million

Veterans
 

Benefits
 

Administration
 

Review of Pension
 

Management Centers
 

OFFICE OF AUDITS AND EVALUATIONS

March 30, 2011 

10-00639-135 
ACRONYMS AND ABBREVIATIONS
 

C&P Compensation and Pension 

DIC Dependency and Indemnity Compensation 

EVR Eligibility Verification Report 

IVM Income Verification Match 

OIG Office of Inspector General 

PAR Performance and Accountability Report 

PDIC Parents’ Dependency and Indemnity Compensation 

PMC Pension Management Center 

VARO Veterans Affairs Regional Office 

VBA Veterans Benefits Administration 

To Report Suspected Wrongdoing in VA Programs and Operations:
 

Telephone: 1-800-488-8244
 

E-Mail: vaoighotline@va.gov
 

(Hotline Information: http://www.va.gov/oig/contacts/hotline.asp)
 
Report Highlights: Review of Veterans 

Benefits Administration’s Pension 

Management Centers 

Why We Did This Review 

We conducted this review to determine if 

the Veterans Benefits Administration’s 

(VBA) Pension Management Centers 

(PMCs) ensure that pensioners receive 

timely benefit payments. We also assessed 

the implementation of recommendations 

from OIG’s FY 2007 audit of VBA’s 

Pension Maintenance Program. PMCs 

assumed processing responsibilities for live 

and death pension applications and 

Dependency and Indemnity Compensation 

in FY 2008 and 2009, respectively. This 

change increased the claims processing 

workload significantly at the PMCs. 

What We Found 

VBA did not process original death pension 

claim benefits timely because PMCs were 

not adequately prepared to process 

additional claims added to their workload 

from VA Regional Offices in FYs 2008 and 

2009. In addition, VBA did not process 

Internal Revenue Service and Social 

Security Administration Income Verification 

Matches (IVM) timely, which resulted in 

overpayments. Lastly, VBA’s PMC 

performance measures in the Performance 

and Accountability Report do not adequately 

measure all the work processed. VBA has 

taken sufficient measures to address prior 

OIG recommendations. 

We identified an opportunity for VBA to 

ensure IVM actions are processed timely 

that can potentially save $205 million in 

overpayments. 

What We Recommended 

We recommended establishment of an 

operational plan to ensure PMCs efficiently 

and effectively manage the workload. VBA 

also needs to establish timeliness 

performance standards for completing 

Income Verification Matches to reduce 

overpayments, and to modify the 

Performance and Accountability Report 

performance measures to reflect the current 

workload and ensure transparency over 

actual performance. 

Agency Comments 

The Acting Under Secretary for Benefits 

agreed with our report findings and 

recommendations. The Acting Under 

Secretary’s planned actions were acceptable; 

we will follow up on their implementation. 

(original signed by:) 

BELINDA J. FINN
 

Assistant Inspector General
 

for Audits and Evaluations
 

i 
TABLE OF CONTENTS
 

Introduction......................................................................................................................................1
 

Results and Recommendations ........................................................................................................2
 

Finding Claims Processing Timeliness Needs Improvement...........................................2
 

Appendix A Background ........................................................................................................ 7
 

Appendix B Scope and Methodology..................................................................................... 9
 

Appendix C Statistical Sampling Methodology and Results ............................................... 12
 

Appendix D Status of Prior Audit Recommendations.......................................................... 13
 

Appendix E Monetary Benefits in Accordance with IG Act Amendments ......................... 14
 

Appendix F Agency Comments........................................................................................... 15
 

Appendix G OIG Contact and Staff Acknowledgments....................................................... 18
 

Appendix H Report Distribution .......................................................................................... 19
 

ii 
Review of VBA’s Pension Management Centers 

Objective 

Roles and 

Responsibilities 

INTRODUCTION 

We conducted this review to determine if the Veterans Benefits 

Administration’s (VBA) Pension Management Centers (PMCs) ensure that 

pensioners receive timely benefit payments. We also assessed the 

implementation of prior recommendations from the OIG FY 2007 audit of 

VBA’s Pension Management Program. The initial project objective was 

planned to determine if VBA controls ensure the timeliness and accuracy of 

payments. The initial project objective was changed to focus on timeliness 

and report on accuracy only as it relates to timeliness. VBA consolidated 

processing for Dependency and Indemnity Compensation (DIC) claims 

during the period from November 2008 through August 2009. This 

consolidation represented a significant business change in the PMCs 

workload and necessitated the change in our objective. 

VBA is responsible for the Compensation and Pension (C&P) program. 

PMCs manage two pension benefits programs and two compensation 

programs. These programs serve financially eligible veterans, dependents, 

and parents of veterans. Through the monthly monetary benefits provided by 

the C&P program, veterans and their families are able to sustain a level of 

financial well-being that would otherwise be challenging in the face of 

disabilities, diseases, or injuries incurred or aggravated during active military 

service. 

While VBA’s Associate Deputy Under Secretary for Field Operations 

provides oversight for the three PMCs, the local VA Regional Office 

(VARO) Director and PMC Manager are responsible for administration, 

direction, and control of the claims processing, and personal contact for all 

veteran and beneficiary recipients receiving pension benefits, DIC benefits, 

burial benefits, and accrued benefits. The three PMCs are located in 

Philadelphia, PA; Milwaukee, WI; and St. Paul, MN. 

Veterans receiving pensions are referred to as “live” pensioners and eligible 

dependents (survivors) of deceased veterans receiving pensions are referred 

to as “death” pensioners. For this report, we referred to pensions with 

recurring payments as “active pensions” and pension applications as 

“original pensions.” Following the initial award, original pensions become 

active pensions. These pensions are not service connected while DIC claims 

are service connected. 

VA Office of Inspector General 1 
Review of VBA’s Pension Management Centers 

Finding 

Improved Claims 

Processing 

Timeliness 

Needed 

RESULTS AND RECOMMENDATIONS 

Claims Processing Timeliness Needs Improvement 

VBA has taken sufficient measures to address prior OIG program 

recommendations. However, claims processing in the areas of original death 

pensions and Income Verification Matches (IVMs) need improvement. 

Further, the PMC-related performance metrics needs to be updated to bring 

transparency to how well VBA is processing all significant workload at its 

PMCs. VBA processed original live pension claims timely. However, VBA 

did not process original death pension claims timely which resulted in 

delayed benefits. This occurred because PMCs were not adequately prepared 

to manage workload increases. Further, VBA does not completely and 

transparently report the PMC-related performance measures in the PAR. For 

example, VBA did not update VA’s PAR to reflect all changes in recent 

workload consolidation. 

In addition, VBA did not process IVMs for active pensions timely, which 

resulted in delayed processing and overpayments. This occurred because 

VBA does not have a timeliness standard for completing IVMs, which are a 

lower priority claims processing action than other pension processing 

actions. Delays in processing IVM actions places active awards at greater 

risk for not being adjusted to reflect accurate amounts based on new 

information. This report identifies an opportunity for VBA to ensure IVM 

actions are processed timely that can potentially save $205 million in 

overpayments. Appendix D outlines the information on the prior OIG 

recommendations and the corrective actions VBA implemented. 

PMCs did not meet the original death pension claims processing timeliness 

goals in FY 2009 because PMCs were not adequately prepared to manage the 

increased workload. This increase was largely due to the addition of original 

pension claims, DIC claims, and other claims in FYs 2008 and 2009. PMC 

management told us that the downturn in the economy also contributed to the 

unexpected increase in original live and death pension claims. The total 

number of claims increased 108 percent from the end of 

FY 2007 (277,231 claims) to the end of FY 2009 (577,814 claims). 

VA Office of Inspector General 2 
Review of VBA’s Pension Management Centers 

PAR Performance 

Measure Updates 

Needed 

We reviewed 420 original pension claims completed in FY 2009. Our 

statistical sample included 204 original live pension claims (49 percent of 

total claims) and 216 original death pension claims (51 percent of total 

claims). 

Based upon the 204 original live pension claims reviewed, we concluded that 

claim processing was timely. We found the average number of days to 

complete live pension claims was 79 days, while VBA’s national goal was 

90 days. However, VBA needs to strengthen controls to ensure timely 

processing of original death pension claims. We found the average number 

of days to complete a death pension claim was 110 days, while VBA’s 

national goal was 65 days. We identified 151 (70 percent) of 216 original 

death pension claims that exceeded the timeliness goal of 65 days. 

Processing time is measured from the date the claim is received to the award 

authorization date. VBA’s Policy and Procedure Manual M21-4, “Claims 

and Appeals Processing Timeliness,” requires program and local 

management to use “the average days to complete a claim” to monitor the 

general effectiveness of claims processing. 

Although VBA had a plan to transfer original claims from VAROs to PMCs, 

the plan was not adequate to ensure all claims and work products were 

processed timely. PMC management told us that the addition of newly hired, 

inexperienced staff impacted processing timeliness. In addition, the 

FY 2009 PAR also reported that the addition of new staff impacted 

FY 2009 timeliness. PMC staffing increased approximately 97 percent from 

FY 2007 to FY 2009. As of May 2010, approximately 71 percent of 

Veterans Services Representatives at one of the three PMCs we visited had 

less than 2 years of experience working claims. To help reduce the 

increasing claims backlog, on May 25, 2010, VBA’s Office of Field 

Operations notified Directors of VA Regional Offices that the responsibility 

for processing original death pension claims would temporarily be 

transferred back to VAROs for 4 months. 

During our review of the PMCs’ performance measures, we found that 

original live pension claim processing timeliness is separately reported in the 

FYs 2009 and 2010 PARs. Yet we determined original death pension claims 

are combined with four other end product codes under the pension non-rating 

performance measure in both the FYs 2009 and 2010 PARs. The pension 

non-rating performance measure represents the average days to process a 

pension claim that does not require a rating decision. The calculation is 

determined from the date the claim is received by VA to the date the claim is 

completed. 

VA Office of Inspector General 3 
Review of VBA’s Pension Management Centers 

Untimely IVMs 

Results in 

Overpayments 

The measure includes: 

 original death pensions 

 disability and death dependency 

 income, estate and election issues 

 IVMs 

 Eligibility Verification Report (EVR) Referrals 

VBA does not completely and transparently report the PMC-related 

performance measures in the PAR. VBA did not update VA’s PAR to reflect 

all changes in recent workload consolidation. Original death pensions and 

IVMs are significant processing actions and should be reported as separate 

performance measures. As a result, stakeholders cannot fully assess the 

PMCs’ performance. 

PMCs use IVMs as a control to identify unreported income and are 

responsible for making any necessary adjustments to the active monthly 

pension payments when the income is verified. VBA’s Policy and 

Procedure Manual M21-1MR, “Matching Programs,” requires VBA to 

process IVMs with income records received from the Internal Revenue 

Service and the Social Security Administration. PMCs receive income data 

from both agencies approximately a year and a half after the applicable 

calendar year. For example, the 2007 income data was received in July 

2009. 

In a prior Government Accountability Office (GAO) report,* VBA IVMs 

were cited as a major management control in detecting unreported income. 

However, our review determined that the processing of IVM actions was not 

adequate or timely, and thus, this key management control is not working as 

intended. As a result, overpayments were not identified timely and 

Government funds were unnecessarily expended. 

We reviewed 420 active pension claims with recurring monthly pension 

awards in FY 2009. We found 12 (3 percent) of 420 claims with IVMs that 

were not processed, resulting in overpayments totaling $124,287. The PMCs 

received just under 70,000 IVM matches for 2006 and 2007. At the time of 

our review, 19,821 IVMs were pending from 244 to 657 days. 

Although the IVMs cannot prevent overpayments, delays in processing 

increase the value of the overpayment as monthly pension benefits continue 

* GAO-08-112, Improved Management Would Improve VA’s Pension Program, February, 

2008 

VA Office of Inspector General 4 
Review of VBA’s Pension Management Centers 

Monetary Effect of 

Potential 

Overpayments 

Conclusion 

to be paid at amounts higher than pensioner’s benefit entitlements. Changes 

in pensioner’s income levels are identifiable in the IVM match information 

and form the basis for VBA to make adjustments to pension benefits. In 

addition, as pension benefits are paid at higher amounts and the value of the 

overpayment increases and ages, the PMC’s ability to collect on the debt is 

reduced. 

The PMC received income data for 2006 wage income in August 2008. 

However, when the PMC did not process an IVM, the pensioner was 

potentially overpaid $37,334 through June 2010. In another case, the PMC 

received 2007 income data in July 2009 that identified a pensioner had 

received $1,200 income more than VA records showed. However, the PMC 

did not adjust the value of the pension based on the new information 

received. Thus, the pensioner was potentially overpaid. 

We determined PMCs do not have a timeliness standard for completing the 

IVMs. In addition, PMC management and staff told us that processing IVMs 

is a lower priority when compared to other processing actions such as 

original pension claims. In fact, no dedicated staff or teams were assigned to 

process IVMs exclusively. This work is performed on an ad hoc basis when 

PMC staff is available. 

Although the 3 percent error rate is low, the financial impact associated with 

untimely processing of these actions can be high. To illustrate, VBA risks 

the potential for overpayments for unprocessed IVMs. We identified an 

average potential overpayment of $10,357 ($124,287 IVM overpayments 

divided by 12 unprocessed IVMs). Overpayments for the remaining 

19,821 IVMs that were still pending at the time of our review could equal 

$205 million (19,821 x $10,357). 

While the overall error rate found during our review was within an 

acceptable level, our testing identified IVMs as a specific area where VBA 

has opportunities to achieve significant cost savings through timely 

processing. Ensuring the timeliness of these actions minimizes potential 

overpayments and helps ensure the accuracy of pension payments. 

VBA has taken sufficient measures to address prior OIG recommendations 

for the FY 2007 audit. We did not identify any significant issues directly 

related to the prior recommendations. However, additional controls to 

ensure that pensioners receive timely benefit payments need improvement. 

Although some efficiency was achieved by the initial PMC consolidation in 

FY 2002, PMCs were not prepared to process the significant addition of 

original pension claims, DIC claims, and other types of claims that were 

added to their workload in FYs 2008 and 2009. An increase in the overall 

number of claims, partly due to the failing economy, along with a significant 

VA Office of Inspector General 5 
Review of VBA’s Pension Management Centers 

Recommendations 

Management 

Comments and 

OIG Response 

number of newly hired, inexperienced staff, has resulted in untimely claim 

processing and delayed identification and collection of overpayments. 

VBA’s decision that VAROs assist with reducing the backlog was a 

temporary measure; however, a workload management plan is needed. 

PMCs must establish procedures to efficiently and effectively manage the 

workload to ensure all pension claims are processed accurately and timely to 

minimize the risk of overpayments. IVMs are not prioritized and processed 

in the same expeditious manner as original claims, which have a 

performance goal. Although the error rate was generally low, delayed 

processing puts IVM actions at a greater risk for overpayments. In addition, 

if Internal Revenue Service and Social Security Administration income data 

could be received more timely, overpayments could be minimized. Finally, 

PAR performance measures should be designed to properly reflect the 

PMCs’ performance on significant processing actions. 

1.	 We recommend the Acting Under Secretary for Benefits establish an 

operational plan to ensure Pension Management Centers efficiently and 

effectively manage the workload to achieve timeliness standards. 

2.	 We recommend the Acting Under Secretary for Benefits modify the 

Performance and Accountability Report to provide separate performance 

measures for significant Pension Management Center processing actions, 

such as original death pensions and Income Verification Matches. 

3.	 We recommend the Acting Under Secretary for Benefits establish 

specific performance goals for Income Verification Matches and 

implement controls to ensure timely processing to reduce overpayments, 

including exploring alternative measures such as assigning a dedicated 

claims processor or team to process Income Verification Matches. 

4.	 We recommend the Acting Under Secretary for Benefits explore 

opportunities to obtain Internal Revenue Service and Social Security 

Administration data quicker to ensure Income Verification Matches are 

processed timely to reduce overpayments. 

The Acting Under Secretary for Benefits agreed with the findings and 

recommendations contained in the draft report, and provided responsive 

implementation plans to address our recommendations. We will monitor 

VBA’s progress and follow up on its implementation until all proposed 

actions are completed. Appendix F contains the full text of the Acting Under 

Secretary’s comments. 

VA Office of Inspector General 6 
Review of VBA’s Pension Management Centers 

Appendix A 

Overview of 

Pension Program 

Prior Reviews 

Pension, DIC, and 

PDIC Obligations 

Consolidation 

Background 

VBA is responsible for the Compensation and Pension (C&P) program. 

Pension Management Centers (PMCs) manage two pension benefits 

programs and two compensation programs as detailed below. 

	 Disability Pension or “Live Pension”—a monthly benefit paid to wartime 

veterans who are permanently and totally disabled or age 65 or older and 

have limited income and net worth. 

	 Death Pension—a monthly benefit paid to eligible dependents (survivors) 

of wartime veterans. Basic eligibility is dependent on the veteran being 

discharged from service under other than dishonorable conditions and 

having served during wartime; the surviving spouse or unmarried child of 

a deceased veteran must have countable income and net worth below a 

limit set by Federal law. 

	 Dependency and Indemnity Compensation (DIC)—a monthly benefit to 

dependents for service-connected deaths. 

	 Parents’ Dependency and Indemnity Compensation (PDIC)—a monthly 

benefit paid to parents of a veteran based on the veteran’s serviceconnected death and the parents’ income limitations. 

OIG conducted an audit of VBA’s Pension Management Program in 

FY 2007, the Audit of Veterans Benefits Administration’s Pension 

Maintenance Program Administered by the Pension Maintenance Centers 

report, published in March 2007. We reported that PMC controls to monitor 

the accuracy and timeliness of processing pension claims needed 

strengthening and the report made six recommendations. The Under 

Secretary for Benefits agreed with all six recommendations and improvement 

actions were completed in August 2007. Among items implemented in 

response to the recommendations were standardized training, revised 

procedures, and monitoring of VA’s local and national Systematic Technical 

Accuracy Review findings. 

In FY 2009, pension, DIC, and PDIC programs had estimated obligations of 

about $9 billion, which represented about 20 percent of the total C&P 

Service’s congressionally appropriated $44 billion. 

Historically, the C&P program has encountered continual weaknesses in 

timeliness of claims decisions, primarily due to an extensive processing 

workload experienced at each VARO. In January 2002, VBA consolidated 

work related to active pension claims into three PMCs, located in 

Philadelphia, PA; St. Paul, MN; and Milwaukee, WI, to: 

	 centralize processing of all pension awards, 

VA Office of Inspector General 7 

2002 
Review of VBA’s Pension Management Centers 

Additional 

Responsibilities 

Following the 2002 

Consolidation 

	 achieve a more effective use of limited human resources, 

	 improve technical accuracy based on skills specialization and enhanced 

use of computer program edits, and 

	 allow VAROs to specialize in service-connected compensation claims 

processing. 

VBA consolidated live and death pension claims applications (original 

pension claims) at the PMCs during the period from May 2008 through 

September 2008. VBA further consolidated processing for DIC claims 

during the period from November 2008 through August 2009. This 

consolidation represented a significant business change in the PMCs 

workload. The effect of this change doubled the payments PMCs processed 

and VBA temporarily redistributed some workload to its VA Regional 

Offices. 

VA Office of Inspector General 8 
Review of VBA’s Pension Management Centers 

Appendix B 

Overview 

Scope and Methodology 

The original project scope included an assessment of the timeliness and 

accuracy of payments. It was modified to focus on the timeliness of original 

live and death pension claims, a subset of the total universe of payments that 

the PMCs are responsible for. We also focused on reporting accuracy, but 

only as it related to timeliness. 

VBA consolidated processing for DIC claims during the period from 

November 2008 through August 2009. This consolidation represented a 

significant business change in PMC workload. The effect of this change 

doubled the payments processed by PMCs. In addition, on May 25, 2010, 

VBA’s Office of Field Operations notified Directors of VA Regional Offices 

and PMCs that the responsibility for processing original death pension 

claims would temporarily be transferred to the originating VARO for 

4 months. The combination of these business changes necessitated the 

change in our scope. 

The scope of the audit included active pensioners who received recurring 

payments in FY 2009. The scope also included live or death pension 

applications completed in FY 2009. 

The universe of active pensions included just under 924,000 active pensions, 

DIC, and PDIC claims with payments valued at over $8.5 billion that were 

processed during FY 2009. All payments as a result of these applications for 

benefits, except one-time special payments, were included in the $8.5 billion 

payments in FY 2009. One-time special payments were excluded since we 

focused on VBA’s processing of monthly recurring payments. The universe 

of original pensions included just over 83,300 pension applications for 

benefits that were completed during FY 2009. 

Our review methodology included: 

	 a statistical sample of 420 original live and death pension claims to test 

application timeliness in accordance with VBA’s performance standards 

and procedures. Our statistical sample included 204 original live pension 

claims (49 percent of total claims) and 216 original death pension claims 

(51 percent of total claims). 

	 a statistical sample of 420 active pensioners, DIC, and PDIC claims to 

determine if the related FY 2009 pension actions were processed in 

accordance with VBA’s performance standards and procedures. 

VA Office of Inspector General 9 
Review of VBA’s Pension Management Centers 

Pie Chart The pie chart below identifies the FY 2009 active pension universe. 

FY 2009 Active Pension Universe 

Fraud Risk 

Data Reliability 

We did not include tests for payment timeliness associated with DIC because 

the responsibility for processing DIC payments transferred to PMC from 

November 2008 through August 2009. This represented a significant 

business change, and given the transfer, would not have encompassed the full 

fiscal year. Additionally, we did not include tests of the timeliness of PDIC 

payment actions because results from prior audits showed a low risk and any 

amounts found in the program would not or were not expected to be material. 

The audit team addressed the risk that fraud, abuse, and violations of legal 

and regulatory requirements could occur. We identified potential risks 

including inadequate monitoring by management for compliance with 

policies, laws, and regulations. In addition, the audit team was alert for 

evidence of fraud including fictitious evidence, such as false signatures, and 

missing or nonexistent key documentation. 

Matching programs are a control to detect and prevent fraud. One of the 

matching programs is IVM. PMCs use IVMs as a control to identify 

unreported income and are responsible for making any necessary adjustments 

to the active monthly pension payments if the income is verified. IVMs are 

composed of income data received from the Internal Revenue Service and 

Social Security Administration. During our statistical sampling and internal 

control assessment, nothing came to our attention that indicated a fraud 

occurred. 

We compared relevant VBA C&P Work-In-Progress and Master Record 

databases data with source documents, such as applications, awards, and 

VA Office of Inspector General 10 
Review of VBA’s Pension Management Centers 

Standards for 

Inspection 

income data, in our sample. Our review showed that the data was reliable as 

it relates to our review objective. We believe that the data is sufficiently 

reliable and the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our review objective. 

We conducted our review work from February through December 2010. Our 

assessment of internal controls focused on those related to our review 

objectives. The review was completed in accordance with the Council of the 

Inspectors General on Integrity and Efficiency’s Quality Standards for 

Inspection. 

VA Office of Inspector General 11 
Review of VBA’s Pension Management Centers 

Appendix C
 

Sampling 

Objectives 

Populations 

Sampling Designs 

Results 

Statistical Sampling Methodology and Results 

We sampled from two universes. One universe is of active beneficiaries, and 

the other is completed initial claims. The sampling objectives are detailed 

below. 

1) To determine if the pension actions during FY 2009 were processed 

timely based on VBA’s performance standards. 

2) To determine if completed original pension claims were processed timely 

based on VBA’s performance standards. 

1) VBA pensioners who received at least one payment in FY 2009. The 

active pension universe included just under 924,000 active pensions, DIC, 

and PDIC claims with payments valued at over $8.5 billion that were 

processed during FY 2009. 

2) Initial claims completed in FY 2009. The universe of original pensions 

included just over 83,300 pension applications for benefits that were 

completed during FY 2009. 

We selected simple random samples from our two universes. 

1) A statistical sample of 420 active pensioners, DIC, and PDIC claims, and 

2) A statistical sample of 420 original live and death pension claims. We 

separated the samples by PMC and reviewed the records onsite for 

timeliness. 

In the active pension universe sample, we found 12 (3 percent) of 420 claims 

valued at $4.3 million with IVMs that were not processed timely. This 

resulted in overpayments totaling $124,287. VBA risks the potential for 

overpayments for unprocessed IVMs. We identified an average potential 

overpayment of $10,357 ($124,287 IVM overpayments divided by 

12 unprocessed IVMs) overpayments for the remaining 19,821 IVMs that 

were still pending at the time of our review. Overpayments for the 

remaining 19,821 IVMs that were still pending at the time of our review 

were valued at $205 million (19,821 x $10,357). 

VA Office of Inspector General 12 
Review of VBA’s Pension Management Centers 

Appendix D	 Status of Prior Audit Recommendations—Report 

No. 05-03180-111 

The Audit of Veterans Benefits Administration’s Pension Maintenance 

Program Administered by the Pension Maintenance Center, issued in 

March 2007, made six recommendations that were addressed to the Under 

Secretary for Benefits. 

1.	 Ensure Pension Management Centers use standardized procedures among 

the Pension Management Centers for processing income adjustments and 

Eligibility Verification Reports. 

2.	 Develop and implement standardized monitoring procedures among the 

Pension Management Centers to ensure pension processing accuracy 

rates reflect actual processing performance. 

3.	 Ensure standardized training among the three centers is provided to all 

Pension Management Center employees responsible for processing 

pension claims. For income adjustments, emphasis should be placed on 

the calculation of unreimbursed medical expenses, prospective medical 

expenses, and income calculation. For Eligibility Verification Reports, 

emphasis should be placed on income and expense calculation, 

dependency development, and required Eligibility Verification Report 

elements. 

4.	 Develop procedures to reduce errors associated with the infrequent 

processing of specialized awards. 

5.	 Develop and implement procedures to more timely process 

Compensation and Pension system messages associated with pension 

maintenance activities. 

6.	 Develop procedures to ensure veterans’ e-folders contain the required 

documents and ensure e-folders contain veteran-specific documents. 

The Under Secretary for Benefits agreed with the recommendations and also 

reported that all improvement actions would be completed by September 

2007. Documentation of implementation was sufficient to close 

recommendations 2, 3, 4 and 6 on April 2007, and recommendations 1 and 

5 on August 2007. 

Our interviews, research, and review of claims substantiated the 

implementation of these recommendations. Our review focused on the 

timeliness of original pension claims and IVMs. 

VA Office of Inspector General 13 
Review of VBA’s Pension Management Centers 

Appendix E Potential Monetary Benefits in Accordance with IG Act 

Amendments 

Recommendation Explanation of Benefits Better Use 

of Funds 

Questioned 

Costs 

3 Estimate approximately 

$205 million could be put to better 

use if IVM internal controls are 

improved. 

$205 million 

Total $205 million 

VA Office of Inspector General 14 
Review of VBA’s Pension Management Centers 

Appendix F Acting Under Secretary for Benefits Comments 

Department of Memorandum Veterans Affairs 

Date: March 16, 2011 

From: Acting Under Secretary for Benefits (20) 

Subj: OIG Draft Report—Review of Pension Management Centers [Project No. 2010­

00639-R4-0213]—VAIQ 7075169 

To: Assistant Inspector General for Audits and Evaluations (52) 

1.	 Attached is VBA’s response to the OIG’s Draft Report: Review of Pension 

Management Centers. 

2.	 Questions may be referred to Catherine Milano, Program Analyst, at 461-9216. 

(Original signed) 

Michael Walcoff 

Attachment 

VA Office of Inspector General 15 
Review of VBA’s Pension Management Centers 

Veterans Benefits Administration (VBA)
 

Comments on OIG Draft Report
 

Review of Pension Management Centers
 

As acknowledged in the OIG draft report, VBA has taken sufficient measures to address all prior 

OIG program recommendations. The report also showed that VBA successfully processes 

original live pension claims within VBA’s 90-day national goal (specifically, within 79 days). 

The OIG noted only a 3 percent error rate (12 out of 420 claims) in untimely processing of 

Income Verification Matches (IVMs). VBA concurs with OIG’s finding and continues to look 

for additional means of improving claims processing for our pensioners. 

The following comments are submitted in response to the recommendations in the OIG Draft 

Report: 

Recommendation 1: We recommend the Acting Under Secretary for Benefits establish an 

operational plan to ensure Pension Management Centers efficiently and effectively manage 

the workload to achieve timeliness standards. 

VBA Response: 

Concur. 

To assist in reducing claims processing times, contractor assistance is being acquired to 

reengineer business processes at the Pension Management Centers (PMC). This project, known 

as the Pension Transformation Plan, will document the distinct workflows in place at the PMCs. 

The contractor will analyze these workflows, along with other inputs (stakeholder interests, 

policy, procedures, legislation, regulation), and produce a common, optimized, “to be” process 

that VBA will implement at all three PMCs. 

The contract will be awarded by March 28, 2011 with a 90-day performance period. 

Implementation of the optimized, “to be” process will begin by August 31, 2011. 

Target Completion Date: August 31, 2011 

Recommendation 2: We recommend the Acting Under Secretary for Benefits modify the 

Performance and Accountability Report to provide separate performance measures for 

significant Pension Management Center processing actions, such as original death pensions 

and Income Verification Matches. 

VBA Response: 

Concur. 

Performance measures in the Department of Veterans Affairs (VA) Performance and 

Accountability Report (PAR) originate from VBA’s annual budget submissions. Changes to 

VA Office of Inspector General 16 
Review of VBA’s Pension Management Centers 

VBA’s existing performance measures must be approved by the Office of Management and 

Budget (OMB) during the budget formulation process. 

The fiscal year 2013 budget formulation process begins in April 2011. During this process, 

VBA will provide separate measures for pension entitlement claims that capture original death 

pension claims, and for pension maintenance activities that capture IVM and other incomerelated adjustments processed at the PMCs. After the performance measures have been 

approved by OMB, VBA will work with the VA Office of Management to ensure these 

measures are included in the 2011 PAR that is published annually in November. 

Target Completion Date: November 30, 2011 

Recommendation 3: We recommend the Acting Under Secretary for Benefits establish 

specific performance goals for Income Verification Matches and implement controls to 

ensure timely processing to reduce overpayments, including exploring alternative measures 

such as assigning a dedicated claims processor or team to process Income Verification 

Matches. 

VBA Response: 

Concur. 

The current VBA standard requires 95 percent of the IVM inventory be controlled or completed 

by the end of each fiscal year. VBA’s Office of Field Operations is working in conjunction with 

the Area Offices to implement new performance goals that will measure IVM timeliness 

beginning in fiscal year 2012. This group will begin discussions in March 2011, with the goal of 

having finalized measures in place by fiscal year 2012. 

Target Completion Date: October 1, 2011 

Recommendation 4: We recommend the Acting Under Secretary for Benefits explore 

opportunities to obtain Internal Revenue Service and Social Security Administration data 

quicker to ensure Income Verification Matches are processed timely to reduce 

overpayments. 

VBA Response: 

Concur. 

VBA agrees to explore the practicality of obtaining a more timely data exchange with the 

Internal Revenue Service and the Social Security Administration. 

Target Completion Date: September 30, 2011 

VA Office of Inspector General 17 
Review of VBA’s Pension Management Centers 

Appendix G OIG Contact and Staff Acknowledgments
 

OIG Contact Cherie E. Palmer 

Acknowledgments Joseph M. DeAntonis 

David Lakoskey 

Alicia Castillo-Flores 

Larry Chinn 

Mary Ann Fitzgerald 

Dana Fuller 

Lee Giesbrecht 

Raymond A. Jurkiewicz 

VA Office of Inspector General 18 
Review of VBA’s Pension Management Centers 

Appendix H Report Distribution 

VA Distribution 

Office of the Secretary
 

Veterans Health Administration
 

Veterans Benefits Administration
 

National Cemetery Administration
 

Assistant Secretaries
 

Office of General Counsel
 

Non-VA Distribution 

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans 

Affairs, and Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans 

Affairs, and Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

This report will be available in the near future on the OIG’s Web site at 

http://www.va.gov/oig/publications/reports-list.asp. This report will remain 

on the OIG Web site for at least 2 fiscal years after it is issued. 

VA Office of Inspector General 19