More than 350 VA executives were paid a total of $2.7 million in bonuses last year, said Gina Farrisee, assistant VA secretary for human resources and administration. That amount is down from about $3.4 million in bonuses paid in 2012, Farrisee said.

The totals do not include tens of millions of dollars in bonuses awarded to doctors, dentists and other medical providers throughout the VA's nearly 900 hospitals and clinics.

Workers at the Phoenix VA Health Care System — where officials have confirmed dozens of patients died while awaiting treatment — received about $3.9 million in bonuses last year, newly released records show. The merit-based bonuses were doled out to about 650 employees, including doctors, nurses, administrators, secretaries and cleaning staff.

Farrisee defended the bonus system, telling the House Veterans Affairs Committee that the VA needs to pay bonuses to keep executives who are paid up to $181,000 per year.

"We are competing in tough labor markets for skilled personnel," Farrisee said Friday. "To remain competitive in recruiting and retaining the best personnel to serve our veterans, we must rely on tools such as incentives and awards that recognize superior performance."

Farrisee's testimony drew sharp rebukes by lawmakers from both parties.

Rep. Jeff Miller, R-Fla., chairman of the House Veterans Affairs Committee, said the VA's bonus system "is failing veterans."

Instead of being given for outstanding work, the cash awards are "seen as an entitlement and have become irrelevant to quality work product," Miller said.

Rep. Phil Roe, R-Tenn., said awarding bonuses to 80 percent of executives means that the VA was setting the bar for performance so low that "anybody could step over it. If your metrics are low enough that almost everybody exceeds them, then your metrics are not very high."

Rep. Ann McLane Kuster, D-N.H., said the VA suffered from "grade inflation, or what (humorist) Garrison Keillor would refer to as 'all of the children are above average.'"

Kuster and other lawmakers said they found it hard to believe that 80 percent of senior employees could be viewed as exceeding expectations, given the growing uproar over patients dying while awaiting VA treatment and mounting evidence that workers falsified or omitted appointment schedules to mask frequent, long delays. The resulting election-year firestorm forced VA Secretary Eric Shinseki to resign three weeks ago.

Miller, the panel's chairman, noted that in the past four years, none of the VA's 470 senior executives have received ratings of minimally satisfactory or unsatisfactory, the two lowest ratings on the VA's five-tier evaluation system. Nearly 80 percent of senior executives were rated as outstanding or exceeding "fully successful," according to the VA.

"Based on this committee's investigations, outside independent reports and what we have learned in the last few months, I wholeheartedly disagree with VA's assessment of its senior staff," Miller said.

An updated audit released this week showed that about 10 percent of veterans seeking medical care at VA hospitals and clinics have to wait at least 30 days for an appointment. More than 56,000 veterans have had to wait at least three months for initial appointments, the report said, and an additional 46,000 veterans who asked for appointments over the past decade never got them.

The VA has confirmed that dozens of veterans died while awaiting appointments at VA facilities in the Phoenix area, although officials say they can't tell whether the delays caused any of the deaths.

The VA's inspector general has said that the bonus system — which has been suspended amid a criminal probe of wrongdoing at the agency — contributed to the fake record-keeping, since employees knew that bonuses for senior managers and hospital directors were based in part on on-time performance.

Some 13 percent of VA schedulers surveyed by auditors reported being told by supervisors to falsify appointment records to make patient waits appear shorter.

The House and Senate have both approved legislation to make it easier to fire senior executives and hospital administrators. The House bill would ban performance bonuses, while the Senate would sharply limit them. Lawmakers say they hope to bring a compromise bill to the president before the July 4 recess.