Veterans' Disability Benefits
Claims Processing Problems Persist and Major Performance Improvements May Be Difficult
Gao ID: GAO-05-749T May 26, 2005
The Chairman, Committee on Veterans' Affairs, U.S. Senate, asked GAO to testify on the current state of VA's disability claims process and factors that may impede VA's ability to improve performance. For years, the claims process has been the subject of concern and attention within VA and by the Congress and veterans service organizations. Many of their concerns have focused on long waits for decisions, large claims backlogs, and the accuracy of decisions. Our work and recent media reports of significant discrepancies in average disability payments from state to state have also highlighted concerns over the consistency of decision-making within VA. In January 2003, GAO designated federal disability programs, including VA's compensation and pension programs, as a high-risk area because of continuing challenges to improving the timeliness and consistency of its disability decisions, and the need to modernize programs.
The Department of Veterans Affairs (VA) continues to experience problems processing veterans' disability compensation and pension claims. These include large numbers of pending claims and lengthy processing times. While VA made progress in fiscal years 2002 and 2003 in reducing the size and age of its inventory of pending claims, it has lost some ground since the end of fiscal year 2003. For example, pending claims increased by about one-third from the end of fiscal year 2003 to the end of March 2005. Meanwhile, VA faces continuing questions about its ability to ensure that veterans get consistent decisions across its 57 regional offices. GAO has highlighted the need for VA to study the consistency of decisions made by different regional offices, identify acceptable levels of decision-making variation, and reduce variations found to be unacceptable. Also, reacting to media reports of wide variations in average disability benefit payments from state to state, the Secretary of Veterans Affairs instructed VA's Inspector General in December 2004 to determine why these variations were occurring. Several factors may impede VA's ability to make significant improvements in its disability claims processing performance. Recent history has shown that VA's workload and performance is affected by factors such as the impacts of laws and court decisions affecting veterans' benefit entitlement and the claims process, and the filing behavior of veterans. These factors have affected the number of claims VA received and decided. Also, to achieve its claims processing performance goals in the face of increasing workloads without significant staffing increases, VA would have to rely on productivity improvements. GAO believes that fundamental reform might be necessary to achieve more dramatic gains in performance.
GAO-05-749T, Veterans' Disability Benefits: Claims Processing Problems Persist and Major Performance Improvements May Be Difficult
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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:
May 26, 2005:
Veterans' Disability Benefits:
Claims Processing Problems Persist and Major Performance Improvements
May Be Difficult:
Statement of Cynthia A. Bascetta:
Director, Education, Workforce and Income Security:
GAO-05-749T:
GAO Highlights:
Highlights of GAO-05-749T, a testimony to Committee on Veterans‘
Affairs, U.S. Senate:
Why GAO Did This Study:
The Chairman, Committee on Veterans‘ Affairs, U.S. Senate, asked GAO to
testify on the current state of VA‘s disability claims process and
factors that may impede VA‘s ability to improve performance. For years,
the claims process has been the subject of concern and attention within
VA and by the Congress and veterans service organizations. Many of
their concerns have focused on long waits for decisions, large claims
backlogs, and the accuracy of decisions.
Our work and recent media reports of significant discrepancies in
average disability payments from state to state have also highlighted
concerns over the consistency of decision-making within VA. In January
2003, GAO designated federal disability programs, including VA‘s
compensation and pension programs, as a high-risk area because of
continuing challenges to improving the timeliness and consistency of
its disability decisions, and the need to modernize programs
What GAO Found:
The Department of Veterans Affairs (VA) continues to experience
problems processing veterans‘ disability compensation and pension
claims. These include large numbers of pending claims and lengthy
processing times. While VA made progress in fiscal years 2002 and 2003
in reducing the size and age of its inventory of pending claims, it has
lost some ground since the end of fiscal year 2003. For example,
pending claims increased by about one-third from the end of fiscal year
2003 to the end of March 2005. Meanwhile, VA faces continuing questions
about its ability to ensure that veterans get consistent decisions
across its 57 regional offices. GAO has highlighted the need for VA to
study the consistency of decisions made by different regional offices,
identify acceptable levels of decision-making variation, and reduce
variations found to be unacceptable. Also, reacting to media reports of
wide variations in average disability benefit payments from state to
state, the Secretary of Veterans Affairs instructed VA‘s Inspector
General in December 2004 to determine why these variations were
occurring.
Several factors may impede VA‘s ability to make significant
improvements in its disability claims processing performance. Recent
history has shown that VA‘s workload and performance is affected by
factors such as the impacts of laws and court decisions affecting
veterans‘ benefit entitlement and the claims process, and the filing
behavior of veterans. These factors have affected the number of claims
VA received and decided. Also, to achieve its claims processing
performance goals in the face of increasing workloads without
significant staffing increases, VA would have to rely on productivity
improvements. GAO believes that fundamental reform might be necessary
to achieve more dramatic gains in performance.
Rating-Related Claims Pending at End of Period, Fiscal Year 2000
through March 2005:
[See Figure 1]
www.gao.gov/cgi-bin/getrpt?GAO-05-749T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Cynthia A. Bascetta at
(202) 512-7215 or bascettac@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
I am pleased to be here today to discuss claims processing issues in
the Department of Veterans Affairs' (VA) disability compensation and
pension programs. Through these programs, VA provided almost $30
billion in cash disability benefits to more than 3.4 million veterans
and their survivors in fiscal year 2004. For years, the claims process
has been the subject of concern and attention within VA and by the
Congress and veterans service organizations. Many of their concerns
have focused on long waits for decisions, large claims backlogs, and
inaccurate decisions. Our work and recent media reports of significant
discrepancies in average disability payments from state to state has
also highlighted concerns over the consistency of decision-making
within VA. In January 2003, we designated modernizing federal
disability programs as a high-risk area, in part because of VA's
continuing challenges to improving the timeliness and consistency of
its disability decisions.
You asked us to discuss the current state of VA's disability claims
process and factors that may impede VA's ability to improve
performance. My testimony today draws on numerous GAO reports and
testimonies on VA's compensation and pension claims-processing
operations. (See related GAO products.) To update our work, we reviewed
recent claims processing performance data, VA's fiscal year 2006 budget
justification, and VA's fiscal year 2004 Performance and Accountability
Report. We did not perform independent verification of VA's data. We
conducted our work in May 2005 in accordance with generally accepted
government auditing standards.
In summary, VA continues to have disability claims processing problems.
For example, as of the end of March 2005, rating-related
claims[Footnote 1] were pending an average of 119 days, 8 days more
than at the end of fiscal year 2003, and far from its strategic goal of
78 days. During the same period, the rating-related inventory grew by
about 86,000 claims to a total of about 340,000 claims. While VA has
improved the accuracy of its decisions to 87 percent in fiscal year
2004, it is still below its strategic goal of 96 percent in fiscal year
2008. Further, we have identified concerns about the consistency of
decisions across VA's regional offices. VA has begun studying one
indicator of inconsistency, the wide variations in average payments per
veteran from state to state, in response to adverse media coverage.
We identified factors that may impede VA's ability to improve its
disability claims processing performance. The impacts of laws, court
decisions, and the filing behavior of veterans can significantly affect
VA's ability to decide claims, as well as the volume of claims
received. Also, VA's ability to improve the productivity of its claims
processing staff may affect its ability to improve performance. More
dramatic gains in timeliness and inventory reduction might require
fundamental changes in the design and operations of VA's disability
programs.
Background:
VA's disability compensation program pays monthly benefits to veterans
with service-connected disabilities (injuries or diseases incurred or
aggravated while on active military duty) according to the severity of
the disability. Also, VA pays dependency and indemnity compensation to
some deceased veterans' spouses, children, and parents and to survivors
of service members who died on active duty. The pension program pays
monthly benefits based on financial need to wartime veterans who have
low incomes, served in a period of war, and are permanently and totally
disabled for reasons not service-connected (or are aged 65 or older).
VA also pays pensions to surviving spouses and unmarried children of
deceased wartime veterans.
When a veteran submits a claim to any of VA's 57 regional offices, a
veterans service representative (VSR) is responsible for obtaining the
relevant evidence to evaluate the claim. Such evidence includes
veterans' military service records, medical examinations and treatment
records from VA medical facilities, and treatment records from private
medical service providers. Once a claim is developed (i.e., has all the
necessary evidence), a rating VSR, also called a rating specialist,
evaluates the claim and determines whether the claimant is eligible for
benefits. If the veteran is eligible for disability compensation, the
rating specialist assigns a percentage rating based on degree of
disability. Veterans with multiple service-connected disabilities
receive a single composite rating. For veterans claiming pension
eligibility, the regional office determines if the veteran served in a
period of war, is permanently and totally disabled for reasons not
service-connected (or is aged 65 or older), and meets the income
thresholds for eligibility. A veteran who disagrees with the regional
office's decision for either program can appeal sequentially to VA's
Board of Veterans' Appeals (BVA), the U.S. Court of Appeals for
Veterans Claims, and the U.S. Court of Appeals for the Federal Circuit.
In January 2003, we designated modernizing VA's disability programs,
along with other federal disability programs, as high-risk. We did so,
in part, because VA still experiences lengthy processing times and
lacks a clear understanding of the extent of possible decision
inconsistencies. We also designated VA's disability programs as high-
risk because our work over the past decade found that VA's disability
programs are based on concepts from the past. VA's disability programs
have not been updated to reflect the current state of science,
medicine, technology, and labor market conditions.
In November 2003, the Congress established the Veterans' Disability
Benefits Commission to study the appropriateness of VA disability
benefits, including disability criteria and benefit levels. The
commission held its first public hearing in May 2005.
Problems in Claims Processing Continue:
VA continues to experience problems processing veterans' disability
compensation and pension claims. These include large numbers of pending
claims and lengthy processing times. While VA made progress in fiscal
years 2002 and 2003 in reducing the size and age of its inventory of
pending claims, it has lost some ground since the end of fiscal year
2003. As shown in figure 1, pending claims increased by about one-third
from the end of fiscal year 2003 to the end of March 2005, from about
254,000 to about 340,000. During the same period, claims pending over 6
months increased by about 61 percent from about 47,000 to about 75,000.
Figure 1: Rating-Related Claims Pending at End of Period, Fiscal Year
2000 through March 2005:
[See PDF for image]
[End of figure]
Similarly, as shown in figure 2, VA reduced the average age of its
pending claims from 182 days at the end of fiscal year 2001 to 111 days
at the end of fiscal year 2003. Since then, however, average days
pending have increased to 119 days at the end of March 2005. This is
also far from VA's strategic goal of an average of 78 days pending by
the end of fiscal year 2008. Meanwhile, the time required to resolve
appeals remains too long. While the average time to resolve an appeal
dropped from 731 days in fiscal year 2002 to 529 days in fiscal year
2004, close to its fiscal year 2004 goal of 520 days, but still far
from VA's strategic goal of 365 days by fiscal year 2008.
Figure 2: Average Days Pending for VA Compensation and Pension Rating-
Related Claims, Fiscal Year 2000 through March 2005:
[See PDF for image]
[End of figure]
In addition to problems with timeliness of decisions, VA acknowledges
that the accuracy of regional office decisions needs to be improved.
While VA reports[Footnote 2] that it has improved the accuracy of
decisions on rating related claims from 81 percent in fiscal year 2002
to 87 percent in fiscal year 2004--close to its 2004 goal of 90
percent. However, it is still below its strategic goal of 96 percent in
fiscal year 2008.
VA also faces continuing questions about its ability to ensure that
veterans receive consistent decisions--that is, comparable decisions on
benefit entitlement and rating percentage--regardless of the regional
offices making the decisions. The issue of decision-making consistency
across VA is not new. In a May 2000 testimony[Footnote 3] before the
Subcommittee on Oversight and Investigations, Committee on Veterans'
Affairs, House of Representatives, we underscored the conclusion made
by the National Academy of Public Administration in 1997[Footnote 4]
that VA needed to study the consistency of decisions made by different
regional offices, identify the degree of subjectivity expected for
various medical issues, and then set consistency standards for those
issues. In August 2002, we drew attention to the fact that there are
wide disparities in state-to-state average compensation payments per
disabled veteran. We noted that such variation raises the question of
whether similarly situated veterans who submit claims to different
regional offices for similar conditions receive reasonably consistent
decisions.[Footnote 5] We concluded that VA needed to systematically
assess decision-making consistency to provide a foundation for
identifying acceptable levels of variation and to reduce variations
found to be unacceptable. Again, in November 2004, we highlighted the
need for VA to develop plans for studying consistency issues.[Footnote
6] VA concurred in principle with our findings and recommendation in
the August 2002 report and agreed that consistency is an important goal
and acknowledged that it has work to do to achieve it. However, VA was
silent on how it would evaluate and measure consistency. Subsequently,
VA concurred with our recommendation in the November 2004 report that
it conduct systematic reviews for possible decision inconsistencies.
In December 2004, the media drew attention to the wide variations in
the average disability compensation payment per veteran in the 50
states and published VA's own data showing that the average payments
varied from a low of $6,710 in Ohio to a high of $10,851 in New Mexico.
Reacting to these media reports, in December 2004, the Secretary
instructed the Inspector General to determine why average payments per
veteran vary widely from state to state.[Footnote 7] Also, VA's
Veterans Benefits Administration began another study in March 2005 of
three disabilities believed to have potential for inconsistency:
hearing loss, post-traumatic stress disorder, and knee conditions. VA
assigned 10 subject matter experts to review 1,750 regional office
decisions. After completing its analysis of study data, VA plans to
develop a schedule for future studies of specific ratable conditions
and recommend a schedule for periodic follow-up studies of previously
studied conditions.
Factors That May Impede VA's Ability to Improve Claims Processing
Performance:
Several factors may impede VA's ability to make, and sustain,
significant improvements in its claims processing performance. These
include the potential impacts of laws, court decisions, and the filing
behavior of veterans; VA's ability to improve claims processing
productivity; and program design and structure.
Laws, Court Decisions, and Filing Behavior of Veterans Impact Workload
and Performance:
Recent history has shown that VA's workload and performance is affected
by several factors, including the impacts of laws and court decisions
expanding veterans' benefit entitlement and clarifying VA's duty to
assist veterans in the claims process, and the filing behavior of
veterans. These factors have affected the number of claims VA received
and decided. For example, court decisions in 1999 and 2003 related to
VA's duty to assist veterans in developing their benefit claims, as
well as legislation in response to those decisions, significantly
affected VA's ability to produce rating-related decisions. VA
attributes some of the worsening of inventory level and pending
timeliness since the end of fiscal year 2003 to a September 2003 court
decision that required over 62,000 claims to be deferred, many for 90
days or longer. Also, VA notes that legislation and VA regulations have
expanded benefit entitlement and as a result added to the volume of
claims. For example, presumptions of service-connected disabilities
have been created in recent years for many Vietnam veterans and former
Prisoners of War. Also, VA expects additional claims receipts based on
the enactment of legislation allowing certain military retirees to
receive both military retirement pay and VA disability compensation.
In addition, the filing behavior of veterans impacts VA's ability to
improve claims processing performance. VA continues to receive
increasing numbers of rating-related claims, from about 586,000 in
fiscal year 2000 to about 771,000 in fiscal year 2004. VA projects 3-
percent increases in claims received in fiscal years 2005 and 2006. VA
notes that claims received are increasing in part because older
veterans are filing disability claims for the first time. Also,
according to VA, the complexity of claims, in terms of the numbers of
disabilities claimed, is increasing. Because each disability needs to
be evaluated, these claims can take longer to complete. VA plans to
develop baseline data on average issues per claim by the end of
calendar year 2005.
Ability to Improve Productivity May Affect Future Performance
Improvements:
In November 2004, we reported that to achieve its claims processing
performance goals in the face of increasing workloads and decreased
staffing levels, VA would have to rely on productivity
improvements.[Footnote 8] However, its fiscal year 2005 budget
justification did not provide information on claims processing
productivity or how much VA expected to improve productivity. VA's
fiscal year 2006 budget justification provides information on actual
and planned productivity, in terms of rating-related claims decided per
direct full-time equivalent (FTE) employee, and identifies a number of
initiatives that could improve claims processing performance. These
initiatives include technology initiatives, such as Virtual VA,
involving the creation of electronic claims folders; consolidation of
the processing of Benefits Delivery at Discharge (BDD) claims at 2
regional offices; and collaboration with the Department of Defense
(DOD) to improve VA's ability to obtain evidence, such as evidence of
in-service stressors for veterans claiming service-connected Post-
Traumatic Stress Disorder.
It is still not clear whether VA will be able to achieve its planned
improvements. VA's fiscal year 2006 budget justification assumes that
it will increase the number of rating-related claims completed per FTE
from 94 in fiscal year 2004 to 109 in fiscal year 2005 and 2006, a 16-
percent increase. For fiscal year 2005, this level of productivity
translates into VA completing almost 826,000 rating-related decisions.
Midway through fiscal year 2005 VA had completed about 373,000
decisions.
Program Design and Regional Office Structure May Limit Performance
Improvements:
Program design features and the regional office structure may constrain
the degree to which improvements can be made in performance. For
example, in 1996, the Veterans' Claims Adjudication Commission[Footnote
9] noted that most disability compensation claims are repeat claims--
such as claims for increased disability percentage--and most repeat
claims were from veterans with less severe disabilities. According to
VA, about 65 percent of veterans who began receiving disability
compensation in fiscal year 2003 had disabilities rated 30 percent or
less. The Commission questioned whether concentrating claims processing
resources on these claims, rather than on claims by more severely
disabled veterans, was consistent with program intent.
In addition to program design, external studies of VA's disability
claims process have identified the regional office structure as
disadvantageous to efficient operation. Specifically, in its January
1999 report, the Congressional Commission on Servicemembers and
Veterans Transition Assistance[Footnote 10] found that some regional
offices might be so small that their disproportionately large
supervisory overhead unnecessarily consumes personnel resources.
Similarly, in its 1997 report, the National Academy of Public
Administration found that VA could close a large number of regional
offices and achieve significant savings in administrative overhead
costs.
Apart from the issue of closing regional offices, the Commission
highlighted a need to consolidate disability claims processing into
fewer locations. VA has consolidated its education assistance and
housing loan guaranty programs into fewer than 10 locations, and the
Commission encouraged VA to take similar action in the disability
programs. In 1995 VA enumerated several potential benefits of such a
consolidation. These included allowing VA to assign the most
experienced and productive adjudication officers and directors to the
consolidated offices; facilitating increased specialization and as-
needed expert consultation in deciding complex cases; improving the
completeness of claims development, the accuracy and consistency of
rating decisions, and the clarity of decision explanations; improving
overall adjudication quality by increasing the pool of experience and
expertise in critical technical areas; and facilitating consistency in
decisionmaking through fewer consolidated claims-processing centers. VA
has already consolidated some of its pension workload (specifically,
income and eligibility verifications) at three regional offices. Also,
VA has consolidated at its Philadelphia regional office dependency and
indemnity compensation claims by survivors of servicemembers who died
on active duty, including those who died during Operation Enduring
Freedom and Operation Iraqi Freedom.
Concluding Observations:
VA has had persistent problems in providing timely, accurate, and
consistent disability decisions to veterans and their families. To some
extent, program design features that protect the rights of veterans
have also increased the complexity of and length of time needed to
process their claims. In addition, expanding entitlements have
increased VA's workload as more veterans file claims. As a result,
major improvements in disability claims processing performance may be
difficult to achieve without more fundamental change. We have placed
VA's disability programs on our high-risk list along with other federal
disability programs. Modernizing its programs would give VA the
opportunity to address many longstanding problems. At the same time, VA
could integrate any changes to disability criteria and benefit levels
that the Veterans' Disability Benefits Commission may propose. This is
important because significant changes in the benefits package and
disability criteria are major factors affecting VA's disability claims
process and its claims processing performance.
Mr. Chairman, this concludes my remarks. I would be happy to answer any
questions you or the members of the committee may have.
GAO Contact and Acknowledgments:
For further information, please contact Cynthia A. Bascetta at (202)
512-7215. Also contributing to this statement were Irene Chu, Martin
Scire, and Greg Whitney.
Related GAO Products:
VA Disability Benefits: Board of Veterans' Appeals Has Made
Improvements in Quality Assurance, but Challenges Remain for VA in
Assuring Consistency. GAO-05-655T. Washington, D.C.: May 5, 2005.
High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 2005.
Veterans Benefits: VA Needs Plan for Assessing Consistency of
Decisions. GAO-05-99. Washington, D.C.: November 19, 2004.
Veterans' Benefits: More Transparency Needed to Improve Oversight of
VBA's Compensation and Pension Staffing Levels. GAO-05-47. Washington,
D.C.: November 15, 2004.
Veterans' Benefits: Improvements Needed in the Reporting and Use of
Data on the Accuracy of Disability Claims Decisions. GAO-03-1045.
Washington, D.C.: September 30, 2003.
Department of Veterans Affairs: Key Management Challenges in Health and
Disability Programs. GAO-03-756T. Washington, D.C.: May 8, 2003.
Major Management Challenges and Program Risks: Department of Veterans
Affairs. GAO-03-0110. Washington, D.C.: January 1, 2003.
Veterans' Benefits: Claims Processing Timeliness Performance Measures
Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002.
Veterans' Benefits: Quality Assurance for Disability Claims and Appeals
Processing Can Be Further Improved. GAO-02-806. Washington, D.C.:
August 16, 2002.
Veterans' Benefits: VBA's Efforts to Implement the Veterans Claims
Assistance Act Need Further Monitoring. GAO-02-412. Washington, D.C.:
July 1, 2002.
Veterans' Benefits: Despite Recent Improvements, Meeting Claims
Processing Goals Will Be Challenging. GAO-02-645T. Washington, D.C.:
April 26, 2002.
Veterans Benefits Administration: Problems and Challenges Facing
Disability Claims Processing. GAO/T-HEHS/AIMD-00-146. Washington, D.C.:
May 18, 2000.
FOOTNOTES
[1] Rating-related claims are primarily original claims for disability
compensation and pension benefits, and reopened claims. For example,
veterans may file reopened claims if they believe their service-
connected conditions have worsened.
[2] We are currently reviewing the reliability of VA's claims
processing accuracy data.
[3] GAO, Veterans Benefits Administration: Problems and Challenges
Facing Disability Claims Processing, GAO/T-HEHS/AIMD-00-146
(Washington, D.C.: May 18, 2000).
[4] National Academy of Public Administration, Management of
Compensation and Pension Benefits Claim Processes for Veterans
(Washington, D.C.: Aug. 1997).
[5] GAO, Veterans' Benefits: Quality Assurance for Disability Claims
and Appeals Processing Can Be Further Improved, GAO-02-806 (Washington,
D.C.: Aug. 16, 2002).
[6] GAO, Veterans Benefits: VA Needs Plan for Assessing Consistency of
Decisions, GAO-05-99 (Washington, D.C.: Nov. 19, 2004).
[7] On May 19, 2005, the Office of Inspector General issued the report
of its review of state variations in disability compensation payments.
Department of Veterans Affairs Office of Inspector General, Review of
State Variances in VA Disability Compensation Payments, Report No. 05-
00765-137 (Washington, D.C.: May 19, 2005).
[8] Veterans' Benefits: More Transparency Needed to Improve Oversight
of VBA's Compensation and Pension Staffing Levels, GAO-05-47
(Washington, D.C.: Nov. 15, 2004).
[9] Veterans' Claims Adjudication Commission, Report to Congress
(Washington D.C.: Dec. 1996).
[10] Report of the Congressional Commission on Servicemembers and
Veterans Transition Assistance (Washington, D.C.: Jan. 14, 1999).