Veterans' Disability Benefits: Processing of Claims Continues to Present Challenges
Published: 2007-03-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Subcommittee on Disability Assistance and Memorial Affairs, House Veterans' Affairs Committee, asked GAO to discuss its recent work related to the Department of Veterans Affairs' (VA) disability claims and appeals processing. GAO has reported and testified on this subject on numerous occasions. GAO's work has addressed VA's efforts to improve the timeliness of decisions on claims and appeals and VA's efforts to reduce backlogs.
section_title: What GAO Found
paragraphs: VA continues to face challenges in improving service delivery to veterans, specifically speeding up the process of adjudication and appeal, and reducing the existing backlog of claims. For example, as of the end of fiscal year 2006, rating-related compensation claims were pending an average of 127 days, 16 days more than at the end of fiscal year 2003. During the same period, the inventory of rating-related claims grew by almost half, in part because of increased filing of claims, including those filed by veterans of the Iraq and Afghanistan conflicts. Meanwhile, appeals resolution remains a lengthy process, taking an average of 657 days in fiscal year 2006. However, several factors may limit VA's ability to make and sustain significant improvements in its claims-processing performance, including the potential impacts of laws and court decisions, continued increases in the number and complexity of claims being filed, and difficulties in obtaining the evidence needed to decide claims in a timely manner, such as military service records. VA is taking steps to address these problems. For example, the President's fiscal year 2008 budget requests an increase of over 450 full-time equivalent employees to process compensation claims. VA is also working to improve appeals timeliness by reducing appeals remanded for further work. While VA is taking actions to address its claims-processing challenges, opportunities for significant performance improvement may lie in more fundamental reform of VA's disability compensation program. This could include reexamining program design such as updating the disability criteria to reflect the current state of science, medicine, technology, and labor market conditions. It could also include examining the structure and division of labor among field offices.

section_title: Letter
paragraphs: I am pleased to have the opportunity to comment on the claims-processing  challenges and opportunities facing the Department of Veterans Affairs’  (VA) disability compensation and pension programs. Through these  programs, VA provided about $34.5 billion in cash disability benefits to  more than 3.5 million veterans and their survivors in fiscal year 2006. For  years, the claims process has been the subject of concern and attention by  VA, the Congress, and veterans service organizations, due in large part  because of long waits for decisions and large claims backlogs. Veterans of  the conflicts in Iraq and Afghanistan, and survivors of servicemembers  who have died in those conflicts, are facing these same issues as they seek  VA disability benefits. In January 2003, we designated modernizing VA and  other federal disability programs as a high-risk area, because of these  service delivery challenges, and because our work over the past decade  has found that these programs are based on outmoded concepts from the  past.
You asked us to discuss VA’s disability claims process, in light of the  ongoing conflicts in Iraq and Afghanistan. My statement draws on a  number of prior GAO reports and testimonies, (see related GAO products),  and information we have updated to reflect the current status of VA claims  processing and initiatives.
In summary, VA continues to face challenges in improving service delivery  to veterans. Between fiscal years 2003 and 2006, the inventory of rating- related claims grew by almost half to a total of about 378,000, in part  because of increased filing of claims, including those filed by veterans of  the Iraq and Afghanistan conflicts. During the same period, the average  number of days these claims were pending increased by 16 days, to an  average of 127 days. Meanwhile, appeals resolution remains a lengthy  process. In fiscal year 2006, it took an average of 657 days to resolve  appeals. Several factors may be affecting VA’s claims-processing  performance. These include the potential impacts of laws and court  decisions, continued increases in the number and complexity of claims  being filed, and difficulties in obtaining the evidence needed to adjudicate  claims in a timely manner, such as military service records. To help  improve claims-processing performance, VA has taken a number of steps,  including requesting funding for additional staff and undertaking  initiatives to reduce appeal remands. The President’s fiscal year 2008  budget requests an increase of over 450 full-time equivalent employees to  process compensation claims. Through training and information sharing,  VA is also working to reduce appeals processing times by decreasing the  number of cases sent back from the appeals level for further development.
Despite the steps VA is taking, opportunities for significant performance  improvement may lie in more fundamental reform of VA’s disability  compensation program. This would include reexamining program design  as well as the structure and division of labor among field offices. For  example, we found that VA’s and other federal disability programs have  not been updated to reflect the current state of science, medicine,  technology, and labor market conditions. For example, the criteria for  disability decisions are based primarily on estimates made in 1945 about  the effect of service-connected impairments on the average individual’s  ability to perform jobs requiring manual labor. In addition, VA and other  organizations have identified potential changes to field operations that  could enhance productivity in processing disability claims. While major  reexamination may be daunting, there are mechanisms for undertaking  such an effort. For example, the congressionally chartered commission on  veterans’ disability benefits has been studying a number of program design  issues and will report to the Congress later this year.
subsections: section_title: Background
paragraphs: VA pays monthly disability compensation benefits to veterans with  service-connected disabilities (injuries or diseases incurred or aggravated  while on active military duty) according to the severity of the disability. VA  also pays compensation to some spouses, children, and parents of  deceased veterans and servicemembers. VA’s pension program pays  monthly benefits based on financial need to certain wartime veterans or  their survivors.
When a veteran submits a claim to any of the Veterans Benefits  Administration’s (VBA) 57 regional offices, a veterans service  representative is responsible for obtaining the relevant evidence to  evaluate the claim. Such evidence includes veterans’ military service  records, medical examinations, and treatment records from VA medical  facilities and private medical service providers. Once a claim has all the  necessary evidence, a rating specialist evaluates the claim and determines  whether the claimant is eligible for benefits. If the veteran is eligible for  disability compensation, the rating specialist assigns a percentage rating  based on degree of disability. A veteran who disagrees with the regional  office’s decision can appeal to VA’s Board of Veterans’ Appeals, and then  to U.S. federal courts. If the Board finds that a case needs additional work,  such as obtaining additional evidence or contains procedural errors, it is  sent back to the Veterans Benefits Administration, which is responsible for  initial decisions on disability claims.
In November 2003, the Congress established the Veterans’ Disability  Benefits Commission to study the appropriateness of VA disability  benefits, including disability criteria and benefit levels. The commission is  scheduled to report the results of its study to the Congress in October  2007.
section_title: VA Continues to Face Challenges in Improving Its Claims Processing
paragraphs: Several factors are continuing to create challenges for VA’s claims  processing, despite its steps to improve performance. While VA made  progress in fiscal years 2002 and 2003 reducing the size and age of its  pending claims inventory, it has lost ground since then. This is due in part  to increased filing of claims, including those filed by veterans of the Iraq  and Afghanistan conflicts. Other factors include increases in claims  complexity, the effects of recent laws and court decisions, and challenges  in acquiring needed evidence in a timely manner. VA’s steps to improve  performance include requesting funding for additional staff and  undertaking initiatives to reduce appeal remands.
VA’s inventory of pending claims and their average time pending has  increased significantly in the last 3 years, in part because of an increase in  the number of claims. The number of pending claims increased by almost  one-half from the end of fiscal year 2003 to the end of fiscal year 2006,  from about 254,000 to about 378,000. During the same period, the number  of claims pending longer than 6 months increased by more than three- fourths, from about 47,000 to about 83,000 (see fig. 1).
Similarly, as shown in figure 2, VA reduced the average age of its pending  claims from 182 days at the end of fiscal year 2001 to 111 days at the end  of fiscal year 2003. However, by the end of fiscal year 2006, average days  pending had increased to 127 days. Meanwhile, the time required to  resolve appeals remains too long. The average time to resolve an appeal  rose from 529 days in fiscal year 2004 to 657 days in fiscal year 2006.
The increase in VA’s inventory of pending claims, and their average time  pending is due in part to an increase in claims receipts. Rating-related  claims, including those filed by veterans of the Iraq and Afghanistan  conflicts, increased steadily from about 579,000 in fiscal year 2000 to about  806,000 in fiscal year 2006, an increase of about 39 percent. While VA  projects relatively flat claim receipts in fiscal years 2007 and 2008, it  cautions that ongoing hostilities in Iraq and Afghanistan, and the Global  War on Terrorism in general, may increase the workload beyond current  levels. VA also attributes increased claims to its efforts to increase  outreach to veterans and servicemembers. For example, VA reports that in  fiscal year 2006, it provided benefits briefings to about 393,000 separating  servicemembers, up from about 210,000 in fiscal year 2003, leading to the  filing of more original compensation claims. VA has also noted that claims  have increased in part because older veterans are filing disability claims  for the first time.
Moreover, according to VA, the complexity of claims is also increasing.  For example, some veterans are citing more disabilities in their claims  than in the past. Because each disability needs to be evaluated separately,  these claims can take longer to complete. Additionally, VA notes that it is  receiving claims for new and complex disabilities related to combat and  deployments overseas, including those based on environmental and  infectious disease risks and traumatic brain injuries. Further, VA is  receiving increasing numbers of claims for compensation for post- traumatic stress disorder, which are generally harder to evaluate, in part  because of the evidentiary requirements to substantiate the event causing  the stress disorder.
Since 1999, several court decisions and laws related to VA’s  responsibilities to assist veterans in developing their benefit claims have  significantly affected VA’s ability to process claims in a timely manner. VA  attributes some of the increase in the number of claims pending and the  average days pending to a September 2003 court decision that required  over 62,000 claims to be deferred, many for 90 days or longer. Also, VA  notes that legislation and VA regulations have expanded benefit  entitlement and added to the volume of claims. For example, in recent  years, laws and regulations have created new presumptions of service- connected disabilities for many Vietnam veterans and former prisoners of  war. Also, VA expects additional claims receipts based on the enactment  of legislation allowing certain military retirees to receive both military  retirement pay and VA disability compensation.
Additionally, claims-processing timeliness can be hampered if VA cannot  obtain the evidence it needs in a timely manner. For example, to obtain  information needed to fully develop some post-traumatic stress disorder  claims, VBA must obtain records from the U.S. Army and Joint Services  Records Research Center (JSRRC), whose average response time to VBA  regional office requests is about 1 year. This can significantly increase the  time it takes to decide a claim. In December 2006, we recommended that  VBA assess whether it could systematically utilize an electronic library of  historical military records rather than submitting all research requests to  JSRRC. VBA agreed to determine the feasibility of regional offices using an  alternative resource prior to sending some requests to JSRRC.
VA has recently taken several steps to improve claims-processing. In its  fiscal year 2008 budget justification, VA identified an increase in claims-  processing staff as essential to reducing the pending claims inventory and  improving timeliness. According to VA, with a workforce that is  sufficiently large and correctly balanced, it can successfully meet the  veterans’ needs while ensuring good stewardship of taxpayer funds. The  fiscal year 2008 request would fund 8,320 full-time equivalent employees  working on compensation and pension, which would represent an  increase of about 6 percent over fiscal year 2006. In addition, the budget  justification cites near-term initiatives to increase the number of claims  completed, such as using retired VA employees to provide training and the  increased use of overtime.
Even as staffing levels increase, however, VA acknowledges that it still  must take other actions to improve productivity. VA’s budget justification  provides information on actual and planned productivity, in terms of  claims decided per full-time equivalent employee. While VA expects a  temporary decline in productivity as new staff are trained and become  more experienced, it expects productivity to increase in the longer term.  Also, VA has identified additional initiatives to help improve productivity.  For example, VA plans to pilot paperless Benefits Delivery at Discharge,  where servicemembers’ disability claim applications, service medical  records, and other evidence would be captured electronically prior to  discharge. VA expects that this new process will reduce the time needed to  obtain the evidence needed to decide claims.
To resolve appeals faster, VA has been working to reduce the number of  appeals sent back by the Board of Veterans’ Appeals for further work such  as obtaining additional evidence and correcting procedural errors. To do  so, VA has established joint training and information sharing between field  staff and the Board. VA reports that it has reduced the percentage of  decisions remanded from about 57 percent in fiscal year 2004 to about 32  percent in fiscal year 2006, and expects its efforts to lead to further  reductions. Also, VA reports that it has improved the productivity of the  Board’s judges from an average of 604 appeals decided in fiscal year 2003  to 698 in fiscal year 2006. The Board attributes this improvement to  training and mentoring programs and expects productivity to improve to  752 decisions in fiscal year 2008.
section_title: Opportunities for Improvement May Lie in More Fundamental Reform
paragraphs: While VA is taking actions to address its claims-processing challenges,  there are opportunities for more fundamental reform that could  dramatically improve decision making and processing. These include  reexamining program design, as well as the structure and division of labor  among field offices.
After more than a decade of research, we have determined that federal  disability programs are in urgent need of attention and transformation, and  we placed modernizing federal disability programs on our high-risk list in  January 2003. Specifically, our research showed that the disability  programs administered by VA and the Social Security Administration  (SSA) lagged behind the scientific advances and economic and social  changes that have redefined the relationship between impairments and  work. For example, advances in medicine and technology have reduced  the severity of some medical conditions and have allowed individuals to  live with greater independence and function in work settings. Moreover,  the nature of work has changed in recent decades as the national economy  has moved away from manufacturing-based jobs to service- and  knowledge-based employment. Yet VA’s and SSA’s disability programs  remain mired in concepts from the past, particularly the concept that  impairment equates to an inability to work. Because of this, and because  of continuing program administration problems, such as lengthy claims- processing times, we found that these programs are poorly positioned to  provide meaningful and timely support for Americans with disabilities.
In August 2002, we recommended that VA use its annual performance plan  to delineate strategies for and progress in periodically updating labor  market data used in its disability determination process. We also  recommended that VA study and report to the Congress on the effects that  a comprehensive consideration of medical treatment and assistive  technologies would have on its disability programs’ eligibility criteria and  benefits package. This study would include estimates of the effects on the  size, cost, and management of VA’s disability programs and other relevant  VA programs and would identify any legislative actions needed to initiate  and fund such changes.
In addition to program design, VA’s regional office claims processing  structure may be disadvantageous to efficient operations. VBA and others  who have studied claims processing have suggested that consolidating  claims processing into fewer regional offices could help improve claims- processing efficiency and save overhead costs. We noted in December  2005 that VA had made piecemeal changes to its claims-processing field  structure. VA consolidated decisionmaking on Benefits Delivery at  Discharge claims, which are generally original claims for disability  compensation, at the Salt Lake City and Winston-Salem regional offices.  VA also consolidated in-service dependency and indemnity compensation  claims at the Philadelphia regional office. These claims are filed by  survivors of servicemembers who die while in military service. VA  consolidated these claims as part of its efforts to provide expedited  service to these survivors, including servicemembers who died in  Operations Iraqi Freedom and Enduring Freedom. However, VA has not  changed its basic field structure for processing compensation and pension  claims at 57 regional offices, which experience large performance  variations. Unless more comprehensive and strategic changes are made to  its field structure, VBA is likely to miss opportunities to substantially  improve productivity, especially in the face of future workload increases.  We have recommended that VA undertake a comprehensive review of its  field structure for processing disability compensation and pension claims.
While reexamining claims-processing challenges may be daunting, there  are mechanisms for undertaking such an effort, including the  congressionally chartered commission currently studying veterans’  disability benefits. In November 2003, the Congress established the  Veterans’ Disability Benefits Commission to study the appropriateness of  VA disability benefits, including disability criteria and benefit levels. The  commission is to examine and provide recommendations on (1) the  appropriateness of the benefits, (2) the appropriateness of the benefit  amounts, and (3) the appropriate standard or standards for determining  whether a disability or death of a veteran should be compensated. The  commission held its first public hearing in May 2005, and in October 2005,  the commission established 31 research questions for study. These  questions address such issues as how well disability benefits meet the  congressional intent of replacing average impairment in earnings capacity,  and how VA’s claims-processing operation compares to other disability  programs, including the location and number of processing centers. These  issues and others have been raised by previous studies of VBA’s disability  claims process. The commission is scheduled to report to the Congress by  October 1, 2007.
Mr. Chairman, this concludes my remarks. I would be happy to answer any  questions that you or other members of the subcommittee may have.
section_title: Contact and Acknowledgments
paragraphs: For further information, please contact Daniel Bertoni at (202) 512-7215.  Also contributing to this statement were Shelia Drake, Martin Scire, Greg  Whitney, and Charles Willson.
section_title: Related GAO Products
paragraphs: Veterans’ Disability Benefits: Long-Standing Claims Processing Problems  Persist. GAO-07-512T. Washington, D.C.: March 7, 2007.
High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January 31,  2007.
Veterans’ Disability Benefits: VA Can Improve Its Procedures for Obtaining  Military Service Records. GAO-07-98. Washington, D.C.: December 12,  2006.
Veterans’ Benefits: Further Changes in VBA’s Field Office Structure Could  Help Improve Disability Claims Processing. GAO-06-149. Washington, D.C.:  December 9, 2005.
Veterans’ Disability Benefits: Claims Processing Challenges and  Opportunities for Improvements. GAO-06-283T. Washington, D.C.:  December 7, 2005.
Veterans’ Disability Benefits: Improved Transparency Needed to Facilitate  Oversight of VBA’s Compensation and Pension Staffing Levels. GAO-06- 225T. Washington, D.C.: November 3, 2005.
VA Benefits: Other Programs May Provide Lessons for Improving  Individual Unemployability Assessments. GAO-06-207T. Washington, D.C.:  October 27, 2005.
Veterans’ Disability Benefits: Claims Processing Problems Persist and  Major Performance Improvements May Be Difficult. GAO-05-749T.  Washington, DC.: May 26, 2005.
VA Disability Benefits: Board of Veterans’ Appeals Has Made  Improvements in Quality Assurance, but Challenges Remain for VA in  Assuring Consistency. GAO-05-655T. Washington, D.C.: May 5, 2005.
Veterans Benefits: VA Needs Plan for Assessing Consistency of Decisions.  GAO-05-99. Washington, D.C.: November 19, 2004.
Veterans’ Benefits: More Transparency Needed to Improve Oversight of  VBA’s Compensation and Pension Staffing Levels. GAO-05-47. Washington,  D.C.: November 15, 2004.
Veterans’ Benefits: Improvements Needed in the Reporting and Use of  Data on the Accuracy of Disability Claims Decisions. GAO-03-1045.  Washington, D.C.: September 30, 2003.
Department of Veterans Affairs: Key Management Challenges in Health  and Disability Programs. GAO-03-756T. Washington, D.C.: May 8, 2003.
Veterans Benefits Administration: Better Collection and Analysis of  Attrition Data Needed to Enhance Workforce Planning. GAO-03-491.  Washington, D.C.: April 28, 2003.
Veterans’ Benefits: Claims Processing Timeliness Performance Measures  Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002.
Veterans’ Benefits: Quality Assurance for Disability Claims and Appeals  Processing Can Be Further Improved. GAO-02-806. Washington, D.C.:  August 16, 2002.
Veterans’ Benefits: VBA’s Efforts to Implement the Veterans Claims  Assistance Act Need Further Monitoring. GAO-02-412. Washington, D.C.:  July 1, 2002.
Veterans’ Benefits: Despite Recent Improvements, Meeting Claims  Processing Goals Will Be Challenging. GAO-02-645T. Washington, D.C.:  April 26, 2002.
Veterans Benefits Administration: Problems and Challenges Facing  Disability Claims Processing. GAO/T-HEHS/AIMD-00-146. Washington,  D.C.: May 18, 2000.
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