Background

VA’s disability compensation claims process starts when a veteran  submits a claim to VA (see fig. 1). A claim folder is created at 1 of VA’s 57  regional offices, and a Veterans Service Representative (VSR) then  reviews the claim and helps the veteran gather the relevant evidence  needed to evaluate the claim. Such evidence includes the veteran’s  military service records, medical examinations, and treatment records  from Veterans Health Administration (VHA) medical facilities and private  medical service providers. Also, if necessary to provide support to  substantiate the claim, VA will provide a medical examination for the  veteran. Once VBA has gathered the supporting evidence, a Rating  Veterans Service Representative (RVSR)—who typically has more  experience at VBA than a VSR—evaluates the claim and determines  whether the veteran is eligible for benefits. If so, the RVSR assigns a  percentage rating. A veteran may subsequently reopen a claim to  request an increase in disability compensation from VA if, for example, a  service-connected disability worsens or a new disability arises.
If the veteran disagrees with VA’s decision regarding a claim, he or she  can submit a written Notice of Disagreement to the regional office  handling the claim. In response to such a notice, VBA reviews the case  and provides the veteran with a written explanation of the decision— known as a Statement of the Case—if VBA does not grant all appealed  issues. If the veteran further disagrees with the decision, he or she may  appeal to the Board of Veterans’ Appeals (the Board) which conducts a  hearing at the veteran’s request, then grants benefits, denies the appeal,  or returns the case to VBA to obtain additional evidence necessary to  decide the claim. If the veteran is dissatisfied with the Board’s decision,  he or she may appeal, in succession, to the U.S. Court of Appeals for  Veterans Claims, to the Court of Appeals for the Federal Circuit, and  finally to the Supreme Court of the United States.
In recent years, VA compensation claims processing timeframes have  increased. Specifically, the average days pending increased from 116  days in fiscal year 2009 to 254 days in fiscal year 2012. During the same  time period, the average days to complete increased from 161 to 260  days. VBA also collects data on the timeliness of the different phases of  the claims process, which is used to identify trends and bottlenecks  throughout the process. In fiscal year 2011, each phase took longer on  average than its stated agency timeliness target (see fig. 2). In fiscal year  2011, the national averages for the initiating development, gathering  evidence, and rating decision phases were 44, 72, and 57 days,  respectively, over their timeliness targets.

	Rising Workloads, along with Program Rules, Record Gathering, and Inefficient Processes, Contribute to Lengthy Processing Time Frames

In recent years, VA’s claims processing production has not kept pace with  the substantial increase in incoming claims. In fiscal year 2011, VA  completed over 1 million compensation rating claims, a 6 percent  increase from fiscal year 2009. However, the number of VA compensation  rating claims received had grown 29 percent—from 1,013,712 in fiscal  year 2009 to 1,311,091 in fiscal year 2011 (see fig. 3). As a result, the  number of backlogged claims—defined as those claims awaiting a  decision for more than 125 days—has increased substantially since 2009.  As of August 2012, VA had 856,092 pending compensation rating claims,  of which 568,043 (66 percent) were considered backlogged.
One factor that contributed to the substantial increase in claims received  was the commencement in October 2010 of VBA’s adjudication of  260,000 previously denied and new claims when a presumptive service  connection was established for three additional Agent Orange diseases.  VBA gave these claims a high priority and assigned experienced claims  staff to process and track them. VBA officials said that 37 percent of its  claims processing resources nationally were devoted to adjudicating  Agent Orange claims from October 2010 to March 2012. VBA officials in  one regional office we spoke to said that all claims processing staff were  assigned solely to developing and rating Agent Orange claims for 4  months in 2011, and that no other new and pending claims in the regional  office’s inventory were processed during that time. Also during this time  period, special VBA teams—known as brokering centers—which  previously accepted claims and appeals from regional offices  experiencing processing delays, were devoted exclusively to processing  Agent Orange claims. According to VBA, other factors that contributed to  the growing number of claims include an increase in the number of  veterans from the military downsizing after 10 years of conflict in Iraq and  Afghanistan, improved outreach activities and transition services to  servicemembers and veterans, and difficult financial conditions for  veterans during the economic downturn.
Similar to claims processing, VA regional office appeals processing has  not kept pace with incoming appeals received. For example, in fiscal year  2012, VA received 121,786 Notices of Disagreement. However, the  number of Statements of the Case that were processed by VBA was only  76,685. As a result, the number of Notice of Disagreements awaiting a  decision grew 76 percent from fiscal years 2009 to 2012 and, during that  period, the time it took VA to process a Statement of the Case increased  57 percent—from 293 days to 460 days on average.
According to VBA officials, staff shortages represent a primary reason  that appeals timeliness at VA regional offices has worsened. For  example, VBA officials at each of the five regional offices we met with  stated that over the last several years appeals staff have also had to train  and mentor new staff, conduct quality reviews, as well as develop and  rate disability claims to varying degrees. A 2012 VA OIG report noted that  VA regional office managers did not assign enough staff to process  appeals, diverted staff from processing appeals, and did not ensure that  appeals staff acted on appeals promptly because, in part, they were  assigned responsibilities to process initial claims, which were given higher  priority.
According to VA officials, federal laws and court decisions over the  past decade have expanded veterans’ entitlement to benefits but have  also added requirements that can negatively affect claims processing  times. For example, the Veterans Claims Assistance Act of 2000 (VCAA)  added a requirement that VA assist a veteran who files a claim in  obtaining evidence to substantiate the claim before making a decision.  This requirement includes helping veterans obtain all relevant federal and  non-federal records. VA is required to continue trying to obtain federal  records, such as VA medical records, military service records, and Social  Security records, until they are either obtained or the associated federal  entity indicates the records do not exist. VA may continue to process the  claim and provide partial benefits to the veteran, but the claim cannot be  completed until all relevant federal evidence is obtained.
Because VA must consider all evidence submitted throughout the claims  and appeals process, if a veteran submits additional evidence or adds a  condition to a claim late in the process it can require rework and may  subsequently delay a decision, according to VBA central office officials.  VBA officials at regional offices we spoke to said that submitting  additional evidence may add months to the claims process. New  evidence must first be reviewed to determine what additional action, if  any, is required. Next, another notification letter must be sent to the  veteran detailing the new evidence necessary to redevelop the claim. VA  may also have to obtain additional records or order another medical  examination before the claim can be rated and a decision made.  Furthermore, while VA may continue to process the claim and provide  partial benefits to the veteran, a claim is not considered “complete” until a  decision is made on all submitted conditions. Moreover, a veteran has up  to 1 year, from the notification of VA’s decision, to submit additional  evidence in support of the claim before the decision is considered final.  Similarly, for an appeal, veterans may submit additional evidence at any  time during the process. If the veteran submits additional evidence late in  the process after VA completes a Statement of the Case, VA must review  the new evidence, reconsider the appeal, and provide another written  explanation of its decision—known as a Supplemental Statement of the  Case. Congress recently passed a law allowing VA to waive review of  additional evidence submitted after the veteran has filed a substantive  appeal and instead have the new evidence reviewed by the Board to  expedite VA’s process of certifying appeals to the Board.
According to VBA officials, delays in obtaining military service and  medical treatment records, particularly for National Guard and Reserve  members, have significantly lengthened the evidence gathering phase.  According to VBA officials, 43 percent of Global War on Terror veterans  are National Guard and Reserve members. Department of Defense  (DOD) guidance requires military staff to respond to VA requests for  National Guard and Reserve records in support of VA disability  compensation claims. However, VBA area directors and officials at all  five regional offices we met with acknowledged that delays in obtaining  these records are system-wide. Military records of National Guard or  Reserve members can often be difficult to obtain, in particular, because  these servicemembers typically have multiple, non-consecutive  deployments with different units and their records may not always be held  with their reserve units and may exist in multiple places. Moreover,  according to VBA officials, National Guard and Reserve members may be  treated by private providers between tours of active duty and VA may  have to contact multiple military personnel and private medical providers  to obtain all relevant records, potentially causing delays in the evidence  gathering process.
Difficulties obtaining SSA medical records can also lengthen the evidence  gathering phase. Although VBA regional office staff have direct access to  SSA benefits payment histories, they do not have similar access to  medical records held by SSA. If a veteran submits a disability claim and  reports receiving SSA disability benefits, VA is required to help the  veteran obtain relevant federal records, including certain SSA medical  records, to process the claim. VBA’s policy manual instructs claims staff  to fax a request for medical information to SSA and if no reply is received,  to wait 60 working days before sending a follow-up request. If a response  is not received after 30 days, claims staff are instructed to send an email  request to an SSA liaison. VBA officials at four of the five regional offices  we reviewed told us that when following this protocol, they have had  difficulty obtaining SSA medical records in a timely fashion. Moreover,  they reported having no contact information for SSA, beyond the fax  number, to help process their requests. In complying with VA’s duty to  assist requirement, VBA staff told us they continue trying to retrieve SSA  records by sending follow-up fax requests until they receive the records or  receive a response that the records do not exist. VBA area directors said  some regional offices have established relationships with local SSA  offices and have better results, but obtaining necessary SSA information  has been an ongoing issue nationally. For example, officials at one  regional office said a response from SSA regarding a medical records  request can sometimes take more than a year to receive.
VBA’s work processes, stemming mainly from its reliance on a paper- based claims system, can lead to misplaced or lost documents, and  contribute to lengthy processing times. VBA officials at three of the five  regional offices we met with noted that errors and delays in handling,  reviewing, and routing incoming mail to the correct claim folder can delay  the processing of a claim or cause rework. For example, VBA officials at  one regional office said that claims may be stalled in the evidence  gathering phase if mail that contains outstanding evidence is misplaced or  lost. In addition, claims staff may rate a claim without knowledge of the  additional evidence submitted and then, once the mail is routed to the  claim folder, have to rerate the claim in light of the new evidence  received. Furthermore, VBA officials told us that processing can also be  delayed if mail staff are slow to record new claims or appeals into IT  systems. As of August 2012, VBA took 43 days on average to record  Notices of Disagreement in the appeals system—36 days longer than  VBA’s national target. VBA area directors said that mail processing  timeliness varies by regional office and that the more efficient offices in  general do a better job of associating mail with the correct claims folder.  VBA officials also said that moving physical claims folders among  regional offices and medical providers contributes to lengthy processing  times. According to a 2011 VA OIG report, processing delays occurred  following medical examinations because staff could not match claims- related mail with the appropriate claim folders until the folders were  returned from the VA Medical Center. In addition, processing halts while  a claim folder is sent to another regional office or brokering center.

	VBA Is Taking Steps to Improve Claims and Appeals Processing, but Future Impact Is Uncertain

Based on a review of VA documents and interviews with VBA officials, we  identified 15 efforts with a stated goal of improving claims and appeals  timeliness. We selected 9 for further review—primarily based on  interviews with VBA officials and a review of recent VA testimonies—that  have the purpose of reducing disability claims and appeals processing  times.
VBA has several ongoing efforts to leverage internal and external  resources to better manage its workload (see fig. 4). For example, VBA  began the Veterans Benefits Management Assistance Program (VBMAP)  in late fiscal year 2011 to obtain contractor support for evidence gathering  for approximately 279,000 disability claims. Under VBMAP, the  contractor gathers evidence in support of a claim and then sends the  claim file back to the originating regional office, which reviews the claim  for completeness and quality and then assigns a rating. Contractor staff  are required to complete their work within 135 days of receiving the file  and provide VBA with status reports that include several measures of  timeliness, including the time it took to receive medical evidence from  providers and to return a claim to VBA for rating. As of June 2012, VBA  regional offices we spoke with were awaiting the first batch of claims that  were to be sent to the contractors.
To help speed up the claims and appeals processes, VBA also has  several efforts that modify program requirements or change procedures  (see fig. 4). The Fully Developed Claims (FDC) program began as a pilot  in December 2008 and was implemented nationwide in June 2010.  Normally, once a veteran submits a claim, VBA will review the claim and  then send the veteran a letter detailing additional evidence required to  support it. The FDC program eliminates this step because the required  notification is provided to the veteran directly on the FDC form, thus  reducing the time VBA would normally spend gathering evidence for the  veteran. In exchange for expedited processing, veterans participating in  the FDC program send VBA any relevant private medical evidence with  the claim and certify that they have no additional evidence to provide.  According to VBA officials, in the first 2 years of the program, VBA  processed 33,001 FDC claims, taking an average of about 98 days to  complete—8 days longer than the goal of 90 days for these claims.  However, as of July 2012, veteran participation in the FDC program had  been low—only 4 percent of all compensation rating claims submitted in  2012.
The Claims Organizational Model initiative is aimed at streamlining the  overall claims process (see fig. 4). For this initiative, VBA created  specialized teams that process claims based on their complexity.  Specifically, an “express team” processes claims with a limited number of  conditions or issues; a “special operations” team processes highly  complex claims, such as former prisoners of war or traumatic brain injury  cases; and a core team works all other claims. Each of these teams is  staffed with both development and ratings staff, which VBA believes will  lead to better coordination and knowledge-sharing. Under this model,  VBA also redesigned the procedures that mailrooms use to sort and  process incoming claims. As of December 2012, VBA had implemented  the initiative at 51 regional offices. According to VA, the remaining  regional offices will be transitioned to the Claims Organizational Model by  the second quarter of fiscal year 2013.
In 2010, VBA began to develop the Veterans Benefits Management  System (VBMS), a paperless claims processing system that is intended to  help streamline the claims process and reduce processing times (see fig.  4). According to VBA officials, VBMS is intended to convert existing  paper-based claims folders into electronic claims folders and allow VBA  employees electronic access to claims and evidence. Once completed,  VBMS is also expected to allow veterans, physicians, and other external  parties to submit claims and supporting evidence electronically. In August  2012, VA officials told us that VBMS was still not ready for national  deployment, citing delays in scanning claims folders into VBMS as well as  other software performance issues. A recent VA OIG report also  concluded that VBMS has experienced some performance issues and the  scanning and digitization of claims lacked a detailed plan. However,  according to VA, as of December 2012, 18 regional offices were piloting  VBMS and all regional offices are expected to implement VBMS by the  end of calendar year 2013.
We have noted that VA’s ongoing efforts should be driven by a robust,  comprehensive plan; however when we reviewed VBA’s plan documents,  we found that they fell short of established criteria for sound planning.  Specifically, VBA provided us with several documents, including a  PowerPoint presentation and a matrix that provided a high-level overview  of over 40 initiatives, but, at the time of our review, could not provide us  with a robust plan that tied together the group of initiatives, their inter- relationships, and subsequent impact on claims and appeals processing  times. Although there is no established set of requirements for all plans,  components of sound planning are important because they define what  organizations seek to accomplish, identify specific activities to obtain  desired results, and provide tools to help ensure accountability and  mitigate risks.

	Implementation of Recommendations Could Help Improve Evidence Gathering and Ensure Better Strategic Management of Improvement Initiatives

In our December 2012 report, we recommended that VBA seek  improvements for partnering with relevant federal and state military  officials to reduce the time it takes to gather military service records from  National Guard and Reserve sources. We also recommended that VBA  develop improvements for partnering with Social Security Administration  officials to reduce the time it takes to gather medical records. Lastly, we  recommended that VBA develop a robust backlog reduction plan for its  initiatives that, among other best practice elements, identifies  implementation risks and strategies to address them and performance  goals that incorporate the impact of individual initiatives on processing  timeliness.
VA generally agreed with our conclusions and concurred with our  recommendations, and summarized efforts that are planned or underway  to address them. For example, VA stated it has recently initiated several  interagency efforts to the timeliness of record exchanges between VBA  and DOD. In addition, VA stated that it is working with SSA to pilot a web- based tool to provide VA staff a secure, direct communication with SSA  and to automate VA’s requests for SSA medical records. VA also agreed  with our recommendation to develop a robust backlog plan for VBA’s  initiatives and, subsequent to our report, published the Department of  Veterans Affairs (VA) Strategic Plan to Eliminate the Compensation  Claims Backlog. This plan includes implementation risks and performance  metrics used to track the cumulative effect of its initiatives on processing  times but still lacks individual performance goals and metrics for all  initiatives.
In conclusion, for years, VA’s disability claims and appeals processes  have received considerable attention as VA has struggled to process  disability compensation claims in a timely fashion. Despite this attention,  VA continues to wrestle with several ongoing challenges—some of which  VA has little or no control over—that contribute to lengthy processing  timeframes. For instance, the number and complexity of VA claims  received has increased. VBA is currently taking steps to improve the  timeliness of claims and appeals processing; however, prospects for  improvement remain uncertain because timely processing remains a  daunting challenge.
Chairman Sanders, Ranking Member Burr, and Members of the  Committee, this concludes my prepared statement. I am pleased to  answer any questions you may have.

	Contacts and Staff Acknowledgments

For further information about this testimony, please contact Daniel Bertoni  at (202) 512-7215 or bertonid@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this testimony. Other key contributors to this testimony include Lucas  Alvarez, James Bennett, Michelle Bracy, Brett Fallavollita, Dan Meyer,  James Rebbe, Ryan Siegel, Walter Vance, and Greg Whitney.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

Summary:
Why GAO Did This Study

This testimony discusses the Department of Veterans Affairs' (VA) disability benefits program, which provides monetary support to veterans with disabling conditions that were incurred or aggravated during military service. In fiscal year 2013, VA estimates it will provide $59.6 billion in compensation benefits to 3.98 million veterans and their families. For years, the disability claims process has been the subject of concern and attention by VA, Congress, and Veterans Service Organizations (VSO), due in part to long waits for decisions and the large number of pending claims. For example, the average length of time to complete a claim increased from 161 days in fiscal year 2009 to 260 days in fiscal year 2012. Moreover, VA's backlog of claims--defined as claims awaiting a decision for over 125 days--has more than tripled since September 2009. In August 2012, approximately two-thirds of the 568,043 compensation rating claims--which include pension and disability rating claims--were backlogged. In addition, timeliness of appeals processing at VA regional offices has also slowed by 56 percent over the last several years.
This testimony is based on a GAO report released on December 21, 2012, titled Veterans' Disability Benefits: Timely Processing Remains a Daunting Challenge, and, also include information updated to reflect the status of improvement efforts. This testimony focuses on (1) factors that contribute to lengthy disability claims and appeals processing times at VA regional offices and (2) status of the Veterans Benefits Administration's (VBA) recent improvement efforts.

What GAO Found

GAO found a number of factors--both external and internal to VBA--have contributed to the increase in processing times and subsequent growth in the backlog of veterans' disability compensation claims. For example, the number of claims received by VBA has increased as the population of new veterans has swelled in recent years. Moreover, due to new regulations that established eligibility for benefits for new diseases associated with Agent Orange exposure, VBA adjudicated 260,000 previously denied and new claims for related impairments. Beyond these external factors, issues with the design and implementation of the program have also contributed to timeliness challenges. For example, the law requires VA to assist veterans in obtaining records that support their claim. However, VBA officials said that delays in obtaining military records--particularly for members of the National Guard and Reserve--and Social Security Administration (SSA) medical records impact VA's duty to assist, possibly delaying a decision on a veteran's disability claim. Further, VBA's paper-based claims processing system involves multiple hand-offs, which can lead to misplaced and lost documents and cause unnecessary delays. Concerning timeliness of appeals, VBA regional offices have in recent years shifted resources away from appeals and towards claims, which has led to lengthy appeals timeframes.
VBA has a number of initiatives underway to improve the timeliness of claims and appeals processing. Such efforts include leveraging VBA staff and contractors to manage workload, modifying and streamlining procedures, improving records acquisition, and redesigning the claims and appeals processes. According to VBA officials, these efforts will help VA process all veterans' claims within VA's stated target goal of 125 days by 2015. However, the extent to which VA is positioned to meet its ambitious processing timeliness goal remains uncertain. VBA provided us with several planning documents, but, at the time of our review, could not provide us with a plan that met established criteria for sound planning, such as articulating performance measures for each initiative, including their intended impact on the claims backlog. GAO has recommended that VBA (1) partner with military officials to reduce timeframes to gather records from National Guard and Reserve sources, (2) work with SSA to reduce timeframes to gather SSA medical records, and (3) develop a robust plan for its improvement initiatives that identifies performance goals that include the impact of individual initiatives on processing timeliness. VA generally agreed with our conclusions and concurred with our recommendations, and identified efforts that it has planned or underway to address them.