Veterans' Disability Benefits: Further Evaluation of Ongoing Initiatives Could Help Identify Effective Approaches for Improving Claims Processing
Published: 2010-01-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: For years, the disability compensation claims process has been the subject of concern and attention by the Department of Veterans Affairs (VA), Congress, and veteran service organizations (VSO), due in part to long waits for decisions and the large number of claims pending a decision. As GAO and other organizations have reported over the last decade, VA has also faced challenges in improving the accuracy and consistency of disability decisions. GAO was asked to examine (1) trends in VA's disability compensation claims processing at the initial claims and appeals levels and (2) actions that VA has taken to improve its disability claims process. To do this, GAO reviewed and analyzed VA performance data, budget submissions, program documents, and external studies and interviewed VA officials and VSO representatives.
section_title: What GAO Found
paragraphs: VA's disability claims and appeals processing has improved in some aspects and worsened in others. In recent years, the number of claims completed annually by VA has increased but not by enough to keep pace with the increasing number of compensation claims received, resulting in more claims awaiting a decision. In addition, the average days that VA took to complete a claim--196 days in fiscal year 2008--has varied over time, but was about the same in fiscal years 2000 and 2008. Several factors have challenged claims processing improvements, such as the increase in the number and complexity of claims submitted to VA, laws, and regulatory changes. VA has reduced the number of pending appeals and improved the accuracy of some appellate work, but the time that it takes to resolve appeals has worsened in recent years. For example, in fiscal year 2008, VA took on average 776 days to process appeals; 78 days longer than in fiscal year 2004. One factor that has contributed to worsening appeals timeliness is the increase in the number of appeals received by VA. VA has taken several steps to improve claims and appeals processing, but their impact is not yet known. VA has hired a significant number of disability claims staff to process disability workloads. VA's Veterans Benefits Administration (VBA) has also expanded its practice of workload redistribution, which could improve the timeliness and quality of its decisions. VA is also testing new claims processing approaches--such as shortening response periods for certain claims and appeals through Expedited Claims Adjudication (ECA) and reorganizing its claims processing units. However, VBA has not established plans to evaluate the effect of some initiatives. In addition, VA has taken other steps to improve claims and appeals processing, such as expanding its quality assurance program; upgrading claims processing software; and moving toward paperless processing, which remains elusive in part due to technical challenges.

section_title: Letter
paragraphs: The Department of Veterans Affairs’ (VA) disability compensation program  provides monetary support to veterans with disabling conditions that were  incurred or aggravated during military service. In fiscal year 2008, VA paid  $30.7 billion in benefits to nearly 3 million veterans through the  compensation program. For years, the disability compensation claims  process has been the subject of concern and attention by VA, Congress,  and veteran service organizations (VSO), due in large part to long waits for  decisions and the large number of claims pending a decision. The number  of veterans awaiting decisions about their eligibility for disability  compensation could grow as servicemembers returning from ongoing  conflicts and aging veterans submit claims. As GAO and other  organizations have reported over the last decade, VA has faced challenges  not only in decreasing the time it takes to decide veterans’ claims, but also  with improving the accuracy and consistency of disability decisions.
At your request, we examined (1) trends in VA’s disability compensation  claims processing at the initial claims and appeals levels and (2) actions  that VA has taken to improve its disability claims process. To identify  trends in disability compensation claims processing, we examined  workload and performance data from VA’s Veterans Benefits  Administration (VBA) and Board of Veterans’ Appeals (Board). To identify  VA’s actions for improving the claims process, we analyzed staffing data;  reviewed VA’s budget submissions, VA’s strategic plan, and other  documents such as external studies and VA’s Office of Inspector General  reports; interviewed VA officials and VSO representatives; and examined  ongoing initiatives and those initiatives that VA completed after fiscal year  2005. In addition, we visited four VBA regional offices and the Board to  learn about ongoing initiatives. In selecting the regional offices—Chicago,  Illinois; Seattle, Washington; Togus, Maine; and Winston-Salem, North  Carolina—we considered regional offices that would provide (1) insights  about ongoing initiatives, such as pilots; (2) a mix of offices located in  different geographic settings (e.g., urban and rural); and (3) a mix of  offices that were above and below VBA’s averages for select claims  processing measures. We also reviewed relevant federal laws, regulations,  and court decisions. Appendix I contains additional information about our  scope and methodology.
We conducted this performance audit from November 2008 through  January 2010 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: VA pays monthly disability compensation to veterans with service- connected disabilities (i.e., 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. In addition, VA’s pension program  pays benefits to low-income veterans who either are elderly or have  disabilities unrelated to their military service. In fiscal year 2008, the  disability compensation program represented 78 percent, or $30.7 billion,  of the cash benefits paid through VBA’s Compensation and Pension  Service.
VA’s disability compensation claims process starts when a veteran submits  a claim to VBA (see fig. 1). Upon reviewing the claim at 1 of VBA’s   57 regional offices, a service representative then assists the veteran in  gathering 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. Also, if necessary for reaching a decision on a claim, the  regional office arranges for the veteran to receive a medical examination.  Once a claim has all of the necessary evidence, a rating specialist  evaluates the claim and determines whether the claimant is eligible for  benefits. If so, the rating specialist assigns a percentage rating. Veterans  with multiple disabilities receive a single composite rating. Veterans can  reopen claims for additional benefits from VA if, for example, a service- connected disability worsens or arises in the future. If the veteran  disagrees with the regional office’s decision, he or she may submit a  written notice of disagreement to the regional office. In response to such a  notice, VBA reviews the case and provides the veteran with further written  explanation of the decision if VBA does not grant all appealed issues. If the  veteran still disagrees, he or she may appeal to the Board. Before  transferring the appeal to the Board, VBA re-reviews the case and if any  new information is obtained provides a new explanation of the decision to  the veteran. The Board, whose members are attorneys experienced in  veterans’ law and in reviewing benefit claims, conducts a hearing if the  veteran requests one, then grants or denies the appeal or returns the case  to VBA to obtain additional evidence necessary to decide the veteran’s  claim. If the veteran is dissatisfied with the Board’s decision, he or she  may appeal to the U.S. Court of Appeals for Veterans Claims.
To improve workload controls and the timeliness and accuracy of its  decisions, in fiscal year 2002, VBA organized its claims processing staff by  teams that perform distinct phases of the claims and appeals processes  (see table 1). In moving toward this organizational structure, VBA sought  to reduce the number of tasks a veteran service representative was  expected to perform and thereby improve its performance.
VA measures its performance related to compensation claims and appeals  processing in various ways and considers the timeliness and quality of its  decisions as key indicators. One way that VBA and the Board assess the  timeliness of their work is using a joint measure that considers the average  time it takes appeals to be resolved, regardless of whether they are  resolved by VBA or the Board. In fiscal year 2009, VA’s timeliness goal for  resolving appeals was 675 days. In terms of quality, VBA and the Board  each assess the accuracy of their decisions by reviewing randomly  selected cases to determine the proportion that contain errors that could  affect the benefits paid to the veteran. In fiscal year 2009, VBA and the  Board had an accuracy rate goal of 98 percent and 94 percent,  respectively.
section_title: VA’s Disability Claims and Appeals Processing Has Improved in Some Aspects and Worsened in Others
paragraphs: Over the past several years, the number of disability compensation claims  has increased, and VA’s performance in processing such claims has  improved in some areas and worsened in others. During this time, VA has  reduced the number of pending appeals and improved the accuracy of  some appellate work, but in recent years, the time that it takes to resolve  appeals has increased.
subsections: section_title: VA Has Increased Its Output of Claims Decisions but Continues to Experience Some Challenges with Timeliness and Accuracy
paragraphs: From fiscal years 2000 to 2008, the number of claims completed annually  by VA has increased but not by enough to keep pace with the increasing  number of compensation claims it has received, and, as a result, the  number of pending claims has grown. VA has substantially increased the  number of claims it completes annually in recent years. In fiscal year 2008,  VA completed about 729,000 claims, which was nearly 66 percent more  than it completed in fiscal year 2000 (see fig. 2). However, VA has also  received significantly more claims in recent years. In fiscal year 2008, VA  received about 719,000 compensation claims, which was about 71 percent  more than it received in fiscal year 2000. By the end of fiscal year 2008,  pending claims—those awaiting a decision—had increased 83 percent  over fiscal year 2000 levels, from about 188,000 to about 343,000   (see fig. 3). Moreover, the number of claims awaiting a decision longer  than 6 months increased about 50 percent, from about 52,000 to about  78,000.
VA has also experienced mixed results in improving the timeliness of its  claims decisions. Overall, the average days that claims were pending  declined, but the average processing time needed to complete a claim did  not improve. From fiscal years 2000 to 2008, the average number of days  that claims were pending fluctuated. In fiscal year 2008, compensation  claims were pending an average of 23 days less than the 146 days in fiscal  year 2000 (see fig. 4). While fiscal year 2008’s average number of days  pending was slightly longer than the average 115 days experienced in fiscal  year 2003, it is a marked improvement over the 188 days that claims were  pending in fiscal year 2001. VA has also reduced the percentage of claims  that took more than 1 year to complete, from 22 percent in fiscal year 2002  to 10 percent in fiscal year 2008. However, VA has made little progress in  reducing average processing times. The average time that VA took to  complete a claim fluctuated between fiscal years 2000 and 2008, from a  high of 246 days in fiscal year 2002 to a low of 181 days in fiscal years 2004  and 2005 (see fig. 5). Since then, this average has increased, and in fiscal  year 2008, VA took about the same amount of time—196 days—to  complete a claim as it did in fiscal year 2000.
In terms of quality, according to VA’s assessments, the accuracy of  compensation claims processing remained about the same during fiscal  years 2003 through 2008. The percentage of compensation claims  processed without errors that could affect benefits paid to veterans  remained at 85 percent, varying slightly in the intervening years   (see fig. 6).
One factor that has contributed to VA’s lack of significant improvement in  claims processing performance is the substantial increase in VA’s  disability workloads. VA attributes the increase in compensation claims to  several sources, including the conflicts in Iraq and Afghanistan. According  to VA, about 35 percent of veterans from ongoing hostilities file claims. In  addition, VA cites the growing number of reopened claims from current  disability benefit recipients—many of whom suffer from chronic  progressive disabilities, such as diabetes—who submit claims for  increased benefits as their conditions worsen or new conditions arise as  they age. In fiscal year 2008, VA received about 488,000 reopened claims  for disability benefits, up 58 percent from about 309,000 in fiscal year 2000.  In addition, VA attributes increased claims receipt to its enhanced  outreach to servicemembers and veterans. VA reported that in fiscal year  2007, it provided benefits briefings to about 297,000 separating  servicemembers, which was up from about 210,000 in fiscal year 2003.
According to VA officials, federal laws, VA regulations, and court decisions  have also adversely affected claims processing timeliness. These changes  enable veterans to get the benefits they deserve. However, the changes  expand benefit entitlement and add processing requirements that increase  VA’s workloads. In recent years, court decisions related to a 1991 law have  created new presumptions of service-connected disabilities for many  Vietnam veterans. In October 2009, VA announced that it was expanding  the list of presumptive service-connected disabilities to include  Parkinson’s disease and two other conditions for Vietnam veterans. VA  also anticipates an increase in claims stemming from an October 2008  regulation change that affects how VA rates traumatic brain injuries.  According to a VA official, a letter was sent to approximately 32,000  veterans notifying them that their rating for traumatic brain injury could  potentially increase, even though their symptoms may not have changed.  In addition to expanded benefit entitlement, a number of laws and court  decisions related to VA’s disability claims process have had implications  for timely claims processing. For example, according to VA officials, the  Veterans Claims Assistance Act of 2000 added more steps to the claims  process, lengthening the time that it takes to develop and decide a claim.
Another factor impacting VA’s claims processing timeliness is the  complexity of claims received. VA notes that it is receiving more claims for  complex disabilities related to combat and deployments overseas,  including those based on environmental and infectious disease risks and  traumatic brain injuries. In addition, veterans cited more disabilities in  their claims in recent years than they had in the past. The number of  compensation claims VA decided with eight or more disabilities increased  from 11 to 16 percent from fiscal years 2006 to 2008. These claims can take  longer to complete because each disability must be evaluated separately.
section_title: VA Has Reduced the Number of Pending Appeals and Improved the Accuracy of Some Appellate Work, but Appeals Processing Timeliness Has Worsened in Recent Years
paragraphs: Since fiscal year 2000, the number of pending appeals has declined, and  the accuracy of appeals processing has improved in some areas. VA has  reduced the number of pending appeals by 25 percent, from about 127,000  in fiscal year 2000 to about 95,000 in fiscal year 2008 (see fig. 7). Over the  same period, agency accuracy reviews indicate that 95 percent of the  Board’s decisions in fiscal year 2008 were processed accurately compared  with 86 percent in fiscal year 2000 (see fig. 8). Another indicator of the  accuracy of appeals processing is the percentage of appeals that are  remanded to VBA by the Board due to errors that could have been  avoided. Examples of avoidable remands include VBA’s failure to obtain  identified private treatment records or to send letters to claimants  indicating what evidence is necessary to substantiate the claim. One of  VA’s goals is to eliminate avoidable remands. Although VBA recently  expanded accuracy reviews and the Board has provided training to VBA  staff based on remand reason trends, the percentage of appeals with  avoidable remands remained about 25 percent from fiscal years 2006 to  2008.
Despite improvements in some aspects of appeals processing, the average  time needed to resolve appeals has worsened in recent years, reversing  prior improvements. In fiscal year 2008, the average processing time for  compensation appeals was 776 days, or approximately 25 months, despite  reaching lows of 656 days in fiscal year 2001 and 680 days in fiscal year  2005 (see fig. 9). The majority of appeal processing time is spent  developing the appeal prior to consideration by the Board. For example,  appeals resolved in fiscal year 2008 remained at VBA for 502 days before  being transferred to the Board.
Several factors have contributed to the worsening trend in appeals  timeliness. First, the number of appeals that VA has received increased  about 50 percent from approximately 24,000 in fiscal year 2000 to about  36,000 in fiscal year 2008 (see fig. 10). In addition, according to VA  officials, each time appellants submit new evidence, VA must review and  summarize the case for the appellant again, adding to the time that it takes  to resolve the appeal. Furthermore, a veteran may submit multiple claims,  and VBA does not forward an appeal to the Board until all of a veteran’s  pending claims are resolved, regardless of whether they relate to the  appeal. This practice follows VBA’s interpretation of a court decision to  prevent delays in processing undecided claims. Therefore, a veteran’s  unrelated, pending claim could forestall final resolution of the appeal.  Finally, according to VA officials, processing time is lengthened when  appeals are remanded back to VBA by the Board. While some appeals are  remanded due to procedural errors by VBA, many other appeals are  remanded because of requirements often driven by recent court decisions  or regulatory changes that occur after the appeal is sent to the Board. For  example, a court decision in January 2008 required VA to notify veterans  seeking increased compensation for worsened conditions of the rating  criteria that pertain to the claim. Until this decision was overturned in  September 2009, it required the Board to remand—or VBA to hold back— hold back— any appeals until the claimants were notified.  any appeals until the claimants were notified. received (in thousand)
section_title: VA Has Taken Some Actions That Have the Potential to Improve Claims Processing, but Their Impact Is Not Yet Known
paragraphs: VA has taken several steps to improve claims processing, including  increasing claims processing staff, redistributing certain workloads,  piloting alternative approaches to processing certain claims, and  increasingly leveraging information technology to process claims. VA  expects these actions to improve decision timeliness, quality, or both.  However, the effects of these actions are not yet known, and VA lacks  plans to assess certain actions.
Vazquez-Flores v. Peake, 22 Vet. App. 37 (2008), vacated Vazquez-Flores v. Shinseki,   580 F.3d 1270 (Fed. Cir. 2009).
See footnote 24.
subsections: section_title: VA Has Increased Staffing, Redistributed Workloads, and Is Piloting New Approaches for Processing Certain Claims to Improve Timeliness, but Lacks Plans to Evaluate Some of These Actions
paragraphs: VA has taken several actions to improve decision timeliness at both the  claim and appellate levels. For example, over the past few years, VA has  hired a significant number of disability claims staff to process disability  workloads. From fiscal years 2005 to 2009, VA increased VBA’s claims  processing staff by 57 percent, from 7,550 to 11,868. This increase  includes 417 staff that VBA hired in fiscal year 2009 using funds from the  American Recovery and Reinvestment Act of 2009 (ARRA). Of the people  hired using ARRA funds, about three-fourths are temporary employees  who assist in developing disability claims and perform other  administrative tasks to free experienced staff to complete more complex  claims processing tasks. During the same period, VA increased the Board’s  staff by 20 percent, from 433 to 519, without using ARRA funds.
As required under section 225 of the Veterans’ Benefits Improvement Act of 2008   (Pub. L. No. 110-389), GAO is in the process of evaluating VA’s training programs for claims  processors.  This evaluation builds on prior work in which we found that increased focus  on evaluation and accountability would enhance training and performance management for  claims processors. See GAO, Veterans’ Benefits: Increased Focus on Evaluation and  Accountability Would Enhance Training and Performance Management for Claims  Processors, GAO-08-561 (Washington, D.C.: May 27, 2008). rating specialists, becoming proficient often takes longer—about 3 years—because of the complexity of the job, in part given the variety of  cases and rating issues. Training new staff also reduces productivity in near term because experienced staff must take time to train and mentor  them and, therefore, may have less time to process their own claim  workloads. According to a VBA training official, VBA has developed  curricula that use practical application of key concepts to accelerate the  learning curve for new staff. VA expects that the staff hired with ARRA  funding will help increase the number of claims processed and reduce  average processing times in 2010. However, even though their  responsibilities are expected to be limited to less complex claims  processing tasks, these additional staff could also pose human capital  challenges in the near term while they are being trained and deployed.
VBA has also expanded its practice of redistributing regional offices’  disability workloads. Although this expansion could improve the  timeliness of its decisions, VBA has not collected data to evaluate the  effect of this practice. Since 2001, VBA has created 15 resource centers  that are staffed exclusively to process claims or appeals from backlogged  regional offices at distinct phases in the claims process. From 2001 to  2002, VBA created 9 resource centers to exclusively rate claims (rating  centers) from other offices. Since 2007, VBA has created 4 additional  resource centers to exclusively develop claims (development centers) for  rating. In 2009, VBA created 2 more resource centers that focus  exclusively on processing appealed claims (appeals centers) before they  are sent to the Board. The development resource centers obtain  information necessary for rating claims, while the appeals resource  centers review appeals and provide written summaries of cases for the  veterans. VBA determines the number of claims redistributed to each of  the resource centers on the basis of the regional offices’ and resource  centers’ changing workloads and capacities. Claims initially had to meet  specific criteria to be eligible for redistribution, such as having seven or  fewer disabilities. However, VBA relaxed these criteria in May 2008 to  allow more claims to be redistributed. The number of claims redistributed  for rating has increased from about 88,000 in fiscal year 2006 to about  140,000 in fiscal year 2008.
While redistributing workloads is helpful, this practice can pose  operational challenges. According to several VSO representatives,  redistributing claims reduces VSOs’ and VA’s ability to monitor claims  processing. Also, according to some resource center staff we interviewed,  workload redistribution sometimes creates inefficiencies. For example,  one rating resource center returned about 20 percent of the claims that it  received during the first half of fiscal year 2009 to the originating regional  offices because the claims required further development before they could  be rated. The resource centers provide written explanations for returned  claims, so that regional offices can correct the errors and avoid them in  the future. Despite such challenges, according to VBA officials,  redistributing backlogged claims to resource centers improves average  processing times because VBA can better leverage the ever-changing  capacities of its offices. Although VBA tracks the number of claims  processed—and recently started monitoring accuracy—by resource  center, it does not track the average processing times of redistributed  workloads. Therefore, VA cannot (1) compare the average processing  times of redistributed versus nonredistributed claims and (2) assess the  resource centers relative to key performance goals or the overall effect of  expanded workload redistribution on claims processing.
In addition to increasing staffing and redistributing workloads, VA is  piloting several new approaches for processing certain claims to improve  timeliness. For example, VA is implementing a pilot with the Department  of Defense (DOD) to perform disability evaluations. Begun in November  2007, the joint DOD-VA pilot process applies to servicemembers navigating  the military’s disability evaluation system, which determines whether  servicemembers are fit for duty or should be released from the military.  In the pilot, VA completes disability ratings for servicemembers found to  be unfit for duty. Key features of the pilot include a single physical  examination conducted to VA standards, disability ratings prepared by VA  for use by both DOD and VA in determining disability benefits, and  additional outreach and case management provided by VA staff at DOD  pilot locations to explain VA results and processes to servicemembers.
The goals of the pilot are to increase transparency and reduce confusion  about the disability evaluations conducted and, if military separation or  retirement is necessary, to expedite VA disability compensation benefits  upon discharge. If implemented widely, the pilot process could change the  way in which many veterans first receive disability benefits from VA.  According to DOD, preliminary pilot results suggest that the new process  expedites delivery of VA benefits to servicemembers following discharge  from the military. However, the number of claims affected by widespread  implementation of the DOD-VA pilot process would probably be small  compared with the total number of compensation claims processed by VA.  In fiscal year 2008, the military’s disability evaluation system caseload was  approximately 20,000, while VA processed about 729,000 compensation  claims that year.
VA is also piloting another new approach to process certain compensation  claims and appeals, but it has not yet established a plan to determine  whether the pilot process is worthy of widespread implementation. In  February 2009, VA launched a 2-year pilot called Expedited Claims  Adjudication (ECA) in 4 regional offices. This pilot, a joint effort between  VBA and the Board, is intended to accelerate the processing time of claims  and appeals. Claimants who opt into the ECA pilot agree to respond to VA  within time frames that are shorter than generally required. For example,  participating claimants agree to submit any notice of disagreement with  VBA’s decision within 60 days as opposed to within 365 days under VA’s  normal requirements. In return, the expectation is that claimants will  receive decisions from VBA—and from the Board if the claimant appeals  the decision—more quickly. VA is collecting data on the timeliness of ECA  processing compared with that of non-ECA processing, but complete data  are not yet available. VA officials said they intend to evaluate ECA before  expanding the expedited process within the agency. However, it is unclear  when and how VA will conduct such an evaluation because it has not yet  established an evaluation plan with specific criteria and methods to help  assess ECA’s impact on non-ECA claims and appeals processing and on  whether ECA is worthy of expansion. For example, it is unclear which  timeliness metrics VA will use to help assess ECA, and the performance  goals the new process must meet before being expanded.
As required under the Veterans’ Benefits Improvement Act of 2008, VA is  also piloting an expedited claims process for claimants who submit “fully  developed claims” and affirm that they do not intend to submit additional  information to support their claims. In return, VA’s goal is to process  such claims within 90 days of receipt of the claim. VA is piloting this  alternative process at 10 regional offices for at least 1 year, and the agency  has hired a contractor to help assess the feasibility and advisability of  continuing the pilot, and possibly deploying the process nationwide.  Because certain types of claims—such as those from newer veterans— may naturally lend themselves to being fully developed and therefore may  not be representative of all claims, the contractor will not merely compare  the average processing times for fully developed claims with those of  other claims. Instead, the contractor is working with VA to identify a  sound and feasible methodology for evaluating this alternative claims  process and is scheduled to provide VA with an evaluation of the pilot at  the end of May 2010.
section_title: VA Is Piloting a Reorganization and Has Implemented Quality Assurance and Technology-Related Initiatives That Could Improve Decision Quality and Timeliness in the Future
paragraphs: VA has taken several additional steps that could improve the quality and  timeliness of its decisions for compensation claims. For example, in July  2009, VA began piloting at one regional office a reorganization of its claims  processors into groups that are collectively responsible for gathering the  evidence for a claim, rating the claim, and processing the decision. This  structure is different from the current organization, which has distinct  teams for each phase of the claims process. This reorganization is based  on a recent recommendation from a consulting firm that studied VA’s  rating-related claim development process. In addition to reducing claim  folder movement and thus potentially reducing the average processing  time, the reorganization is intended to increase claims processing staff’s  appreciation for how their work quality impacts other aspects of the  process. Although some VA officials expressed skepticism that this  reorganization would significantly improve the agency’s performance in  processing compensation claims, they also acknowledged its potential  benefits. According to VA officials, VA plans to evaluate the pilot in May  2010, but it has not yet established specific criteria for expanding the  reorganization to other locations. Similar to the ECA pilot, VA has not yet  specified which metrics it will use to help assess the pilot, and the goals  that the new process must meet before being expanded.
VA has also expanded its capacity to measure claims and appeals  processing quality, which it uses to help monitor performance and identify  training opportunities for staff. For example, in fiscal year 2008, VA  doubled the number of staff working in VBA’s quality measurement group  from about 10 to 20 staff to improve its ability to assess the accuracy of  claim decisions and appellate work. In fiscal year 2008, this group more  than doubled the number of claims it reviews for accuracy from 10 to   21 cases per month, per regional office. In addition, in fiscal year 2009,  based in part on a VA inspector general recommendation, VBA began  monitoring the accuracy of claims decided by rating resource centers as it  does for regional offices. Moreover, starting in fiscal year 2008, based in  part on our prior recommendation, VBA’s quality measurement group  began conducting studies to monitor the extent to which veterans with a  similar disability receive consistent ratings across regional offices.  According to VA officials, VBA’s quality measurement group conducted  four consistency studies in fiscal year 2008. VBA used these studies to  identify training needs—such as how to verify a stressor for post-traumatic  stress disorder—at specific regional offices. The group had planned to  conduct additional consistency studies the following year, but because it  doubled the number of case reviews and conducted ad hoc, focused  reviews (e.g., of appellate work), it was not able to conduct further  consistency studies. However, in fiscal year 2008, VBA’s quality  measurement group began testing the consistency of decisions made by  claims processing staff at different locations on a hypothetical claim. The  group conducted two of these consistency tests during fiscal years 2008  and six tests in fiscal year 2009. VBA has used the results of these tests to  help identify training needs related to rating certain disabilities, such as  cardiovascular conditions.
VA has also leveraged technology in recent years to improve claims  processing. For example, VA has upgraded its claims processing software  in phases to enhance its ability to track information about claims and  reduce the need for duplicative data entry that could introduce errors.  According to VA, a software upgrade in October 2007 improved staff’s  ability to manage their workloads and more easily identify priority cases,  such as those for veterans returning from the current conflicts in Iraq and  Afghanistan, by electronically filtering and sorting pending claims. Other  claims processing software upgrades have allowed VA to capture  management information that is essential to conducting more robust  analyses on claims processing performance. For example, the prior  software system did not allow VA to electronically capture more than six  conditions per claim. With its current claims processing software, VA  captures information on the actual number of claimed conditions, which in  turn allows VA to analyze claim development time by condition.
Finally, VA has also begun processing certain compensation claims with  less reliance on paper claim files, but widespread paperless processing  remains elusive, in part because of technical challenges. As of October  2008, claims processing staff at two regional offices review scanned  versions of all compensation claims filed by servicemembers 60 to   180 days before leaving the military, known as Benefits Delivery at  Discharge claims. According to VA officials, this process is currently as  efficient as paper-based processing, but may eventually be more efficient  and enable further redistribution of case processing as regional offices’  changing capacities and workloads require. In addition, in the spring of  2009, VA designated one of its regional offices to test emerging  technologies and processes in a real setting to gauge their potential impact  on the agency and its employees. For example, VA recently used this office  to test the impact of claims processing staff using only electronic  information as opposed to hard-copy reference materials to process  claims. VA hopes to further test paperless claims processing. However,  officials said that the current system’s infrastructure cannot sustain the  high volume of data needed to process paperless claims on a widespread  basis. Even in processing Benefits Delivery at Discharge claims—which  comprise a small fraction of total compensation claims—the system  infrastructure used to process such claims occasionally malfunctions.  Although VA has taken some steps to strengthen its claims processing  system’s infrastructure, technical challenges persist, especially given the  volume of evidence generally received for claims and the piecemeal,  paper-based fashion in which VA often receives the information. These  factors challenge VA as it works toward having a fully paperless claims  processing system by the end of 2012.
section_title: Conclusions
paragraphs: For years, VA’s disability claims and appeals processes have received  considerable attention as VA has struggled to process an increasing  number of claims from both veterans of recent conflicts as well as aging  veterans from prior conflicts. Although VA workload and performance  data indicate that VA has made progress in improving some aspects of its  disability claims and appeals processing over the past decade, VA  continues to wrestle with ongoing challenges that may not be resolved in  the near future. Specifically, significant increases in claims workloads,  complicated by more conditions per claim and human capital challenges  associated with training and integrating VA’s large influx of new staff  continue to contribute to lengthy processing times and a large pending  claims inventory.
VA has little or no control over some contributors to its increasing  workload, but it has taken steps to address some internal inefficiencies  and challenges that persist within its disability claims and appeals  processes. Some of VA’s key actions, including its expansion of workload  redistribution to resource centers and separate pilots aimed at reducing  processing times, have the potential to improve the claims and appeals  processes. However, without fully evaluating these actions, VA will not  have the necessary information to determine their effectiveness and  whether VA should continue to invest its limited resources in them. For  example, workload redistribution to resource centers has the potential to  improve services to veterans, but without tracking the timeliness and  accuracy of the decisions processed by these centers, VA will not be able  to fully monitor the centers’ performance and will lack key inputs for  determining whether they yield positive returns on investment. As a result,  VA could miss out on opportunities to either increase efficiencies by  adding more resource centers, or to scale back workload redistribution if  it is not having the desired effect. In addition, absent an evaluation plan or  specific criteria for measuring the effect of its ECA and reorganization  pilots, VA may not be able to determine whether they are successful or to  make well-informed decisions about expanding them. Considering the  challenges VA faces and will likely face in the future, it is important that  VA make effective long-term decisions based on solid data to improve  benefit delivery for veterans.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Veterans Affairs direct:  1.  VBA to collect data on redistributed claims for development, rating,  and appellate work to help assess the timeliness and accuracy of  resource centers’ output and the effectiveness of workload  redistribution. 2.  VBA and the Board to establish an evaluation plan for assessing the  ECA pilot process and guiding any expansion decisions. Such a plan  should include criteria for determining how much improvement should  be achieved under the pilot on specific performance measures—such  as average VBA and Board processing times—and include methods for  how VBA and the Board will consider ECA’s impact on non-ECA  claims and appeals processing before implementing the process  widely.  3.  VBA to establish a plan to evaluate its claims processing  reorganization pilot and guide any expansion decisions. Such a plan  should include criteria for determining how much improvement should  be achieved in the pilot on specific performance measures—such as  decision timeliness and accuracy—before the process is implemented  throughout VBA.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to VA for review and comment. VA  generally agreed with our conclusions and concurred with our  recommendations. Its written comments are reproduced in appendix II.
VA agreed with our recommendation that VBA collect data on  redistributed claims and appellate work to help assess the timeliness and  accuracy of resource centers’ output and the effectiveness of workload  redistribution. VA stated that, by March 2010, VBA plans to change a  primary workload management tool to help collect timeliness data of  redistributed work. Analyzing such timeliness data along with other  factors, such as quality and cost, will be helpful in evaluating the  effectiveness of workload redistribution.
VA also agreed with our recommendation that VBA and the Board  establish an evaluation plan for assessing the ECA pilot process, and  stated that the Board will work with VBA to establish evaluation criteria  and explore the potential impact of ECA on non-ECA claims and appeals  processing. VA stated that the Board hopes to complete an evaluation of  ECA and make recommendations regarding potentially expanding the pilot  process or permanently incorporating successful aspects of it by the end  of fiscal year 2010. We applaud VA’s intent to evaluate the pilot and  encourage VA to take steps to ensure that the evaluation design and  criteria yield valid information for making decisions regarding expansion.
Finally, VA agreed with our recommendation that VBA establish a plan to  evaluate its claims processing reorganization pilot, and provided critical  factors that VBA and a private consulting firm established to help assess  and report on the pilot. Identifying these factors is an important start;  however, we believe that VBA should also establish the minimum levels of  performance improvement by factor that should be achieved before the  pilot process is considered successful and worthy of expansion.
We are sending copies of this report to the relevant congressional  committees, the Secretary of Veterans Affairs, and other interested parties.  The report is also available at no charge on GAO’s Web site at  http://www.gao.gov.
If you or your staffs have any questions concerning this report, please  contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. Staff members who made key contributions to this  report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of our review were to examine (1) trends in the Department  of Veterans Affairs’ (VA) disability compensation claims processing at the  claims and appellate levels and (2) actions that VA has taken to improve  its disability claims process. For both objectives, we focused our analysis  on VA’s processing of disability compensation for veterans as opposed to  other types of benefits, such as pensions.
To examine workload and performance trends, we analyzed compensation  claims processing data from VA’s Veterans Benefits Administration (VBA)  and Board of Veterans’ Appeals (Board). In addition, we interviewed VA  officials familiar with the claims process and reviewed VA annual  performance reports and other documents to understand data trends and  related VA challenges and to corroborate our findings. Further information  about our analysis of VA workload and performance data is provided in  the following text.
To identify actions that VA has taken to improve its disability  compensation claims and appeals processing, we reviewed relevant VA  testimony and key documents, such as VA strategic plans, and interviewed  VA officials responsible for compensation claims and appeals processing.  We focused on VA actions that are ongoing or those that VA completed  after fiscal year 2005. To examine these actions, we analyzed VBA and  Board staffing data; reviewed VA’s budget submissions, internal  processing guidance, and other documents such as external studies and  VA’s Office of Inspector General reports; and interviewed VA officials and  veteran service organization representatives. In addition, we visited four  VBA regional offices and the Board to learn about ongoing initiatives. In  selecting the regional offices—Chicago, Illinois; Seattle, Washington;  Togus, Maine; and Winston-Salem, North Carolina—we considered  regional offices that would provide (1) insights about ongoing initiatives,  such as pilots; (2) a mix of offices located in different geographic settings  (e.g., urban and rural); and (3) a mix of offices that are above and below  VBA’s averages for select claims processing measures. We also reviewed  relevant federal laws, regulations, and court decisions.
We conducted this review from November 2008 to January 2010 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives.
subsections: section_title: Analysis of VA Claims Workload and Performance Data
paragraphs: To analyze VA disability compensation claim workloads and processing  timeliness, we obtained nationwide, summary-level workload and  performance data by fiscal year from VA’s Benefits Delivery Network and  accompanying Distribution of Operational Resources (known as “DOOR”)  reports, and Veterans Services Network (VETSNET) system and  accompanying VETSNET Operations Reports (known as “VOR”), and  spoke with VA officials about these data and sources. We limited our  analysis to the following three types of disability claims: (1) initial  compensation claims with fewer than or equal to seven disabilities,   (2) initial compensation claims with eight or more disabilities, and   (3) reopened compensation claims. We analyzed data for fiscal years   2000 to 2008. To analyze pending claims trends, we considered the number  of claims that were awaiting a decision on the last day of each fiscal year.  To analyze and report other claim processing trends besides those for  receipts—which are designated by fiscal year according to when VA  received the claim—VA designated claims by fiscal year according to when  the decisions occurred. To verify the reliability of summary-level workload  and timeliness data from these systems, we obtained and analyzed record- level data from VA and spoke with VA officials about how the data are  input.
We were able to replicate all of the summary-level workload and  timeliness data that VA provided. However, we questioned VA’s method  for calculating claim receipts. Therefore, we attempted to replicate claim  receipt data using VA’s method and our method. VA calculates monthly  claim receipts by counting the total number of pending claim records at  the end of a month; subtracting the number of pending claim records from  the end of the previous month; and adding the number of completed  claims during the month, regardless of when they originated. To calculate  the annual number of claims received, VA then adds the monthly claim  receipt counts. Our method for calculating annual claim receipts was to  count the number of claims whose claim date was in a given year. We  compared the results and found that the annual claim receipts data using  our method were about 2 to 3 percent lower than the data replicated using  VA’s method. Ultimately, we decided to use the summary-level receipts  data that VA provided because they were materially close to our counts  and because we were able to replicate VA’s summary-level data using its  method.
To analyze the quality of VA’s disability compensation claims processing,  we obtained annual, nationwide data from its Systematic Technical  Accuracy Review (STAR) program and verified the reliability of the data.  The STAR program audits a randomly selected sample of VBA’s completed  claims for accuracy. We limited our analysis to the following three types of  disability claims: (1) initial compensation claims with fewer than or equal  to seven disabilities, (2) initial compensation claims with eight or more  disabilities, and (3) reopened compensation claims. To report consistent  data, we analyzed fiscal years 2003 to 2008 because the STAR program  changed its audit methodology in fiscal year 2002. To verify the reliability  of STAR data, we spoke with VA officials responsible for overseeing the  STAR system. We also relied on prior verification of STAR data.  Consistent with this prior verification, we found that the STAR data were  reliable for reporting nationwide trends.
section_title: Analysis of VA Appellate Workload and Performance Data
paragraphs: To analyze VA’s disability compensation appellate workloads and  processing performance, we obtained record-level appeals data extracted  on April 2, 2009, from the Veterans Appeals Control and Locator System  (VACOLS). We limited our analysis to rating-related disability  compensation appeals, which we identified by speaking with Board  officials about how rating-related disability compensation appeals are  classified in VACOLS, then limiting the data accordingly. We further  limited our analysis to original appeals as opposed to appeals that, for  example, had been previously remanded by the Board. Using the record- level appeals data, we generated nationwide annual data for fiscal years  2000 to 2008. To analyze pending appeals trends, we considered the  number of appeals that were awaiting a decision on the last day of each  fiscal year. To analyze other appeals processing trends besides those for  receipts—which we designated by fiscal year according to when VA  received the appeal—we designated appeals by fiscal year according to  when their resolution occurred.
Our reporting of avoidable remands—which are appeals that the Board  does not consider because of claims processing errors that occurred  before VBA certified transferring the appeal to the Board—varies from  calculations we received from VBA. For fiscal years 2006 to 2008, we  calculated avoidable remand rates of 24.3 percent, 25.4 percent, and   24.7 percent, respectively; whereas VBA reported avoidable remand rates  of 23.7 percent, 17.9 percent, and 17.7 percent, respectively. Our analysis  was limited to compensation appeals, whereas VBA included  noncompensation-related appeals. In addition, the calculation methods  differed. We calculated the avoidable remand rate as the number of  avoidable remands on original appeals—which excludes appeals that were  previously remanded by the Board—divided by the number of original  appeals decided by the Board. VBA calculated the rate as the number of  avoidable remands on original appeals, divided by the total number of  appeals decided by the Board. We believe that VBA’s method is misleading  because appeals in the denominator are not restricted as they are in the  numerator.
To assess the reliability of record-level appeals data, we (1) interviewed  Board officials about program and technical operations and (2) performed  electronic testing to identify missing and potentially invalid data and to  identify internal inconsistencies. We found that the data were reliable for  our reporting purposes.
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: Shelia Drake, Assistant Director; Joel Green; Lisa McMillen; and Bryan  Rogowski made significant contributions to this report. In addition, Walter  Vance provided guidance on research methodology; Cynthia Grant and  Christine San provided assistance with data analysis; Roger Thomas  provided legal counsel; Jessica Orr helped with report preparation; and  James Bennett provided assistance with graphics.
section_title: Related GAO Products
paragraphs: Veterans’ Disability Benefits: Preliminary Findings on Claims  Processing Trends and Improvement Efforts. GAO-09-910T. Washington,  D.C.: July 29, 2009.
Military Disability System: Increased Supports for Servicemembers and  Better Pilot Planning Could Improve the Disability Evaluation Process.  GAO-08-1137. Washington, D.C.: September 24, 2008.
Veterans’ Benefits: Increased Focus on Evaluation and Accountability  Would Enhance Training and Performance Management for Claims  Processors. GAO-08-561. Washington, D.C.: May 27, 2008.
Veterans Benefits Administration: Progress Made in Long-Term Effort  to Replace Benefits Payment System, but Challenges Persist. GAO-07-614.  Washington, D.C.: April 27, 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.
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: 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.
High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January  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 Administration: Problems and Challenges Facing  Disability Claims Processing. GAO/T-HEHS/AIMD-00-146. Washington,  D.C.: May 18, 2000.