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Veterans' Benefits: Better Assessments Needed to Guide Claims Processing
Improvements (Letter Report, 01/13/95, GAO/HEHS-95-25).

Slow claims processing and poor customer service has long been
recognized as serious problems for the Department of Veterans Affairs
(VA). As early as 1990, VA began encouraging its regional offices to
improve their claims processing system, but processing times and
backlogs have increased rather than decreased. At the end of fiscal year
1994, nearly 500,000 claims awaited a VA decision. About 65,000 of these
were initial disability compensation claims. On average during fiscal
year 1994, veterans waited more than seven months for their initial
disability claims to be decided and, if approved, payments to begin;
some waited much longer. This report discusses VA's current plans to
change regional office claims processing and assesses VA's plans to
determine the effectiveness of those changes.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-95-25
     TITLE:  Veterans' Benefits: Better Assessments Needed to Guide 
             Claims Processing Improvements
      DATE:  01/13/95
   SUBJECT:  Veterans benefits
             Claims processing
             Veterans disability compensation
             Productivity
             Operations analysis
             Information processing operations
             Claims settlement
             Accounting procedures
             Work measurement standards
             Cost effectiveness analysis

             
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Cover
================================================================ COVER

Report to the Ranking Minority Member, Committee on Veterans'
Affairs,
U.S.  Senate

January 1995

VETERANS' BENEFITS - BETTER
ASSESSMENTS NEEDED TO GUIDE CLAIMS
PROCESSING IMPROVEMENTS

GAO/HEHS-95-25

Veterans' Claims Processing

Abbreviations
=============================================================== ABBREV

  AMIE - automated medical information exchange
  OMB - Office of Management and Budget
  SSA - Social Security Administration
  VA - Department of Veterans Affairs
  VBA - Veterans Benefits Administration
  VHA - Veterans Health Administration
  VARO - VA Regional Office

Letter
=============================================================== LETTER

B-255638

January 13, 1995

The Honorable John D.  Rockefeller IV
Ranking Minority Member
Committee on Veterans' Affairs
United States Senate

Dear Senator Rockefeller: 

Slow claims processing and poor service to customers have long been
recognized as critical concerns for the Department of Veterans
Affairs (VA).  As early as 1990, VA began encouraging regional
offices (VARO) to develop and implement improvements in their claims
processing systems; but instead of decreasing, processing times and
backlogs have increased.  At the end of fiscal year 1994, almost
500,000 claims were waiting for a VA decision.  About 65,000 of these
claims were initial disability compensation claims.  On average
during fiscal year 1994, veterans waited over 7 months for their
initial disability claims to be decided and, if approved, payments to
begin; many waited much longer. 

At your request, we examined VA's efforts to address these problems. 
Specifically, we obtained information about VA's current plans to
implement changes in VARO claims processing structures and procedures
and assessed VA's plans to determine the effectiveness of those
changes. 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

VA is taking steps it hopes will ensure all that VAROs implement
changes that will improve claims processing timeliness and overall
service to veterans.  A key effort focuses on implementing the
recommendations of a Blue Ribbon Panel established to identify ways
to improve processing timeliness in disability claims, generally
considered the most difficult and time consuming in VA.  To guide
VAROs in implementing those recommendations, VA is developing several
model claims processing structures designed to, among other things,
reorganize staff so that fewer resources are devoted to clerical
functions and more to making decisions about veterans' claims.  The
models will also serve as a framework for implementing other
improvement initiatives such as improving management of claims
folders to reduce the number of lost files and using evidence
received over the telephone or by facsimile machine.  VA is also
developing regulations and training materials to facilitate and
encourage VAROs to adopt initiatives.  VAROs are being allowed
significant flexibility to implement initiatives they believe are
appropriate for their individual circumstances. 

VA has not developed adequate evaluation plans, however, to allow it
to judge the relative merit of various initiatives or the
circumstances under which they work best.  Without such information,
VA will not have a sound basis for determining what additional
changes, if any, should be made and guiding future improvement
efforts.  This is of special concern given that (1) information
available to date about the effectiveness of individual initiatives
is inconclusive and (2) some VAROs we visited were reluctant to make,
or faced difficulties in making, certain changes.  Additionally, VA
does not have a formal mechanism to disseminate information about the
content and effectiveness of regional initiatives to allow other
VAROs to fully understand changes they could make and learn from
other VAROs' experience. 

   BACKGROUND
------------------------------------------------------------ Letter :2

VA's Veterans Benefits Administration (VBA) is responsible for
administering benefit programs, such as disability compensation and
pension.  Veterans and their families can apply for benefits at any
of VA's 58 VAROs.  Significant differences exist among VAROs; for
example, as of September 30, 1994, their claims processing staffs
ranged in size from 11 to 219.  Likewise, performance varies
considerably; for example, the time needed to process initial
disability claims ranged from 86 to 367 days in 1994.  VA's ability
to process claims for benefits in a timely way has been a major topic
of concern for many years.\1

In 1990, VA took steps to fundamentally change the way services are
provided to veterans.  A key element of those changes is
modernization of VBA's automated information systems, projected to be
completed in 1998.  Progress on this effort has been slow, and we
have raised significant concerns about the adequacy of planning and
implementation.\2 In response to our initial work, VA agreed with the
Director of the Office of Management and Budget (OMB) to, among other
things, increase project oversight, establish outcome-oriented
performance measures and document the system's effect on service, and
update the project's economic analysis.  The OMB agreement included
timeliness goals to be met by the end of fiscal year 1998--as well as
interim goals--for selected types of claims, including initial
disability compensation and initial pension claims. 

In 1990 the Secretary of VA also asked all VAROs to identify and
implement innovative changes aimed at speeding up claims processing
and reducing the growing backlog.  In response, some VAROs undertook
major restructuring initiatives,\3 but most continued using the
traditional "assembly-line" approach to processing.  Under this
approach, each claim passes through several individuals, each of whom
performs a specific task.  One person enters the claim into the
computerized system and opens the claims file.  Another then
determines what information is needed and develops requests for that
information.  Another communicates with VA hospital staff if a
physical examination is needed.  These steps continue until an
"authorizer" approves the decision.  Often, files are centrally
located and are sent back and forth from the central files to various
claims processors many times before a claim is decided. 

The claims backlog and processing times did not decrease but grew
from 1990 to 1993.  The backlog of compensation and pension claims
grew from about 378,000 to about 528,000 during that period.  Table 1
shows that, during the same period, average processing time increased
for the four types of claims specifically included in VA's agreement
with OMB.\4

                Table 1

 Average Processing Days for Four Major
 Types of Initial Claims (Fiscal Years
             1990 and 1993)

--------------------
\1 See for example, Veterans' Benefits:  Improvements Needed in
Processing Disability Claims (GAO/HRD-89-24, June 22, 1989) and
Veterans' Benefits:  Lack of Timeliness, Poor Communication Cause
Customer Dissatisfaction (GAO/HEHS-94-179, Sept.  20, 1994). 

\2 Veterans' Benefits:  Acquisition of Information Resources for
Modernization Is Premature (GAO/IMTEC-93-6, Nov.  4, 1992) and
Veterans' Benefits:  Redirected Modernization Shows Promise
(GAO/AIMD-94-26, Dec.  9, 1993). 

\3 In this report an initiative is defined as any type of change that
VA makes to claims processing structures and procedures designed to
improve timeliness and service.  The goal of such changes could be to
reduce processing time, reduce backlog, increase productivity,
improve customer service, and so on. 

\4 The Secretary has agreed with the Director of OMB to meet stated
processing time goals for these four types of claims by the end of
fiscal year 1998. 

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