Veterans' Disability Benefits: Claims Processing Challenges Persist, while VA Continues to Take Steps to Address Them
Published: 2008-02-14T00:00:00

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 present its views on the Department of Veterans Affairs' (VA) disability claims process. This statement discusses (1) claims processing challenges VA faces, (2) steps VA is taking to address these challenges, and (3) opportunities for more fundamental reform. GAO has reported and testified on this subject on numerous occasions. GAO's work has addressed VA's efforts to improve the timeliness and accuracy of decisions on claims, VA's efforts to reduce pending claims levels, and concerns about decisional consistency. This testimony is based on a body of past work, updated as appropriate to reflect the current workload and initiatives.
section_title: What GAO Found
paragraphs: Despite taking steps to improve its disability claims process, VA continues to face challenges, specifically in reducing the number of claims pending, speeding up the process of deciding claims, and improving accuracy and consistency of decisions across regional offices. For example, between fiscal years 2003 and 2007, the inventory of claims awaiting a decision by VA grew by more than 50 percent to a total of about 392,000, and the average number of days claims were pending increased by 3 weeks to 132 days. Further, GAO and VA's Inspector General have identified concerns about the consistency of decisions across regional offices. Factors affecting VA's claims-processing performance may include increases in the number and complexity of claims being filed and the potential impacts of laws and court decisions. VA continues to take steps to help improve claims-processing performance, including requesting funding for additional staff. The President's fiscal year 2009 budget request funds an increase of more than 2,600 additional full-time equivalent employees over fiscal year 2007 levels to process claims. Beyond the steps VA is taking to address its claims processing challenges, opportunities for significant performance improvement may lie in more fundamental reform of VA's disability compensation program. Such reforms 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. Recent studies conducted by presidential and congressionally appointed commissions have recommended some fundamental changes, including updating VA's rating schedule, which provides the basis for decisions about eligibility for benefits.

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 $37.5 billion in cash disability benefits to  more than 3.6 million veterans and their survivors in fiscal year 2007. For  years, the claims process has been the subject of concern and attention by  VA, Congress, and veterans service organizations, due in large part to long  waits for decisions and large numbers of claims pending a decision.  Further, we and VA’s Inspector General have identified concerns about the  consistency of decisions across regional offices. These concerns have  continued and been magnified as veterans of the conflicts in Iraq and  Afghanistan, and survivors of service members who have died in those  conflicts face similar 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. More recently, the President  and Congress established commissions to study VA’s disability  compensation system.
You asked us to discuss our views on VA’s disability claims process.  Specifically, my statement today addresses (1) claims processing  challenges VA faces, (2) steps VA is taking to address these challenges and  (3) opportunities for more fundamental reform.  My statement draws on a  number of prior GAO reports and testimonies that were conducted in  accordance with generally accepted government auditing standards. (See  related GAO products.) We updated information as appropriate to reflect  the current status of VA claims processing workload and initiatives.
In summary, despite taking steps to improve its processing of disability  claims, VA continues to face challenges, specifically in speeding up the  process of deciding claims, reducing the number of claims pending, and  improving the accuracy and consistency of decisions across regional  offices. For example, between fiscal years 2003 and 2007, the inventory of  claims awaiting a decision grew by more than 50 percent to a total of  about 392,000, in part because of increased filing of claims, including those  filed by veterans of the Iraq and Afghanistan conflicts and from VA’s  increased outreach to veterans. During the same period, the average  number of days these claims were pending increased by 21 days, to an  average of 132 days. Further, we and VA’s Inspector General have  identified concerns about the consistency of decisions across regional  offices. Some of the factors affecting VA’s claims processing performance  may include increases in the number and complexity of claims being filed  such as those for post-traumatic stress disorder (PTSD), reopening of  existing claims, and the potential impacts of laws and court decisions. VA  has taken a number of steps to help improve claims processing  performance, including requesting funding for additional staff, establishing  “tiger teams” to help process certain claims, and expediting the processing  of claims filed by veterans of Operation Iraqi Freedom (OIF) and  Operation Enduring Freedom (OEF). The President’s fiscal year 2009  budget request funds an increase of over 2,600 full-time equivalent  employees from actual fiscal year 2007 levels to process compensation  claims. While the infusion of a large number of staff has the potential of  increasing VA’s claims processing capacity, quickly absorbing these many  staff will likely present human capital challenges for VA such as how to  develop, train, and deploy them.
Beyond 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, after more than a decade of research, we have 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. More specifically, VA’s rating schedule, upon which disability  decisions are made, is 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. We and at least two recent  commissions—the President’s Commission on Care for America’s  Returning Wounded Warriors, commonly referred to as the Dole-Shalala  Commission, and the Veterans’ Disability Benefits Commission— appointed to study VA’s disability compensation system, have  recommended updating VA’s rating schedule, among other fundamental  reforms.
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 additional compensation for some dependents––spouses,  children, and parents–of veterans. 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.
section_title: VA Continues to Face Challenges in Improving Its Claims Processing
paragraphs: VA continues to experience significant service delivery challenges—large  pending workloads, lengthy processing times, and inaccurate and  inconsistent decisions. A number of factors contribute to these challenges,  such as an increase in the numbers and complexity of the claims veterans  are filing and the effects of recent laws and court decisions. These factors  have eroded some of the earlier gains VA made in reducing claims  backlogs. For example, VA made progress in fiscal years 2002 and 2003  reducing the size and age of its pending claims inventory, but it has lost  ground since then.
VA’s inventory of claims awaiting a decision and their average time  pending has increased significantly in the last 4 years, in part because of  an increase in the number of claims received. The number of pending  claims increased by more than 50 percent from the end of fiscal year 2003  to the end of fiscal year 2007 to about 392,000. During the same period, the  number of claims pending longer than 6 months more than doubled from  about 47,000 to about 101,000 (see fig. 1).
Similarly, while VA reduced the average number of days claims were  pending from a high of 182 days at the end of fiscal year 2001 to 111 days  at the end of fiscal year 2003, the average age of pending claims crept back  up to 132 days by the end of fiscal year 2007, as shown in figure 2.
A number of factors are contributing to this increase in VA’s inventory of  pending claims, and their average time pending. First, there has been a  steady increase in the number of claims filed—including those filed by  veterans of the Iraq and Afghanistan conflicts—from about 579,000 in  fiscal year 2000 to about 838,000 in fiscal year 2007, an increase of about  45 percent. VA projects claims receipts to increase to about 872,000 in  fiscal year 2009 and cautions that ongoing hostilities in Iraq and  Afghanistan, and the Global War on Terrorism in general, may further  increase its workload. VA also attributes increased claims receipts to its  efforts to increase outreach to veterans and service members. For  example, VA reports that in fiscal year 2006, it provided benefits briefings  to about 393,000 separating service members, up from about 210,000 in  fiscal year 2003. VA has also noted that the number of veterans receiving  compensation has increased by about a half million from fiscal years 2000  to 2007. VA anticipates the number of reopened claims will increase as  compensation recipients—many of whom suffer from chronic progressive  disabilities such as diabetes, mental illness, and cardiovascular  disabilities—reopen claims for increased benefits as they age and their  conditions worsen.
Another factor affecting processing times is the complexity of cases, in  both terms of numbers and types of disabilities veterans are claiming.  According to VA, some veterans are citing more disabilities in their claims  than in the past and these claims can take longer to complete because  each disability needs to be evaluated separately. VA reported that the  number of cases with eight or more disabilities claimed increased by 168  percent—from about 21,800 to about 58,500—from 2000 to 2007.  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 reports receiving increasing numbers of claims for  compensation for PTSD, which is generally more difficult to evaluate, in  part because of the evidence required to link the disorder to a particular  event. According to VA, from 1999 through 2007, the number of veterans  receiving compensation benefits for PTSD increased from 120,000 to  nearly 300,000.
Further, a number of statutes and court decisions related to VA’s  disability claims process have affected VA’s ability to process claims in a  timely manner. For example, VA stated that the Veterans Claims  Assistance Act of 2000 significantly increased the length and complexity of  claims development by adding more steps to the process and lengthening  the time it takes to develop and decide a claim. VA also notes that  legislation and VA regulations have expanded benefit entitlement, adding  to the volume of claims. In recent years, statutes have created new  presumptions of service-connected disabilities for many Vietnam veterans  and former prisoners of war. Also, VA expects additional claims receipts  following enactment of legislation that allows certain military retirees to  receive both military retirement pay and VA disability compensation.
section_title: VA Continues to Take Steps to Improve Claims Processing
paragraphs: VA is taking several steps to improve claims processing. Some near-term  initiatives include the increased use of overtime and use of retired VA  employees to provide training and to assist in processing claims. VA  reported it currently employs 70 rehired annuitants.  VA expects these  annuitants to complete 23,000 rating decisions in 2008.  VA has also used  other initiatives such as brokering claims between offices to help manage  its claims inventory and establishing special teams to assist in the  processing of claims. For example, VA established teams to process  disability claims for veterans 70 years and older and for expediting claims  of OIF and OEF veterans. In 2007, VA announced an initiative to provide  priority processing of disability claims for all OIF and OEF veterans’,  including active duty, National Guard, and reservists.
In VA’s fiscal year 2009 budget justification, an increase in claims  processing staff was identified as essential to reducing the pending claims  inventory and improving timeliness. The fiscal year 2009 request would  fund 10,998 full-time equivalent employees working on compensation and  pension claims, and represents an increase of about 2,600 positions, or 32  percent over fiscal year 2007. In keeping with our prior recommendation,  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 in fiscal year 2008 as  new staff are trained and become more experienced, it expects  productivity to increase in the longer term. VA is modifying its centralized  training program to focus newly hired employees on processing burial and  dependency claims. VA reports this will allow them to become productive  more quickly, while enabling more experienced staff to focus on disability  claims processing. However, incorporating the large number of new  employees into the disability claims process will likely present human  capital challenges for VA. For example, VA would have to adequately train  them. For staff who decide claims, it is estimated that this could take 1 to  2 years. VA would also have to determine where these staff should be  deployed.
Even as staffing levels increase, however, VA acknowledges that it still  must take other actions to improve productivity. For example, VA added  more locations where service members can initiate the VA disability  claims process up to 180 days prior to separating from the service. VA  reports that these locations, known as Benefits Delivery at Discharge sites,  now total 140. The goal of the program is to provide benefits within 60  days following discharge. In addition, VA also plans to pilot paperless  Benefits Delivery at Discharge, where service members’ disability claim  applications, service medical records, and other evidence would be  captured electronically prior to discharge. VA expects this new process  will reduce the time needed to gather evidence for deciding claims. GAO  currently has work underway looking at the Benefits Delivery at Discharge  program.
Another step to improve claims processing is a pilot program by VA and  the Department of Defense (DOD) in which VA completes disability  ratings for service members who have been found unfit for duty due to  disability by the military services. The goal of the pilot program is to  deliver faster and more consistent disability evaluations and compensation  to service members and veterans. Because VA rates disabilities while the  service member is still in the military service, disability benefits can be  awarded soon after the service member is discharged. GAO is currently  studying this pilot.
In addition to challenges with managing pending claims inventories and  deciding claims in a timely manner, VA acknowledges that regional office  decisional accuracy needs further improvement. VA reports that it  improved the accuracy of decisions on rating-related compensation claims  from 80 percent in fiscal year 2002 to 88 percent in fiscal year 2007.  However, this figure remains short of its current strategic goal of 98  percent. In March 2007, VA stated it had established an aggressive quality  assurance program to assess rating, authorization, and fiduciary program  accuracy. Additionally, VA plans to begin routine quarterly monitoring of  compensation and pension cases by diagnostic code and to expand quality  review staff to complete additional reviews.
VA also continues to face questions about its ability to ensure that  veterans receive consistent decisions across regional offices. We have  identified the need for VA to systematically address this issue to achieve  acceptable levels of variation. VA’s Inspector General has studied one  indicator of possible inconsistency, which is a wide variation in average  payments per veteran from state to state. In May 2005, the Inspector  General reported that variation in rating decisions was more likely to  occur for some disabilities like PTSD than for others, where much of the  information needed to make a determination is susceptible to  interpretation and judgment. To improve decision consistency, VA  conducted a pilot project to monitor consistency of rating-related claims  decisions. VA also conducted a consistency review of post-traumatic stress  disorder claims. Finally, VA deployed 58 computerized exam templates for  each type of compensation and pension exam to each Veterans Health  Administration compensation and pension exam site to improve the  quality of medical exams used to make rating decisions.
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 program reform such as  reexamining program design and the structure and division of labor among  field offices.
After more than a decade of research, we have determined that federal  disability programs, including VA’s disability program, are in urgent need  of attention and transformation and 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) lag behind the scientific advances and  economic and social changes that have redefined the relationship between  impairments and work. For instance, 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. At the same time, impairments  such as traumatic brain injury have become more prevalent.  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— and as such, we found that these programs are poorly positioned to  provide meaningful and timely support for Americans with disabilities. We  currently are assessing the challenges VA faces in providing vocational  rehabilitation and employment services to current beneficiaries as well as  the large number of service members returning from the OIF and OEF  conflicts in need of such services.
In prior work, 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 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 its October 2007 report, the Veterans’ Disability Benefits Commission  (VDBC)—established by Congress in 2003 to study the appropriateness of  VA disability benefits—also pointed out that VA’s eligibility criteria were  outdated and recommended that the VA Rating Schedule be reviewed and  updated. The commission further recommended the schedule be reviewed  and updated on a frequent basis and that first priority be given to revising  the mental health and neurological body systems to expeditiously address  post traumatic stress disorder, other mental disorders, and traumatic brain  injury.
In its July 2007 report, the Dole-Shalala Commission also recommended  updating VA’s rating schedule. The commission reported that VA’s rating  schedule is outdated and does not include diagnostic criteria for injuries  that are new or for which diagnostic criteria are changing rapidly, such as  traumatic brain injury. Further, the commission pointed out that VA’s  rating schedule fails to acknowledge the disabling impact of conditions  such as PTSD, and the effect medical advances have on the prognosis for  certain conditions such as serious burns and amputations.
VA is in the process of addressing some of our and the commission’s  concerns. For example, VA is modifying the rating schedule to provide  detailed and updated criteria for evaluating traumatic brain injury and the  potential effect of medical advances on certain conditions.  In January  2008, VA announced that it had contracted for a study of the appropriate  level of compensation for any loss of earnings capacity caused by service- incurred or service aggravated conditions.
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. For example, VA consolidated decision making on certain  claims—Benefits Delivery at Discharge claims, which are generally  original claims for disability compensation—at two regional offices (Salt  Lake City, Utah and Winston-Salem, North Carolina). VA also consolidated  in-service dependency and indemnity compensation claims at the  Philadelphia regional office. These claims are filed by survivors of service  members who die while in military service. VA consolidated these claims  as part of its efforts to provide expedited service to survivors, including  service members who died in Operations Iraqi Freedom and Enduring  Freedom. Despite these initiatives, VA has not changed its basic field  structure for processing disability claims at 57 regional offices, which have  large variations in performance. 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. Undertaking such a review is  especially critical, since VA will need to determine how and where to  deploy the 2,600 new staff that may be coming on board between fiscal  years 2007 to 2009 to address its claims processing challenges.
In conclusion, reexamining claims-processing challenges and finding  viable solutions are daunting tasks. While VA has taken a number of steps  to improve its disability claims process, challenges persist. Opportunities  may lie in more fundamental reform. A number of recent studies by  commissions, GAO, and others have laid the groundwork and made many  recommendations for addressing current workload challenges and  redesigning the current program to better align it with modern concepts of  disability and support services. However, as we move forward, it is  imperative that VA adequately assess its options for improving its  disability compensation program and their potential effects. It is also  important that VA continue to look for other fundamental reforms that  may be needed to improve its disability program for the longer term.
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: GAO Contact and Acknowledgments
paragraphs: For further information, please contact Daniel Bertoni at (202) 512-7215 or  Bertonid@gao.gov. Also contributing to this statement were Shelia Drake,  Martin Scire, Kate van Gelder, and Rachael Valliere.
section_title: Related GAO Products
paragraphs: DOD and VA: Preliminary Observations on Efforts to Improve Health  Care and Disability Evaluations for Returning Servicemembers.   GAO-07-1256T. Washington, D.C.: September 26, 2007.
Veterans’ Disability Benefits: Processing of Claims Continues to Present  Challenges. GAO-07-562T. Washington, D.C.: March 13, 2007.
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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