VA         Department of Veterans Affairs


Page 20             GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Page 21   GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix I

Additional Analyses of Federal and Private
Sector Physicians’ Compensation

                      In addition to the primary comparisons discussed in this report, we
                      developed additional analyses of physicians’ compensation. This appendix
                      presents average pay information, when it was available, based on
                      physicians’ years of service and pay grades or position types.13 We also
                      discuss other aspects of compensation in addition to basic and special
                      pay, including (1) employers’ contributions to the costs of physicians’
                      retirement and health and life insurance benefits—also referred to as
                      nonwage compensation; (2) other types of premium and incentive pay paid
                      under titles 5 and 37 to some physicians; and (3) tax-free allowances for
                      subsistence, housing, and other expenses paid under title 37 to most
                      physicians in the military and the Commissioned Corps.


                      Consistent with previous comparisons in this report, VA and HHS physicians
Federal Physicians’   receiving title 38 special pay were paid more than other federal physicians
Pay by Years of       based on their years of service. For HHS physicians paid under title 5 and
Service               Commissioned Corps physicians paid under title 37, differences in pay
                      narrowed as years of service increased. Average pay for HHS title 5
                      physicians and Commissioned Corps physicians was nearly the same for
                      physicians with more than 20 years of service—$118,650 and $119,145,
                      respectively. For military physicians, information on amounts of special
                      pay was not readily available in the years-of-service groupings we
                      requested. Figure I.1 shows comparisons of average physicians’ pay based
                      on years of service (see table I.1 for dollar amounts).




                      13
                       Because information was not available from the pay data provided, we did not develop pay
                      comparisons based on physicians’ roles as clinicians, researchers, teachers, or administrators.



                      Page 22                      GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                       Appendix I
                                       Additional Analyses of Federal and Private
                                       Sector Physicians’ Compensation




Figure I.1: VA, HHS, and
Commissioned Corps Average
Physicians’ Pay by Years of Service    Physicians' pay
                                       150,000




                                       120,000




                                        90,000




                                        60,000




                                        30,000




                                            0
                                                  1 to 4                     5 to 9               10 to 19         20 or more
                                                  Years of service


                                                           VA title 38

                                                           HHS title 5 receiving 38 special pay

                                                           HHS title 5 eligible for PCAs

                                                           Commissioned Corps title 37

                                       Source: GAO analysis of information provided by VA and HHS.


Table I.1: VA, HHS, and Commissioned
Corps Average Physicians’ Pay by                                                            HHS with title            Commissioned
Years of Service                       Years of experience                  VA title 38    38 special pay HHS title 5        Corps
                                       1 to 4                                 $117,035             $98,535    $91,535           $63,270
                                       5 to 9                                   127,500            118,080     99,150            87,005
                                       10 to 19                                 134,330            136,175    108,240            97,890
                                       20 and more                              137,910            148,470    118,650           119,145
                                       Source: GAO analysis of information provided by VA and HHS.




                                       Page 23                           GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                      Appendix I
                      Additional Analyses of Federal and Private
                      Sector Physicians’ Compensation




                      For executive-level pay,14 the average pay for VA physicians exceeded that
Federal Physicians’   of HHS title 5 physicians by $17,580, or about 12 percent. The average pay
Pay by Position       for these HHS physicians exceeded the average for Commissioned Corps
                      physicians in O-7 and O-8 pay grades (Admiral) by $10,455, or about
                      8 percent, and military physicians in O-7, O-8, and O-9, pay grades
                      (General) by $12,645, or about 10 percent.

                      For staff-level pay, the average for VA physicians (first level supervisors,
                      “chief grade,” and below) exceeded that of HHS title 5 physicians who were
                      paid under the General Schedule by about 24 percent, or $30,405. The
                      average pay for military and Commissioned Corps physicians was 39 and
                      24 percent less than the average for VA physicians. The average pay for HHS
                      physicians was about the same as the average for Commissioned Corps
                      physicians and about 20 percent more than the average for physicians in
                      the military.

                      Physicians’ pay for military and Commissioned Corps physicians varied
                      considerably by pay grade. Pay for Commissioned Corps physicians in the
                      O-3 pay grade averaged $39,030 and in the O-6 pay grade averaged
                      $118,845. According to DOD officials, a large percentage of military
                      physicians at the O-3 level are in graduate medical education programs in
                      either internships or residency training. These physicians were not eligible
                      for incentive or multiyear special pays that averaged about $27,000 and
                      were available to military physicians in higher pay grades. Figure I.2 shows
                      physicians’ pay by type of position (see table I.2 for detailed dollar
                      amounts).




                      14
                        Includes VA physicians in the “executive grade” and higher, including Senior Executive Service and
                      executive level equivalents. According to 38 U.S.C.7404(b)(2), VA officials in the executive grade must
                      hold the position of chief of staff at a hospital, medical center, outpatient clinic (independent), or
                      comparable position. Title 5 executives are generally those in the Senior Executive Service or under
                      the Executive Schedule.



                      Page 24                      GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                         Appendix I
                                         Additional Analyses of Federal and Private
                                         Sector Physicians’ Compensation




Figure I.2 Average Federal Physicians’
Pay by Position
                                             Physicians' pay

                                             160,000




                                             120,000




                                              80,000




                                              40,000




                                                  0
                                                         Executive                                 Staff
                                                         Physicians' positions


                                                               VA title 38

                                                               HHS title 5 eligible for PCAs

                                                               Commissioned Corps title 37

                                                               Military title 37

                                         Source: GAO analysis of pay data provided by federal agencies.


Table I.2: Average Federal Physicians’
Pay by Position                                                                                            Commissioned
                                         Pay grade                           VA title 38 HHS title 5              Corps    Military title 37
                                         Executive                            $146,240         $128,660         $118,205         $116,015a
                                         Staff                                     128,215       97,810           97,265            78,160
                                         a
                                          For physicians at the O-7, O-8, and O-9 levels, GAO calculated this amount from DOD payroll
                                         data on basic pay and DOD program information on special pay.

                                         Source: GAO analysis of information provided by federal agencies.




                                         Federal physicians may also be eligible for other types of compensation,
Other Compensation                       such as nonwage compensation, incentive or premium pay, or allowances.
                                         In some cases, only small numbers of federal physicians receive these



                                         Page 25                       GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                       Appendix I
                       Additional Analyses of Federal and Private
                       Sector Physicians’ Compensation




                       benefits. In the case of nonwage compensation for both federal and
                       private sector physicians, benefit costs were not always quantified. When
                       they were quantified, available estimates of benefit costs generally were
                       not calculated in a consistent fashion that permitted meaningful
                       comparisons among categories of physicians, either within the federal
                       sector or between the federal and private sectors. We therefore did not
                       include information on these other benefits in our principal comparisons.


Employer-Provided      Nonwage compensation includes employers’ retirement benefit
Nonwage Compensation   contributions and employers’ shares of physicians’ health and life
                       insurance costs.15 Nonwage compensation paid by federal agencies on
                       behalf of their employees ranged from 19 to 40 percent of basic pay.
                       Studies of private sector physicians that we reviewed did not contain
                       similar information on nonwage compensation. However, a 1994
                       Department of Labor study of employee benefits showed that, for
                       white-collar professional workers in the private sector, the cost of
                       employer-provided nonwage compensation (i.e., health and life insurance,
                       retirement, social security, and workers’ compensation benefits) was
                       about 23.4 percent of basic pay. Federal physicians paid under titles 5 and
                       38 are required to pay for a share of their nonwage compensation. Private
                       sector organizations may also require their physicians to contribute
                       toward the costs of these benefits. Information on the costs of nonwage
                       compensation that physicians received under titles 5, 37, and 38 and
                       according to private studies follows.

                       Title 5 Physicians: Based on information from the HHS payroll system, the
                       government’s costs for nonwage compensation averaged about $16,480 or
                       about 19 percent of basic pay for the HHS physicians paid under title 5. This
                       amount included the government’s share of retirement benefit costs under
                       the Civil Service Retirement System (CSRS) or the Federal Employees
                       Retirement System (FERS) as well as the government’s share of health and
                       life insurance costs. A more general measure of indirect cost is contained
                       in OMB Circular A-76.16 This circular states that in 1996 the standard cost
                       factor for federal civilian employees’ retirement benefits was 23.7 percent,
                       for life insurance and health benefits it was 7.05 percent, and for
                       miscellaneous fringe benefits it was 1.7 percent.


                       15
                        For more information on employer-provided benefits, see Tax Policy: Effects of Changing the Tax
                       Treatment of Fringe Benefits (GAO/GGD-92-43, Apr. 7, 1992).
                       16
                        Circular A-76 establishes federal policy for the performance of recurring commercial activities and
                       provides guidance for determining whether recurring commercial activities should be operated under
                       contract with commercial sources, in-house, or through interservice support agreements.



                       Page 26                     GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix I
Additional Analyses of Federal and Private
Sector Physicians’ Compensation




Title 38 Physicians: According to a VA official, the total cost of nonwage
compensation for its employees was about 25 percent of basic and special
pay. In 1996, average basic and special pay for VA physicians was about
$128,540. Based on VA estimates, nonwage compensation would be about
$32,135 if these benefits averaged 25 percent of physicians’ pay.

The dollar value of nonwage compensation for VA physicians was higher
than the dollar value of these benefits for HHS physicians paid under title 5.
Physicians paid under title 38 can include physicians’ special pay as part of
basic pay in determining retirement annuities under CSRS and FERS. In
contrast, PCAs earned by title 5 physicians and special payments to
physicians in the military and the Commissioned Corps are not considered
part of basic pay for retirement benefit calculation purposes.

Title 37 Physicians: For fiscal year 1996, the DOD actuary estimated the
cost of military retirement benefits to be 32.9 percent of basic pay. Costs
of other nonwage compensation for military personnel were 1.45 percent
for medicare hospital insurance benefits and 6.2 percent for old age,
survivors, and disability insurance benefits on basic pay up to $62,700.
Physicians in the military and the Commissioned Corps and their
dependents may receive free health care benefits in military facilities, but
DOD has not developed, in terms of basic pay, information on the cost of
providing these benefits.

Physicians in the military and the Commissioned Corps also may receive
other benefits and privileges that are neither easily quantified nor readily
susceptible to comparison. Examples of several of these benefits include
eligibility to purchase goods and services at military base commissaries
and exchanges at prices generally lower than those charged by
commercial facilities and access to military service clubs and other
DOD-sponsored recreational facilities.


Further, these physicians have the option of declaring a state of residence,
regardless of where they are actually stationed or the length of time they
spend in that state. This can be of significant value for those selecting
residency in states with no personal income taxes. While these benefits
and privileges can be of considerable value to physicians in the military
and the Commissioned Corps, we did not attempt to estimate their
comparative values or costs.

Private Sector Physicians: Information from studies of private sector
physicians showed that the organizations that were surveyed also



Page 27                  GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                     Appendix I
                                     Additional Analyses of Federal and Private
                                     Sector Physicians’ Compensation




                                     provided physicians with nonwage compensation. Table I.3 shows
                                     information on the types of benefits provided and the percentage of survey
                                     respondents providing the benefit. These studies did not provide
                                     information on total employer costs of these benefits or on the cost of
                                     these benefits as a percentage of basic pay.

Table I.3: Types of Private Sector
Employer-Provided Benefits                                                                    Private sector organizations
                                                                                      Hospital and                  Sullivan, Cotter, and
                                                                                       Healthcare                        Associates,
                                                                                  Compensation Service             Incorporated (January
                                                                                   (January 1997 data)                   1996 data)
                                                                                    Percentage providing            Percentage providing
                                     Type of benefit                                             benefit                         benefit
                                                                                                               a
                                     Retirement                                                                                             95
                                                                                                                                                b
                                          Defined benefit plan                                                63
                                                                                                                                                b
                                          Defined contribution plan                                           81
                                     Group medical insurance                                                  99                           100
                                     Group life insurance                                                     97                            99
                                     a
                                      Total percentage providing retirement benefits not reported.
                                     b
                                         Percentage receiving each type of retirement benefit not reported.

                                     Source: Studies of private sector physicians’ pay.



                                     In addition to the benefits shown in table I.3, other benefits for which
                                     some organizations provided payment included vision care, professional
                                     organizations’ dues, continuing education expenses, personal time off, and
                                     flexible benefit plans.17 Federal agencies may also pay educational and
                                     training expenses for their physicians.

                                     The HHCS study indicated that about 60 percent of the 179 participant
                                     organizations that responded offered a “fixed” set of employee fringe
                                     benefits, 32 percent offered a “flexible” or “cafeteria” set of benefits, and
                                     8 percent offered both fixed and flexible benefits. Flexible benefit or
                                     cafeteria plans are generally not available to federal employees.


Premium, Incentive, and              Some physicians paid under titles 5 and 37 also received premium,
Other Types of Pay                   incentive, or other types of pay based on factors such as hours of duty,

                                     17
                                       Flexible or cafeteria benefit plans allow employees to choose from a list of fringe benefits that best
                                     fit their families’ needs. Benefits commonly offered by flexible benefit plans include medical and
                                     dental insurance, life insurance, accidental death and disability insurance, and long-term disability
                                     insurance.



                                     Page 28                        GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                         Appendix I
                                         Additional Analyses of Federal and Private
                                         Sector Physicians’ Compensation




                                         possession of special skills, performance, or working under extreme
                                         conditions. These other types of pay were not based on an individual’s
                                         occupation as a physician but were earnings based on the
                                         above-mentioned circumstances. For those physicians receiving these
                                         types of pay, compensation was increased by amounts that ranged from a
                                         few dollars to over $24,000. Based on agency-provided information, tables
                                         I.4 and I.5 list for physicians paid under titles 5 and 37 (1) other types of
                                         pay; (2) numbers of physicians receiving the pay; (3) average amounts
                                         received; and (4) where available, ranges of compensation received.

                                         Title 5 Physicians: Table I.4 contains information on other types of pay
                                         earned by at least 50 HHS physicians.

Table I.4: Other Types of Pay Received
by HHS Physicians (1996)                                                                                                        Range of
                                                                         Number receiving         Average amount            compensation
                                         Types of additional paya          compensation                  received               received
                                         Award                                              652               $1,610       $100 to $13,565
                                         Overtime                                           330                 3,100            5 to 21,865
                                         Holiday                                            145                   585             5 to 3,780
                                         Night                                               82                 1,125             5 to 6,180
                                         Uniform                                             63                   240              15 to 415
                                                    b
                                         Retention                                           62               11,100          750 to 24,525
                                         Sunday                                              58                   850            40 to 4,935
                                         a
                                          Physicians may receive more than one type of additional pay. Also, HHS physicians receiving
                                         special payments under title 38 cannot earn premium pay that is paid under chapter 55 of title 5
                                         (e.g., overtime pay, holiday premium pay, night pay differentials, and Sunday premium pay).
                                         b
                                          HHS’s personnel manual states that physicians who receive PCAs may also receive retention
                                         allowances. The manual further states that every effort must be made to ensure that they are
                                         authorized only in extreme cases.

                                         Source: GAO analysis of HHS payroll information.



                                         Physicians paid under title 5 may also be eligible for other payments, such
                                         as recruitment bonuses, relocation allowances, and certain cost-of-living
                                         allowances (COLA) that are not identified in table I.4.

                                         Title 37 Physicians: Other types of pay that physicians in the military
                                         received are listed in table I.5.




                                         Page 29                     GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                         Appendix I
                                         Additional Analyses of Federal and Private
                                         Sector Physicians’ Compensation




Table I.5: Examples of Other Pay
Received by Physicians in the Military                                                                       Average annual
                                                                                 Number receiving pay        amount received
                                         Types of pay                                  Army     Air Force       Army     Air Force
                                         Aviator career incentive                        189         502       $3,980       $4,270
                                         Hostile fire                                      98         95        1,800        1,800
                                         Foreign language                                   2        103          805        1,075
                                         Source: GAO analysis of Army and Air Force pay data.



                                         Some physicians may be eligible to simultaneously receive more than one
                                         type of incentive or special pay. Unlike some title 5 physicians, physicians
                                         in the military and the Commissioned Corps do not receive compensation
                                         for working overtime, at night, on Sundays, or on holidays.

                                         Title 38 Physicians: According to a VA official, VA full-time physicians are
                                         considered to be on duty for 24 hours a day. As such, they are not eligible
                                         for premium pay, such as overtime and for work on Sunday or at night. VA
                                         physicians also do not receive locality-based comparability payments
                                         under 5 U.S.C. 5304; however, they may receive geographic location pay if
                                         they work in areas where extraordinary recruitment or retention
                                         difficulties exist. They may also be eligible for recruitment bonuses and
                                         retention allowances under 38 U.S.C. 7410.


Allowances for Military                  Physicians in the military and the Commissioned Corps may be entitled to
and Commissioned Corps                   a variety of different allowances related to such elements as subsistence,
Physicians                               housing, family separation, and COLAs. Table I.6 shows, for these
                                         physicians, average annual allowances received and the number of
                                         physicians receiving them. Allowances are tax free and generally vary
                                         depending on marital status, family size, and pay grade.




                                         Page 30                    GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                         Appendix I
                                         Additional Analyses of Federal and Private
                                         Sector Physicians’ Compensation




Table I.6: Allowances Received by Military and Commissioned Corps Physicians
                                                       Number receiving allowance                     Average allowance amounts
Types of allowance                                         Army       Air Force          Corps          Army       Air Force         Corps
Basic housing                                              4,085          3,611          1,443         $8,265         $8,355         $9,540
Basic subsistencea                                         4,726          4,068          1,458          1,800          1,805          1,795
Overseas station-COLA                                        846            429            137          5,125          6,050          5,940
Overseas station-housing                                     215            229            N/A          8,950          5,740               N/A
Overseas station-other housing                             1,037            904            N/A            680            450               N/A
Family separation                                              96             51           N/A          1,330          1,910               N/A
Variable housingb                                          3,801          3,580          1,256          2,755          1,890          3,895
                                         Note: N/A indicates data were not applicable.
                                         a
                                          Differences in basic subsistence amounts were due to differences in time periods for which the
                                         data was collected.
                                         b
                                          Variable housing allowances supplement basic quarters allowances for service members who
                                         reside in high-cost areas in the United States.

                                         Source: GAO analysis of Army, Air Force, and Commissioned Corps pay data.



                                         Because allowances are not subject to federal income tax, physicians in
                                         the military and the Commissioned Corps also receive a tax advantage that
                                         can be expressed as the additional income that they would have to receive
                                         in order to be left with the same net take-home pay, if allowances were
                                         taxable. Because many allowances vary by pay grade and number of
                                         dependents, the tax advantage varies. For example, according to
                                         January 1996 military compensation pay tables, the tax advantage for an
                                         officer in the O-4 pay grade ranged from $1,889 to $3,813, depending on
                                         family size and years of service. For an officer in the O-6 pay grade, it
                                         ranged from $2,168 to $4,777.




                                         Page 31                     GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix II

Descriptions of Special Payment Provisions
and Roles of Federal Physicians

                   In addition to basic pay, federal physicians may be entitled to various
                   special payments, depending on the laws under which they are paid. Each
                   of the laws—title 5 for most civilian physicians in federal agencies other
                   than VA, title 38 for VA physicians and selected title 5 physicians, and title
                   37 for physicians in the military and the Commissioned Corps—spells out
                   (1) requirements that are to be met for physicians to receive special
                   payments and (2) dollar ranges for these payments. Special payments may
                   be provided in varying amounts based on different factors, such as a
                   physician’s years of service, medical specialty or category of service,
                   geographic location, or length-of-service agreement. In general, physicians
                   who received special payments under titles 37 and 38 received more types
                   and higher amounts of these payments than physicians paid under title 5.
                   The following sections discuss these special payment provisions and the
                   roles of federal physicians paid under these laws.



Types of Special
Payments to
Physicians

Title 5-PCAs       Federal physicians paid under title 5 may be eligible for PCAs if agencies
                   document significant recruitment and retention problems and if physicians
                   enter into a service agreement with their employing agencies. These
                   agreements require physicians to complete periods of service of 1 or 2
                   years.

                   The maximum allowance is $14,000 per year for physicians with less than
                   24 months of federal service and $20,000 for physicians with more than 24
                   months of service. While these are the maximum amounts authorized by
                   law, some agencies have established schedules that limit PCAs based on the
                   characterization of the positions in which physicians serve. For example,
                   for physicians with more than 24 months of service, the maximum
                   allowance is $10,000 for occupational health physicians and for physicians
                   performing disability evaluations, according to HHS’ personnel manual.

                   PCAs are not considered basic pay for purposes of calculating premium pay
                   (e,g., overtime, night, and holiday pay), payments for accumulated and
                   accrued annual leave and severance pay, compensation for work injuries,
                   or retirement and life insurance benefits.




                   Page 32               GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                         Appendix II
                                         Descriptions of Special Payment Provisions
                                         and Roles of Federal Physicians




                                         Table II.1 shows the agencies employing the most physicians under title 5
                                         and the percentage of physicians receiving PCAs in fiscal year 1996.

Table II.1: PCAs by Agency (Fiscal
Year 1996)                                                                           Number of
                                         Federal departments and                     physicians     Physicians        Percentage
                                         agencies                             eligible for PCAs     with PCAs          with PCAs
                                         HHS                                             1,363            1,019                75
                                         DOD                                               633              487                77
                                         Justice                                           198              183                92
                                         State                                              60               54                90
                                         Other agencies (14)                               148               98                66
                                         Total                                           2,402            1,841                77
                                         Source: GAO analysis of OMB information.



                                         The number of physicians eligible for PCAs in the 14 other agencies ranged
                                         from 1 to 35; 8 of these agencies employed fewer than 10 physicians. Five
                                         of the 14 agencies did not provide PCAs to any of their physicians. Officials
                                         with the National Aeronautics and Space Administration, with 27 eligible
                                         physicians, and the Tennessee Valley Authority, with 4 eligible physicians,
                                         told us that PCAs were not necessary to retain or recruit physicians in their
                                         agencies.


Title 38 Special Payment                 Title 38 authorizes several different special payments for physicians. While
Provisions                               most of the physicians receiving special payments under title 38 are
                                         employed by VA, OPM has authorized agencies (HHS, DOD, and the
                                         Department of Justice) that pay physicians under title 5 to pay selected
                                         physicians’ special payments under title 38. Physicians receiving these
                                         payments are not eligible to receive PCAs. Under title 38, physicians may be
                                         eligible for one or more of the following types of special payments.

                                     •   Full-time status: Physicians who have full-time status are entitled to a
                                         special payment of $9,000 annually.
                                     •   Length of service: Physicians are entitled to length of service awards that
                                         range from $4,000 for 2 to 4 years of service to $25,000 for 12 or more
                                         years of service. VA has established a schedule for length of service pay,
                                         which is shown in table II.2.




                                         Page 33                   GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                        Appendix II
                                        Descriptions of Special Payment Provisions
                                        and Roles of Federal Physicians




Table II.2: Length-of-Service and
Special Pay Amounts for VA                                      Length of service                                  Special pay
Physicians Paid Under Title 38          At least                                             But less than            amount
                                        2 years                                                     3 years              $4,000
                                        3 years                                                     4 years               6,000
                                        4 years                                                     6 years               9,000
                                        6 years                                                     8 years              12,000
                                        8 years                                                    12 years              15,000
                                        12 years                                                   20 years              18,000
                                        20 years                                                   25 years              20,000
                                        25 years                                                                         25,000
                                        Source: VA.



                                    •   Scarce medical specialty: Physicians serving in medical specialties for
                                        which there are extraordinary recruitment and retention difficulties may
                                        receive payments of up to $40,000. Physicians serving in executive
                                        positions in VA’s headquarters office are prohibited from receiving scarce
                                        specialty pay.
                                    •   Responsibility pay: Physicians serving in executive positions either in field
                                        offices or in VA’s headquarters office may be eligible for amounts ranging
                                        from $4,500 for a service chief to $45,000 for the Under Secretary of
                                        Health, based on the specific position in which they serve.
                                    •   Board certification: Physicians are entitled to a special payment of $2,000
                                        if they are board certified. If they are certified in a subspecialty or
                                        secondary board, they are entitled to an additional $500.
                                    •   Geographic location: Physicians serving in specific geographic locations
                                        where extraordinary recruitment or retention difficulties exist are eligible
                                        for geographic location pay of up to $17,000 annually.
                                    •   Exceptional qualifications: VA’s Under Secretary of Health may approve, on
                                        a case-by-case basis, special payments at an annual rate of not more than
                                        $15,000 for physicians with exceptional qualifications within a specialty.




                                        Page 34                  GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                               Appendix II
                               Descriptions of Special Payment Provisions
                               and Roles of Federal Physicians




Title 5 Physicians             HHS, DOD, and the Department of Justice, which pay physicians under title
Receiving Title 38 Pay         5, were authorized, under a delegation of title 38 pay authority from OPM,
                               to use the same categories of special payments to physicians described in
                               the previous section in paying their physicians. OPM delegated title 38 pay
                               authority to these agencies and VA18 in November 1993 to provide them
                               with added flexibilities needed to maintain a quality health care staff. HHS
                               agencies began using its delegated authority to make special payments to
                               physicians under title 38 in August and September 1995. DOD has
                               formalized a plan for the title 38 special pay authority, but as of April 1997,
                               it had not used the authority to pay its physicians. Justice has not
                               formalized a plan for using this authority. On June 27, 1997, OPM extended
                               title 38 pay authority to HHS, DOD, and Justice through June 30, 2002.

                               HHS guidelines for implementing OPM’s delegation of authority provide for
                               almost identical special payment amounts using criteria similar to those
                               used by VA. HHS limits special payments for length of service to $18,000
                               compared with $25,000 for VA. Also, by law (5 U.S.C. 5371(c)(1)), members
                               of the Senior Executive Service are not eligible for special payments under
                               title 38.


Title 37 Special Payment       Under title 37, physicians in the military and Commissioned Corps
Provisions                     physicians are eligible for types of special payments for physicians similar
                               to those available to title 38 physicians. Special payments and the amounts
                               authorized are discussed below.

                           •   Variable special pay: Physicians in the military and Commissioned Corps
                               physicians are entitled to variable special pay. Variable special pay is paid
                               monthly and ranges from $1,200 annually for interns to $12,000 annually
                               for officers with 6 but less than 8 years of service. After 8 years, this pay
                               declines based on the theory that future retirement benefits and other
                               types of special payments will serve as greater incentives for physicians to
                               stay on active duty.
                           •   Board-certified special pay: Physicians who are board-certified in their
                               respective specialties are entitled to amounts ranging from $2,500 to
                               $6,000 annually, based on their years of service. Physicians with less than
                               10 years of service receive $2,500 annually; physicians with 18 or more
                               years of service receive $6,000 annually. Board certified pay is paid
                               monthly.



                               18
                                OPM’s delegation agreement with VA expands the use of some of VA’s existing title 38 authorities. It
                               does not involve special payments to physicians or other compensation for physicians.



                               Page 35                      GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                       Appendix II
                       Descriptions of Special Payment Provisions
                       and Roles of Federal Physicians




                   •   Additional special pay: Physicians who sign an agreement to serve at least
                       1 additional year from the effective date of their service agreements are
                       entitled to $15,000 annually, which is paid at the beginning of the 1-year
                       period. Physicians who are undergoing internships or initial residency
                       programs do not qualify for additional special payments.
                   •   Multiyear special pay: Physicians who are fully qualified in designated
                       medical specialties are eligible to enter into written agreements to provide
                       2, 3, or 4 more years of service. The duration of the agreement determines
                       the amount payable. Annual amounts ranging from $2,000 to $14,000 are
                       payable upon acceptance of the agreement and on the anniversary of the
                       agreement. To receive multiyear special pay, physicians must have
                       completed any service commitment incurred for medical education and
                       training or completed 8 years of service. In either case, these physicians
                       must be below the pay grade of O-7 (General or Admiral). Every year, the
                       Assistant Secretary of Defense for Health Affairs convenes a Triservice
                       Flag Officer Review Board to determine the annual amount provided for
                       each specialty, to be based primarily on the staffing level in each specialty
                       community.

                       In fiscal year 1996, physicians who signed 4-year agreements could receive
                       $14,000 for each year of the agreement in medical specialties, such as
                       family practice, orthopedic surgery, emergency medicine, internal
                       medicine, and urology. Other medical specialties received less. Also,
                       multiyear special pay was not available for all specialists; for example, in
                       fiscal year 1996, anesthesiologists and physicians in the pediatric and
                       internal medicine subspecialties were not eligible to sign agreements for
                       multiyear special pay under title 37.

                   •   Incentive special pay: Physicians who sign an agreement to remain on
                       active duty for at least 1 year and who are fully qualified in medical
                       specialties designated as critical and practice in that specialty a substantial
                       portion of the time or who meet other criteria related to their assignment
                       may be authorized to receive up to $36,000 in incentive special pay.
                       Physicians must be in pay grade O-6 and below to receive this pay, which
                       is a lump-sum payment at the beginning of the 12-month period. The Flag
                       Officer Review Board annually determines the authorized amount of
                       incentive special pay for each specialty.


                       Federal physicians serve in a variety of categories and medical specialties,
Roles of Federal       depending on the mission of the employing federal agency and the needs
Physicians


                       Page 36                  GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                          Appendix II
                                          Descriptions of Special Payment Provisions
                                          and Roles of Federal Physicians




                                          of the population served. The following sections describe, by pay
                                          authority, the roles that these physicians fill in their employing agencies.


Title 5 Physicians                        Federal regulations related to PCAs (5 C.F.R 595) require heads of agencies
                                          to establish, as a minimum, the following separate categories of physicians
                                          for purposes of determining if there are significant recruitment and
                                          retention problems.

                                      •   Category 1: Positions primarily involved in the practice of medicine or
                                          direct service to patients in hospitals, clinics, public health programs,
                                          diagnostic centers, and similar settings.
                                      •   Category 2: Positions primarily involved in the conduct of medical
                                          research and experimental work or the identification of causes or sources
                                          of diseases or disease outbreaks.
                                      •   Category 3: Positions primarily involved in the evaluation of physical
                                          fitness or the provision of initial treatment of on-the-job illness or injury.
                                      •   Category 4: Positions not described above, including positions involving
                                          disability evaluation and rating, training, or the administration of patient
                                          care or medical research and experimental programs.

                                          PCAs may be paid only to physicians serving in positions in categories
                                          determined by the agency to have significant recruitment and retention
                                          problems. Table II.3 shows, for the agencies with the most physicians
                                          being paid under title 5, the number of physicians in each category and the
                                          number receiving PCAs.


Table II.3: Number of Physicians by Category and Number Receiving PCAs (Fiscal Year 1996)
                                                                                                                   Category IV
                                     Category 1                Category II               Category III           (Administrators or
                               (Direct care providers)       (Researchers)           (Fitness examiners)       disability examiners)
Federal Agency                     Number           PCAs     Number           PCAs     Number       PCAs         Number        PCAs
HHS                                    404           343         813           532           0             0          146        144
DOD                                    485           354           32           29         116          104             0          0
Justice                                198           183            0            0           0             0            0          0
State                                     51          45            0            0           0             0            9          9
Other                                     31          26           33           15          18             7           66         50
Totals                               1,169           951         878           576         134          111           221        203
                                          Source: GAO analysis of OMB data.




                                          Page 37                   GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
    Appendix II
    Descriptions of Special Payment Provisions
    and Roles of Federal Physicians




    In addition to HHS physicians who were paid under title 5, some physicians
    in HHS were eligible for special payments under title 38. In fiscal year 1996,
    HHS provided physicians’ special payments under title 38 to 294 physicians.
    Most of these physicians were employed in the Food and Drug
    Administration (FDA), Indian Health Service (IHS), and NIH.

    Even though physicians in the federal government are paid under a
    number of different pay plans, there is some commonality in the types of
    positions they fill in the agencies for which they work.

    The following section illustrates the roles of federal physicians.

    Titles 5, 37, and 38 physicians in HHS: HHS physicians may be paid as
    civilians under title 5 and as Commissioned Corps personnel under title 37.
    In addition, some title 5 physicians received special payments under title
    38 as a result of the previously mentioned delegation of authority.
    Examples of physicians’ roles in the HHS agencies that employ the most
    physicians are listed as follows:

•   FDA:  Approximately 95 percent of FDA’s physicians are involved in
    researching and evaluating the clinical research data related to technology
    assessment, investigational studies, or marketing of medical/patient care
    services or products. According to OMB’s annual report on PCAs, FDA
    competes with pharmaceutical companies for physicians qualified to
    support the regulation of food, prescription and over-the-counter drugs,
    and medical devices.
•   NIH: NIH physicians are involved in intramural medical research, extramural
    and collaborative research, or the administration of these programs. NIH
    competes with the academic community and with private sector
    pharmaceutical firms for physicians with outstanding research skills.
•   IHS: IHS provides a comprehensive health services delivery system,
    including hospital and ambulatory medical care and prevention and
    rehabilitation services, for American Indians and Alaska Natives. Much of
    the population served by IHS is scattered over long distances and in remote
    areas. IHS physicians are paid as civil servants under title 5 or as
    Commissioned Corps officers under title 37. IHS has 914 physicians and
    administers 37 hospitals and numerous health centers.
•   Centers for Disease Control (CDC): Physicians at CDC provide leadership
    and direction in areas such as the prevention of infectious and chronic
    diseases, environmental health, occupational safety, international health,
    epidemiologic and laboratory research, data analysis and information
    management, and health promotion.



    Page 38                  GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix II
Descriptions of Special Payment Provisions
and Roles of Federal Physicians




Title 38 physicians at VA: According to VA payroll system data, VA had over
7,300 full-time physicians that had been employed for at least 1 year, as of
December 1996. VA physicians serve in the largest federal medical-care
delivery system in the United States, providing care to over 2.9 million
patients in 1996. These physicians have training in numerous specialties
and provide inpatient and outpatient hospital subacute, rehabilitative and
psychiatric care, and residential and nursing-home care. In addition to
providing patient care, numerous VA physicians are involved in
administering its facilities; conducting basic, clinical, epidemiological, and
behavioral research; and training medical residents and students.

Title 37 Commissioned Corps physicians: Commissioned Corps payroll
data indicated that, as of December 1996, the Corps had over 1,450
full-time physicians who had been on duty for at least 1 year.
Approximately 1,210 or 80 percent of these physicians were with the
following HHS agencies: NIH (473), IHS (337), CDC (331), and FDA (69). Other
Corps physicians either were with the remaining HHS agencies or were
detailed to such other federal agencies as the Bureau of Prisons and the
Coast Guard. In a 1996 report on the Commissioned Corps,19 we noted that
Commissioned Corps officers and federal civilian employees often had
similar duties and some—physicians, nurses, and pharmacists—had
identical duties.

Title 37 military physicians: As of September, 30, 1996, the Army, Navy,
and Air Force had about 13,000 military physicians. About 12 percent of
these physicians had graduated from the Uniformed Services University of
the Health Sciences, a 4-year, tuition free medical school established by
DOD in response to the Department’s need to attract and retain physicians.
About 80 percent of the 13,000 physicians received financial assistance for
their medical education in civilian medical schools under DOD’s Health
Professions Scholarship Program. The remaining physicians were brought
into the military through direct accession.

A wide range of medical specialties are needed to support operational
forces during times of war and other military operations and to maintain
and sustain the well-being of the fighting forces in preparation for war.
Military physicians also provide health care services to nonactive duty
beneficiaries and to the dependents of active and nonactive duty
personnel. Furthermore, military physicians also contribute to research



19
 Federal Personnel: Issues on the Need for the Public Health Service’s Commissioned Corps
(GAO/GGD-96-55, May 7, 1996).



Page 39                     GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix II
Descriptions of Special Payment Provisions
and Roles of Federal Physicians




efforts conducted in areas such as Acquired Immune Deficiency
Syndrome, breast cancer, and blood research. As of September 1996, of
the 13,000 DOD physicians, over 1,000 were serving internships, and about
2,900 were in specialty training programs.

Differences exist between military physicians paid under title 37 and DOD
civilian physicians paid under title 5. According to DOD officials, the DOD
civil service system is structured to hire physicians primarily at the
GS-13/14/15 levels where experience requirements and pay are
significantly higher than they are for military physicians at the O-3 and O-4
levels (approximately 70 percent of the military physicians). The civil
service does not have a significant attrition rate when compared with the
attrition rate of junior military physicians. The result of the different
employment situations is that most civilian physicians are employed at
grade levels comparable with military pay grades O-5 and O-6.




Page 40                  GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix III

Objectives, Scope, and Methodology


               Because the authority to enter agreements to pay PCAs is due to expire on
               September 30, 1997, Representative Constance A. Morella requested a
               report on federal and private sector physicians’ pay and benefits.
               Following discussions with her office, we agreed that our principal
               objectives would be to (1) compare amounts paid to federal physicians
               under title 5 to amounts paid under other sections of the U.S. Code with
               each other and with amounts paid to private sector physicians,
               (2) determine what other types of pay and benefits federally employed
               physicians receive, and (3) identify ongoing agency efforts that have the
               potential for affecting federal physicians’ pay.

               To compare physicians’ pay, we obtained and analyzed information on
               physicians’ basic pay and on any special payments that were available only
               to physicians. For purposes of this report, basic pay means a rate of pay
               established under titles 5, 22, 37, or 38, including a special salary rate
               under 5 U.S.C. 5305 (or similar authority) and a locality-adjusted rate of pay
               under 5 U.S.C. 5304. On the basis of our preliminary work, we agreed to
               obtain physicians’ pay and benefit information for full-time federal
               physicians paid under title 5, most of whom were with HHS or DOD;
               physicians with the Public Health Service’s Commissioned Corps or on
               military duty and paid under title 37; physicians with VA and paid under
               title 38; and title 5 physicians with HHS who received special payments
               under title 38. We also reviewed federal statutes and regulations on special
               pay that is available only to physicians, for information on the various
               types of special pay that physicians could receive.

               HHS, VA,and the Commissioned Corps provided us with actual annualized
               pay data for full-time federal physicians with over 1 year of service for the
               12-month period ending December 1996. Payroll information for military
               physicians was obtained from Defense Finance and Accounting Service
               pay centers for the Army and Air Force. Army and Air Force information
               was for the 12-month periods ending January and March 1997,
               respectively. The same comparable data used for the Army and Air Force
               could not be obtained from the Navy pay and personnel system. According
               to DOD officials, because all three military departments use the same pay
               rates, Army and Air Force data provide a fairly accurate representation of
               pay for military physicians. Unless reported separately, amounts and
               averages for DOD military physicians were based on combined information
               from the Army’s and Air Force’s payroll systems. According to data from
               the Defense Manpower Data Center, as of September 1996, of the 13,051
               physicians in the military, 8,955 were in the Army and Air Force. From the
               information provided by the Army and Air Force, we could not determine



               Page 41               GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix III
Objectives, Scope, and Methodology




median pay amounts or identify amounts paid at the 25th and 75th
percentile for military physicians. We did not independently verify the
accuracy of any pay data we obtained.

DOD’s Directorate of Compensation prepares extensive pay-related
information in the form of pay tables for all military personnel. These
tables show for each pay grade, longevity step, and family size,
information such as basic pay, quarters and subsistence allowances, and
Social Security and federal income tax withholdings. Also, DOD health
affairs staff have developed information showing estimated amounts of
special pay that military physicians in various pay grades are likely to earn
on an annual basis. This information, together with staffing data, can be
used to estimate amounts paid to DOD’s military physicians.

We sought actual rather than estimated payroll data from all agencies for
our primary analyses because these data would more accurately reflect the
pay of physicians. We also sought actual data to avoid the potential
difficulty of comparing data among agencies that used different estimating
methodologies or of comparing estimated and actual data provided by
these agencies. However, actual pay data in the formats and timeframes
we specified were not always readily available.

For information on DOD physicians paid under title 5, DOD program officials
for the Army and Navy provided us with estimated annualized pay data
based on information for an April 1997 pay period, which was multiplied
by 26—the number of pay periods in 1 year. The Air Force obtained annual
physicians’ pay data from its personnel data system. We used the data
provided to avoid the additional time that would have been involved in
collecting actual pay data for these physicians from multiple pay centers.

For pay and benefits data for private sector physicians, we identified
physician compensation studies listed in Modern Healthcare.20 From the
studies listed and a discussion with the author of the above-mentioned
article, we judgmentally selected and purchased four studies that
contained information on physicians employed primarily in group
practices, HMOs, and hospitals. We selected these studies because they
contained information on (1) physicians practicing in settings that were
similar to those in which federal physicians practiced, rather than
information on physicians operating as sole practitioners and (2) amounts
paid to physicians as salary and direct compensation, rather than as net
income. Because these studies did not contain information on the median

20
  Modern Healthcare, July 15, 1996.



Page 42                      GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
                                            Appendix III
                                            Objectives, Scope, and Methodology




                                            pay of all physicians surveyed, we were unable to make across-the-board
                                            comparisons between federal physicians’ pay and private sector
                                            physicians’ pay. However, these studies contained information on median
                                            pay for physicians in selected medical specialties. Where possible, we
                                            compared the pay of VA, Commissioned Corps, and military physicians
                                            with the pay of private sector physicians in the following medical
                                            specialties—general surgery, internal medicine, psychiatry, and family
                                            practice. These were medical specialties where large numbers of federal
                                            and private sector physicians practiced.

                                            The organizations that prepared these pay surveys have been conducting
                                            physician pay studies from 4 to 21 years. We did not independently verify
                                            the data shown in these studies. Information on the scope of these studies
                                            is shown in table III.1.


Table III.1: Information on Private Sector Studies
                                                                                         Number of
                                                                       Number of           medical
                                                 Time period           physicians        specialties          Types of organizations
Study publisher                                     covered              covered           covered            responding
Hospital & Healthcare Compensation                                                                            324 hospitals, group
 Servicea                                                                                                     practice facilities, and
                                                          1996               12,676                42         HMOs
American Medical Group Association                        1995               23,280                69         272 group practices
Medical Group Management Association                      1995b              28,928                57         1,380 group practices
Sullivan, Cotter and Associates,                                                                              192 hospitals, group
  Incorporated                                            1995               14,000                94         practices, and HMOs
                                            a
                                             The HHCS study contained information on government and nongovernment physicians. We used
                                            the information on nongovernment physicians.
                                            b
                                             In some cases, information was for a more recently completed 12-month period.

                                            Source: Private sector studies indicated.



                                            The preparers of two of these studies cautioned users of their reports that
                                            the data provided by responding medical practices might not be
                                            representative of all physicians or all medical groups because the data
                                            were not based on a random sample of medical groups. Two of these
                                            preparers also recommended the use of medians in evaluating physicians’
                                            pay, because the median is not subject to the distortion that may occur in
                                            the mean (average) when extremely high or low values are included in the
                                            data set. We therefore used medians when presenting private sector data.
                                            However, we used averages in our analyses of federal data because



                                            Page 43                      GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
    Appendix III
    Objectives, Scope, and Methodology




    median pay was not available for all federal physicians’ groups we
    compared. Also, in most cases, the averages differed only slightly from the
    medians.

    To determine other types of pay and benefits received by federal
    physicians, we reviewed (1) federal statutes and regulations on pay and
    benefits that physicians could receive in addition to their basic and special
    pay and (2) actual pay information provided by the agencies reviewed. We
    also asked these agencies for information on the cost of other
    compensation that the government paid for, either in whole or in part, but
    which was not included in physicians’ pay. For example, employer costs
    include amounts paid for Social Security and other federal retirement
    benefits and for the government’s share of costs for employees’ health and
    life insurance benefits. After receiving the data from these agencies, and
    depending on how the agencies formatted the data, we made additional
    calculations or reformatted the data to make it as consistent as possible.

    Regarding the objective to identify ongoing agency efforts that could
    potentially affect physicians’ pay, we asked agency officials if they were
    involved in activities that had the potential for affecting physicians’ pay.

    In addition to the limitations indicated above:

•   We did not make a determination on whether PCAs should be increased or
    whether there should be a minimum comparability allowance because we
    did not collect and compare information on such factors as (1) physicians’
    duties and responsibilities, (2) amounts of supervision physicians either
    received or provided, and (3) actual retention and recruitment concerns
    experienced.
•   The military service pay centers for the Army and Air Force provided us
    with total amounts of basic pay, special pay for physicians, incentive pay,
    and allowances. From this information, we could calculate averages but
    could not determine median or percentile pay.
•   Because of the small numbers of physicians involved and the specialized
    reasons for which they were hired, we did not compare pay and benefit
    data for physicians employed by the Uniformed Services University of the
    Health Sciences under 10 U.S.C. 2113 (f)(1) or in the Senior Biomedical
    Research Services under 42 U.S.C. 237.

    We requested comments on a draft of this report from the Secretaries of
    HHS,Defense, and VA; and the Directors of OPM and OMB. Written comments
    from HHS and VA and oral comments from DOD and OPM were incorporated



    Page 44                 GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix III
Objectives, Scope, and Methodology




in the report, where appropriate. Similarly, we incorporated comments
from OMB staff familiar with physicians’ pay issues.

We did our work in Washington, D.C., from December 1996 to August 1997
in accordance with generally accepted government auditing standards.




Page 45                 GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
Appendix IV

Number of Full-Time Federal Physicians
(September 1996)


              Federal physicians                                                                          Number
              Militarya                                                                                     13,051
                                   b
              Veterans Affairs                                                                                  8,048
              Commissioned Corpsc                                                                               1,594
                                                   d
              Other government physicians                                                                       2,770
              Total                                                                                         25,463
              Note: Numbers of physicians in this table do not correspond to those used as the bases for
              analysis in other sections of this report. Our analyses generally were based on physicians that
              had 12 months of service during the year.
              a
               Physicians in the military (Army, Navy, and Air Force) and paid under title 37.
              b
                  Almost all VA physicians are paid under title 38. A few are paid under title 5.
              c
               Information is for December 1996. Corps physicians are paid under title 37.
              d
                  Most of these physicians are paid under title 5 and are with HHS or DOD.

              Source: OPM’s Central Personnel Data File, Defense Manpower Data Center, and the
              Commissioned Corps.




(410101)      Page 46                         GAO/GGD-97-170 Analyses of Federal Physicians’ Pay and Benefits
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