Veterans' Benefits: Improved Operational Controls and Management Data Would Enhance VBA's Disability Reevaluation Process
Published: 2007-12-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: To help ensure that veterans are properly compensated for disabilities, VA is required to perform disability reevaluations for specific disabilities. VA also performs reevaluations whenever it determines there is a need to verify either the continued existence or current severity of veterans' disabilities. VBA completed about 17,700 reevaluations in fiscal year 2005. GAO was asked to review the Veterans Benefits Administration's (VBA) disability reevaluation program. This report assesses (1) the operational controls VA uses to ensure the effectiveness of the disability reevaluation process and (2) the management information VA collects and uses to manage the disability reevaluation process. To conduct this study, GAO analyzed VBA data, reviewed federal regulations and VBA procedures, conducted site visits, and interviewed VBA officials.
section_title: What GAO Found
paragraphs: VBA's operational controls do not adequately ensure that staff schedule or conduct disability reevaluations as necessary; however, VBA is planning to improve some of the controls. VBA claims processing software does not automatically establish or prompt regional office staff to schedule a time - known as a diary date - to determine whether a disability reevaluation should proceed. Consequently, some cases that require a reevaluation may never receive it. After the diary date matures, staff perform a preliminary review of a veteran's claim file to determine if a more comprehensive reevaluation should be conducted. If staff determine during this review that a reevaluation is no longer needed, the reevaluation is cancelled. However, cancellations are not tracked or subject to quality assurance reviews to ensure adherence to program policies and procedures. VBA plans on improving some of its control mechanisms through its new claims management system, the Veterans Service Network (VETSNET), including developing the ability to track cancellations. However, VBA has no plans to include a prompt for scheduling reevaluation diary dates in VETSNET. VBA cannot effectively manage the disability reevaluation process because some of the data it collects are inconsistent and it does not systematically collect and analyze key management data. While VBA collects data on the amount of time regional offices take to conduct disability reevaluations, these data are not consistentbecause regional offices use different starting points for measuring timeliness. Also, VBA does not know the types of disabilities being reevaluated, the length of time before reevaluations are conducted, or the results of the reevaluations. As a result, VBA cannot ensure that it is effectively and appropriately using its resources.

section_title: Letter
paragraphs: In fiscal year 2006, the Department of Veterans Affairs (VA) paid about  $26.5 billion in cash benefits to approximately 2.7 million veterans to  compensate them for disabling medical conditions connected to injuries or  illnesses incurred or aggravated during active military service. To help  ensure that veterans are properly compensated for these service- connected disabilities, VA is required to perform disability reevaluations  for specific disabilities. VA also performs disability reevaluations  whenever it determines there is a need to verify either the continued  existence or current severity of veterans’ disabilities. In fiscal year 2005  the Veterans Benefits Administration (VBA) completed about 17,700  disability reevaluations. During this same time period, VBA completed  about 629,000 disability compensation claims.
At your request, we reviewed VBA’s disability reevaluation program.  Specifically, we assessed (1) the operational controls VA uses to ensure  the effectiveness of the disability reevaluation process and (2) the  management information VA collects and uses to manage the disability  reevaluation process. To develop the information for this report, we  analyzed VBA workload and timeliness data and reviewed federal  regulations on disability reevaluations, VBA’s written guidance and  training materials on reevaluations, and VBA’s procedures for conducting  reevaluations. We discussed the procedures for ensuring that  reevaluations are conducted and the information used to manage the  reevaluation program with headquarters and regional office officials and  observed control procedures at 5 of VA’s 57 regional offices. We selected  these five offices based on the number of reevaluations they completed,  the time it took to complete reevaluations, and geographic dispersion. For  more details on our scope and methodology, see appendix I. We  conducted our review from October 2006 through October 2007 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: Through its disability compensation program, VBA pays monthly benefits  to veterans for injuries or diseases incurred or aggravated while on active  military duty. VBA rates such disabilities by using its Schedule for Rating  Disabilities. For each type of disability, the Schedule assigns a percentage  rating that is intended to represent the average earning reduction a veteran  with that condition would experience in civilian occupations. Veterans are  assigned a single or combined (in cases of multiple disabilities) rating  ranging from 0 to 100 percent, in increments of 10 percent. Basic monthly  payments range from $115 for a 10 percent disability to $2,471 for a 100  percent disability. About 58 percent of veterans receiving disability  compensation have disabilities rated at 30 percent and lower; about 9  percent have disabilities rated at 100 percent. The most common  impairments for veterans who began receiving compensation in fiscal year  2005 were, in order, hearing impairments, diabetes, post-traumatic stress  disorder, back-related injuries, and other musculoskeletal conditions.
VA performs disability reevaluations for disabilities required by regulation  and whenever it determines that it is likely that a disability has improved,  or if evidence indicates there has been a material change in a disability or  that the current rating may be incorrect. Federal regulations generally  instruct VA to conduct reevaluations between 2 and 5 years after any  initial or subsequent VA examination, except for disabilities where another  time period is specifically mentioned in the regulations. The latter  generally require a reexamination 6 or 12 months after the discontinuance  of treatment or hospitalization.
The reevaluation process starts when a VBA Rating Veterans Service  Representative (RVSR) completes a disability compensation claim and  determines whether the veteran should be reevaluated at some time in the  future. RVSRs base this decision on a number of factors. The disability  reevaluation may be mandated by the Schedule for Rating Disabilities. For  example, a veteran with a 100 percent disability rating due to a heart valve  replacement is required to be reevaluated 6 months after discharge from  the hospital. Alternatively, the RVSR may determine that the severity of  the disability may change. For instance, medical evidence may suggest that  a veteran with limited range of motion will be continuing physical  rehabilitation and is expected to improve. To ensure that the disability is  reviewed in the future, the RVSR enters a diary date into VBA’s claims  processing system, which later generates a reminder that the disability  needs to be reviewed. When this reminder is generated, the veteran’s file is  retrieved and an RVSR performs a preliminary assessment of whether a  reevaluation should be conducted. If the RVSR determines that a  reevaluation is no longer needed, the reevaluation is cancelled. For  example, staff may cancel a reevaluation when a veteran dies or if the file  is already being reviewed by VBA following the veteran’s claim that his  disability has worsened. If the RVSR determines that a reevaluation of the  disability should be conducted, the RVSR can simply review the  information in the file or, if needed, collect supplemental medical  information which can include the results of a physical examination. Once  all of the information has been analyzed, an RVSR can make a decision to  increase, decrease, or continue the current rating. Figure 1 summarizes the  disability reevaluation process.
VBA maintains a quality assurance review program known as the  Systematic Technical Accuracy Review (STAR) program. VBA selects  random samples of each regional office’s disability compensation  decisions and assesses the regional office’s accuracy in processing and  deciding such cases. For each decision, the STAR quality review unit  reviews the documentation contained in the regional office’s claim file to  determine, among other things, whether the regional office complied with  the Veterans Claims Assistance Act duty-to-assist requirements for  obtaining relevant records, made correct service connection  determinations for each claimed condition, and made correct disability  rating evaluations for each condition. VBA has a fiscal year 2008  performance goal that 90 percent of compensation decisions contain no  errors that could affect decision outcomes; its long-term strategic goal is  98 percent. In addition to STAR, regional offices conduct their own local  quality assurance reviews. The guidance for these local quality assurance  reviews calls for reviewing a random sample of an average of five claims  for each RVSR, per month.
VA is currently projecting that it will fully implement a new processing and  benefits payment system—VETSNET, for their disability compensation  process in May 2008. VA anticipates that VETSNET will be faster, more  flexible, and have a higher capacity than VBA’s aging Benefits Delivery  Network (BDN). For the past 40 years, BDN has been used to process  compensation and pension benefits payments to veterans and their  dependents each month. However, this system is based on antiquated  software programs that have become increasingly difficult and costly to  maintain.
section_title: VBA’s Operational Controls Do Not Ensure That Disability Reevaluations Occur, but VBA Is Planning to Update Some of Its Processes and Procedures
paragraphs: VBA’s operational controls do not adequately ensure that staff schedule or  conduct disability reevaluations as necessary. VBA’s claims processing  software does not ensure that diary dates are established. To the extent  that staff do not enter diary dates, some cases that need reevaluations may  never be brought to the attention of claims processing staff. As a result,  some reevaluations may not be conducted. Staff can also cancel disability  reevaluations and VBA does not track or review cancelled reevaluations.  Thus, VBA does not have assurances that reevaluations are being  cancelled appropriately. Also, completed reevaluations are not likely to  receive quality assurance reviews. VBA plans on improving some of its  control mechanisms through its new claims management system,  VETSNET. However, VETSNET will not address all of the issues we found  regarding VBA’s operational controls.
subsections: section_title: Controls Do Not Ensure Staff Schedule or Conduct Disability Reevaluations
paragraphs: VBA operational controls do not ensure that cases that should be  reevaluated are scheduled for disability reevaluations. VA’s regulations  require VBA to schedule disability reevaluations either when VBA  determines that a veteran’s disability is likely to change or when mandated  by the Schedule for Rating Disabilities. For cases where VA determines  that a disability is likely to change, VBA staff must manually enter diary  dates into VBA’s claims processing system in order to ensure that a  reminder is generated. The diary date is the only VBA procedural trigger  that alerts regional offices that a claim needs to be reviewed. However,  claims processing staff can complete a rating decision on a disability claim  without entering a reevaluation diary date. To the extent that staff do not  enter a diary date, a case that needs to be reevaluated may never be  brought to the attention of claims processing staff. As a result, the case  will likely not be reevaluated. The VA Office of Inspector General has  found some instances where this has occurred. For example, during a  review at the Little Rock, Arkansas regional office, the VA IG found that  staff failed to enter required dates for 10 of 41 cases sampled at that office.
VBA’s electronic claims processing system also does not automatically set  up diary dates for all disabilities where a reevaluation is mandated by VA’s  Schedule for Rating Disabilities. According to VA, there are 31 disabilities  where reevaluations are required by the Schedule. VBA has automated  diary dates for 14 of these disabilities. As a result, staff must manually  enter diary dates into the system for the remaining 17 disabilities. VBA  does not currently have a plan for expanding its automated diary date  protocol to include all disabilities where reevaluations are mandatory.  VBA officials said that their first priority is to ensure VETSNET is  operational and their conversion plan is completed.
Once diary dates have been entered by RVSRs into the claims processing  system, the dates are transferred to VBA’s centralized data processing  center in Hines, Illinois. When the diary dates mature, the data processing  center prints and mails out paper notices to VBA’s regional offices alerting  them that reevaluations are needed. However, once the centralized data  processing center prints out these notifications, the diary dates are erased  from the centralized computer system. In addition, VBA does not track  which disability cases were identified for reevaluation. Since the notices  are single pieces of paper, they could be lost or misplaced. If this occurs,  these disability reevaluations would likely be delayed or not performed at  all. VBA is planning on improving its ability to track reevaluations.
According to VBA officials, VETSNET will eliminate the paper notification  of a matured diary date. Instead, once a disability reevaluation diary date  matures, VETSNET will automatically create an electronic record, which  can be tracked. Although VA plans on processing all disability  compensation claims using VETSNET by May 2008, VBA officials told us  that the automatically created electronic record would not be included.  These officials were unable to provide us with a timetable for when such a  control system would be rolled out.
section_title: Some Disability Reevaluations Not Tracked or Reviewed
paragraphs: Once the regional office receives the paper notice that a reevaluation is  due, staff perform a preliminary assessment of the veteran’s claim file to  determine if more comprehensive reevaluation should be conducted. If  staff determine during this preliminary assessment that a reevaluation is  no longer needed, they can cancel the reevaluation. Regional office staff  noted several reasons for canceling reevaluations, such as when a veteran  dies. Additionally, a reevaluation would be cancelled if the veteran  reopens their claim because the disability has worsened. However, VBA  does not track the number or reasons for cancellations. Also, cancelled  reevaluations are not subject to quality assurance reviews. VBA plans on  improving its ability to track cancellations using VETSNET. According to  VBA officials, when VETSNET is fully implemented for disability  compensation claims in May 2008, VBA will be able to track the number  and reasons for cancelled disability reevaluations.
While completed disability reevaluations are subject to quality assurance  review, very few are likely to be reviewed. Disability reevaluations  represent a small portion of the total disability claims workload that VBA  reviews for quality. For example, reevaluations represented about 2  percent of the total number of disability claims decisions completed in  fiscal year 2005. Since VBA randomly selects claims for review from the  total number of disability decisions, it is not likely that VBA will review  many reevaluations. Similarly, each regional office’s quality assurance  review would not likely select many reevaluation claims. Specifically, the  local quality assurance guidance calls for reviewing a random selection of  an average of five claims for each RVSR per month. Disability  reevaluations are part of the sample, but since they are a small portion of  the total caseload, they have a low likelihood of being selected. Some of  the regional office quality assurance review staff we spoke with reported  that in the course of a month, they may only see a handful of disability  reevaluation claims. Thus, VBA may not have a sufficient handle on the  accuracy and consistency of these reevaluations agencywide.
section_title: VBA Lacks Adequate Program Information to Effectively Manage the Disability Reevaluation Process
paragraphs: VBA cannot effectively manage the disability reevaluation process because  some of the data it collects are not consistent and it does not  systematically collect and analyze key management data. While VBA  collects data on the amount of time regional offices take to conduct  disability reevaluations, these data are not reliable. Also, VBA does not  know the number of reevaluation diary dates that mature in a year or the  types of disabilities being reevaluated, the length of time before  reevaluations are conducted, or if the reevaluation decisions result in an  increase, decrease, or no change in the severity of veterans’ disabilities.  VBA’s electronic system is unable to capture the entire amount of time it  takes to complete a disability reevaluation and VBA does not currently  collect and analyze outcome data.
subsections: section_title: Timeliness Data Are Inconsistent
paragraphs: VBA’s disability reevaluation timeliness data are inconsistent because  regional offices use different starting points for measuring how long it  takes to complete reevaluations. For example, staff at one regional office  told us they start measuring the length of time to complete disability  reevaluations from the date that VBA’s centralized data processing center  in Hines, Illinois, prints the paper notifications. Since the paper  notifications are mailed from Hines to the regional office, several days can  pass before the regional office receives the paper notifications. As a result,  the actual time it takes this office to complete disability reevaluations  would be overcounted. Other regional offices we visited indicated that  measuring timeliness is not started until the date that staff review the  claims file and determine that a reevaluation should proceed. Staff at one  regional office we visited stated that it takes about 10 days for the claim to  reach the desk of staff who perform the review. Since this review may not  always take place as soon as the office receives the notification, the actual  time it takes to complete disability reevaluations for these offices would  be undercounted.
section_title: VBA Does Not Collect Key Disability Reevaluation Management Data
paragraphs: VBA does not collect and analyze key management data on disability  reevaluations. Thus, VBA does not have a firm grasp on its performance in  handling claims that are due for a reevaluation. That is, while VA collects  data on the number of revaluations that it completes, it does not compare  this information to the number of claims that were initially scheduled for a  reevaluation. Therefore, VA does not know if it is performing well in  completing the claims scheduled for review. By not tracking this  information, VA does not have a clear sense of the extent to which  reevaluations are being cancelled (as noted) or whether some  reevaluations are simply never started.
According to VBA officials, VBA also does not collect data on the types of  disabilities being reevaluated and how far in the future reevaluations are  scheduled. Also according to VBA officials, VBA does not collect data on  the outcomes of reevaluations and, as a result, does not have the benefit of  historical results data that could be used to calibrate its decisions on  which disabilities are likely to change and thus should be a higher priority  for reevaluation. Regional office staff stated that such information on the  disability reevaluation process could be useful in aiding their daily  decision making on which disabilities to reevaluate and when to schedule  them. Having such historical data could also aid VBA in workload  management decisions. For example, in January 2002, as a temporary  effort to free up staff for processing its backlog of disability compensation  and pension claims, VBA postponed most of their currently scheduled  reevaluations for 2 years. VBA made this decision without historical data  on the extent to which reevaluations affect the benefit levels of disabilities  and lost an opportunity to target only those cases likely to result in a  change in status. As such, VBA did not know the potential number of  veterans it could be over- or under-compensating for the 2 years the  reevaluations were postponed. If VBA had a better data-driven feedback  component, it could have avoided wholesale postponement of reviews for  2 years. Figure 2 summarizes the disability reevaluation process with an  added data-driven feedback loop.
section_title: Conclusions
paragraphs: It is important that veterans have confidence in the system designed to  compensate them for their service-connected disabilities and that  taxpayers have faith in VBA’s stewardship of the disability compensation  program. Inadequate management controls could result in some veterans  being under-compensated for conditions that have worsened or over- compensated for conditions that have improved. VBA is improving some  of its operational controls over reevaluations. For example, through its  VETSNET system VBA plans to track the number and reasons for  cancellations. However, without a system to remind staff to schedule  disability reevaluation diary dates or a system that automatically  schedules diary dates for all claims that require reevaluation, staff could  inadvertently fail to enter diary dates, and reevaluations may not be  scheduled and performed as needed. Meanwhile, measuring regional office  performance requires reliable performance data. VBA cannot adequately  measure how long it actually takes regional offices to complete disability  reevaluations since offices use different starting points for measuring  timeliness. For offices that start measuring their timeliness after the claim  review has been started, the measurement can result in undercounting the  total amount of time to complete a disability reevaluation. Also, without  reliable performance data, VBA cannot accurately evaluate regional office  timeliness or compare regional offices’ performance. Therefore, VBA  cannot reward good performance and take actions to improve lagging  performance. In addition, without data on the results of reevaluations,  VBA cannot ensure that it is prioritizing its resources to reevaluate those  veterans whose disabilities are likely to change, and that it is reevaluating  those disabilities at the appropriate point in time. Moving in this direction  becomes increasingly more important given Operation Enduring Freedom  and Operation Iraqi Freedom. Outcome data on the reevaluation process  could be used to target certain disabilities in the future. For example, if  VBA found that reevaluating a certain disability never resulted in a change  in the rating level, then it could consider not reevaluating that disability in  the future. In addition, data on the timing of reevaluations could also be  used strategically to refine when disabilities are reevaluated. For example,  some regional offices may be scheduling reevaluations for 2 years into the  future for a particular disability, whereas other regional offices may be  using a 3-year time period. This information could be combined with the  outcomes of such reevaluations to refine guidance and training on  scheduling reevaluations.
section_title: Recommendations
paragraphs: We recommend that the Secretary of the Department of Veterans Affairs  direct the Under Secretary for Benefits to take the following five actions to  enhance VBA’s disability reevaluation process:    VA should modify its electronic claims processing system so that a  rating decision cannot be completed without staff completing the diary  date field.
VA should modify its electronic claims processing system to ensure  that a diary date is automatically generated by the system for all  disabilities where a reevaluation is required by VA’s Schedule for  Rating Disabilities.
VBA should include cancelled reevaluations in its quality assurance  reviews and should evaluate the feasibility of periodically sampling a  larger number of completed disability reevaluations for quality  assurance review.
VBA should clarify its guidance so that all regional offices consistently  use the date they are notified of a matured diary date as the starting  point for measuring timeliness.
VBA should develop a plan to collect and analyze data on the results of  disability reevaluations. To the extent necessary, this information could  be used to refine guidance on the selection and timing of future  disability reevaluations.
section_title: Agency Comments
paragraphs: In its written comments on a draft of this report (see app. II), VA generally  agreed with our conclusions and concurred with our recommendations.
As agreed with your office, unless you publicly announce its contents  earlier, we plan no further distribution until two weeks after the date of  this report. At that time, we will send copies of this report to the Secretary  of Veterans Affairs, appropriate congressional committees, and other  interested parties. The report will also be available at GAO’s Web site at  http://www.gao.gov.
If you or your staff have any questions regarding this report, please call me  at (202) 512-7215. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Other contacts and staff acknowledgements are listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To develop the information for this report, we analyzed Veterans Benefits  Administration (VBA) workload and timeliness data on disability  reevaluations. We found that VBA workload reports, which detail the  length of time it takes regional offices to complete disability reevaluations  are not reliable, since VBA guidance allows regional offices the ability to  begin measuring when disability reevaluations begin at different points in  time. Because VBA does not routinely collect and analyze data on the time  allowed prior to reevaluating disabilities or the results of reevaluations, we  requested a VBA analysis of claims-level data. In November 2006, VBA  agreed to develop a one-time analysis of reevaluations completed in 2006.  However, because of difficulties in developing the data VBA was unable to  provide the analysis in time for us to incorporate the results into this  report. We also reviewed federal regulations on disability reevaluations,  VBA’s written guidance and training materials on reevaluations, and VBA’s  procedures for conducting reevaluations. We discussed the procedures for  ensuring that reevaluations are conducted and the information used to  manage the reevaluation program with VBA headquarters and regional  office officials and observed control procedures at 5 of VBA’s 57 regional  offices. Specifically, we visited VA’s regional offices in Chicago, Illinois;  Columbia, South Carolina; Muskogee, Oklahoma; Nashville, Tennessee;  and Seattle, Washington. We selected the Columbia, Muskogee, and  Nashville regional offices based on fiscal year 2005 VBA data that showed  they completed reevaluations faster than the national average. Chicago  and Seattle took longer than the national average. All five offices also  completed a greater than average number of reevaluations. We also  selected these five offices based on their geographic dispersion. During  our site visits, we toured the regional office’s facilities and interviewed  regional office management, 30 staff involved in regional office claims  processing, 6 staff tasked with quality assurance, and other staff. We did  not perform a case file review during our visits. The VA Office of Inspector  General had performed a limited case file review and found that in some  instances reevaluations were not scheduled where required. We built on  the Inspector General’s work by looking at VBA’s processes for ensuring  that reevaluations are scheduled when required.
section_title: Appendix II: Comments from the Department of Veterans Affairs
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: The following individuals made important contributions to the report:  Brett Fallavollita, Assistant Director; Martin Scire; David Forgosh; as well  as Susannah Compton; James Rebbe; Christine San; and Walter Vance.