United States Government Accountability Office

GAO Testimony before the Subcommittee on 

Disability Assistance and Memorial 

Affairs, Committee on Veterans' Affairs, 

House of Representatives 

VETERANS' DISABILITY

BENEFITS 

Processing of Claims 

Continues to Present 

Challenges 

Statement of Daniel Bertoni, Acting Director 

Education, Workforce, and Income Security Issues 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Tuesday, March 13, 2007

 

GAO-07-562T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 13, 2007

VETERANS’ DISABILITY BENEFITS

Processing of Claims Continues to 

Highlights of GAO-07-562T, a testimony Present Challenges 

before the Subcommittee on Disability

Assistance and Memorial Affairs,

Committee on Veterans' Affairs, House of 

Representatives 

The Subcommittee on Disability 

Assistance and Memorial Affairs, 

House Veterans’ Affairs Committee, 

asked GAO to discuss its recent

work related to the Department of

Veterans Affairs’ (VA) disability

claims and appeals processing. 

GAO has reported and testified on

this subject on numerous 

occasions. GAO’s work has 

addressed VA’s efforts to improve 

the timeliness of decisions on 

claims and appeals and VA’s efforts 

to reduce backlogs. 

VA continues to face challenges in improving service delivery to 

veterans, specifically speeding up the process of adjudication and appeal, 

and reducing the existing backlog of claims. For example, as of the end 

of fiscal year 2006, rating-related compensation claims were pending an 

average of 127 days, 16 days more than at the end of fiscal year 2003. 

During the same period, the inventory of rating-related claims grew by 

almost half, in part because of increased filing of claims, including those 

filed by veterans of the Iraq and Afghanistan conflicts. Meanwhile, 

appeals resolution remains a lengthy process, taking an average of 657 

days in fiscal year 2006. However, several factors may limit VA’s ability to

make and sustain significant improvements in its claims-processing 

performance, including the potential impacts of laws and court decisions, 

continued increases in the number and complexity of claims being filed,

and difficulties in obtaining the evidence needed to decide claims in a 

timely manner, such as military service records. VA is taking steps to 

address these problems. For example, the President’s fiscal year 2008 

budget requests an increase of over 450 full-time equivalent employees to 

process compensation claims. VA is also working to improve appeals 

timeliness by reducing appeals remanded for further work. 

Rating-Related Claims Pending at End of Period, Fiscal Years 2000-

2006

0

100

200

300

400

500

Claims pending (in thousands)

Source: VA data.

Fiscal year

Pending over 6 months

57

228

172

421

122

346

47

254

67

321

72

346

83

378

2000 2001 2002 2003 2004 2005 2006

Total pending

While VA is taking actions to address its claims-processing challenges, 

opportunities for significant performance improvement may lie in more 

fundamental reform of VA's disability compensation program. This could 

include reexamining program design such as updating the disability 

criteria to reflect the current state of science, medicine, technology, and 

labor market conditions. It could also include examining the structure 

and division of labor among field offices. 

www.gao.gov/cgi-bin/getrpt?GAO-07-562T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Daniel Bertoni 

at (202) 512-7215 or bertonid@gao.gov. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to have the opportunity to comment on the claims-processing 

challenges and opportunities facing the Department of Veterans Affairs’ 

(VA) disability compensation and pension programs. Through these 

programs, VA provided about $34.5 billion in cash disability benefits to 

more than 3.5 million veterans and their survivors in fiscal year 2006. For 

years, the claims process has been the subject of concern and attention by

VA, the Congress, and veterans service organizations, due in large part 

because of long waits for decisions and large claims backlogs. Veterans of

the conflicts in Iraq and Afghanistan, and survivors of servicemembers 

who have died in those conflicts, are facing these same issues as they seek

VA disability benefits. In January 2003, we designated modernizing VA and 

other federal disability programs as a high-risk area, because of these 

service delivery challenges, and because our work over the past decade 

has found that these programs are based on outmoded concepts from the 

past. 

You asked us to discuss VA’s disability claims process, in light of the 

ongoing conflicts in Iraq and Afghanistan. My statement draws on a 

number of prior GAO reports and testimonies, (see related GAO products), 

and information we have updated to reflect the current status of VA claims 

processing and initiatives. 

In summary, VA continues to face challenges in improving service delivery 

to veterans. Between fiscal years 2003 and 2006, the inventory of ratingrelated claims grew by almost half to a total of about 378,000, in part 

because of increased filing of claims, including those filed by veterans of 

the Iraq and Afghanistan conflicts.1

 During the same period, the average 

number of days these claims were pending increased by 16 days, to an 

average of 127 days. Meanwhile, appeals resolution remains a lengthy 

process. In fiscal year 2006, it took an average of 657 days to resolve 

appeals. Several factors may be affecting VA’s claims-processing 

performance. These include the potential impacts of laws and court 

decisions, continued increases in the number and complexity of claims 

being filed, and difficulties in obtaining the evidence needed to adjudicate

claims in a timely manner, such as military service records. To help 

 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. 

Page 1 GAO-07-562T 
improve claims-processing performance, VA has taken a number of steps, 

including requesting funding for additional staff and undertaking 

initiatives to reduce appeal remands. The President’s fiscal year 2008 

budget requests an increase of over 450 full-time equivalent employees to 

process compensation claims. Through training and information sharing, 

VA is also working to reduce appeals processing times by decreasing the 

number of cases sent back from the appeals level for further development. 

Despite the steps VA is taking, opportunities for significant performance 

improvement may lie in more fundamental reform of VA’s disability 

compensation program. This would include reexamining program design 

as well as the structure and division of labor among field offices. For 

example, we found that VA’s and other federal disability programs have 

not been updated to reflect the current state of science, medicine, 

technology, and labor market conditions. For example, the criteria for 

disability decisions are based primarily on estimates made in 1945 about 

the effect of service-connected impairments on the average individual’s 

ability to perform jobs requiring manual labor. In addition, VA and other 

organizations have identified potential changes to field operations that 

could enhance productivity in processing disability claims. While major 

reexamination may be daunting, there are mechanisms for undertaking 

such an effort. For example, the congressionally chartered commission on 

veterans’ disability benefits has been studying a number of program design 

issues and will report to the Congress later this year. 

VA pays monthly disability compensation 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. VA 

also pays compensation to some spouses, children, and parents of 

deceased veterans and servicemembers. VA’s pension program pays 

monthly benefits based on financial need to certain wartime veterans or 

their survivors.2

Background 

When a veteran submits a claim to any of the Veterans Benefits 

Administration’s (VBA) 57 regional offices, a veterans service 

representative 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 

 2

 Veterans qualify for pensions if they have low income, served in a period of war, and are

permanently and totally disabled for reasons not service-connected (or are age 65 or older). 

Page 2 GAO-07-562T 
facilities and private medical service providers. Once a claim has all the 

necessary evidence, 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. A veteran who disagrees with the regional

office’s decision can appeal to VA’s Board of Veterans’ Appeals, and then 

to U.S. federal courts. If the Board finds that a case needs additional work, 

such as obtaining additional evidence or contains procedural errors, it is 

sent back to the Veterans Benefits Administration, which is responsible for 

initial decisions on disability claims. 

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 is 

scheduled to report the results of its study to the Congress in October 

2007. 

Several factors are continuing to create challenges for VA’s claims 

processing, despite its steps to improve performance. While VA made 

progress in fiscal years 2002 and 2003 reducing the size and age of its 

pending claims inventory, it has lost ground since then. This is due in part

to increased filing of claims, including those filed by veterans of the Iraq 

and Afghanistan conflicts. Other factors include increases in claims 

complexity, the effects of recent laws and court decisions, and challenges

in acquiring needed evidence in a timely manner. VA’s steps to improve 

performance include requesting funding for additional staff and 

undertaking initiatives to reduce appeal remands. 

VA Continues to Face 

Challenges in 

Improving Its Claims 

Processing 

VA’s inventory of pending claims and their average time pending has 

increased significantly in the last 3 years, in part because of an increase in

the number of claims. The number of pending claims increased by almost 

one-half from the end of fiscal year 2003 to the end of fiscal year 2006,

from about 254,000 to about 378,000. During the same period, the number 

of claims pending longer than 6 months increased by more than threefourths, from about 47,000 to about 83,000 (see fig. 1). 

Page 3 GAO-07-562T 
Figure 1: Rating-Related Claims Pending at End of Period, Fiscal Years 2000-2006

0

50

100

150

200

250

300

350

400

450

Claims pending (in thousands)

Source: VA data.

Fiscal year

Pending over 6 months

Total pending

57

228

172

421

122

346

47

254

67

321

72

346

83

378

2000 2001 2002 2003 2004 2005 2006

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. However, by the end of fiscal year 2006, average days 

pending had increased to 127 days. Meanwhile, the time required to 

resolve appeals remains too long. The average time to resolve an appeal 

rose from 529 days in fiscal year 2004 to 657 days in fiscal year 2006. 

Page 4 GAO-07-562T 
Figure 2: Average Days Pending for VA Compensation and Pension Rating-Related 

Claims, Fiscal Years 2000-2006 

0

20

40

60

80

100

120

140

160

180

200

Days pending

Source: VA data.

Fiscal year

2000 2001 2002 2003 2004 2005 2006

138

182

174

111

118 120

127

The increase in VA’s inventory of pending claims, and their average time 

pending is due in part to an increase in claims receipts. Rating-related 

claims, including those filed by veterans of the Iraq and Afghanistan 

conflicts, increased steadily from about 579,000 in fiscal year 2000 to about 

806,000 in fiscal year 2006, an increase of about 39 percent. While VA 

projects relatively flat claim receipts in fiscal years 2007 and 2008, it 

cautions that ongoing hostilities in Iraq and Afghanistan, and the Global 

War on Terrorism in general, may increase the workload beyond current 

levels. VA also attributes increased claims to its efforts to increase 

outreach to veterans and servicemembers. For example, VA reports that in 

fiscal year 2006, it provided benefits briefings to about 393,000 separating 

servicemembers, up from about 210,000 in fiscal year 2003, leading to the 

filing of more original compensation claims. VA has also noted that claims

have increased in part because older veterans are filing disability claims 

for the first time. 

Moreover, according to VA, the complexity of claims is also increasing. 

For example, some veterans are citing more disabilities in their claims 

than in the past. Because each disability needs to be evaluated separately,

these claims can take longer to complete. Additionally, VA notes that it is

receiving claims for new and complex disabilities related to combat and 

Page 5 GAO-07-562T 
deployments overseas, including those based on environmental and 

infectious disease risks and traumatic brain injuries. Further, VA is 

receiving increasing numbers of claims for compensation for posttraumatic stress disorder, which are generally harder to evaluate, in part 

because of the evidentiary requirements to substantiate the event causing

the stress disorder. 

Since 1999, several court decisions and laws related to VA’s 

responsibilities to assist veterans in developing their benefit claims have 

significantly affected VA’s ability to process claims in a timely manner. VA 

attributes some of the increase in the number of claims pending and the 

average days pending 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 added to the volume of claims. For example, in recent

years, laws and regulations have created new presumptions of serviceconnected disabilities 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. 

Additionally, claims-processing timeliness can be hampered if VA cannot

obtain the evidence it needs in a timely manner. For example, to obtain 

information needed to fully develop some post-traumatic stress disorder 

claims, VBA must obtain records from the U.S. Army and Joint Services 

Records Research Center (JSRRC), whose average response time to VBA 

regional office requests is about 1 year. This can significantly increase the 

time it takes to decide a claim. In December 2006, we recommended that

VBA assess whether it could systematically utilize an electronic library of

historical military records rather than submitting all research requests to 

JSRRC. VBA agreed to determine the feasibility of regional offices using an 

alternative resource prior to sending some requests to JSRRC.

VA has recently taken several steps to improve claims-processing. In its 

fiscal year 2008 budget justification, VA identified an increase in claimsprocessing staff as essential to reducing the pending claims inventory and

improving timeliness. According to VA, with a workforce that is 

sufficiently large and correctly balanced, it can successfully meet the 

veterans’ needs while ensuring good stewardship of taxpayer funds. The 

fiscal year 2008 request would fund 8,320 full-time equivalent employees 

working on compensation and pension, which would represent an 

increase of about 6 percent over fiscal year 2006. In addition, the budget

justification cites near-term initiatives to increase the number of claims 

Page 6 GAO-07-562T 
completed, such as using retired VA employees to provide training and the

increased use of overtime. 

Even as staffing levels increase, however, VA acknowledges that it still 

must take other actions to improve productivity.3

 VA’s budget justification 

provides information on actual and planned productivity, in terms of 

claims decided per full-time equivalent employee. While VA expects a 

temporary decline in productivity as new staff are trained and become 

more experienced, it expects productivity to increase in the longer term. 

Also, VA has identified additional initiatives to help improve productivity. 

For example, VA plans to pilot paperless Benefits Delivery at Discharge, 

where servicemembers’ disability claim applications, service medical 

records, and other evidence would be captured electronically prior to 

discharge. VA expects that this new process will reduce the time needed to

obtain the evidence needed to decide claims. 

To resolve appeals faster, VA has been working to reduce the number of 

appeals sent back by the Board of Veterans’ Appeals for further work such 

as obtaining additional evidence and correcting procedural errors. To do 

so, VA has established joint training and information sharing between field

staff and the Board. VA reports that it has reduced the percentage of 

decisions remanded from about 57 percent in fiscal year 2004 to about 32 

percent in fiscal year 2006, and expects its efforts to lead to further 

reductions. Also, VA reports that it has improved the productivity of the 

Board’s judges from an average of 604 appeals decided in fiscal year 2003 

to 698 in fiscal year 2006. The Board attributes this improvement to 

training and mentoring programs and expects productivity to improve to 

752 decisions in fiscal year 2008. 

While VA is taking actions to address its claims-processing challenges, 

there are opportunities for more fundamental reform that could 

dramatically improve decision making and processing. These include 

reexamining program design, as well as the structure and division of labor 

among field offices. 

After more than a decade of research, we have determined that federal 

disability programs are in urgent need of attention and transformation, and 

Opportunities for 

Improvement May Lie 

in More Fundamental 

Reform 

 3

See GAO, 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).

 

Page 7 GAO-07-562T 
we placed modernizing federal disability programs on our 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. Because of this, and because 

of continuing program administration problems, such as lengthy claimsprocessing times, we found that these programs are poorly positioned to 

provide meaningful and timely support for Americans with disabilities. 

In August 2002, we recommended that VA use its annual performance plan 

to delineate strategies for and progress in periodically updating labor 

market data used in its disability determination process. We also 

recommended that VA study and report to the Congress on the effects that 

a comprehensive consideration of medical treatment and assistive 

technologies would have on its disability programs’ eligibility criteria and 

benefits package. This study would include estimates of the effects on the 

size, cost, and management of VA’s disability programs and other relevant

VA programs and would identify any legislative actions needed to initiate 

and fund such changes.

In addition to program design, VA’s regional office claims processing 

structure may be disadvantageous to efficient operations. VBA and others 

who have studied claims processing have suggested that consolidating 

claims processing into fewer regional offices could help improve claimsprocessing efficiency and save overhead costs. We noted in December 

2005 that VA had made piecemeal changes to its claims-processing field 

structure. VA consolidated decisionmaking on Benefits Delivery at 

Discharge claims, which are generally original claims for disability 

compensation, at the Salt Lake City and Winston-Salem regional offices. 

VA also consolidated in-service dependency and indemnity compensation 

claims at the Philadelphia regional office. These claims are filed by 

Page 8 GAO-07-562T 
survivors of servicemembers who die while in military service.4

 VA 

consolidated these claims as part of its efforts to provide expedited 

service to these survivors, including servicemembers who died in 

Operations Iraqi Freedom and Enduring Freedom. However, VA has not 

changed its basic field structure for processing compensation and pension 

claims at 57 regional offices, which experience large performance 

variations. Unless more comprehensive and strategic changes are made to 

its field structure, VBA is likely to miss opportunities to substantially 

improve productivity, especially in the face of future workload increases. 

We have recommended that VA undertake a comprehensive review of its 

field structure for processing disability compensation and pension claims. 

While reexamining claims-processing challenges may be daunting, there

are mechanisms for undertaking such an effort, including the 

congressionally chartered commission currently studying veterans’ 

disability benefits. 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 is to examine and provide recommendations on (1) the 

appropriateness of the benefits, (2) the appropriateness of the benefit 

amounts, and (3) the appropriate standard or standards for determining 

whether a disability or death of a veteran should be compensated. The 

commission held its first public hearing in May 2005, and in October 2005,

the commission established 31 research questions for study. These 

questions address such issues as how well disability benefits meet the 

congressional intent of replacing average impairment in earnings capacity, 

and how VA’s claims-processing operation compares to other disability 

programs, including the location and number of processing centers. These 

issues and others have been raised by previous studies of VBA’s disability 

claims process. The commission is scheduled to report to the Congress by 

October 1, 2007. 

Mr. Chairman, this concludes my remarks. I would be happy to answer any 

questions that you or other members of the subcommittee may have. 

 4

VBA also provides dependency and indemnity compensation to survivors of certain 

deceased disability compensation beneficiaries. 

Page 9 GAO-07-562T 
For further information, please contact Daniel Bertoni at (202) 512-7215.

Also contributing to this statement were Shelia Drake, Martin Scire, Greg 

Whitney, and Charles Willson. 

Contact and 

Acknowledgments 

Page 10 GAO-07-562T 
Page 11 GAO-07-562T 

Related GAO Products 

Veterans’ Disability Benefits: Long-Standing Claims Processing Problems 

Persist. GAO-07-512T. Washington, D.C.: March 7, 2007. 

High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January 31,

2007. 

Veterans’ Disability Benefits: VA Can Improve Its Procedures for Obtaining 

Military Service Records. GAO-07-98. Washington, D.C.: December 12, 

2006. 

Veterans’ Benefits: Further Changes in VBA’s Field Office Structure Could 

Help Improve Disability Claims Processing. GAO-06-149. Washington, D.C.: 

December 9, 2005. 

Veterans’ Disability Benefits: Claims Processing Challenges and 

Opportunities for Improvements. GAO-06-283T. Washington, D.C.: 

December 7, 2005. 

Veterans’ Disability Benefits: Improved Transparency Needed to Facilitate 

Oversight of VBA’s Compensation and Pension Staffing Levels. GAO-06-

225T. Washington, D.C.: November 3, 2005. 

VA Benefits: Other Programs May Provide Lessons for Improving 

Individual Unemployability Assessments. GAO-06-207T. Washington, D.C.: 

October 27, 2005. 

Veterans’ Disability Benefits: Claims Processing Problems Persist and 

Major Performance Improvements May Be Difficult. GAO-05-749T. 

Washington, DC.: May 26, 2005. 

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. 

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. 

Veterans Benefits Administration: Better Collection and Analysis of 

Attrition Data Needed to Enhance Workforce Planning. GAO-03-491. 

Washington, D.C.: April 28, 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. 

Page 12 GAO-07-562T (130649) 
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