Category Archives: Compensation

Keeping Score: A comparison of pay-for-performance programs among commercial insurers

Source: PricewaterhouseCoopers’ Health Research Institute, 2007

It is impossible to improve what cannot be measured or to measure what hasn’t been defined. Take, for example, the topic of healthcare quality. Everyone wants quality, but everyone’s keeping score differently. This conundrum was described in some detail in The Quality Conundrum, a book developed and distributed in 2007 by PricewaterhouseCoopers’ Health Research Institute (HRI). It explores practical approaches to improving the quality of patient care from the perspective of patients, physicians, payers, and employers.

One of these approaches is pay-for-performance (P4P), which attempts to define, measure, and reward quality. This represents a radical departure from traditional payment methods, which pay providers the same regardless of differences in quality. P4P has gained traction, largely because the Centers for Medicare and Medicaid Services (CMS) has told hospitals and physicians that future increases in payment will be linked to improvements in clinical performance. Commercial health plans are also responding to employers’ demands for quality improvement by developing “scorecards” that use quality metrics to grade care provided by hospitals and physicians. By tying providers’ scores to financial payments, non-financial rewards, and public reporting, both private and public payers intend to incent improvements in quality of care and outcomes.

The most mature P4P programs are more than 10 years old. However, among payers interviewed for this report, P4P programs are still evolving. As they’ve blossomed, providers have faced a host of new and varied reporting requirements-what some call a “virtual soup of different metrics.” This has caused some to question the value of P4P and whether the results are worth the administrative burden.
See also:
Pay-for-Performance: Will the Latest Payment Trend Improve Care?
Source: Meredith B. Rosenthal, R. Adams Dudley, JAMA: Journal of the American Medical Association, Vol. 297 No. 7, February 21, 2007 (subscription required)

Push For Merit-Based Teacher Pay Heats Up

Source: Hays Daily News, 8/26/2007

OKLAHOMA CITY (AP) — A merit-based teacher salary plan proposed by Republican state lawmakers could cause teachers’ paychecks to vary dramatically depending on how well their students perform in the classroom.

Supporters say tying teacher pay to performance will lead to increased accountability and more innovation and effort in the classroom. But opponents say teachers would be forced to compete instead of collaborate. And tying raises or bonuses to student test scores is not the best measure of what constitutes a good teacher, many say.

1995 – 2005: Foreign-Born Latinos Make Progress on Wages

Source: Rakesh Kochhar, Pew Hispanic Center, August 21, 2007

Foreign-born Latino workers made notable progress between 1995 and 2005 when ranked by hourly wage. The proportion of foreign-born Latino workers in the lowest quintile of the wage distribution decreased to 36% from 42% while many workers moved into the middle quintiles, according to a new analysis of Census Bureau data by the Pew Hispanic Center.

Newly arrived Hispanic workers also were much less likely to be low-wage earners in 2005 than in 1995, in part because they were older, better educated and more likely to be employed in construction than in agriculture. Yet despite the clear movement into the middle range of the wage distribution, many foreign-born Latinos remain low-wage earners. Even though the share of Latino workers at the low end decreased, in absolute numbers this population grew by 1.2 million between 1995 and 2005.

Foreign-born workers in general did well during that time period, though there were significant differences among them. While Latino workers moved out of the low end of the wage distribution and into the middle, Asians significantly boosted their presence in the high-wage workforce.

Coming Up Short: Resurrection Health Care’s Distorted Pay Priorities

Source: Council 31, American Federation of State, County and Municipal Employees (AFSCME), July 2007

From press release:
Council 31 of the American Federation of State, County and Municipal Employees (AFSCME) have issued a new report documenting low wage levels that keep patient-support staff art Resurrection Health Care hospitals mired in poverty and unable to support their families. Resurrection Health Care (RHC) is the second largest non-profit hospital system in the Chicago metropolitan area. It encompasses eight hospitals, as well as nursing homes, home health services, and outpatient clinics.

Entitled Coming Up Short: Resurrection Health Care’s Distorted Pay Priorities, the report depicts a starkly skewed pay structure in which the compensation of RHC hospital executives significantly exceeds national norms while the meager wages of patient-support staff (housekeepers, laundry and food service workers) fall far short of self-sufficiency standards in the Chicago area.

Hike in Federal Minimum Wage Has Minimal Impact in Most States

Source: CCH/Wolters Kluwer, July 19, 2007

Workers in most states will not be affected by the upcoming increase in the federal minimum wage to $5.85, according to CCH, a leading provider of human resources information and software and part of Wolters Kluwer Law & Business (hr.cch.com). CCH has been reporting on federal wage and hour law since the enactment of the first federal minimum wage in 1938. That’s because 32 states and the District of Columbia have minimum wages higher than the new federal level.

“Over the last ten years, while the federal minimum wage has been steady at $5.15 per hour, more and more states have set their minimum wages above that, and above the new minimum as well,” said Barbara O’Dell, JD, CCH workplace analyst.
+ Timeline of federal minimum wage rates 1938-2009

Correctional Officers: Hiring Requirements and Wages

Source: Corrections Compendium, Vol. 32 no. 3, May/June 2007

In a similar survey Corrections Compendium conducted early in 2004, 43 percent of the respondents in U.S. correctional systems noted that they experienced problems in recruiting qualified candidates for correctional officer positions. The current survey indicated that little has changed. Forty-four U.S. correctional systems and four Canadian systems responded to the survey, with 44 percent of them experiencing problems in recruitment. … The systems were asked to state the wage range paid to their correctional officers at entry level, after the first year of service, and for captains or their equivalent. The minimum starting wage in New Jersey is $45,549. Wages at the top of the entry level category were reported by Wisconsin as $50,759, Colorado as $52,368 and Nevada as $53,390.

2007 Total Compensation Benchmarking Survey

Source: International Public Management Association for Human Resources, May 2007

The focus of this survey is variable pay—what types of practices are government agencies utilizing to affect their workforces and how effective are these practices? Some highlights from the survey include:

• More than three-quarters of all organizations have a defined pay philosophy
• Most organizations use the traditional grade and step systems although a significant number are using other systems
• Three quarters of respondents offer uniform allowances
• Hiring bonuses are more common at the federal level than at the city or county level
• Less than half of respondents use variable pay
• Of those that do, pay for performance is the most common
• There is a strong correlation between funding levels and the perceived success of the variable pay program
• Fifteen percent of organizations utilize broadbanding
• Thirteen respondents have a gainsharing program in place.
+ Press Release

Low Wages Prevalent in Direct Care and Child Care Workforce

Source: Kristin Smith and Reagan Baughman, Carsey Institute, University of New Hampshire, Policy Brief no. 7, Summer 2007

One in every two direct care workers and one in every three child care workers live in a low-income family (below 200 percent of the poverty line), and many live in poverty. Hourly wages for the caregiving workforce are low and many lack health insurance. Despite work, these families struggle to make ends meet. Our society depends on the care work of many paid professionals-direct care and child care workers-to help meet the daily needs of our children and the elderly. To stem turnover and provide quality services to young children and the elderly, job conditions among the direct care and child care workforce must improve, and increasing wages is a promising place to start.

Performance Pay and Wage Inequality

Source: Thomas Lemieux, W. Bentley MacLeod, Daniel Parent, Institute for the Study of Labor, IZA DP No. 2850, June 2007

We document that an increasing fraction of jobs in the U.S. labor market explicitly pay workers for their performance using bonuses, commissions, or piece-rates. We find that compensation in performance-pay jobs is more closely tied to both observed (by the econometrician) and unobserved productive characteristics of workers. Moreover, the growing incidence of performance-pay can explain 24 percent of the growth in the variance of male wages between the late 1970s and the early 1990s, and accounts for nearly all of the top-end growth in wage dispersion (above the 80th percentile).

IRS Issues Spring 2007 Statistics of Income Bulletin

Source: Internal Revenue Service, IR-2007-119, June 18, 2007

The Internal Revenue Service today announced the release of the spring 2007 issue of the Statistics of Income Bulletin. Highlights include articles on high-income individual income tax returns, taxpayers reporting noncash contributions, farm proprietorship returns, qualified zone academy bonds, international boycott reports and S corporations.

The article on farm proprietorship returns is the first published by IRS in more than 20 years. In addition, this issue of the Bulletin presents selected tax year 1990-2004 individual income tax return data that have been indexed for inflation and tax year 2005 individual income tax return statistics classified by state and size of adjusted gross income.

For tax year 2004, there were 3,021,435 individual income tax returns filed with adjusted gross income (AGI) of $200,000 or more and 3,067,602 returns with expanded income of $200,000 or more.
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