Veterans' Disability Benefits: Long-Standing Claims Processing Challenges Persist
Published: 2007-03-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Senate 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 and accuracy of decisions on claims and appeals, VA's efforts to reduce backlogs, and concerns about decisional consistency.
section_title: What GAO Found
paragraphs: VA continues to face challenges in improving service delivery to veterans, specifically in speeding up the process of adjudication and appeal, reducing the existing backlog of claims, and improving the accuracy and consistency of decisions. 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, due in part to 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. Further, we and VA's Inspector General have identified concerns about the consistency of decisions by VA's regional offices and the Board of Veterans' Appeals (BVA). 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 working to improve appeals timeliness by reducing appeals remanded for further work. VA is also developing a plan to monitor consistency across regional offices. 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 and accurate manner, such as military service records. 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. Many of their  concerns have focused on long waits for decisions, large claims backlogs,  and inaccurate decisions. Our work, and media reports of significant  discrepancies in average disability payments from state to state have also  highlighted concerns about the consistency of decision-making within VA.  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 found that these  programs are based on outmoded concepts from the past.
You asked us to discuss our recent work on VA’s disability claims process.  My statement draws on a number of prior GAO reports and testimonies.  (See related GAO products.) We updated information as appropriate to  reflect the current status of VA claims processing and initiatives.
In summary, VA continues to face challenges in improving service delivery  to veterans, specifically in speeding up the process of adjudication and  appeal, reducing the existing backlog of claims, and improving the  accuracy and consistency of decisions. For example, between fiscal years  2003 and 2006, the inventory of rating-related claims grew by almost half  to a total of about 378,000, due in part to 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. While VA has  improved the accuracy of its compensation decisions to 88 percent in  fiscal year 2006, it is still well short of its established goal of 98 percent.  Meanwhile, appeals resolution remains a lengthy process. In fiscal year  2006, it took an average of 657 days to resolve appeals. Further, we and  VA’s Inspector General have identified concerns about the consistency of  decisions across regional offices and at the Board of Veterans’ Appeals.
VA is taking steps to address service delivery problems, but improvements  may be limited by several factors. 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. Further,  VA has taken actions to improve consistency, including developing a plan  to monitor decisions and identify unacceptable variations, and  commissioning a study of the major influences on compensation  decisions. However, several factors may limit VA’s ability to make and  sustain significant improvements in its 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 and accurate manner, such as military service records.
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 and other  federal disability programs have not been updated to reflect the current  state of science, medicine, technology, and labor market conditions.  Specifically, 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, our work has shown that about one-third of newly  compensated veterans could be interested in receiving lump sum  payments, which could potentially save VA time and money associated  with reopening cases over time and could be beneficial to veterans. In  addition, VA and other organizations have identified potential changes to  field operations that could enhance productivity and accuracy 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 service members. 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 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 to the Congress by October 1, 2007.
section_title: VA Continues to Face Service Delivery Challenges
paragraphs: VA continues to experience significant service delivery challenges  including lengthy processing times and inaccurate and inconsistent  decisions. 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. Moreover, questions  remain about consistency of VA’s decisions across regional offices and at  the Board of Veterans’ Appeals.
VA’s inventory of pending claims and their average time pending have  increased significantly in the last 3 years. 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.
In addition to problems with deciding claims in a timely manner, VA  acknowledges that regional office decision accuracy needs further  improvement. VA reports that it has improved the accuracy of decisions on  rating related compensation claims from 80 percent in fiscal year 2002 to  88 percent in fiscal year 2006. However, this figure remains well short of  its strategic goal of 98 percent.
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, the wide variations in average  payments per veteran from state to state. In May 2005, the Inspector  General reported that compensation payments are affected by many  factors and that some disabilities are inherently more susceptible to  variations in rating determinations. Further, we reported in May 2005 that  the Board of Veterans’ Appeals had taken actions to strengthen its system  for reviewing the quality of its decisions, but VA still lacked a systematic  method for ensuring the consistency of decision making within VA as a  whole.
section_title: Despite VA’s Continuing Steps, a Number of Factors May Limit Its Ability to Improve Claims Processing
paragraphs: VA has recently taken several steps to improve service delivery, but their  potential to lead to significant improvements may be limited by several  factors. These steps include requesting funding for additional staff,  initiatives to reduce appeal remands, and initiatives to assess and monitor  decision consistency. However, limitations on potential improvements  include increases in claims volume and complexity, and challenges in  acquiring needed evidence in a timely manner.
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 service members’ 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.
To improve decision consistency, VA has contracted for a study of the  major influences on compensation payments, to develop baseline data for  monitoring and managing decision variances. Also, VA is in the process of  testing templates for compensation and pension medical examinations for  specific types of disabilities to ensure that medical evidence from these  examinations will enable consistent evaluations of disabilities. Further, VA  formed a workgroup to study variances in the rates of benefit grants and  denials, and in assigned disability evaluations, leading to development of  plans to monitor consistency on an ongoing basis.
Despite these efforts, VA may be limited in its ability to make and sustain  significant claims processing performance improvements. Recent history  has shown that VA’s claims processing workload and performance are  affected by several factors, including the impacts of laws and court  decisions, increasing numbers and complexity of claims, and difficulties in  obtaining accurate and timely information to adjudicate claims. 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.
In addition, rating-related claims continue to increase, 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 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 they  are receiving more disability claims, such as those related to mental health  issues including post-traumatic stress disorder, which are generally harder  to evaluate.
Additionally, claims processing timeliness and decisional accuracy 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 the JSRRC. VBA agreed to determine  the feasibility of regional offices using an alternative resource prior to  sending some requests to the JSRRC. We also reported that while VBA  quality reviewers found few decision errors due to failure to obtain  military service records, VBA does not know the extent to which the  information that is provided to regional offices is reliable and accurate.  Regional offices rely on a VBA unit at the National Personnel Records  Center, where service records of many veterans are stored, to do thorough  and reliable searches and analyses of records and provide accurate reports  on the results. However, we noted that VBA does not systematically  evaluate the quality of these searches and analyses. Incomplete and  inaccurate reports could affect decisional accuracy.
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  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  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—and as such, 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.
Another area of program design that could be examined is the option of  providing a lump sum payment in lieu of monthly disability compensation.  In 1996, the Veterans’ Claims Adjudication Commission noted that most  disability compensation claims are repeat claims—such as claims for  increased disability percentage—and most repeat claims were from  veterans with less severe disabilities. According to VA, about 65 percent  of veterans who began receiving disability compensation in fiscal year  2003 had disabilities rated 30 percent or less. The commission questioned  whether concentrating claims processing resources on these claims, rather  than on claims by more severely disabled veterans, was consistent with  program intent. The commission asked Congress to consider paying less  severely disabled veterans compensation in a lump sum. According to the  commission, the lump sum option could have a number of benefits for VA  as well as veterans. Specifically, the lump sum option could reduce the  number of claims submitted and allow VA to process claims more  quickly—especially those of more seriously disabled veterans. Moreover, a  lump sum option could be more useful to some veterans as they make the  transition from military to civilian life. In December 2000, we reported that  about one-third of newly compensated veterans could be interested in a  lump sum option.
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, save overhead costs, and improve decisional  accuracy and consistency. We noted in December 2005 that VA had made  piecemeal changes to its claims processing field structure. VA  consolidated some of its pension income and eligibility verifications at  three regional offices. Further, VA consolidated decision making on  Benefits Delivery at Discharge claims, which are generally original claims  for disability compensation, at the Salt Lake City and Winston-Salem  regional offices. However, VA has not changed its basic field structure for  processing compensation and pension claims at 57 regional offices, which  experience large performance variations and questions about decision  consistency. Unless more comprehensive and strategic changes are made  to its field structure, VBA is likely to miss opportunities to substantially  improve productivity, accuracy, and consistency, especially in the face of  future workload increases. We have recommended that the 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,  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, whether lump sum  payments should be made for certain disabilities or level of severity of  disability, 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 committee 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, Greg Whitney, and Charles Willson.
section_title: Related GAO Products
paragraphs: 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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