VA Benefits
Other Programs May Provide Lessons for Improving Individual Unemployability Assessments Gao ID: GAO-06-207T October 27, 2005The Department of Veterans Affairs (VA) provides disability compensation to veterans disabled by injuries or diseases that were incurred or aggravated while on active military duty. Under Individual Unemployability (IU) benefit regulations, a veteran can receive increased compensation at the total disability compensation rate if VA determines that the veteran is unemployable because of service-connected disabilities. GAO has reported that numerous technological and medical advances, combined with changes in society and the nature of work, have increased the potential for people with disabilities to work. Yet VA has seen substantial growth of IU benefit awards to veterans over the last five years. In 2001 GAO reported that a growing number of private insurance companies in the United States have focused their programs on developing and implementing strategies to enable people with disabilities to return to work. Our testimony will describe how U.S. private insurers facilitate return to work in three key areas: (1) the eligibility assessment process, (2) work incentives, and (3) staffing practices. It will also compare these practices with those of VA's IU eligibility assessment process.
The disability programs of the three private insurers we reported on in 2001 included three common return-to-work practices in their disability assessment process. Incorporate return-to-work considerations from the beginning of the assessment process: Private insurers integrated return-to-work considerations early and throughout the eligibility assessment process. Their assessment process both evaluated a person's potential to work and assisted those with work potential to return to the labor force. Provide incentives for claimants and employers to encourage and facilitate return to work: These incentives included requirements for obtaining appropriate medical treatment and participating in a return-to-work program, if such a program would benefit the individual. In addition, they provided financial incentives to employers to encourage them to provide work opportunities for claimants. Strive to use appropriate staff to achieve accurate disability decisions and successful return-to-work outcomes: Private insurers have access to staff with a wide range of expertise not only in making eligibility decisions, but also in providing return-to-work assistance. The three private disability insurers told us that they selected the appropriate type and intensity of staff resources to assess and return individuals with work capacity to employment cost-effectively. In comparison, VA's Individual Unemployability decision-making practices lag behind those used in the private sector. As we have reported in the past, a key weakness in VA's decision-making process is that the agency has not routinely included a vocational specialist in the evaluation to fully evaluate the applicant's ability to work. Preliminary findings from our ongoing work indicate that VA still does not have procedures in place to fully assess veterans' work potential. In addition, the IU decision-making process lacks sufficient incentives to encourage return to work. In considering whether to grant IU benefits, VA does not have procedures to include vocational specialists from its Vocational Rehabilitation and Education (VR&E) services to help evaluate a veteran's work potential. By not using these specialists, VA also misses an opportunity to have the specialist develop a return-to-work plan, in collaboration with the veteran, and identify and provide needed accommodations or services for those who can work. Instead, VA's IU assessment is focused on the veterans' inabilities and providing cash benefits to those labeled as "unemployable," rather than providing opportunities to help them return to work. Incorporating return-to-work practices could help VA modernize its disability program to enable veterans to realize their full productive potential without jeopardizing the availability of benefits for people who cannot work.
GAO-06-207T, VA Benefits: Other Programs May Provide Lessons for Improving Individual Unemployability Assessments
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Testimony before the Committee on Veterans' Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Thursday, October 27, 2005:
VA Benefits:
Other Programs May Provide Lessons for Improving Individual
Unemployability Assessments:
Statement of Cynthia Bascetta, Director, Education, Workforce, and
Income Security Issues:
GAO-06-207T:
GAO Highlights:
Highlights of GAO-06-207T, a testimony before the Committee on
Veterans' Affairs, U.S. Senate:
Why GAO Did This Study:
The Department of Veterans Affairs (VA) provides disability
compensation to veterans disabled by injuries or diseases that were
incurred or aggravated while on active military duty. Under Individual
Unemployability (IU) benefit regulations, a veteran can receive
increased compensation at the total disability compensation rate if VA
determines that the veteran is unemployable because of service-
connected disabilities. GAO has reported that numerous technological
and medical advances, combined with changes in society and the nature
of work, have increased the potential for people with disabilities to
work. Yet, VA has seen substantial growth of IU benefit awards to
veterans over the last five years.
In 2001 GAO reported that a growing number of private insurance
companies in the United States have focused their programs on
developing and implementing strategies to enable people with
disabilities to return to work. Our testimony will describe how U.S.
private insurers facilitate return to work in three key areas: (1) the
eligibility assessment process, (2) work incentives, and (3) staffing
practices. It will also compare these practices with those of VA‘s IU
eligibility assessment process.
What GAO Found:
The disability programs of the three private insurers we reported on in
2001 included the following common return-to-work practices in their
disability assessment process:
Incorporate return-to-work considerations from the beginning of the
assessment process: Private insurers integrated return-to-work
considerations early and throughout the eligibility assessment process.
Their assessment process both evaluated a person‘s potential to work
and assisted those with work potential to return to the labor force.
Provide incentives for claimants and employers to encourage and
facilitate return to work: These incentives included requirements for
obtaining appropriate medical treatment and participating in a return-
to-work program, if such a program would benefit the individual. In
addition, they provided financial incentives to employers to encourage
them to provide work opportunities for claimants.
Strive to use appropriate staff to achieve accurate disability
decisions and successful return-to-work outcomes: Private insurers have
access to staff with a wide range of expertise not only in making
eligibility decisions, but also in providing return-to-work assistance.
The three private disability insurers told us that they selected the
appropriate type and intensity of staff resources to assess and return
individuals with work capacity to employment cost-effectively.
In comparison, VA‘s Individual Unemployability decision-making
practices lag behind those used in the private sector. As we have
reported in the past, a key weakness in VA‘s decision-making process is
that the agency has not routinely included a vocational specialist in
the evaluation to fully evaluate the applicant‘s ability to work.
Preliminary findings from our ongoing work indicate that VA still does
not have procedures in place to fully assess veterans‘ work potential.
In addition, the IU decision-making process lacks sufficient incentives
to encourage return to work. In considering whether to grant IU
benefits, VA does not have procedures to include vocational specialists
from its Vocational Rehabilitation and Education (VR&E) services to
help evaluate a veteran‘s work potential. By not using these
specialists, VA also misses an opportunity to have the specialist
develop a return-to-work plan, in collaboration with the veteran, and
identify and provide needed accommodations or services for those who
can work. Instead, VA's IU assessment is focused on the veterans‘
inabilities and providing cash benefits to those labeled as
’unemployable,“ rather than providing opportunities to help them return
to work. Incorporating return-to-work practices could help VA modernize
its disability program to enable veterans to realize their full
productive potential without jeopardizing the availability of benefits
for people who cannot work.
www.gao.gov/cgi-bin/getrpt?GAO-06-207T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Cynthia Bascetta at (202)
512-7215 or bascettac@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
Thank you for inviting me to testify on how the Department of Veterans
Affairs (VA) Individual Unemployability (IU) disability assessment
practices compare with those used by private sector insurers in helping
people with severe disabilities realize their full potential to work.
It is especially fitting, with the continuing deployment of our
military forces to armed conflict, that we reaffirm our commitment to
those who serve our nation in its times of need. Therefore, ensuring
the most effective and efficient management of benefits and services to
those who incur disabilities because of military service is of
paramount importance. At the same time, many people with disabilities
have indicated that they want to work and be independent and would do
so if they receive the supports they need. Fortunately, numerous
technological and medical advances, combined with changes in society
and the nature of work, have increased the potential for people with
disabilities to work. Nevertheless, VA has seen substantial growth of
unemployability benefit awards to veterans with service-connected
disabilities. From fiscal years 1999 to 2004, the number of veterans
receiving unemployability benefits has more than doubled, from 95,000
to 197,000.
To help people with disabilities achieve their full potential, the
disability programs financed by social insurance systems in other
countries focus on returning beneficiaries with disabilities to work.
Also, in recent years, a growing number of private insurance companies
in the United States have been focusing on developing and implementing
strategies to enable people with disabilities to return to work. Today
I would like to discuss how U.S. private sector disability programs
facilitate return to work in three key areas: (1) the eligibility
assessment process, (2) work incentives, and (3) staffing practices. I
will describe these three elements for U.S. private sector disability
insurers and compare these practices with those of VA's IU eligibility
assessment process.
My testimony is based primarily upon our prior work, including our 2001
report assessing the disability practices of selected private insurance
companies and other countries.[Footnote 1] This work involved in-depth
interviews and document review for three private sector disability
insurers: UNUMProvident, Hartford Life, and CIGNA. In addition, we used
our 1987 review of Individual Unemployability benefits[Footnote 2] as
well as preliminary observations from our ongoing review of these
benefits.
In summary, the disability systems of the private insurers we reviewed
integrated return-to-work considerations early after disability onset
and throughout the eligibility assessment process. This involved both
determining--as well as enhancing--the ability of each claimant to
return to work. For example, private insurers used vocational
specialists to help ensure they fully assess the work capacity of
claimants, identify needed accommodations, and develop individualized
plans to help those who can return to work. In addition, these insurers
provided incentives for claimants to take part in vocational
rehabilitation programs and to obtain appropriate medical treatment.
They also provided incentives for employers to provide work
opportunities for claimants. Managers of these other programs also
explained to us that they have developed techniques--such as separating
(or triaging) claims--to use staff with the appropriate expertise to
provide return-to-work assistance to claimants in a cost-effective
manner.
VA's individual unemployability decision-making practices lag behind
those used in the private sector. As we have reported in the past, a
key weakness in VA's decision-making process is that the agency did not
routinely include a vocational specialist in the evaluation to fully
evaluate an applicant's ability to work. Preliminary findings from our
ongoing work indicate that VA still does not have procedures in place
to fully assess veterans' work potential. In addition, the IU decision-
making process lacks sufficient incentives to encourage return to work.
In considering whether to grant IU benefits, VA does not have
procedures to include vocational specialists from its Vocational
Rehabilitation and Education (VR&E) services to help evaluate a
veteran's work potential. By not using these specialists, VA also
misses an opportunity to have the specialist develop a return-to-work
plan, in collaboration with the veteran, and identify and provide
needed accommodations or services for those who can work. Instead, VA's
IU assessment is focused on the veterans' inabilities and providing
cash benefits to those labeled as "unemployable," rather than providing
opportunities to help them return to work. Incorporating return-to-work
practices could help VA modernize its disability program to enable
veterans to realize their full productive potential without
jeopardizing the availability of benefits for people who cannot work.
Background:
VA pays basic compensation benefits to veterans incurring disabilities
from injuries or diseases that were incurred or aggravated while on
active military duty. VA rates the severity of all service-connected
disabilities by using its Schedule for Rating Disabilities. The
schedule lists types of disabilities and assigns each disability a
percentage rating, which is intended to represent an average earning
impairment the veteran would experience in civilian occupations because
of the disability. All veterans awarded service-connected disabilities
are assigned single or combined (in case of multiple disabilities)
ratings ranging from 0 to 100 percent, in increments of 10 percent,
based on the rating schedule; such a rating is known as a schedular
rating. Diseases and injuries incurred or aggravated while on active
duty are called service-connected disabilities.
VA's Individual Unemployability Benefits:
Disability compensation can be increased if VA determines that the
veteran is unemployable (not able to engage in substantially gainful
employment) because of the service-connected disability. Under VA's
unemployability regulations, the agency can assign a total disability
rating of 100 percent to veterans who cannot perform substantial
gainful employment because of service-connected disabilities, even
though their schedular rating is less than 100 percent. To qualify for
unemployability benefits, a veteran must have a single service-
connected disability of 60 percent or more or multiple disabilities
with a combined rating of 70 percent or more, with at least one of the
disabilities rated 40 percent or more. VA can waive the minimum ratings
requirement and grant unemployability benefits to a veteran with a
lower rating; this is known as an extra-schedular rating.
Staff at VA's regional offices make virtually all eligibility decisions
for disability compensation benefits, including IU benefits. The 57 VA
regional offices use nonmedical rating specialists to evaluate
veterans' eligibility for these benefits. Upon receipt of an
application for compensation benefits, the rating specialist would
typically refer the veteran to a VA medical center or clinic for an
exam. Based on the medical examination and other information available
to the rater, the rater must first determine which of the veteran's
conditions are or are not service-connected. For service-connected
conditions, the rater compares the diagnosis with the rating schedule
to assign a disability rating.
Along with medical records, raters may also obtain other records to
evaluate an IU claim. VA may require veterans to furnish an employment
history for the 5-year period preceding the date on which the veteran
claims to have become too disabled to work and for the entire time
after that date. VA guidance also requires that raters request basic
employment information from each employer during the 12-month period
prior to the date the veteran last worked. In addition, if the veteran
has received services from VA's VR&E program or Social Security
disability benefits, the rater may also request and review related
information from these organizations.
Once VA grants unemployability benefits, a veteran may continue to
receive the benefits while working if VA determines that the work is
only marginal employment rather than substantially gainful employment.
Marginal employment exists when a veteran's annual earned income does
not exceed the annual poverty threshold for one person as determined by
the U.S. Census Bureau--$ 9,827 for 2004. Furthermore, if veterans are
unable to maintain employment for 12 continuous months due to their
service-connected disabilities they may retain their IU benefits,
regardless of the amount earned.
Modernizing Federal Disability Programs:
After more than a decade of research, GAO has determined that federal
disability programs were in urgent need of attention and transformation
and placed modernizing federal disability programs on its high-risk
list in January 2003. Specifically, our research showed that the
disability programs administered by VA and the Social Security
Administration (SSA) lagged behind the scientific advances and economic
and social changes that have redefined the relationship between
impairments and work. For example, advances in medicine and technology
have reduced the severity of some medical conditions and have allowed
individuals to live with greater independence and function in work
settings. Moreover, the nature of work has changed in recent decades as
the national economy has moved away from manufacturing-based jobs to
service-and knowledge-based employment. Yet VA's and SSA's disability
programs remain mired in concepts from the past--particularly the
concept that impairment equates to an inability to work--and as such,
we found that these programs are poorly positioned to provide
meaningful and timely support for Americans with disabilities.
In contrast, we found that a growing number of U.S. private insurance
companies had modernized their programs to enable people with
disabilities to return to work. In general, private insurer disability
plans can provide short-or long-term disability insurance coverage, or
both, to replace income lost by employees because of injuries and
illnesses. Employers may choose to sponsor private disability insurance
plans for employees either by self-insuring or by purchasing a plan
through a private disability insurer. The three private disability
insurers we reviewed recognized the potential for reducing disability
costs through an increased focus on returning people with disabilities
to productive activity. To accomplish this comprehensive shift in
orientation, these insurers have begun developing and implementing
strategies for helping people with disabilities return to work as soon
as possible, when appropriate.
Private Insurers Incorporate Return-to-Work Considerations from the
Beginning of the Assessment Process:
The three private insurers we studied incorporate return-to-work
considerations early in the assessment process to assist claimants in
their recovery and in returning to work as soon as possible.[Footnote
3] With the initial reporting of a disability claim, these insurers
immediately set up the expectation that claimants with the potential to
do so will return to work. Identifying and providing services intended
to enhance the claimants' capacity to work are central to their process
of deciding eligibility for benefits. Further, the insurers continue to
periodically monitor work potential and provide return-to-work
assistance to claimants as needed throughout the duration of the claim.
Their ongoing assessment process is closely linked to a definition of
disability that shifts over time from less to more restrictive--that
is, from an inability to perform one's own occupation to an inability
to perform any occupation.
After a claim is received, the private insurers' assessment process
begins with determining whether the claimant meets the initial
definition of disability. In general, for the three private sector
insurers we studied, claimants are considered disabled when, because of
injury or sickness, they are limited in performing the essential duties
of their own occupation and they earn less than 60 to 80 percent of
their predisability earnings, depending upon the particular
insurer.[Footnote 4] As part of determining whether the claimant meets
this definition, the insurers compare the claimant's capabilities and
limitations with the demands of his or her own occupation and identify
and pursue possible opportunities for accommodation--including
alternative jobs or job modifications--that would allow a quick and
safe return to work. A claimant may receive benefits under this
definition of disability for up to 2 years.
As part of the process of assessing eligibility according to the "own
occupation" definition, insurers directly contact the claimant, the
treating physician, and the employer to collect medical and vocational
information and initiate return-to-work efforts, as needed. Insurers'
contacts with the claimant's treating physician are aimed at ensuring
that the claimant has an appropriate treatment plan focused, in many
cases, on timely recovery and return to work. Similarly, insurers use
early contact with employers to encourage them to provide workplace
accommodations for claimants with the capacity to work.
If the insurers find the claimant initially unable to return to his or
her own occupation, they provide cash benefits and continue to assess
the claimant to determine if he or she has any work potential. For
those with work potential, the insurers focus on return to work before
the end of the 2-year period, when, for all the private insurers we
studied, the definition of disability becomes more restrictive. After 2
years, the definition shifts from an inability to perform one's own
occupation to an inability to perform any occupation for which the
claimant is qualified by education, training, or experience. Claimants
initially found eligible for benefits may be found ineligible under the
more restrictive definition.
The private insurers' shift from a less to a more restrictive
disability definition after 2 years reflects the changing nature of
disability and allows a transitional period for insurers to provide
financial and other assistance, as needed, to help claimants with work
potential return to the workforce. During this 2-year period, the
insurer attempts to determine the best strategy for managing the claim.
Such strategies can include, for example, helping plan medical care or
providing vocational services to help claimants acquire new skills,
adapt to assistive devices to increase functioning, or find new
positions. For those requiring vocational intervention to return to
work, the insurers develop an individualized return-to-work plan, as
needed. Basing the continuing receipt of benefits upon a more
restrictive definition after 2 years provides the insurer with leverage
to encourage the claimant to participate in a rehabilitation and return-
to-work program. Indeed, the insurers told us they find that claimants
tend to increase their efforts to return to work as they near the end
of the 2-year period.
If the insurer initially determines that the claimant has no work
potential, it regularly monitors the claimant's condition for changes
that could increase the potential to work and reassesses after 2 years
the claimant's eligibility under the more restrictive definition of
disability. The insurer continues to look for opportunities to assist
claimants who qualify under this definition of disability in returning
to work. Such opportunities may occur, for example, when changes in
medical technology--such as new treatments for cancer or AIDS--may
enable claimants to work, or when claimants are motivated to work.
The private insurers that we reviewed told us that throughout the
duration of the claim, they tailor the assessment of work potential and
development of a return-to-work plan to the specific situation of each
individual claimant. To do this, disability insurers use a wide variety
of tools and methods when needed. Some of these tools, as shown in
tables 1 and 2, are used to help ensure that medical and vocational
information is complete and as objective as possible. For example,
insurers consult medical staff and other resources to evaluate whether
the treating physician's diagnosis and the expected duration of the
disability are in line with the claimant's reported symptoms and test
results. Insurers may also use an independent medical examination or a
test of basic skills, interests, and aptitudes to clarify the medical
or vocational limitations and capabilities of a claimant. In addition,
insurers identify transferable skills to compare the claimant's
capabilities and limitations with the demands of the claimant's own
occupation. This method is also used to help identify other suitable
occupations and the specific skills needed for these new occupations
when the claimant's limitations prevent him or her from returning to a
prior occupation. Included in these tools and methods are services to
help the claimant return to work, such as job placement, job
modification, and retraining.
Table 1: Medical Assessment: Tasks, Tools, and Methods:
Task: Assess the diagnosis, treatment, and duration of the impairment
and begin developing a treatment plan focused on returning the claimant
to work promptly and safely;
Tools and methods: Consultation of medical staff and other resources,
including current medical guidelines describing symptoms, expected
results from diagnostic tests, expected duration of disability, and
treatment.
Task: Assess the claimant's cognitive skills;
Tools and methods: Standardized mental tests.
Task: Validate the treating physician's assessment of the impairment's
effect on the claimant's ability to work and the most appropriate
treatment and accommodation;
Tools and methods: Review of the claimant's file, generally by a nurse
or a physician who is not the claimant's treating physician.
Task: Verify the diagnosis, level of functioning, and appropriateness
of treatment;
Tools and methods: Independent medical examination of the claimant by a
contracted physician.
Task: Evaluate the claimant's ability to function, determine needed
assistance, and help the claimant develop an appropriate treatment plan
with the physician;
Tools and methods: Home visits by a field nurse or investigator or
accompanied doctor visits.
Task: Assess the claim's validity;
Tools and methods: Home visits and interviews with neighbors or others
who have knowledge of the claimant's activities.
Source: GAO analysis of private insurers' practices.
[End of table]
Table 2: Vocational Assessment and Assistance: Tasks, Tools, and
Methods:
Task: Identify transferable skills, validate restrictions on and
capabilities for performing an occupation, and identify other suitable
occupations and retraining programs;
Tools and methods:
* Test basic skills, such as reading or math;
* Determine interests and aptitudes;
* Evaluate functional capacities associated with an occupation, such as
lifting, walking, and following directions;
* Compare functional capacities, work history, education, and skills
with the demands of an occupation.
Task: Enhance work capabilities and help develop job-seeking skills;
Tools and methods:
* Provide résumé preparation, help develop job- seeking skills, and
help with job placement;
* Assist in obtaining physical, occupational, or speech therapy and
access to employee assistance, support groups, or state agency
vocational rehabilitation or other community services;
* Identify and fund on-the-job training or other educational courses.
Task: Assess ability to perform own or any occupation, assess potential
for accommodation, and determine whether sufficient salary is offered
locally or nationally for a suitable occupation;
Tools and methods:
* Observe and analyze the essential duties of the claimant's own
occupation, another occupation for the same employer, or an occupation
of a prospective employer;
* Determine the general availability and salary range of specified
occupations;
* Identify for a specified occupation the potential employers and
related job descriptions, salary range, and openings.
Task: Reaccustom claimant to a full work schedule and enable claimant
to overcome impairment and return to work;
Tools and methods:
* Provide work opportunities for the claimant to gradually resume his
or her job duties;
* Procure devices to assist with work or otherwise help to modify the
job.
Source: GAO analysis of private insurers' practices.
[End of table]
Private Insurers Provide Incentives for Claimants and Employers to
Encourage and Facilitate Return to Work:
To facilitate return to work, the private insurers we studied
employment incentives both for claimants to participate in vocational
activities and receive appropriate medical treatment, and for employers
to accommodate claimants. The insurers require claimants who could
benefit from vocational rehabilitation to participate in an
individualized return-to-work program. They also provide financial
incentives to promote claimants' efforts to become rehabilitated and
return to work. To better ensure that medical needs are met, the
insurers we studied require that claimants receive appropriate medical
treatment and assist them in obtaining this treatment. In addition,
they provide financial incentives to employers to encourage them to
provide work opportunities for claimants.
The three private insurers we reviewed require claimants who could
benefit from vocational rehabilitation to participate in a customized
rehabilitation program or risk loss of benefits. As part of this
program, a return-to-work plan for each claimant can include, for
example, adaptive equipment, modifications to the work site, or other
accommodations. These private insurers mandate the participation of
claimants whom they believe could benefit from rehabilitation because
they believe that voluntary compliance has not encouraged sufficient
claimant participation in these plans.[Footnote 5]
The insurers told us that they encourage rehabilitation and return to
work by allowing claimants who work to supplement their disability
benefit payments with earned income.[Footnote 6] During the first 12 or
24 months of receiving benefits, depending upon the particular insurer,
claimants who are able to work can do so to supplement their benefit
payments and thereby receive total income of up to 100 percent of
predisability earnings.[Footnote 7] After this period, if the claimant
is still working, the insurers decrease the benefit amount so that the
total income a claimant is allowed to retain is less than 100 percent
of predisability income.
When a private insurer, however, determines that a claimant is able,
but unwilling, to work, the insurer may reduce or terminate the
claimant's benefits. To encourage claimants to work to the extent they
can, even if only part-time, two of the insurers told us they may
reduce a claimant's benefit by the amount the claimant would have
earned if he or she had worked to maximum capacity. The other insurer
may reduce a claimant's monthly benefit by the amount that the claimant
could have earned if he or she had not refused a reasonable job offer-
-that is, a job that was consistent with the claimant's background,
education, and training. Claimants' benefits may also be terminated if
claimants refuse to accept a reasonable accommodation that would enable
them to work.
Since medical improvement or recovery can also enhance claimants'
ability to work, the private insurers we studied not only require, but
also help, claimants to obtain appropriate medical treatment. To
maximize medical improvement, these private insurers require that the
claimant's physician be qualified to treat the particular impairment.
Additionally, two insurers require that treatment be provided in
conformance with medical standards for treatment type and frequency.
Moreover, the insurers' medical staff work with the treating physician
as needed to ensure that the claimant has an appropriate treatment
plan. The insurers told us they may also provide funding for those who
cannot otherwise afford treatment.
The three private sector insurers we studied may also provide financial
incentives to employers to encourage them to provide work opportunities
for claimants. By offering lower insurance premiums to employers and
paying for accommodations, these private insurers encourage employers
to become partners in returning disabled workers to productive
employment. For example, to encourage employers to adopt a disability
policy with return-to-work incentives, the three insurers offer
employers a discounted insurance premium. If their disability caseload
declines to the level expected for those companies that assist
claimants in returning to work, the employers may continue to pay the
discounted premium amount. These insurers also fund accommodations, as
needed, for disabled workers at the employer's work site.[Footnote 8]
Private Insurers Strive to Use Appropriate Staff to Achieve Accurate
Disability Decisions and Successful Return-to-Work Outcomes:
The private disability insurers we studied have developed techniques
for using the right staff to assess eligibility for benefits and return
those who can to work. Officials of the three private insurers told us
that they have access to individuals with a range of skills and
expertise, including medical experts and vocational rehabilitation
experts. They also told us that they apply this expertise as
appropriate to cost effectively assess and enhance claimants' capacity
to work.
The three private disability insurers that we studied have access to
multidisciplinary staff with a wide variety of skills and experience
who can assess claimants' eligibility for benefits and provide needed
return-to-work services to enhance the work capacity of claimants with
severe impairments. The private insurers' core staff generally includes
claims managers, medical experts, vocational rehabilitation experts,
and team supervisors. The insurers explained that they set hiring
standards to ensure that the multidisciplinary staff is highly
qualified. Such qualifications are particularly important because
assessments of benefit eligibility and work capacity can involve a
significant amount of professional judgment when, for example, a
disability cannot be objectively verified on the basis of medical tests
or procedures or clinical examinations alone.[Footnote 9] Table 3
describes the responsibilities of this core staff of experts employed
by private disability insurers, as well as its general qualifications
and training.
Table 3: Responsibilities and Qualifications of Staff Employed by
Private Disability Insurers to Assess and Enhance a Claimant's Work
Potential:
Type of staff: Claims managers;
Responsibilities:
* Determine disability benefit eligibility;
* Develop, implement, and monitor an individualized claim management
strategy;
* Serve as primary contact for the claimant and the claimant's
employer;
* Focus on facilitating the claimant's timely, safe return to work;
* Coordinate the use of expert resources; Qualifications and training:
One insurer gives preference to those with a college degree and
requires insurance claims experience and specialized training and
education; Another requires a college degree, a passing grade on an
insurer-sponsored test, and specialized training and coaching.
Type of staff: Medical and related experts[A];
Responsibilities:
* Collect and evaluate medical and functional information about the
claimant to assist in the eligibility assessment and help to ensure
that claimants receive the appropriate medical care to enable them to
return to work;
* At one insurer, physicians also help train company staff;
Qualifications and training: Medical staff include registered nurses
with case management or disability-related experience and experts in
behavioral and mental issues, such as psychologists, experienced
psychiatric nurses, and licensed social workers. Two insurers also
employ board-certified physicians in various specialties.[B].
Type of staff: Vocational rehabilitation experts;
Responsibilities:
* Help assess the claimant's ability to work;
* Help overcome work limitations by identifying needed assistance, such
as assistive devices and additional training, and ensuring that it is
provided; Qualifications and training: Rehabilitation experts are
master's- degree-level vocational rehabilitation counselors. In
addition, one insurer requires board certification and 5 years of
experience.
Type of staff: Supervisors;
Responsibilities:
* Provide oversight, mentoring, and training; Qualifications and
training: One insurer gives preference to those with a college degree
and requires 3 years' disability experience, some management
experience, and specialized training. Another insurer requires a
college degree, more than 12 years' disability claims experience, and
completion of courses leading to a professional designation.
Source: GAO analysis of private insurers' practices.
[A] At one company, the medical experts are employees of a company
subsidiary but are often colocated with the insurer's employees.
[B] One company, for example, employs 85 part-and full-time physicians,
including psychiatrists, doctors of internal medicine, orthopedists,
family practice physicians, cardiologists, doctors of occupational
medicine, and neurologists.
[End of table]
The three disability insurers we reviewed use various strategies for
organizing their staff to focus on return to work, with teams organized
to manage claims associated either with a specific impairment type or
with a specific employer (that is, the group disability insurance
policyholder). One insurer organizes its staff by the claimant's
impairment type--for example, cardiac/respiratory, orthopedic, or
general medical--to develop in-depth staff expertise in the medical
treatments and accommodations targeted at overcoming the work
limitations associated with a particular impairment. The other two
insurers organize their staff by the claimant's employer because they
believe that this enables them to better assess a claimant's job-
specific work limitations and pursue workplace accommodations,
including alternative job arrangements, to eliminate these
limitations.[Footnote 10] Regardless of the overall type of staff
organization, each of the three insurers facilitates the interaction of
its core staff--claims managers, medical experts, and vocational
rehabilitation experts--by pulling these experts together into small,
multidisciplinary teams responsible for managing claims. Additionally,
one insurer engenders team interaction by physically colocating core
team members in a single working area.
To provide a wide array of needed experts, the three disability
insurers expand their core staff through agreements or contracts with
subsidiaries or other companies. These experts--deployed both at the
insurer's work site and in the field--provide specialized services to
support the eligibility assessment process and to help return claimants
to work. For instance, these insurers contract with medical experts
beyond their core employee staff--such as physicians, psychologists,
psychiatrists, nurses, and physical therapists--to help test and
evaluate the claimant's medical condition and level of functioning. In
addition, the insurers contract with vocational rehabilitation
counselors and service providers for various vocational services, such
as training, employment services, and vocational testing.
The private insurers we examined told us that they strive to apply the
appropriate type and intensity of staff resources to cost-effectively
return to work claimants with work capacity. The insurers described
various techniques that they use to route claims to the appropriate
claims management staff, which include separating (or triaging)
different types of claims and directing them to staff with the
appropriate expertise. According to one insurer, the critical factor in
increasing return-to-work rates and, at the same time, reducing overall
disability costs is proper triaging of claims. In general, the private
insurers separate claims by those who are likely to return to work and
those who are not expected to return to work. The insurers told us that
they assign the type and level of staff necessary to manage claims of
people who are likely to return to work on the basis of the particular
needs and complexity of the specific case (see table 4).
Table 4: Staff Assignment for Claims Management by Triage Category:
Likely to return to work:
Triage category: Condition requires medical assistance and more than 1
year to stabilize medically;
Staff assigned: Medical specialist;
Types of return-to-work services provided: Likely to return to work:
* Recommend improvements in treatment plan to treating physician;
* Refer claimant for more specialized or appropriate medical services;
* Ensure frequency of treatment meets standards for condition.
Triage category: Condition requires less than a year to stabilize;
Staff assigned: Claims manager;
Types of return-to-work services provided: Likely to return to work:
* Monitor medical condition;
* Maintain contact with employer and physician to ensure return to
work;
* Obtain input from medical and vocational specialists as needed.
Triage category: Condition is stabilized, and claimant needs
rehabilitation or job accommodation to return to work;
Staff assigned: Multidisciplinary team including;
* Vocational expert;
* Medical expert;
* Claims specialist;
* Other specialists as needed;
Types of return-to-work services provided: Likely to return to work:
* Evaluate claimant's functional abilities for work;
* Customize return-to-work plan;
* Arrange for needed return- to-work services;
* Monitor progress against expected return-to-work date.
Unlikely to return to work:
Triage category: Claimant is determined unable to return to work;
Staff assigned: Claims manager;
Types of return-to-work services provided: Likely to return to work:
* Review medical condition and level of functioning regularly.
Source: GAO analysis of private insurers' practices.
[End of table]
As shown in table 4, claimants expected to need medical assistance,
such as those requiring more than a year for medical stabilization, are
likely to receive an intensive medical claims management strategy. A
medical strategy involves, for example, ensuring that the claimant
receives appropriate medical treatment. Claimants who need less than a
year to stabilize medically are managed much less intensively. For
these claims, a claims manager primarily monitors the claimant's
medical condition to assess whether it is stable enough to begin
vocational rehabilitation, if appropriate. Alternatively, a claimant
with a more stable, albeit serious, medical condition who is expected
to need vocational rehabilitation, job accommodations, or both to
return to work might warrant an intensive vocational strategy. The
private disability insurers generally apply their most resource-
intensive, and therefore most expensive, multidisciplinary team
approach to these claimants. Working closely with the employer and the
attending physician, the team actively pursues return-to-work
opportunities for claimants with work potential.
Finally, claimants who are likely not to return to work (or "stable and
mature" claims) are generally managed using a minimum level of
resources, with a single claims manager responsible for regularly
reviewing a claimant's medical condition and level of
functioning.[Footnote 11] The managers of these claims carry much
larger caseloads than managers of claims that receive an intensive
vocational strategy. For example, one insurer's average claims
manager's caseload for these stable and mature claims is about 2,200
claims, compared with an average caseload of 80 claims in the same
company for claims managed more actively.
VA's Individual Unemployability Return-to-Work Efforts Lag behind Other
Programs:
Unlike disability compensation programs in the private sector, VA has
not drawn on vocational experts for IU assessments to examine the
claimant's work potential and identify the services and accommodations
needed to help those who could work to realize their full potential. In
our 1987 report, we found that VA had not routinely obtained all
vocational information needed to determine a veteran's ability to
engage in substantially gainful employment before it granted IU
benefits. Without understanding how key vocational factors, such as the
veteran's education, training, earnings, and prior work history, affect
the veteran's work capacity, VA cannot adequately assess the veteran's
ability to work. To perform this analysis, VA officials told us that
the agency has vocational specialists who are specially trained to
perform this difficult analysis. Skilled vocational staff can determine
veterans' vocational history, their ability to perform past or other
work, and their need for retraining. By not collecting sufficient
information and including the expertise of vocational specialists in
the assessment, VA did not have an adequate basis for awarding or
denying a veteran's claim for unemployability benefits.
Preliminary findings from our ongoing work indicate that VA still does
not have procedures in place to fully assess veterans' work potential.
In addition, the IU decision-making process lacks sufficient incentives
to encourage return to work. In considering whether to grant IU
benefits, VA does not have procedures to include vocational specialists
from its VR&E services to help evaluate a veteran's work potential. By
not using these specialists, VA also misses an opportunity to have the
specialist develop a return-to-work plan, in collaboration with the
veteran, and identify and provide needed accommodations or services for
those who can work. Instead, VA's IU assessment is focused on the
veterans' inabilities and providing cash benefits to those labeled as
"unemployable," rather than providing opportunities to help them return
to work.
Concluding Observations:
Return-to-work practices used in the U.S. private sector reflect the
understanding that people with disabilities can and do return to work.
The continuing deployment of our military forces to armed conflict has
focused national attention on ensuring that those who incur
disabilities while serving in the military are provided the services
needed to help them reach their full work potential. Approaches from
the private sector demonstrate the importance of using the appropriate
medical and vocational expertise to assess the claimant's condition and
provide appropriate medical treatment, vocational services, and work
incentives. Applying these approaches to VA's IU assessment process
would raise a number of important policy issues. For example, to what
extent should the VA require veterans seeking IU benefits to accept
vocational assistance or appropriate medical treatment? Such policy
questions will be answered through the national policymaking process
involving the Congress, VA, veterans' organizations, and other key
stakeholders. Nevertheless, we believe that including vocational
expertise in the IU decision-making process could provide VA with a
more adequate basis to make decisions and thereby better ensure program
integrity. Moreover, incorporating return-to-work practices could help
VA modernize its disability program to enable veterans to realize their
full productive potential without jeopardizing the availability of
benefits for people who cannot work.
Mr. Chairman, this concludes my prepared statement. I would be pleased
to respond to any questions you or members of the committee may have.
For future contacts regarding this testimony, please call Cynthia
Bascetta at (202) 512-7215. Carol Dawn Petersen, Julie DeVault, and
Joseph Natalicchio also made key contributions to this testimony.
[End of section]
Related GAO Products:
21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: February 2005).
High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January
2005).
High-Risk Series: An Update, GAO-03-119 (Washington, D.C.: January
2003).
SSA and VA Disability Programs: Re-Examination of Disability Criteria
Needed to Help Ensure Program Integrity, GAO-02-597 (Washington, D.C.:
Aug. 9, 2002).
SSA Disability: Other Programs May Provide Lessons for Improving Return-
to-Work Efforts, GAO-01-153 (Washington, D.C.: Jan. 12, 2001).
SSA Disability: Return-to-Work Strategies May Improve Federal Programs,
GAO/HEHS-96-133 (Washington, D.C.: July 11, 1996).
Veterans' Benefits: Improving the Integrity of VA's Unemployability
Compensation Program, GAO/HRD-87-62 (Washington, D.C.: Sept. 21, 1987).
FOOTNOTES
[1] See SSA Disability: Other Programs May Provide Lessons for
Improving Return-to-Work Efforts, GAO-01-153 (Washington, D.C.: Jan.
12, 2001). In this report, we evaluated the disability systems of
Germany, Sweden, and the Netherlands. We found that their disability
programs are focused on return-to-work and include practices similar to
those used in the U.S. private sector.
[2] See Veterans' Benefits: Improving the Integrity of VA's
Unemployability Compensation Program, GAO/HRD-87-62 (Washington, D.C.:
Sept. 21, 1987).
[3] Throughout the testimony, we use the term "claimant" to refer to
both a person who submits a claim for disability insurance and a person
who receives disability benefits for the lifetime of a claim.
[4] The private insurers generally define one's "own occupation" as the
occupation a person is routinely performing at onset of disability.
They generally assess how the claimant's own occupation is performed in
the national economy, rather than how the work is performed for a
specific employer or at a specific location. Moreover, two of the
insurers have expanded their "own occupation" definition of disability
to include a reasonable alternative position. These two insurers
require that a claimant who is judged able to do so accept a reasonable
alternative position--a job in the same general location as that
offered by the claimant's current employer--or risk losing cash
benefits. The claimant must be qualified to perform the work of this
alternative position--which must pay the claimant more than 60 to 80
percent of predisability earnings, depending upon the insurer--given
his or her education, training, or experience.
[5] Although claimants may be involved in the development of the
individualized rehabilitation plans, the insurers make the final
decision about the types of rehabilitation services claimants will
receive.
[6] The private disability insurers we reviewed told us that their
benefits generally replace 60 percent of predisability earnings,
depending upon the insurer.
[7] To illustrate, assume that Ms. Jones is a claimant with
predisability earnings of $1,000 per month and an insurance policy that
replaces 60 percent of her predisability earnings. She is currently not
working. Under this scenario, her income would be limited to $600 per
month in disability benefits. However, if she returned to work, even
part-time, she would have the opportunity to increase her total income
to 100 percent of her predisability earnings or, in this instance,
$1,000. If she returned to work and earned $500 per month, the insurer
would reduce her benefit payment from $600 to $500 per month, so that
her combined earnings and benefit payment would provide a total monthly
income equal to her predisability income of $1,000.
[8] Educating employers about the size and extent of disability costs
is an important element in motivating employers to promote efforts to
return claimants to work. For example, one of the private insurers we
reviewed educates employers about the direct and indirect costs of not
controlling lost time associated with disability, which this insurer
estimated to amount to 4 to 6 percent of an employer's payroll.
[9] According to one insurer, disabilities with subjective diagnoses
include certain types of mental illness, fibromyalgia, chronic pain
(often back pain), and chronic fatigue syndrome.
[10] All three insurers, however, have behavioral care specialists
specifically for managing psychiatric claims.
[11] The insurers review these claims on a regular basis, ranging from
every 6 months to every 3 years, depending upon the insurer and the
characteristics of the claim.
