VA DISABILITY 

COMPENSATION

Actions Needed to 

Address Hurdles 

Facing Program 

Modernization

Report to Congressional Committees

September 2012

GAO-12-846

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-846, a report to

congressional committees

September 2012

VA DISABLITY COMPENSATION

Actions Needed to Address Hurdles Facing Program 

Modernization 

Why GAO Did This Study

VA administers one of the nation’s

largest federal disability compensation 

programs, providing veterans with a 

cash benefit based on average loss of 

earning capacity as a result of serviceconnected disabilities. However, 

concerns exist that VA’s rating 

schedule—the criteria used to assign 

degree of work disability—is not 

consistent with changes in medicine 

and the labor market. Due in part to 

these types of challenges, GAO

designated federal disability programs 

as high risk. Consequently, GAO 

examined (1) VA’s progress in revising 

its rating schedule with updated 

medical and economic information; and

(2) the opportunities and challenges of

various policy approaches proposed by 

commissions and others for updating 

VA’s disability benefits structure. To do 

this, GAO reviewed literature and VA 

documents, and relevant federal laws 

and regulations, as well as interviewed 

VA officials, disability experts, and 

veteran groups. 

What GAO Recommends

Congress may wish to direct VA to 

conduct focused studies on various 

approaches to modernize disability 

benefits and, if necessary, propose

relevant legislation. GAO is also 

making several recommendations to 

improve VA’s capacity to revise the

rating schedule now and in the future. 

These include completing plans for 

conducting earnings loss studies and 

developing a written strategy for 

implementing revisions to the rating 

schedule. VA agreed with the 

recommendations and noted plans to 

address them. 

What GAO Found

The Department of Veterans Affairs (VA) initiated a comprehensive effort in 2009 

to revise its disability rating schedule with both updated medical and earnings 

information, but faces hurdles with several key aspects. The current revision 

effort takes a more comprehensive and empirical approach than VA’s past 

efforts. VA has hired full-time staff to revise the rating schedule’s medical 

information and plans to conduct studies to evaluate veterans’ average loss of 

earnings in today’s economy. As part of this effort, VA is considering modifying 

the rating schedule—currently based largely on degree of medical severity—to 

include a veteran’s ability to function in the workplace. Moving in this direction is 

more consistent with how experts conceive of disability. However, this change, in 

part, has resulted in VA falling behind schedule. As of July 2012, VA is over 12 

months behind in revising criteria for the first categories of impairments. In 

addition, VA has not developed its capacity to produce timely research on the 

impact of impairments on earnings. Moreover, VA lacks a complete plan—with 

specific activities and updated time frames—for conducting earnings loss and 

related studies. VA also does not have a written strategy to address the possible 

effects that revisions may have on agency operations, including impacts on an

already strained claims workload. Finally, although VA intends to conduct 

medical and earnings updates beyond the current effort, VA lacks a formal

mechanism to guide its commitment to do so. It is important that VA update and 

maintain its rating schedule to reflect current medical and labor market 

information to avoid overcompensating some veterans with service-connected 

disabilities while undercompensating others.

Three key approaches for modernizing VA’s disability programs recommended

by disability commissions and others—providing quality of life payments,

providing integrated vocational services with transitional cash assistance, and 

systematically factoring the effects of assistive technology and medical 

interventions into rating decisions—hold opportunity and challenges. Experts and 

veteran groups GAO interviewed believe each approach holds at least some 

opportunity for serving veterans more fairly, equitably, and effectively. However, 

challenges exist. For example, they noted that it could be difficult to achieve 

consensus for specific design elements among the diverse set of stakeholders. 

Also, VA’s capacity to administer these approaches—which could increase the 

complexity and/or number of claims—is questionable. Importantly, costs of each 

approach were raised. Some interviewees also noted that two or more of the 

approaches could be combined into a comprehensive benefits package that may

mitigate concerns raised by the implementation of any single approach. For 

example, if factoring assistive technology into disability ratings resulted in lower 

disability compensation payment levels for some, a quality of life payment could 

offset that loss. VA officials told GAO they are not considering these approaches 

because they fall outside of VA’s legal responsibility to compensate for loss of 

earning capacity. However, a system that maximizes equity, balances fiscal 

pressures, and ultimately serves individual veterans effectively will benefit from 

deliberations informed by more modern views about disability.

View GAO-12-846. For more information, 

contact Daniel Bertoni at (202) 512-7215 or 

bertonid@gao.gov. 
Page i GAO-12-846 VA Disability Compensation 

Letter 1 

Background 3

VA Has Begun to Update Its Disability Criteria, but Faces Delays 

and Lacks Complete Planning in Key Areas 7

Selected Policy Approaches for Updating VA’s Benefit Structure 

Present Both Opportunities and Challenges 18

Conclusions 30

Matter for Congressional Consideration 32

Recommendations for Executive Action 32

Appendix I Scope and Methodology 36

Appendix II Comprehensive Revisions and Other Key Updates to the VA Schedule 

for Rating Disabilities (VASRD) 41

Appendix III Key Questions for Designing New Disability Compensation Programs 43

Appendix IV Comments from the Department of Veterans Affairs 45

Appendix V GAO Contact and Staff Acknowledgments 48

Tables

Table 1: Examples of Medical Changes to VA’s Rating Schedule 

Being Considered during the Current Update 10

Table 2: Key Steps Missing from VA’s Project Planning 17

Table 3: Six Elements of Sound Planning Used to Evaluate VA’s 

Efforts 37

Table 4: Experts and Veteran Groups Interviewed by GAO 39

Figures

Figure 1: The VA Disability Benefits Process 5

Contents
Page ii GAO-12-846 VA Disability Compensation 

Figure 2: VA’s Process for Revising the Disability Compensation 

Rating Schedule 9

Figure 3: Overview of What VA Does Now and the Modified 

Approaches 19

Figure 4: Experts’ and Veteran Groups’ Views on Potential 

Opportunities and Challenges of Providing a Quality of 

Life Payment 21

Figure 5: Experts’ and Veteran Groups’ Views on Potential 

Opportunities and Challenges of Providing Integrated 

Vocational Services along with Transitional Cash 

Assistance 24

Figure 6: Experts’ and Veteran Groups’ Views on Potential 

Opportunities and Challenges of Incorporating Assistive 

Technology and Medical Interventions into Disability 

Rating Decisions 27

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.
Page 1 GAO-12-846 VA Disability Compensation 

United States Government Accountability Office 

Washington, DC 20548

September 10, 2012

Congressional Committees

The nation is committed to caring for veterans who incurred injuries 

during their military service. To compensate for these sacrifices, the U.S. 

Department of Veterans Affairs (VA) administers one of the largest 

federal disability compensation programs in the nation. VA’s disability 

compensation program provides veterans with a cash benefit based on 

the average loss in earning capacity in civilian occupations that result 

from injuries or conditions incurred or aggravated during military service. 

In fiscal year 2011, VA’s program provided about $39.4 billion in disability 

payments to nearly 3.4 million veterans with service-connected 

disabilities. In the years ahead, enrollment and costs could increase given 

the conflicts in Iraq and Afghanistan and as more Vietnam veterans—a 

significant proportion of the total veteran population—further age into 

disability-prone years. Given the large cash outlays and increasing 

demand for VA services, VA must be well positioned to make accurate 

disability decisions and ensure that veterans are appropriately and 

equitably compensated.

In 2003, GAO designated federal disability programs, including VA’s 

disability program, as high risk due in part to challenges agencies face in 

keeping their criteria for evaluating disability and determining 

compensation consistent with advances in medicine, technology, and 

changes in the labor market and society. According to experts, VA’s 

disability program infers the ability to work based on an individual’s 

medical conditions and symptoms—a concept that originated with the 

creation of the schedule for rating disabilities over 65 years ago. 

However, experts believe that, in assessing disability, a modern practice 

includes considering an individual’s ability to function in their work and 

other environments along with their medical conditions.

These concerns, in light of more modern concepts of disability, present an 

opportunity to reevaluate this federal program. Various reports and 

studies conducted by GAO, congressional- and presidential-appointed 

commissions (including the Veterans’ Disability Benefits Commission and 

the Dole-Shalala Commission), and task forces have individually 

suggested various approaches to address a sensitive, but critical, national 

issue: how to update and strengthen VA’s disability benefits structure, 

including the type, timing, and conditions of cash and other assistance to 

 
 

Page 2 GAO-12-846 VA Disability Compensation 

ensure that veterans with service-connected disabilities receive the 

compensation and services they deserve.

We have prepared this report under the Comptroller General’s authority to 

evaluate government programs as part of our continued effort to assist 

policymakers in determining how VA programs could more effectively 

meet the needs of veterans with disabilities in the 21st Century.1

To conduct our work, we reviewed prior GAO, disability commission and 

committee reports; relevant federal laws and regulations; program 

documentation, including policies, procedures, strategic goals, and 

supporting project plans; and testimonies from disability groups and 

commissions. We interviewed VA officials, disability experts, and 

representatives of veteran groups. We also evaluated VA’s project plans 

for revising its disability criteria against generally accepted project 

management practices. To identify the policy approaches for our second 

objective, we conducted a literature search of relevant reports by 

disability commissions, task forces, committees, as well as GAO reports. 

We selected policy approaches that address VA’s disability benefits 

structure and which reflect more modern concepts of disability. To identify 

the opportunities and challenges associated with these policy 

approaches, we conducted 16 interviews with a range of informed experts 

and veteran groups on the political and administrative feasibility, 

effectiveness, and fiscal sustainability they believe are associated with 

each approach. Of those we interviewed, most said that the policy 

approaches we selected were relevant approaches for our research 

purposes. Our nongeneralizable sample of experts included individuals 

who participated in disability commissions, research, or congressional 

testimony on the topic, or who serve in an organization that represents 

veterans with disabilities. Additional information about our scope and 

methodology is provided in appendix I.

In this 

report, we (1) identify the progress that VA has made in revising the 

criteria used to determine eligibility for veterans’ disability benefits with 

updated medical and economic information, and (2) discuss the 

opportunities and challenges associated with various policy approaches 

that disability commissions and others have raised for updating VA’s 

disability benefits structure.

 

1 For Comptroller General’s authority, see 31 U.S.C. § 717(b)(1).
 

Page 3 GAO-12-846 VA Disability Compensation 

We conducted this performance audit from August 2011 to September 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

VA’s disability program compensates veterans with a service-connected 

disability by providing a monthly cash benefit. As required by statute, the 

benefit is based upon an average reduction in earning capacity across a 

group of individuals with a similar physical or mental impairment.2

The level of cash benefit is determined in part through the Veterans 

Affairs Schedule for Rating Disabilities (VASRD or rating schedule). The 

rating schedule is based on the extent to which the veteran’s disability 

limits average earning capacity. VA staff use the rating schedule to assign 

disability ratings to veterans.

Thus, 

the benefit is not based on the loss of individual earnings or noneconomic 

losses. A veteran with a service-connected disability receives the benefit 

whether or not employed and regardless of the amount of income he or 

she is earning.

3 The rating schedule contains medical 

conditions or injuries categorized into 15 body systems, with a level of 

severity ranging in 10 percent increments up to 100 percent. For 

example, the removal of three ribs is rated as a 30 percent impairment in 

earning capacity, or $389 per month, and cash benefits are increased for 

veterans with spouses and dependents.4

 

2 38 U.S.C. § 1155 provides that the “ratings shall be based, as far as practical, upon the 

average impairments of earning capacity resulting from such injuries in civil occupations.”

A veteran must be rated at least 

3 According to a VA-commissioned report, although significant differences exist between 

state worker compensation programs and VA’s disability compensation program, both 

compensate for total disability as well as the permanent consequences of injuries or 

diseases that are not totally disabling. In contrast, SSA’s disability programs compensate 

individuals whose disabilities prevent them from engaging in any substantial gainful 

activity and have lasted or are expected to last at least 1 year or result in death.

4 Congress sets the amount of veteran disability compensation for each percentage 

disability rating, and this amount is subject to annual cost-of-living adjustments. 

Background

VA’s Disability 

Compensation Program 

and Related Services
 

Page 4 GAO-12-846 VA Disability Compensation 

10 percent to receive cash benefits. For veterans with multiple 

impairments, VA uses a table that applies a formula for combining ratings 

into a single rating.5

Besides cash assistance, VA provides health care, housing, vocational 

rehabilitation, and other employment-related services to eligible 

veterans.6

 

5 For a description of the procedures used to calculate combined disability ratings, see 

GAO, Veterans’ Disability Benefits: VA Should Improve Its Management of Individual 

Unemployability Benefits by Strengthening Criteria, Guidance, and Procedures, 

These services are provided through multiple administrations 

and programs within VA, such as the Veterans Health Administration and 

Vocational Rehabilitation and Employment program. In many instances, a 

veteran must first receive a disability rating from the Veterans Benefits 

Administration (VBA) and then apply for these services at the discretion of 

the veteran, as shown in figure 1.

GAO-06-309 (Washington, D.C.: May 30, 2006).

6 Generally, veterans with a disability rating of 20 percent or higher (who have an 

employment handicap) and veterans with a disability rating of 10 percent (who have a 

serious employment handicap) are eligible to receive vocational rehabilitation services. 
 

Page 5 GAO-12-846 VA Disability Compensation 

Figure 1: The VA Disability Benefits Pocess

Note: This figure is intended to present a basic overview of VA’s disability compensation program. For 

clarity purposes, we omitted some steps, processes, and legal options. 

Various commissions, expert panels, and our prior work have raised a 

variety of concerns about the soundness of the rating schedule and about 

VA’s basic disability benefits structure. The following were among these 

concerns:

• VA’s modifications of the medical information in the disability criteria 

have been slow and have not fully incorporated advances in 

technology and medicine. Moreover, the rating schedule has not been 

adjusted since its creation in 1945 to reflect ongoing changes in the 

labor market. Past studies evaluated veterans’ with service-connected 

Concerns about VA’s Disability 

Program in Light of Modern 

Approaches
 

Page 6 GAO-12-846 VA Disability Compensation 

disabilities average loss of earnings and found that not all veterans 

were being equitably compensated.7

• VA faces continuing challenges in the area of disability claims 

processing, contributing to a large backlog of initial compensation 

claims and appeals.8

• VA focuses too singularly on compensation without adequate focus on 

rehabilitation to maximize a veteran’s recovery and reintegration. This 

issue was raised by the Bradley Commission and Dole-Shalala 

Commission.9 Also, a small proportion of veterans participate in VA’s 

vocational services.10

• VA’s various disability benefits and services need to be better 

integrated to serve individual veterans.

To address these and other concerns, GAO, commissions, committees, 

and expert panels made a range of recommendations that generally 

reflect modern concepts of disability. These modern concepts are 

reflected in the International Classification of Functioning, Disability, and 

Health (ICF), which is the World Health Organization’s framework for 

health and disability.11 This framework takes into account the interaction 

between an individual’s medical condition or impairment and intervening 

factors, such as their physical and social environment.12

 

7 For example, two studies, conducted by CNA and Economic Systems Inc., respectively, 

suggested that veterans with mental health impairments were being undercompensated.

That is, rather 

8 See GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February

2011). 

9 The President’s Commission on Veterans’ Pensions (also known as the Bradley 

Commission) was presidentially chartered in 1955 to carry out a comprehensive study of 

the laws and policies pertaining to veterans. The President’s Commission on Care for 

America’s Returning Wounded Warriors (also known as the Dole-Shalala Commission) 

was also presidentially charged to study the needs of the current generation of “wounded 

warriors” in 2007.

10 We also have reported on employment and training programs for veterans with 

disabilities and made recommendations to improve program coordination and 

measurement of performance. See GAO, Disabled Veterans’ Employment: Additional 

Planning, Monitoring, and Data Collection Efforts Would Improve Assistance, 

GAO-07-1020 (Washington, D.C.: Sept. 12, 2007).

11 All 191 World Health Organization member states in 2001 endorsed the use of the ICF 

as the international standard to describe and measure health and disability.

12 Several modern frameworks of disability include the degree that an individual is unable 

to participate in life activities. These frameworks include the ICF, the Institute of Medicine 

model, and the Abridged Verbrugge and Jette Model of Disability. 
 

Page 7 GAO-12-846 VA Disability Compensation 

than predominately viewing disability as a medical condition (e.g., loss of 

an arm), modern concepts of disability focus on an individual’s functional 

ability. Under these concepts, two people with the same impairment and 

symptoms, for a variety of reasons, might have different degrees of 

disability. For example, some individuals with post-traumatic stress 

disorder (PTSD) may experience symptoms such as anxiety, depression, 

and insomnia that make maintaining employment very difficult. However, 

other individuals with PTSD may be able to mitigate these symptoms 

through medication or other therapies and perform adequately in a work 

environment. Some frameworks of disability also distinguish work 

participation from other consequences of injuries or diseases that have a 

broader impact on a person’s quality of life. Examples include difficulty 

interacting with family and friends and managing personal finances.

In response to a directive from the Secretary, VA initiated an effort in 

2009 to comprehensively revise all 15 body systems in its disability rating 

schedule.13

 

13 The law states that VA shall adjust the rating schedule from time to time based on 

experience. 38 U.S.C. § 1155. In addition, the Advisory Committee on Disability 

Compensation was established by law to provide advice to VA on the maintenance and 

periodic readjustment of the rating schedule. 38 U.S.C. § 546.

This comprehensive revision will update the two major 

components of the rating schedule: (1) the medical criteria, and (2) 

earnings loss information. In 1989, VA took steps to conduct a 

comprehensive revision of the medical criteria, but it did not complete 

VA Has Begun to 

Update Its Disability 

Criteria, but Faces 

Delays and Lacks 

Complete Planning in 

Key Areas

VA Has Begun a 

Comprehensive Update of 

Its Disability Criteria with 

Medical and Earnings 

Information
 

Page 8 GAO-12-846 VA Disability Compensation 

revisions for all body systems.14 Since then, VA has updated portions of 

its medical criteria primarily in response to congressional or stakeholder 

requests. (See app. II for more information about previous updates to the 

rating schedule.) According to VA, while the agency has conducted 

economic earnings loss studies, it has never adjusted the rating schedule 

based on the findings from these studies.15 According to VA, the purpose 

of the current initiative to update the medical and earnings loss 

information is to ensure the rating schedule is as accurate and 

modernized as possible to meet the needs of veterans in the 21st 

century.16

VA is using a multiphase process to comprehensively revise the medical 

and earnings information for each body system. This process is led by 

VBA—which hired six full-time medical officers to lead the revisions—in 

consultation with the Veterans Health Administration. Phase 1 involves a 

2-day public forum to solicit updated medical information from various 

stakeholders, and the process ends with the publication of revisions as 

final rules in the Federal Register, as shown in figure 2.

 

14 GAO, SSA and VA Disability Programs: Re-Examination of Disability Criteria Needed to 

Help Ensure Program Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002). Although 

VA initiated a medical update of its rating schedule in 1989, in 2002, we found that the 

updates generally took more than 5 years to complete for each body system. VA also did 

not complete revisions for all body systems, including the musculoskeletal system. This 

body system is the most common impairment category among all veterans receiving 

disability compensation by the end of fiscal year 2011. 

15 Earnings loss studies include VA’s Economic Validation of the Rating Schedule 

(ECVARS) published in the late 1960s; CNA’s Final Report for the Veterans’ Disability 

Benefits Commission: Compensation, Survey Results, and Selected Topics published in 

2007; and Economic Systems Inc.’s A Study of Compensation Payments for ServiceConnected Disabilities, published in 2008.

16 VA documents also state that a goal of the rating schedule revisions is to improve the 

efficiency of the disability claims process.
 

Page 9 GAO-12-846 VA Disability Compensation 

Figure 2: VA’s Process for Revising the Disability Compensation Rating Schedule

To conduct the medical updates, the workgroups evaluate all impairments 

in the current rating schedule and make recommendations to add or 

remove impairments, update medical and diagnostic terminology, and 

clarify impairments that cannot be easily identified. For example, as part 

of the current updates, VA workgroups proposed adding a new body 

system, “rheumatic diseases.” See table 1 for examples of changes being 

considered to existing body systems. In addition to specific updates and 

clarifications, the medical workgroups consider broader concepts such as 

how VA measures pain for the purposes of evaluating claims.
 

Page 10 GAO-12-846 VA Disability Compensation 

Table 1: Examples of Medical Changes to VA’s Rating Schedule Being Considered 

during the Current Update

Body system Medical change being considered

Digestive/nutritional 

disorders

Add new criteria for liver transplants

Update criteria for malnutrition and Celiac disease

Dental and oral 

conditions

Revise criteria for hard and soft tissue impairments

Skin Use color photographs in the evaluations of dermatological 

disorders

Source: GAO analysis of VA presentations on rating schedule updates.

In recognition of medical advances and current research on disability, VA 

is considering revising its criteria to reflect a more modern view of 

disability that gives greater consideration to a veteran’s ability to function 

with a service-connected disability.17 According to VA officials, a common 

theme emerging from the workgroups is the need to shift from the current 

symptom-based rating criteria to one that incorporates a veteran’s ability 

to function in the workplace. Subject-matter experts involved in the 

workgroups have suggested that, while symptoms determine diagnosis, 

the best indicator of impairment in earnings is the translation of symptoms

into functional impairment.18

 

17 This view is consistent with the ICF framework. As noted earlier, the ICF focuses on 

ability to function despite a medical impairment, including taking into account the impact of 

environmental factors, such as products and technology, public attitudes, and support 

services. 

To develop the indicators of functional 

impairment, VA conducted research and determined that four functional 

domains directly impact one’s ability to secure and maintain gainful 

employment. These include interacting with others, developing and 

18 In July 2012, VA officials told us that the agency is moving forward with revisions to the 

mental health body system that incorporate measures of functional impairment. For the 

other body system revisions, VA is also considering changes that give greater 

consideration to a veteran’s ability to function.
 

Page 11 GAO-12-846 VA Disability Compensation 

maintaining a routine or schedule, managing workload demands, and 

completing tasks that require mental skills.19

While VA is considering a number of different elements to update its 

medical criteria, it is giving only limited consideration to the role that 

supports—such as assistive technology and medical interventions—can 

play in enhancing a veteran’s earning capacity. In 2002, we reported that 

VA’s program was not designed to factor in the potential benefits of 

treatment, corrective devices, and assistive technology when evaluating a 

veteran’s service-connected disability.20 Assistive devices and other 

supports can play a critical role in a veteran’s capacity for work, according 

to the ICF framework. VA officials told us that, while they plan to consider 

how medical advances have decreased the severity and duration of some 

conditions, they do not plan to change the way assistive technology and 

medical interventions are considered when making individual disability 

determinations for a number of reasons.21 Specifically, according to VA 

officials, including the effects of assistive technology in evaluations of 

disabilities would overlook the severity of the disability itself and focus on 

the individualized adaptation to an assistive device, and the statute for 

VA’s disability compensation program is based on the average reduction 

in earning capacity across a group of individuals with a similar physical or 

mental impairment.22

Concurrent with the medical updates, VA also plans to obtain updated 

information on the average earnings loss associated with serviceconnected disabilities. VA officials stated that conducting earnings loss 

 

19 During recent updates to its medical criteria, SSA has also taken steps to include an 

assessment of an individual’s functional abilities. For example, as part of SSA’s 

comprehensive revisions to the immune system criteria, the agency included several 

functional measures, such as completing tasks in a timely manner despite deficiencies in 

concentration or persistence. See GAO, Modernizing SSA Disability Programs: Progress 

Made, but Key Efforts Warrant More Management Focus, GAO-12-420 (Washington, 

D.C.: June 19, 2012).

20 GAO-02-597. 

21 Section two of this report provides further details on VA’s consideration of assistive 

technology and medical interventions. 

22 Medical interventions and assistive devices are currently incorporated into the rating 

schedule for some medical diagnoses, according to VA officials. For example, prosthetic 

implants are rated within the anatomical locations and degree of residual effects of a 

prosthesis.
 

Page 12 GAO-12-846 VA Disability Compensation 

analyses are necessary to make knowledge-based adjustments to the 

rating schedule, a practice consistent with recommendations from expert 

panels and our prior work.23

• For the first three body systems—the mental health, hemic/lymphatic, 

and endocrine systems—VA plans to use the results from a 2008 

earnings loss report to inform any adjustments to the level of 

compensation associated with these various impairments.

An important aspect of the earnings updates 

are validation studies to confirm the findings of the earnings loss analyses 

and to verify the accuracy of proposed changes to the rating schedule. 

The validation studies will be conducted through separate contracts. 

Specifically, VA plans to update all 15 body systems as follows:

24

• For the remaining 12 body systems, VA plans to contract with external 

organizations to conduct earnings loss studies and validation studies. 

However, VA’s first contracted earnings study with a university for the 

musculoskeletal system is pending termination as of August 2012, 

according to VA.

For each earnings loss study, the contractor will identify the average 

lifetime earnings loss incurred by veterans with specific serviceconnected disabilities. To do this, the studies will compare the earnings 

levels of veterans with various service-connected disabilities to veterans 

without a disability as well as with the nonveteran population. Contractors 

will identify differences between veterans’ average earnings losses and 

VA disability compensation levels (i.e., the extent that veterans are being 

over- and undercompensated) and suggest improvements to the current 

system.

 

23 In 1997, we reported that there are generally accepted and widely used approaches to 

statistically estimate the effect of specific service-connected conditions on veterans’ 

average earnings. See GAO, VA Disability Compensation: Disability Ratings May Not 

Reflect Veterans’ Economic Losses, GAO/HEHS-97-9 (Washington, D.C.: Jan. 7, 1997). 

In addition, in more recent reports, the Institute of Medicine and CNA recommended that 

VA routinely assess the impact of impairments on earnings.

24 VA will use data from the 2008 Economic Systems Inc. report because the report’s 

findings reflect the findings of other independent studies related to the mental health 

diagnoses and do not require further validation. In addition, the relatively noncomplex 

nature of the hemic/lymphatic and endocrine body systems combined with the minimal 

findings in the 2008 Economic Systems Inc. report require no additional independent data, 

according to VA’s project management plan.
 

Page 13 GAO-12-846 VA Disability Compensation 

VA has experienced delays in revising its disability rating schedule. 

Specifically, VA planned to publish final rules in the Federal Register 

(phase 5) for the first three body systems by June 2011. VA has not, 

however, met this goal. As of July 2012, VA has completed public forums 

for all 15 body systems (phase 1) and has working drafts of revisions for 

nine body systems (phase 3). However, VA has not issued any proposed 

or final rules (phases 4 and 5). Moreover, as of July 2012, VA was more 

than a year behind in completing the first earnings loss study for the 

musculoskeletal body system and has yet to complete studies for the 

remaining eleven body systems. According to VA officials, they now 

expect to issue proposed rules for all body systems by 2016, but they 

have moved the original project completion date from 2016 to an 

unspecified future date.

VA officials noted various reasons for the delays, including a lengthy 

drafting and review process for the potential medical revisions. VA 

officials told us that giving greater consideration to functional impairment 

represents a significant change to VA’s current disability criteria. As a 

result, VA workgroups and staff have taken longer to draft and review 

revisions than originally planned. Furthermore, VA took additional steps to 

solicit comments from stakeholders about these changes. For example, 

VA held a rating schedule status summit in June 2012 to publically share 

the draft revisions for nine body systems before the publication of

proposed rules in the Federal Register in an effort to promote 

transparency and solicit comments.

VA also is experiencing delays because it has had difficulty obtaining the 

data it needs to study earnings loss. Specifically, to conduct these 

studies, VA needs earnings data from the Social Security Administration 

(SSA) and the Internal Revenue Service (IRS), among other data 

sources, as well as VA data on veterans with service-connected 

disabilities. VA officials stated that the coordination between the various 

federal agencies took much longer than expected, in part, because 

federal law generally prohibits the release of certain individual 

information.

25

 

25 See 26 U.S.C. § 6103. Early in the update project, VA sought wage data on individual 

veterans from SSA and IRS. However, VA now plans to use aggregate earnings data like 

prior earnings loss studies. For example, to conduct their analyses in 2008, Economic

Systems Inc. reported that SSA released only aggregate earnings information on groups

of at least five veterans. The Veterans Disability Benefits Commission also cited this 

challenge. 

VA officials also stated that VBA contractors must work 

VA’s Revision Process 

Faces Delays and 

Additional Hurdles
 

Page 14 GAO-12-846 VA Disability Compensation 

very closely with SSA to process, analyze, and transmit earnings data. As 

of July 2012, VA had not obtained the aggregate data from SSA or the 

IRS needed to conduct the first earnings loss study. In addition, VA 

officials described hurdles obtaining internal agency data in a timely way. 

For example, VBA has experienced challenges coordinating with another 

VA office to obtain data needed to evaluate veterans’ earnings losses. 

VBA recently received this data 12 months after first requesting it. To 

address this hurdle and streamline the process, VBA is implementing a 

system that will allow VBA staff to more independently access and 

analyze internal data. However, as of July 2012, VBA had not fully 

implemented this new system.

In addition to delays in obtaining data, VA faces other hurdles related to 

the earnings loss studies. For example, VA currently relies on external 

organizations that produce studies one body system at a time. Experts we 

interviewed, including members of VA’s Advisory Committee on Disability 

Compensation, said this process is inefficient and may not best facilitate 

the agency’s goal to measure earnings loss on an ongoing basis. As one 

expert noted, to contract with an external organization, VA must complete 

market research and evaluate and select a contractor, among other tasks. 

Once a contractor is selected, they must then perform a number of startup tasks, including applying for security clearances and authorization to 

use VA data, reviewing the methodology of previous earnings studies, 

and identifying and gathering needed data from various federal agencies 

to create a study group of veterans with service-connected disabilities 

and a comparison group. To avoid repeating these tasks for each 

contract, several experts we interviewed suggested that VA should build 

its internal research capacity to more seamlessly conduct these studies. 

For example, VA could develop more in-house resources for conducting 

these types of analyses or establish long-term partnerships with research 

organizations. VA has explored methods to build their research capacity, 

but it has yet to adopt an approach for doing so.

According to some experts we interviewed, even after the earnings loss 

studies are completed, VA’s revision initiative may face an additional 

hurdle: gaining acceptance from a diverse group of stakeholders. Various 

experts and veteran groups have raised concerns about the changes 
 

Page 15 GAO-12-846 VA Disability Compensation 

being considered.26 Some experts and veteran groups we interviewed 

raised concerns about incorporating measures of functional impairment 

into the rating schedule. They stated that assessing a veteran’s function 

may result in a more prolonged disability claims process and questioned 

VA’s ability to successfully implement new functional criteria. In addition, 

one veteran group raised concerns that the earnings loss studies may not 

adequately capture the complex nature of a veteran’s impaired earning 

capacity. For example, measuring veterans’ average lifetime earnings 

losses due to a service-connected injury or illness—the aim of the current 

studies—may not capture lost opportunities to pursue a more lucrative or 

fulfilling career. At the same time, several experts did not agree with the 

methodology of the current earnings loss studies.27 Other experts said 

that these studies are a good way to measure average earnings loss. In 

addition, several veteran group representatives told us that the rating 

schedule in its present form generally represents an equitable method for 

determining disability compensation.

To guide the revision initiative, VA developed a project management plan 

and operating plan that contain many elements of sound planning but lack 

complete and updated information in key areas.28 In our previous work, 

we have identified elements of sound planning that facilitate effective 

project management. Sound planning practices include identifying and 

documenting specific activities needed to achieve project goals. They 

also include documenting when work activities will occur, how long they 

will take, and how they are related to one another.29

 

26 Under federal law, adjustments to the rating schedule generally cannot result in a 

reduction of a veteran’s disability rating. 38 U.S.C. § 1155. Thus, if a recommended 

update would result in a decrease in rating levels and senior VA officials approve the 

change, veterans already in the system would not see a decrease in their compensation. 

Increases, if warranted, are allowable.

 VA’s project plans 

27 Two experts we interviewed said that measuring earnings loss one body system at a 

time may not accurately capture the impact of multiple impairments on veterans’ earnings. 

28 VA’s project management plan is designed to document the organizational, 

developmental, and supporting processes that will result in the successful revision of the 

rating schedule. VA also developed an operating plan to consider the entire program 

lifecycle—initiating, planning, executing, monitoring and controlling, and closing.

29 In addition, it is important that agencies establish policies, procedures, and mechanisms 

that enforce management’s directives and clearly document activities, particularly with 

ongoing, long-term projects. See GAO, Internal Control: Standards for Internal Control in 

the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

VA’s Project Planning 

Reflects a Number of 

Sound Practices but Lacks 

Key Information
 

Page 16 GAO-12-846 VA Disability Compensation 

include key elements of sound planning, such as clearly stating the 

purpose and strategy, including the goals and objectives, of the revision 

project. However, VA has not taken several key steps that may be critical 

to completing and maintaining an updated rating schedule, such as 

planning for earnings loss and validation studies, developing a strategy 

for implementing revisions, and adopting a formal policy for regular 

updates in the future (see table 2). Regarding an implementation strategy, 

for example, if revisions to the mental health rating criteria resulted in 

upward adjustments of the ratings, VA would re-rate those veterans with 

mental health disabilities, according to VA officials. As noted previously, 

the earnings study being used by VA to update the mental health rating 

criteria showed the veterans with those conditions are likely 

undercompensated. As of the end of fiscal year 2011, 878,417 or 6.7 

percent of those disabilities for which veterans received benefits were 

mental health conditions. Any effort to re-rate those cases likely 

represents a significant workload increase. Some experts we interviewed 

recommended that VA immediately develop a written strategy for 

implementing these revisions to help ensure that veterans do not 

experience any negative service-delivery consequences, such as 

increased wait times for disability benefits. 
 

Page 17 GAO-12-846 VA Disability Compensation 

Table 2: Key Steps Missing from VA’s Project Planning

Information in key 

areas Steps not taken Why is this important?

Earnings loss updates VA does not have a complete plan—containing specific 

activities and time frames—for conducting earnings loss 

studies for all body systems in the rating schedule.

VA’s project plans are missing details and updated time 

frames associated with a number of critical steps, such 

as finalizing contracts with research organizations.

VA project plans are also missing descriptions of the 

activities and time frames for conducting validation 

studies.

VA officials stated that conducting earnings loss 

analyses are necessary to make knowledgebased adjustments to the rating schedule, a 

practice consistent with recommendations from 

expert panels and our prior work.

VA officials said that validation studies are an 

integral part of the earnings update process.

Implementation strategy VA has not developed a written strategy for addressing 

the full range of effects that revisions to the rating 

schedule may have on agency operations, which may 

include increased staff and resource needs, 

reconfiguring staff duties, and developing a plan for 

training and developing new procedures.

VA has not yet assessed possible effects of revisions on 

agency operations or documented activities that need to 

occur, according to VA officials.

VA should be proactively assessing potential 

impacts of any revisions and developing plans 

for implementation, according to some experts 

we interviewed. VA officials told us they 

recognize the need to do this.

If the current revisions resulted in higher 

disability ratings for conditions affecting a 

significant number of veterans, this could 

negatively impact VA’s claims processing 

workload. VA’s disability claims system already 

has a substantial backlog, and changes to the 

rating schedule may pose an administrative 

burden.

It is important that agencies clearly document 

activities, particularly to help manage change to 

cope with shifting environments and evolving 

demands and priorities.

a

Regular updates 

b

Although VA intends to continue comprehensive 

revisions beyond the completion of the current project, it 

lacks a formal policy, procedure, or mechanism 

committing itself to doing so.

VA has not established a policy—through regulation, 

policy manual, or other means—for the continuation of 

the revision project in the future.

c

VA officials told us they intend to use lessons learned 

from the current process to guide future efforts, but are 

not currently documenting these to inform a formal 

policy.

Many experts and veteran groups we 

interviewed said it is important that VA continue 

to update the rating schedule in the future.

d

Several commission reports, including the 

Institute of Medicine’s, recommended that VA 

update the rating schedule at regular intervals 

to serve veterans with disabilities more 

effectively and equitably.

It is important that agencies establish policies, 

procedures, and mechanisms that enforce 

management’s directives.

Source: GAO analysis of VA documents, interviews with VA officials and experts, and GAO guidance and prior work related to internal 

controls.

a

In 2010, we found that VA’s disability claims and appeals processing had improved in some aspects 

and worsened in others. In recent years, the number of claims completed annually by VA has 

increased but not by enough to keep pace with the increasing number of compensation claims 

received, resulting in more claims awaiting a decision. GAO, Veterans’ Disability Benefits: Further 

Evaluation of Ongoing Initiatives Could Help Identify Effective Approaches for Improving Claims 

Processing, GAO-10-213 (Washington, D.C.: Jan. 29, 2010). 

b

See GAO, GAO/AIMD-00-21.3.1. 
 

Page 18 GAO-12-846 VA Disability Compensation 

c

In 2002, we found that VA did not have a well-defined plan to conduct future medical criteria 

updates. At the time, VA provided us with a statement acknowledging the need to re-review the 

medical criteria in the future, but had neither a time frame nor strategy for completing the task. See 

GAO, SSA and VA Disability Programs: Re-Examination of Disability Criteria Needed to Help Ensure 

Program Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002). 

d

In July 2012, VA stated that they are taking steps to update their current project management plan to 

include future reviews of each body system every 5 years. 

Three key approaches for modernizing VA’s disability programs—as 

recommended by disability commissions and others—present 

opportunities and challenges. These approaches are (1) providing quality 

of life payments, (2) providing integrated vocational services with 

transitional cash assistance, and (3) factoring the effects of assistive 

technology and medical interventions systematically into rating decisions. 

See figure 3 for an overview of what VA does now and what these 

approaches would do. Those we interviewed said to varying degrees that 

the approaches could provide more equitable compensation and that 

approaches two and three could better help veterans integrate into the 

workforce and society. At the same time, however, experts and veteran 

groups identified administrative, political feasibility, and cost challenges, 

among others. Nevertheless, some experts said that combining the 

approaches could create a more integrated, comprehensive benefits 

package and could also mitigate challenges associated with any one 

approach. When considering such large-scale policy changes, we have 

previously identified strategies for policymakers to use to develop specific 

policy proposals. In translating broad policy approaches or concepts—

including the three outlined below—into specific proposals, policymakers 

will need to define key design features (e.g., eligibility requirements and 

the type and timing of payments). For a summary of key questions raised 

during our discussions with experts and veteran groups about the 

possible design of the approaches, see appendix III.

When assessing these policy approaches, one must keep in mind that 

VA’s disability compensation program is a statutory scheme with 

parameters set forth in federal law. This statutory scheme restricts the 

extent to which VA can reform its disability program, as there are many 

actions VA cannot take without Congress amending the relevant laws. 

For example, under 38 U.S.C. § 1155, VA is required, as far as is 

practicable, to base its disability ratings on the average impairments of 

earning capacity resulting from various types of injuries. This provision 

essentially prohibits VA from basing disability ratings (or a portion of the 

ratings) on a loss of quality of life, thus making the first policy approach 

discussed below legally impossible without a statutory change.

Selected Policy 

Approaches for 

Updating VA’s Benefit 

Structure Present 

Both Opportunities 

and Challenges
 

Page 19 GAO-12-846 VA Disability Compensation 

Figure 3: Overview of What VA Does Now and the Modified Approaches

Note: Regarding the integrated vocational services with transitional cash assistance approach, the 

Dole-Shalala Commission stated that the goal of VA’s disability program should be to return veterans 

to normal activities, if feasible, as quickly as possible. The commission recommended integrating 

vocational rehabilitation with transition payments into the VA disability compensation system. 

According to VA officials, Congress and VA have made efforts to address issues related to the timing 

and incentives for rehabilitation for wounded servicemembers. For example, according to VA, the 

National Defense Authorization Act for Fiscal Year 2008 established Vocational Rehabilitation and 

Employment eligibility for severely injured active duty individuals before a VA rating is issued. In 

addition, VA is initiating the Integrated Disability Evaluation System (IDES) that provides Vocational 

Rehabilitation and Employment outreach and transition services to active duty servicemembers at 48 

IDES installations. This outreach includes a mandatory meeting with a Vocational Rehabilitation and 

Employment counselor. 
 

Page 20 GAO-12-846 VA Disability Compensation 

According to several of the experts and veteran groups we interviewed, 

quality of life payments could better align VA’s compensation program 

with more current thinking about disability while simultaneously providing 

greater equity to VA’s disability compensation program.30

 

30 Several commission reports addressed the definition of quality of life. Economic 

Systems Inc. defined quality of life for veterans as an overall sense of well-being based on 

physical and psychological health, social relationships, and economic factors. See

Economic Systems Inc., A Study of Compensation Payments for Service-Connected 

Disabilities (Falls Church, VA: September 2008). The Institute of Medicine defined quality 

of life as including the cultural, psychological, physical, interpersonal, spiritual, financial, 

political, temporal, and philosophical dimensions of a person’s life. See Institute of 

Medicine, A 21st Century System for Evaluating Veterans for Disability Benefits

(Washington, D.C.: 2007).

In general, 

experts and veteran groups we interviewed said that a payment for quality 

of life held more opportunity than the other proposed approaches to 

update the nation’s veteran benefits program. However, they also cited 

challenges relating to its implementation and fiscal sustainability, as 

shown in figure 4.

Selected Policy 

Approaches Hold 

Opportunities, but Would 

Present Challenges

Quality of Life Payments
 

Page 21 GAO-12-846 VA Disability Compensation 

Figure 4: Experts’ and Veteran Groups’ Views on Potential Opportunities and Challenges of Providing a Quality of Life 

Payment

In terms of opportunities, a payment for veterans’ loss in quality of life 

might help align the program with more current thinking about disability by 

recognizing the impact of illness or injury beyond loss in earnings. Along 

these lines, many experts and veteran groups said that loss in earnings 

and quality of life should be explicitly integrated into the compensation 

program to recognize the overall impact of disability on veterans. For 

example, veterans who lose a hand may be able to work in today’s 

economy, but the injury could prevent them from tossing a football with 

their children or engaging in other life activities. Most of those we 

interviewed agreed with commissions and experts who concluded that a 

modern program should compensate veterans with disabilities for losses 

beyond their earnings, even though the current program is designed to 

compensate based on economic losses.

According to several experts, VA has an opportunity to develop a 

systematic approach to more equitably award quality of life 

compensation. According to these experts, VA currently provides implicit 

quality of life benefits to some veterans with service-connected disabilities 
 

Page 22 GAO-12-846 VA Disability Compensation 

but not others.31 For example, several experts argued that some veterans 

may receive compensation for impairments in the rating schedule that 

have little, if any, associated earnings loss.32 Several experts added that, 

in considering a quality of life payment, VA needs to determine the 

degree to which the rating schedule already includes consideration of the 

effect of a disability on quality of life. Two experts we interviewed said that 

benefits currently provided to veterans outside of the rating schedule, 

such as enhanced monthly compensation payments, could be viewed as 

compensation for loss in quality of life.33

While this approach presents opportunities, it could prove challenging 

because it would require a change in law and could create a more 

complex system, according to several of those we interviewed. Congress, 

they noted, would likely need to revise the statute to expand the purpose

of disability compensation to include quality of life. And if the program’s 

purpose is expanded, VA would need to determine how to make fair, 

timely, and accurate payments but not exacerbate the existing claims 

backlog, according to several experts and veteran groups we interviewed.

Specifically, adding a quality of life assessment might require additional 

time to assess claims and create another avenue for appeals. Further, VA 

would need to address how to adjust compensation for any changes in a 

veteran’s quality of life loss over time, according to VA.

Another implementation challenge is how to measure quality of life—a 

subjective judgment—and assign a dollar value to different degrees of 

these losses. Two veterans with the same service-connected illness or 

injury may experience pain, social difficulties, and other intangible 

impacts that, depending on their circumstances and characteristics, may 

result in different degrees of losses in quality of life. According to several 

 

31 The Institute of Medicine noted that that Congress and VA have added conditions in the 

rating schedule that have little if any effect on ability to work. However, the expansions of 

conditions have been ad hoc and may not address the full range or extent of impacts of 

injuries on quality of life. See Institute of Medicine, A 21st Century System for Evaluating 

Veterans for Disability Benefits (Washington, D.C.: 2007).

32 For example, in the rating schedule, a higher evaluation is assigned for an amputation 

of an extremity that prevents the use of a prosthetic device as compared to an evaluation 

of an extremity at the same location, which allows for a prosthetic device. According to VA 

officials, this higher evaluation could be argued as a quality of life benefit.

33 Enhanced compensation is provided to veterans with disabilities who are housebound 

or who are in need of aid and attendance from others.
 

Page 23 GAO-12-846 VA Disability Compensation 

experts and veteran groups, a number of tools exist to make the process 

more objective. For example, CNA surveyed veterans with and without 

service-connected disabilities to show differences in quality of life loss 

between the two groups. While losses in quality of life can be measured, 

a process to attach a dollar value will need to be developed and refined, 

according to several experts and veteran groups, because none of the 

existing tools are intended to determine levels of compensation. Also, 

several experts suggested that VA could use benchmarks, such as the 

compensation provided by other countries’ programs.

Finally, many experts added that quality of life payments would increase 

program costs. In the short term, VA would likely need additional funds to 

cover the costs of researching and developing assessment tools and for 

training staff on new procedures. In the long term, according to experts 

and veteran groups, veterans may receive increased levels of 

compensation, which could also affect the program’s long-term cost. Any 

increased costs would need to be considered in the context of our 

nation’s current and future fiscal challenges. However, several experts 

noted that quality of life payments could offset any reduced compensation 

for service-connected conditions that have no associated earnings loss, 

subsequently resulting in total compensation remaining level.

Several of the experts we interviewed stated that a key goal for VA should 

be helping veterans with disabilities return to the workforce. Moreover, 

they identified this approach as an opportunity to provide early assistance 

to help veterans achieve their full work potential. However, experts and 

veteran groups suggested that moving forward with this approach would 

present challenges, such as gaining consensus for the approach and its 

potential cost, as shown in figure 5.

Providing Integrated Vocational 

Services with Transitional Cash 

Assistance
 

Page 24 GAO-12-846 VA Disability Compensation 

Figure 5: Experts’ and Veteran Groups’ Views on Potential Opportunities and Challenges of Providing Integrated Vocational 

Services along with Transitional Cash Assistance

According to several experts we interviewed, the goal of VA’s disability 

program should be to build a veteran’s capacity to work rather than 

mainly providing income support or cash benefits.34 These experts said 

that participation in work leads to better integration into civilian life and 

other intangible benefits like greater satisfaction and self-esteem. In 

addition, several experts suggested that, if vocational assistance 

increases a veteran’s earning capacity, VA should consider that when 

determining losses in earnings. That is, veterans should be rated after 

they reach maximum medical improvement.35

 

34 In 2004, the VA Vocational Rehabilitation and Employment Task Force reached a 

similar conclusion, stating that VA had reduced its focus on the ultimate mission of 

returning veterans with service-connected disabilities to the workforce and stressed the 

preeminent role of vocational rehabilitation in achieving that goal. See VA Vocational 

Rehabilitation and Employment Task Force, Report to the Secretary of Veterans Affairs: 

The Vocational Rehabilitation and Employment Program for the 21st Century Veteran

(Washington, D.C.: March 2004).

However, several cautioned 

that VA should maintain protections for veterans with service-connected 

disabilities who may not succeed at work even after extensive assistance.

35 A 2008 study commissioned by VA noted that a useful distinction is to separate the 

temporary disability period from the permanent disability period. The temporary disability 

period begins when the veteran is first affected by a service-connected disability and ends 

on the date when the veteran reaches maximum medical improvement. See Economic 

Systems Inc., A Study of Compensation Payments for Service-Connected Disabilities

(Falls Church, VA: September 2008). 
 

Page 25 GAO-12-846 VA Disability Compensation 

According to many experts we interviewed, this policy approach could 

enhance veterans’ capacity to work by providing earlier vocational 

assistance after the onset of disability rather than after a veteran has 

been rated for disability compensation. Experts we interviewed cited 

several benefits of early vocational assistance. For example, they said 

that it improves the likelihood that veterans with service-connected 

disabilities will obtain and retain employment after injury.

At the same time, achieving consensus for this approach may be difficult. 

Several of those we interviewed suggested that the approach does not 

provide much additional incentive to participate in rehabilitation. For 

example, veterans already have access to employment and training 

services, and many veterans work with or without these services.36 While 

veteran groups we spoke with said they support rehabilitation services, 

they would not favor this policy shift if it means that a veteran’s disability 

payment may be reduced because of increased vocational capacity. They 

maintained, in fact, that a veteran whose work potential was increased or 

who completed the program should receive the same level of 

compensation he or she would have received had he or she not received 

services. Officials from two veteran groups also said that these services 

should not be mandatory. In addition, while this approach would target 

veterans of working age, several of the experts’ and veteran groups’ 

views differed on whether the approach should target veterans at any 

point after military discharge and/or veterans shortly after discharge, 

particularly those with no or little civilian work history.37

 

36 VA and others offer a range of employment and training programs. For example, as 

previously discussed, VA’s Vocational Rehabilitation and Employment program provides 

rehabilitative services as well as training toward degrees and certifications. VA, the 

Department of Labor, and the Department of Defense also offer transitioning 

servicemembers with short-term vocational assistance through the Disabled Transition 

Assistance Program and Transition Assistance Program (TAP). TAP, for example, 

provides 3-day employment workshops at military installations to servicemembers up to 6 

months before they separate from the military (e.g., job searches, career decision making, 

current occupational and labor market conditions, etc.). In addition, veterans are given 

priority for Department of Labor-funded federal workforce employment and training 

programs through a streamlined delivery system, called the one-stop system, required by 

federal law.

37 The basic period of eligibility for Vocational Rehabilitation and Employment program 

services is generally the 12 years after the date of separation from active military service. 

The basic period of eligibility may be extended in certain circumstances, such as if it is 

determined that a veteran is in need of services to overcome a serious employment 

handicap.
 

Page 26 GAO-12-846 VA Disability Compensation 

Several veteran groups and experts also expressed concerns about VA’s 

capacity to administer this approach. For example, they said that VA does 

not have sufficient numbers of staff capable of assessing a veteran’s 

vocational capacity or providing work supports through its current 

vocational program. Moreover, others noted that this reform could divert 

resources from current VA management initiatives, such as efforts to 

expedite the delivery of VA benefits to servicemembers and veterans.

This approach also would likely have cost implications. In the short term, 

VA would need to estimate costs, pilot the approach while running VA’s 

current programs, and then implement the program, according to several 

of those we interviewed. Others said that there could also be long-term 

cost implications if this approach required resources in addition to those 

being expended under the current program. According to two of those we 

interviewed, the ultimate costs would depend on who is eligible for the 

services. For example, limiting eligibility to veterans shortly after 

discharge would be less costly than making services available to veterans 

at any point in time after discharge.

According to experts we interviewed, systematically incorporating the 

effects of assistive technology and medical interventions into rating 

decisions affords an opportunity to more accurately assess veterans’ 

impaired earning capacity, including the loss of functioning in the 

workplace. Assistive technology and medical interventions include, for 

example, a prosthetic device for walking, a device to assist with a vision 

impairment, and medications for pain. However, they suggested that 

implementing this approach would present challenges, such as its 

acceptability among veterans and other stakeholders, as shown in figure 

6.

Systematically Incorporate 

Assistive Technology and 

Medical Interventions in Rating 

Decisions
 

Page 27 GAO-12-846 VA Disability Compensation 

Figure 6: Experts’ and Veteran Groups’ Views on Potential Opportunities and Challenges of Incorporating Assistive 

Technology and Medical Interventions into Disability Rating Decisions

According to several experts we interviewed, factoring in these advances 

may result in more accurate assessments of veterans’ average earnings 

losses. Advances in assistive technology and modern medicine can help 

veterans with service-connected disabilities increase their earnings by 

helping them more fully integrate into the workplace. While assistive 

devices and medications can play a critical role in an individual’s ability to 

function, VA does not always consider them in its assessment of 

disability. According to several experts we talked with, accurately 

measuring veterans’ ability to function with personal and environmental 

supports may result in less compensation for certain veterans. However, 

a couple of experts said that this may allow VA to target resources to 

those with the greatest earnings losses.

While many of those we interviewed acknowledged the benefits of 

assistive technology and medicine, many of those we interviewed and VA 

officials expressed concerns with factoring assistive technology into 

disability rating decisions, including the following:

• The effectiveness of assistive technology and medication is difficult to 

demonstrate, or research is incomplete.

• The interventions affect individuals differently and may not work for 

everyone. Also, the effectiveness of assistive technology varies over 

the lifetime of an individual—for example, as a person ages and 
 

Page 28 GAO-12-846 VA Disability Compensation 

experiences changes in musculature, their ability to compensate using 

a prosthetic decreases. Others described assistive technology that did 

not perform as expected.

• The incorporation of assistive technology into rating decisions could 

introduce a disincentive for veterans to use such tools and supports.

Many experts and veteran groups discussed challenges similar to those 

raised with the other policy approaches, such as potentially needing to 

administer new assessments and the associated upfront costs. In 

particular, individually assessing veterans would add complexity to a 

ratings process that already faces challenges with making timely and 

accurate rating decisions. For example, VA may need to determine 

whether veterans are making good faith efforts to use interventions when 

making disability assessments, according to two of those we interviewed. 

In addition, to assess a veteran’s ability to function while using these 

interventions, VA would need to hire staff with necessary skills. To 

address some of these challenges, several experts said that VA’s 

planned studies to measure earnings loss would automatically factor in 

the average economic benefits of assistive technology use without 

needing a new assessment. However, one expert cautioned that this 

approach might not be as precise as an individual assessment.

According to several of those we interviewed, policymakers could create 

a comprehensive benefits package for individual veterans by integrating 

compensation with vocational training and treatment. Several experts 

outlined a sequence for implementing the approaches to improve the 

timing of benefits and provide seamless support to veterans. Initially, VA 

would provide financial support during a temporary medical and 

vocational rehabilitation period to maximize a veteran’s recovery. This 

temporary period would be followed by long-term compensation for any 

reduced earnings loss. In conjunction with these payments, veterans 

would receive an explicit quality of life payment.

Several of the experts we talked to described potential benefits of 

combining approaches. Specifically, VA may be able to

Experts and Veteran Groups 

Discussed Combining Selected 

Policy Approaches
 

Page 29 GAO-12-846 VA Disability Compensation 

• provide more equitable compensation and services to veterans by 

examining the interactive effects of existing and new approaches,38

• clarify the distinction between compensation for earnings loss and the 

other impacts of living with a disability, and/or

• mitigate potential adverse effects associated with any single 

approach. For example, if payments for average earnings loss were 

reduced because the impact of assistive devices was incorporated, 

adding an offsetting quality of life payment could ensure that future 

veterans get sufficient compensation.

Several experts and veteran groups, however, did not necessarily support 

combining the three approaches. Finally, if a comprehensive program 

was targeted to new enrollees, VA may need to administer dual 

programs.

Although we and others have identified a need to reexamine federal 

disability programs to meet the challenges and expectations of the 21st 

Century, VA officials said they are not currently considering the three 

policy approaches discussed in this report. VA officials said they have, 

however, kept abreast of all studies and recommendations arising from 

the various commissions and reports. Further, they said they have taken 

into consideration many of the recommendations made in these studies. 

For example, VA is implementing recommendations to comprehensively 

revise the rating schedule. Moreover, in 2008 VA contracted with a 

private consultant to study disability compensation, loss in quality of life, 

transition benefits for rehabilitation, assistive technology, and other areas 

raised by the disability commissions and our work. While their report 

proposed many specific policy options to address these issues, it stated

that the Congress and VA needed to decide on the key goals of the 

approaches.39

 

38 Our previous work suggests some weaknesses in communication and coordination 

among various VA disability programs. Overall, we have noted that federal programs 

should be structured in a manner that collectively allows them to provide coherent and 

seamless support to people with disabilities. For example, see GAO, Federal Disability 

Assistance: Wide Array of Programs Needs to be Examined in Light of 21st Century 

Challenges,

Doing so would help further specify how to design and 

implement a new approach. According to VA officials, they currently are 

not acting on these approaches because they fall outside the VA’s 

GAO-05-626 (Washington, D.C.: June 2, 2005). 

39 Economic Systems Inc., A Study of Compensation Payments for Service-Connected 

Disabilities (Falls Church, VA: September 2008). 

Key Strategies to Consider 

in Updating VA’s Disability 

Program for the 21st 

Century
 

Page 30 GAO-12-846 VA Disability Compensation 

statutory requirement to compensate veterans for average earnings loss. 

VA officials said they will further consider new policy approaches at the 

request of the Congress.

As our high-risk series notes, however, continued attention by the Office 

of Management and Budget (OMB) and concerted efforts by agencies, as 

well as sustained congressional attention, are critical to fully resolve highrisk areas, which include federal disability programs.40 Should the 

Congress choose to pursue fundamental changes to the disability 

compensation program, with assistance from VA, we have identified key 

reexamination strategies that should be considered,41

• building support within the Congress, the Administration, the agency, 

and the broader public to justify a reexamination of the program.

such as

• identifying the most important goals for the program and developing 

specific policy proposals to meet those goals.

• choosing reexamination methods to guide the process and help 

evaluate potential changes.42

The nation has a long-standing commitment to compensate veterans for 

injuries or illnesses incurred during their military service. After decades of 

recurring criticism that VA’s rating schedule is out of date, VA is now 

demonstrating a commitment to comprehensive revision of its disability 

criteria and consideration of a more modern approach to determining 

disability. VA faces challenges, however, that may impede its ability to 

complete and implement the revisions. Specifically, without sufficient 

capacity to conduct research on earnings loss, VA may be unable to 

make fact-based and timely revisions to its rating schedule. Moreover, 

incomplete plans for conducting earnings loss and related studies could 

jeopardize project outcomes and result in a rating schedule that remains, 

 

40 GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February 2011).

41 Several overarching components are necessary for the reexamination strategies, 

including (1) sustained leadership to champion program changes; (2) broad-based input 

from a range of stakeholders; (3) empirically based research to assess alternative 

approaches; and (4) clear and transparent processes for engaging the broader public in 

the debate over recommended changes. See GAO, 21st Century Challenges: 

Reexamining the Base of the Federal Government, GAO-05-325SP (Washington, D.C.: 

February 2005).

42 Ibid.

Conclusions
 

Page 31 GAO-12-846 VA Disability Compensation 

in the end, outdated. In addition, without a written strategy for 

implementing the revisions, VA might not be adequately positioned to 

mitigate possible increases to the disability claims backlogs. This could 

increase veterans’ wait times for disability benefits, which runs counter to 

one of the desired outcomes of the revision goal of improving claims 

efficiency. Finally, in the absence of sustained, ongoing revisions and 

adjustments, VA’s rating schedule is increasingly at risk of not reflecting 

advances in medicine and changes in the labor market. Without a formal 

policy for conducting regular updates in the future, VA may experience 

extended gaps in its efforts to revise the rating schedule. Consequently, 

some future veterans may not receive the appropriate level of 

compensation. We recognize that adjusting the rating schedule and 

making changes to veterans’ disability benefits can be contentious. 

Stakeholders have different views about how to define disability, measure 

the loss of earning capacity, and even the purpose of veterans’ disability 

compensation. Nevertheless, without a rating schedule that reflects 

advances in medicine and changes in the labor market, VA may continue 

to overcompensate some veterans while undercompensating others.

As underscored by the policy approaches recommended by previous 

commissions and other experts, current thinking on disability has 

outpaced consideration of updates to VA’s disability compensation 

benefits structure. Changes in our understanding of disability and the 

economy create a compelling case for the Congress, VA, and 

stakeholders to reexamine the goals of VA’s disability compensation 

programs and how to best serve veterans with service-connected 

disabilities. This examination would raise important, but difficult, 

questions: Should veterans with disabilities be compensated for more 

than loss of earning capacity? Should the discussion of disability benefits 

structure be intertwined with efforts to build a veteran’s capacity to work 

and provide work supports? Should some compensation be considered 

temporary? Should any proposed disability compensation changes apply 

to existing and/or future veterans? VA officials are giving little attention to 

these larger issues, and the trade-offs involved. However, a system that 

maximizes equity, balances fiscal pressures, and ultimately serves 

individual veterans effectively will benefit from deliberations informed by 

more modern views about disability. VA has signaled that, absent further 

direction from the Congress, it will focus its efforts within its current 

framework. Without a broader perspective, VA may miss the opportunity 

to be an agent in its own transformation to the benefit of those it serves.
 

Page 32 GAO-12-846 VA Disability Compensation 

To the extent that Congress wishes to consider various options to 

modernize VA’s disability benefits program, Congress could direct the VA 

to conduct focused studies on these or other policy approaches and, if 

necessary, propose relevant legislation for congressional consideration. 

For example, providing explicit quality of life payments, or some other 

combination of policy changes, to veterans with service-connected 

disabilities may help to modernize VA’s program, but such changes need 

further study to determine their feasibility and fiscal impact.

Based on our review, we are making three recommendations.

1. To ensure that decisions about veteran disability compensation 

benefits are informed by current earnings loss information, we 

recommend that the Secretary of Veterans Affairs

• take necessary steps to increase research capacity to determine the 

impact of impairments on earnings in a timely manner and

• develop a more complete plan for conducting earnings loss and 

validation studies for the entire rating schedule.

2. To ensure that VA is positioned to seamlessly implement revisions to 

the rating schedule, we recommend that the Secretary of Veterans 

Affairs develop a written implementation strategy. This strategy could 

include steps to mitigate the possible effects of rating schedule 

revisions on agency operations, including an increase in the number 

of claims received.

3. To ensure the rating schedule revisions are sustained beyond the 

current update project, we recommend that the Secretary of Veterans 

Affairs establish a formal policy, procedure, or mechanism to revise 

the rating schedule—with updated medical and earnings loss 

information—at regular intervals.

We provided a draft of this report to VA for review and comment. VA 

concurred with our recommendations and indicated it will take steps to 

address them by a target completion date of August 31, 2013. Its written 

comments are reproduced in appendix IV. VA also provided technical 

comments that we incorporated, as appropriate.

VA agreed with our recommendation to take necessary steps to increase 

its research capacity to determine the impact of impairments on earnings 

in a timely manner and develop a more complete plan for conducting 

earnings loss and validation studies for the entire rating schedule. VA 

Matter for 

Congressional 

Consideration

Recommendations for 

Executive Action

Agency Comments

and Our Evaluation
 

Page 33 GAO-12-846 VA Disability Compensation 

stated that it is exploring the option of engaging in research partnerships 

to conduct more than one earnings loss study at a time. After exploring 

this and any other appropriate options, we encourage VA to take all 

necessary actions to ensure it conducts earnings loss studies in a timely 

manner, now and in the future. In addition, VA stated that it will expand its 

current project management plan to include milestones, deliverables, and 

the designation of a sub-program manager to manage the earnings loss 

and validation studies. 

VA also agreed with our recommendation to develop a written 

implementation strategy that could include steps to mitigate the possible 

effects of rating schedule revisions on agency operations, including an 

increase in the number of claims received. VA stated that, going forward, 

it will develop a formal plan that establishes cross-functional teams 

representing all business processes and procedural functions involved in 

the rating schedule changes. VA acknowledged that now is the time to 

standardize a process for implementing the rating schedule revisions. 

Finally, VA agreed with our recommendation to establish a formal policy, 

procedure, or mechanism to revise the rating schedule with updated 

medical and earnings loss information at regular intervals. According to 

VA, it is currently formulating a plan that evaluates the rating schedule 

revision process, which will allow VA’s Compensation Service to establish 

a formal, continuous revision policy that is efficient, traceable, and 

transparent to produce a rating schedule that reflects up-to-date medical 

information. 

We are sending copies of this report to the appropriate congressional 

committees; the Secretary of Veterans Affairs; and other interested 

parties. In addition, the report is available at no charge on the GAO 

website at http://www.gao.gov. 
 

Page 34 GAO-12-846 VA Disability Compensation 

If you or your staff have any questions about this report, please contact 

me 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 report. GAO staff who made key contributions to this 

report are listed in appendix V.

Daniel Bertoni

Director, Education, Workforce,

and Income Security Issues
 

Page 35 GAO-12-846 VA Disability Compensation 

List of Committees

The Honorable Patty Murray

Chairman

The Honorable Richard Burr

Ranking Member

Committee on Veterans’ Affairs

United States Senate

The Honorable Darrell Issa

Chairman

Committee on Oversight and Government Reform

House of Representatives

The Honorable Jeff Miller

Chairman

The Honorable Bob Filner

Ranking Member

Committee on Veterans’ Affairs

House of Representatives
Appendix I: Scope and Methodology

Page 36 GAO-12-846 VA Disability Compensation 

In this report, we (1) identified the progress that the Department of

Veterans Affairs (VA) has made in revising the criteria used to determine 

eligibility for veterans’ disability benefits with updated medical and 

economic information, and (2) discussed the opportunities and challenges 

associated with selected policy approaches that disability commissions 

and others have raised for updating VA’s disability benefits structure. 

Overall, we reviewed prior GAO, disability commission, and committee 

reports; relevant federal laws and regulations; program documentation, 

including policies, procedures, strategic goals, and supporting project 

plans; and congressional testimonies from disability groups and 

commissions. We also interviewed VA officials, key stakeholders, 

disability experts, and representatives of veteran groups.

To address our first reporting objective, we reviewed VA’s strategic goals, 

plans, policies, Federal Register notices, and other relevant program 

documentation and interviewed VA officials. We also reviewed VA’s 

Advisory Committee on Disability Compensation reports, 

recommendations, and meeting minutes and presentations on the rating 

schedule updates. In addition, we interviewed several Advisory 

Committee on Disability Compensation members and reviewed reports 

and interviewed experts from relevant organizations—such as the 

Institute of Medicine—and veteran disability commissions—such as the 

Veterans Disability Benefits Commission. We also evaluated VA’s project 

planning documents using established elements for sound planning.

To determine the extent to which VA’s project plans to revise its disability 

criteria included elements of sound planning, we relied on project 

management practices in A Guide to Project Management Body of 

Knowledge, our guidance on internal controls, and the Government 

Performance and Results Act of 1993 (GPRA).1

 

1 Pub. L. No. 103-62, 107 Stat. 285. 

We also considered 

recent GAO work that evaluated federal planning efforts. Through these 

efforts, we identified six elements for sound planning. Although there is no 

established set of requirements for all project plans, we determined that 

these elements of sound planning help decision makers effectively shape 

policies, programs, priorities, and resource allocations intended to help 

achieve desired results and ensure accountability. While these elements

may be organized in a variety of ways and use different terms, for the 

Appendix I: Scope and Methodology

Elements of Sound 

Planning
Appendix I: Scope and Methodology

Page 37 GAO-12-846 VA Disability Compensation 

purposes of this report, we grouped them into six categories, from plan 

conception through implementation, that represent sufficiently broad, 

higher-level criteria that may apply to a wide variety of project plans and 

priorities. (See table 3.)

Table 3: Six Elements of Sound Planning Used to Evaluate VA’s Efforts 

Problem, goals, and methodology In establishing the problem, goals, and methodology, the agency identifies the problem to be

addressed and the causes of the problem, as well as the strategy, including goal and 

objectives, and the methodology for achieving these goals and objectives.

Activities and timelines An agency should identify and document the specific activities that must be performed to 

complete the project. The agency should develop a schedule that defines, among other 

things, when work activities will occur, how long they will take, and how they are related to 

one another, as well as interim milestones and checkpoints to gauge the completion of the 

project.

Resources The agency should identify the sources and types of resources or investments needed (e.g., 

budgetary, human capital, information technology, research and development, contracts) to 

complete project activities. If resource availability cannot be assured, the agency will need to 

establish alternate plans. The agency should develop a reliable estimate of the costs of these 

resources.

Coordination The agency should identify stakeholders—individuals and organizations that are involved in 

or may be affected by project activities—and ensure that they are included in developing and 

executing the project plan, allowing them to contribute appropriately. In addition to internal 

communications, management should ensure there are adequate means of communicating 

with, and obtaining information from, external stakeholders that may have a significant impact 

on the agency achieving its goals.

Risk Risk assessment generally includes estimating the significance of risks from both external 

and internal sources, assessing the likelihood of its occurrence, and deciding how to manage 

the risk.

Performance evaluation The agency should describe how goals will be achieved and establish performance indicators 

to be used in measuring or assessing the relevant outputs, service levels, and outcomes of 

each program activity, and identify a process to monitor and report on progress.

Source: GAO analysis based on the Program Management Institute Information, the Government Performance and Results Act of 

1993, and selected GAO reports.

To address our second reporting objective, we identified policy 

approaches that could update VA’s disability benefits structure by 

conducting a literature search for relevant reports by disability 

commissions, task forces, committees, and GAO. We selected 

approaches from the following reports:

• Advisory Committee on Disability Compensation, Biennial Report 

dated 27, July 2010; Interim Report dated 7 July, 2009;

• CNA, Final Report for the Veterans’ Disability Benefits Commission: 

Compensation, Survey Results, and Selected Topics (August 2007);

• Economic Systems Inc., A Study of Compensation Payments for 

Service-Connected Disabilities (September 2008);

Selection and Expert 

Assessment of Policy 

Approaches
Appendix I: Scope and Methodology

Page 38 GAO-12-846 VA Disability Compensation 

• GAO, SSA and VA Disability Programs: Re-Examination of Disability 

Criteria Needed to Help Ensure Program Integrity, GAO-02-597

(August 2002);

• Institute of Medicine, Committee on Medical Evaluation of Veterans 

for Disability Compensation, A 21st Century System for Evaluating 

Veterans for Disability Benefits and PTSD Compensation and Military 

Service (2007);

• President’s Commission on Care for America’s Returning Wounded 

Warriors (Dole-Shalala Commission), Serve, Support, Simplify: Report 

of the President’s Commission on Care for America’s Returning 

Wounded Warriors (July 2007); and

• Veterans’ Disability Benefits Commission, Honoring the Call to Duty: 

Veterans’ Disability Benefits in the 21st Century (October 2007).

These sources offered numerous recommendations intended to improve 

VA’s disability benefits structure. We assumed that these high-level 

commissions and review groups had identified many of the major policy 

approaches to update VA’s disability benefits structure. We limited 

selection of policy approaches to those that address more broadly 

focused updates to VA’s current disability benefits structure, such as 

changes to the type, timing, or conditions of disability benefits (e.g., levels 

of benefits and changes in legislative authorities) and those that align with 

modern concepts of disability. For example, policy approaches of relevant 

scope would be those that facilitate the participation of people with 

disabilities in the workforce and society by evaluating and addressing 

environmental factors that can hinder employment and other activities. 

For this review, we excluded recommendations aimed at VA’s 

organizational structure, administrative processes, and management 

operations (e.g., developing and using performance metrics and 

improving processes for communicating with veterans).

Applying these criteria, we identified three relevant policy approaches: (1) 

providing quality of life payments, (2) providing integrated vocational 

services with transitional cash assistance, and (3) systematically factoring 

assistive technology and medical interventions into rating decisions. To 

identify other policy approaches, we asked 16 experts and veteran groups 

what other policy approaches, if any, might improve VA’s disability 

benefits structure. Of those we interviewed, most said that the policy 

approaches we selected were the relevant approaches for our research 

purposes.

To obtain information from experts and veteran groups on the 

opportunities and challenges associated with each approach, we 

Selection of Experts
Appendix I: Scope and Methodology

Page 39 GAO-12-846 VA Disability Compensation 

developed a list of semi-structured interview questions. We conducted 

several pretests of the interview questions to validate its structure and 

ensure the clarity and logical sequence of the questions asked. During 

each semi-structured interview, we obtained information from experts and 

veteran groups on several topics, including their general assessments of 

the fiscal sustainability, political and administrative feasibility, and 

effectiveness of each approach. In addition, we obtained experts’ and 

veteran groups’ views on design features—such as eligibility criteria and 

the type and duration of payments—that could be considered part of each 

policy approach. We also obtained experts’ and veteran groups’ 

perspectives on the need, if any, to combine two or more policy 

approaches. Finally, we analyzed the information obtained from experts 

and veteran groups to identify underlying opportunities and challenges 

associated with each policy approach.

We selected a nongeneralizable sample of experts who had participated 

in disability commissions, research, or a congressional hearing on the 

topic, or who serve in an organization that represents veterans with 

disabilities. In addition, we selected a group of experts to help ensure a 

range of viewpoints. Although many points of view were represented by 

our experts, they may not represent the complete range of opinions on 

the policy approaches. Table 4 identifies the experts and veteran groups 

we interviewed, including their respective title and professional affiliation.

Table 4: Experts and Veteran Groups Interviewed by GAO 

Name and title Current affiliation

Carl Blake, National Legislative 

Director 

Paralyzed Veterans of America

Lonnie R. Bristow, Former President American Medical Association

John F. Burton, Jr., Professor 

Emeritus 

Rutgers University and Cornell University

Edward Eckenhoff, Founder and 

President Emeritus

National Rehabilitation Hospital Network

Bob Epley, Independent Consultant VA Advisory Committee on Disability 

Compensation

Howard H. Goldman, Professor of 

Psychiatry 

University of Maryland, School of Medicine 

Barry A. Jesinoski, Executive Director Disabled American Veterans

George Kettner, President Economic Systems Inc. 

Michael McGeary, Senior Program 

Officer

Institute of Medicine

Lori Perkio, Assistant Director The American Legion
Appendix I: Scope and Methodology

Page 40 GAO-12-846 VA Disability Compensation 

Name and title Current affiliation

Sally Satel, Resident Scholar American Enterprise Institute

David Stapleton, Senior Fellow Mathematica Policy Research 

Tom Tarantino, Deputy Policy 

Director

Iraq and Afghanistan Veterans of America

Rick Weidman, Executive Director for 

Policy and Government Affairs

Vietnam Veterans of America

Ray Wilburn, Senior Analyst CNA 

Gail R. Wilensky, Senior Fellow Project HOPE 

Source: GAO.
Appendix II: Comprehensive Revisions and 

Other Key Updates to the VA Schedule for 

Rating Disabilities (VASRD) 

Page 41 GAO-12-846 VA Disability Compensation 

Body system

Most recent 

comprehensive body 

system update

(Final rule source)

Most recent 

noncomprehensive revision to 

diagnostic codes (since last 

comprehensive update)

(Final rule source) Nature of noncomprehensive change 

Musculoskeletal 1945a 2005

(70 Fed. Reg. 75,399, Dec. 20, 

2005)

Reference to conditions to be rated 

analogously to diagnostic code for 

atrophic rheumatoid arthritis was revised 

Muscle Injuries Section 1997

(Major Revision - 62 Fed. 

Reg. 30,235, June 3, 1997)

Not applicable (n/a) n/a

Digestive 1945 2001

(66 Fed. Reg. 29,486, May 31, 

2001)

Revision of diagnostic codes for residuals 

of injury and cirrhosis of the liver and 

revision to weight loss regulation

Neurological Conditions 

and Convulsive 

Disorders 

1961 2011

(76 Fed. Reg. 78,824, Dec. 20, 

2011)

Revised rating criteria for amyotrophic 

lateral sclerosis

Dental and Oral 

Conditions

1994

(59 Fed. Reg. 2530, Jan. 18, 

1994)

1997

(62 Fed. Reg. 8201, Feb. 24, 

1997)

Relocated portions pertaining to 

noncompensable conditions to Part 3 

Genitourinary 1994

(59 Fed. Reg. 2523, Jan. 18, 

1994)

1994

(59 Fed. Reg. 46,339, Sept. 8, 

1994)

Note regarding entitlement to Special 

Monthly Compensation (SMC) for 

deformity of the penis with loss of erectile 

power, testis atrophy and removal 

Gynecological 

Conditions/

Disorders of the Breast

1995

(60 Fed. Reg. 19,851, April 

21, 1995)

2002

(67 Fed. Reg. 6874, Feb. 14, 

2002; corrected by 67 Fed. Reg. 

37,695, May 30, 2002)

Entitlement to SMC for loss of a breast 

Hemic/Lymphatic 1995

(60 Fed. Reg. 49,227, Sept. 

22, 1995)

2012

(77 Fed. Reg. 6467, Feb. 8, 

2012)

Diagnostic code for AL amyloidosis 

(primary amyloidosis) was added 

Mental Health 1996

(71 Fed. Reg. 52,695, Oct. 8, 

1996)

2009

(74 Fed. Reg. 18,467, Apr. 23, 

2009)

Post-traumatic stress disorder 

nomenclature change 

Endocrine 1996

(61 Fed. Reg. 20,446, May 

7, 1996)

n/a n/a

Infectious Diseases, 

Immune Disorders and 

Nutritional Deficiencies

1996

(61 Fed. Reg. 39,875, July 

31, 1996)

n/a n/a

Appendix II: Comprehensive Revisions and 

Other Key Updates to the VA Schedule for 

Rating Disabilities (VASRD)
Appendix II: Comprehensive Revisions and 

Other Key Updates to the VA Schedule for 

Rating Disabilities (VASRD) 

Page 42 GAO-12-846 VA Disability Compensation 

Body system

Most recent 

comprehensive body 

system update

(Final rule source)

Most recent 

noncomprehensive revision to 

diagnostic codes (since last 

comprehensive update)

(Final rule source) Nature of noncomprehensive change 

Respiratory System 1996

(61 Fed. Reg. 46,720, Sept. 

5, 1996)

2006

(71 Fed. Reg. 52,457, Sept. 6, 

2006)

(71 Fed. Reg. 28,586, May 17, 

2006)

Substantive revisions to the evaluation 

criteria for certain respiratory and 

cardiovascular conditions, hypertension 

with heart disease; amended provisions 

pertaining to tuberculosis for those entitled 

on August 19, 1968

Cardiovascular 1997

(62 Fed. Reg. 65,207, Dec. 

11, 1997)

2006

(71 Fed. Reg. 52,460, Sept. 6, 

2006)

Substantive revisions to the evaluation 

criteria for respiratory and cardiovascular 

conditions, hypertension with heart 

disease

Impairment of Auditory 

Acuity 

1999

(64 Fed. Reg. 25,210, May 

11, 1999)

2003

(68 Fed. Reg. 25,822, May 14, 

2003)

Amendment on the evaluation of tinnitus

Skin 2002

(67 Fed. Reg. 49,590, July 

31, 2002; corrected by 67 

Fed. Reg. 58,448, Sept. 16, 

2002)

2008

(73 Fed. Reg. 54,708, Sept. 23, 

2008; corrected by 77 Fed. Reg. 

2910, Jan. 20, 2012)

Modified evaluation of scars

Organs of the Special 

Sense

2008

(73 Fed. Reg. 66,543, Nov. 

10, 2008)

n/a n/a

Source: GAO analysis of VA information and Institute of Medicine report, verified by VA officials.

a

 According to the Institute of Medicine report, the “Spine” section was comprehensively updated in 

2003 (68 Fed. Reg. 51,454, Aug. 27, 2003). 
Appendix III: Key Questions for Designing New 

Disability Compensation Programs

Page 43 GAO-12-846 VA Disability Compensation 

Transforming broad policy approaches into specific programs requires 

that design features be defined. In reference to VA’s disability program for 

veterans, the features relate to the form, amount, and eligibility for the 

payments and services. The following summarizes key questions raised 

during our discussions with experts and veteran groups about the 

possible design of programs for providing quality of life payments, 

providing integrated vocational services with transitional cash assistance, 

and factoring the effects of assistive technology and medical interventions 

systematically into rating decisions.

Quality of life payments

• Should existing veterans be eligible for quality of life payments or just 

new enrollees?

• Should veterans have the opportunity to opt in or out of a new 

program that provides quality of life payments?

• Should quality of life payments supplement earnings loss payments 

for veterans with low, high, or all disability ratings levels?

• Should disability compensation be based primarily on quality of life, 

with earnings loss payments being made only when actual earnings 

loss occurs?

• How frequently should quality of life payments be provided to veterans 

(e.g., one-time lump sum, monthly annuity)?

• What system should be used to determine payment levels (e.g., 

individual assessments or an average loss in quality of life across a 

group of veterans)?

• Should quality of life be inferred from impairment or measured 

directly?

• For veterans receiving quality of life payments and earnings loss 

payments, should the earnings loss payments end at retirement age?

Integrating vocational rehabilitation services with disability compensation

• Should all veterans be eligible for the program or just veterans shortly 

after discharge?

• Should the program be available for veterans at all disability rating 

levels or for veterans with lower or higher degrees of disability?

• Should the program focus on veterans with certain kinds of 

impairments?

• Should the payments be provided while the veteran participates in 

vocational rehabilitation, education, or training programs (i.e., for a 

longer rehabilitative period)? Or, should the payments also be 

provided on a short-term basis to support a veteran’s return to the 

community?

Appendix III: Key Questions for Designing 

New Disability Compensation Programs
Appendix III: Key Questions for Designing New 

Disability Compensation Programs

Page 44 GAO-12-846 VA Disability Compensation 

• Should the loss of earnings be periodically reassessed following a 

temporary rehabilitation period?

Assistive technology and medical interventions

• Should VA assess the effects of assistive technology and medical 

interventions during the disability examination process?

• Should an assessment of the effects of assistive technology and 

medical interventions only be considered for future 

enrollees/veterans?

• Should VA incorporate the anticipated effects of assistive technology 

and medical interventions only when a veteran actually uses them?

• Should VA incorporate the estimated effects of assistive technology 

and medical interventions?

• Should VA limit the incorporation of the effects of assistive technology 

and medical interventions to those with empirically-based 

demonstrations of their effectiveness?
Appendix IV: Comments from the Department 

of Veterans Affairs 

Page 45 GAO-12-846 VA Disability Compensation 

Appendix IV: Comments from the 

Department of Veterans Affairs
Appendix IV: Comments from the Department 

of Veterans Affairs 

Page 46 GAO-12-846 VA Disability Compensation 
Appendix IV: Comments from the Department 

of Veterans Affairs 

Page 47 GAO-12-846 VA Disability Compensation 
Appendix V: GAO Contact and Staff 

Acknowledgments

Page 48 GAO-12-846 VA Disability Compensation 

Daniel Bertoni, (202) 512-7215 or bertonid@gao.gov. 

In addition to the contact named above, individuals making key 

contributions to this report were Brett Fallavollita, Assistant Director;

Alison Grantham; Mark Ward; and James Whitcomb. In addition, key 

support was provided by James Bennett, Tim Carr, David Chrisinger, Alex 

Galuten, Kristen Jones, Jean McSween, Patricia Owens, and Almeta 

Spencer. 

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(131115)
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