Veterans' Disability Benefits: VA Can Better Ensure Unemployability Decisions Are Well Supported
Released: 2015-07-02T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: VA generally provides Individual Unemployability benefits to disabled veterans of any age who are unable to maintain employment with earnings above the federal poverty guidelines due to service-connected disabilities. Because the population of veterans who receive these supplemental benefits has been growing, GAO was asked to review VA's management of these benefits.

This report (1) examines age-related trends in the population of Individual Unemployability beneficiaries and benefit payments; (2) assesses the procedures used for benefit decision-making; and (3) describes suggested options for revising the benefit. GAO analyzed fiscal year 2009 through 2013 data provided by VA—the most recent years available; reviewed applicable federal laws, regulations, and program policies; visited six regional offices selected for their differing accuracy rates, workload, and geography; reviewed a non-generalizable sample of claims; and spoke with rating specialists, experts, and VSO representatives.

section_title: What GAO Found
paragraphs: The number of older veterans receiving Individual Unemployability benefits, a disability supplement, has been increasing, as has the total amount of benefit payments. In fiscal year 2013, 330,000 veterans received this benefit, which the Department of Veterans Affairs (VA) provides to disabled veterans of any age who are unemployable because of service-connected disabilities. From fiscal years 2009 through 2013, the most recent data available, there was a 22 percent increase in the number of veterans receiving these benefits, and a 73 percent increase in the subgroup of beneficiaries aged 65 and older. Moreover, among new beneficiaries in 2013, about 2,800 veterans were 75 and older, of which more than 400 were 90 and older. These trends have given rise to questions about what constitutes “unemployability.” Only a small proportion, 4 to 6 percent, of beneficiaries had benefits discontinued during these years—about 70 percent of which were due to the death of the beneficiary. During the 5-year study period, disability payments to those receiving Individual Unemployability—the base payment plus the supplement—increased by 30 percent (to $11 billion in fiscal year 2013). For that year, GAO estimated $5.2 billion for the supplement alone.

VA's procedures do not ensure that Individual Unemployability benefit decisions are well-supported. For example, contrary to federal internal control standards, the guidance on determining unemployability is incomplete for ensuring consistency. In discussion groups with GAO, VA's rating specialists said they disagreed on the factors they need to consider when determining unemployability, weighed the same factors differently, and had difficulty separating allowable from non-allowable factors. Some specialists said these challenges create the risk that two raters could examine the same evidence and reach an opposite decision to approve or deny a claim. Also, VA's quality assurance approach primarily checks the procedural accuracy of decisions and does not ensure a comprehensive assessment of whether decisions are complete, accurate, and consistent. In addition, VA does not independently verify self-reported earnings information supplied by applicants and beneficiaries, although the agency has access to Internal Revenue Service data for this purpose. VA officials said they are waiting for a data system, expected in 2016, to conduct verifications. However, by postponing verification of self-reported earnings, the benefit is at risk of being awarded to ineligible veterans.

Based on a review of literature, GAO identified various options for revising eligibility requirements and the structure of the Individual Unemployability benefit. Six options focus on eligibility requirements, such as considering additional criteria when determining unemployability and applying an age cap of 65. The seventh option would change the benefit structure by reducing payments as beneficiaries earn income in excess of the poverty threshold. Experts and representatives of veterans service organizations (VSO) that GAO interviewed identified the potential strengths of each option (such as improved decision accuracy) and potential challenges (such as increased need for fiscal and administrative resources). In addition, VA's advisory committee recommended in 2012 that the agency study age and require vocational assessments when weighing veterans' unemployability; VA agreed to study both, but has not yet taken action.

section_title: What GAO Recommends
paragraphs: GAO recommends that VA issue updated guidance to determine eligibility; identify a comprehensive quality assurance approach to assess benefit decisions; verify veterans' self-reported income; and move forward on studies suggested by its advisory committee. VA concurred with all of GAO's recommendations.

section_title: Letter
paragraphs: The Department of Veterans Affairs (VA) compensates veterans for work- related disabilities incurred during active military service—aiding a total of  about 3.7 million veterans through its Disability Compensation program in  2013. When veterans are deemed to have a service-connected disability,  the level of compensation they are awarded is based on an assessment  of disability ranging from 0 to 100 percent (in increments of 10 percentage  points) and is intended to reflect an average loss in earning capacity  resulting from their service-connected disability. In recognition of its  position that “average loss” does not always adequately compensate  individual veterans in their particular circumstances, VA provides a  supplemental compensation for veterans with a demonstrated need.  Specifically, the Total Disability Individual Unemployability (TDIU) benefit  is provided to veterans, irrespective of age, who are deemed to be unable  to obtain or maintain gainful employment due to their service-connected  disability (VA assigns these veterans a 100 percent disability rating).

In 2003, GAO designated federal disability programs, including VA’s  Disability Compensation program, as high risk due in part to challenges  agencies face in keeping their criteria for evaluating disability and  determining compensation consistent with advances in medicine,  technology, and changes in the labor market and society. Meanwhile,  more veterans are receiving disability benefits, including TDIU, and many  disabled veterans are living longer and collecting disability benefits for  longer periods of time. These trends have led to questions regarding  TDIU benefits including whether this supplement to the regular disability  compensation benefit should be provided to veterans of retirement age.  For example, the Congressional Budget Office (CBO), as part of a  broader examination to reduce the federal deficit, estimated that  restricting TDIU benefits to veterans younger than their full Social  Security retirement age would reduce costs by $15 billion between 2015  and 2023. You asked us to examine TDIU benefits.

This report addresses the following questions:  1.  What are the age-related trends in the population of TDIU  beneficiaries and the trend in the total TDIU benefit payments?  2.  How well do VA’s procedures position the agency to ensure that TDIU  benefit decisions are supported?  3.  What alternative options have been proposed for revising the eligibility  requirements and design structure for TDIU benefits?

To describe the age-related trends in the population of TDIU  beneficiaries, we obtained and analyzed data from VA regarding new and  continuing beneficiaries covering fiscal years 2009 through 2013 (the  most recently available data). The data included information such as the  beneficiaries’ age, schedular disability ratings, benefit discontinuations  and total amounts paid in disability benefits. To assess the reliability of  the data, we obtained detailed information from agency officials on the  methods used to generate the data requested, including limitations and  assumptions made by VBA officials. In addition, we performed logic  testing of the computer program VA used to extract the data. Through  these means, we found these data to be sufficiently reliable for the  purpose of analyzing age-related trends in the TDIU beneficiary  population and the benefit payments.

To describe the procedures VA uses to support TDIU eligibility decisions,  we examined relevant federal laws, regulations and procedures for new  and continuing claim determination decisions, including the TDIU policy  manual and guidance documents. We also conducted interviews with VA  and its Veterans Benefits Administration (VBA) officials in their central  office, and six regional offices. These offices were selected to represent a  range of TDIU caseloads, percentages of claims resulting in granted  benefits, accuracy of eligibility reviews, and geographic locations (Boston,  Massachusetts; Denver, Colorado; Manchester, New Hampshire; New  Orleans, Louisiana; Portland, Oregon; and Seattle, Washington). During  our visits to five of these regional offices (the sixth office served as a  preliminary site visit), we held 11 discussion groups of 2 to 3 rating  specialists using an interview protocol. We also interviewed quality review  team (QRT) coaches, QRT members, and regional office management.  We reviewed training materials and quality assurance data provided by  the regional officials. In addition, we conducted a non-generalizable file  review of 34 randomly-selected claims resulting in granted and denied  benefits decided between April 2012 and April 2014.

To identify the options that have been proposed to revise the TDIU  eligibility and structure, we reviewed prior VA proposals, CBO options for  reducing the federal budget deficit, and literature related to TDIU. We also  conducted interviews with five disability experts familiar with TDIU  benefits and representatives of two veterans service organizations (VSO)  to obtain their views on any potential opportunities and challenges the  options pose. We did not independently assess the individual merits or  accuracy of the views expressed by the experts and VSO  representatives.

We conducted this performance audit from January 2014 to June 2015 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 we obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: VA Disability Compensation Benefits
paragraphs: VA provides monthly disability compensation to veterans with disabling  conditions caused or aggravated by their military service. Since 1925, VA  has used the Veterans Affairs Schedule for Rating Disabilities (VASRD)  to assign disability ratings to veterans based upon the existence and  severity of service-connected disabilities. The severity of a disability is  based on an average reduction in earning capacity across a group of  veterans with similar physical or mental impairments brought on by their  service. This degree of severity is expressed as a percentage and is often  referred to as a “schedular rating.” For veterans with multiple service- connected disabilities, VA calculates the rating using a table that applies  a formula for combining multiple ratings into a single rating. The rating  dictates the amount of monthly compensation—set by law—a veteran  receives, as shown in table 1. Veterans receiving a 100 percent rating are  deemed to have a total disability.

section_title: History of the TDIU Benefit and the Eligibility Decision-Making Process
paragraphs: In 1934, VA revised its disability compensation program to establish TDIU  compensation. VA has testified that the TDIU supplemental benefit was  created to allow veterans to be deemed totally disabled even if they do  not meet the criteria for a 100 percent rating. VA provided the rationale  that while the rating schedule is intended to identify impaired earnings  reduction for the average veteran, it does not always adequately  compensate individual veterans based on their particular circumstances.  The TDIU benefit was established during the Depression, when Social  Security retirement benefits were passed into law. In 1945, VA  established that age was not to be considered a factor in evaluating  entitlement to TDIU.

Today, TDIU benefits are generally a way VA can increase an eligible  veteran’s schedular disability rating to 100 percent based on the veteran’s  inability to earn income above the amount set by federal poverty  guidelines because of their service-connected disabilities. To be eligible  for TDIU compensation, a veteran must have a single service-connected  disability rated at least 60 percent or multiple disabilities with a combined  rating of at least 70 percent (with at least one disability rated at 40  percent or higher). In addition, the veteran must be unable to obtain or  maintain “substantially gainful employment” as a result of these service- connected disabilities. VA generally considers “substantially gainful  employment” to be employment above the federal poverty guidelines— $11,490 for an individual with no dependents in 2013. VA refers to the  inability to maintain gainful employment as “unemployability.” Because a  TDIU award yields a higher rating percentage, it leads to higher levels of  compensation above the base schedular rating amount. For example, the  rating for a veteran with no dependents could be increased from 60  percent ($1,026 per month) to 100 percent ($2,816 per month), an  increase of $1,790 per month—or $21,480 a year.

Disability compensation claims processing, including TDIU claims, is  performed at 57 VBA regional offices. See figure 1 for a description of  how TDIU-related claims processing is performed. Veterans are assigned  a VASRD rating through VBA’s review of their service-connected  disabilities. When a claim for TDIU benefits is raised, a rating specialist  determines if the veteran meets the schedular rating requirements and is  unemployable. The rating specialist considers additional evidence— beyond that related to the veterans’ military service and medical  diagnosis required to decide a disability compensation claim—to decide  whether the veteran’s service-connected disabilities make them  unemployable. In determining unemployability, the rating specialist  reviews the veteran’s employment history as well as the reason(s), if any,  for termination of employment. Unlike other benefit programs, such as  Social Security Disability Insurance (SSDI), VA does not consider  reaching retirement age as a cause for ineligibility.

Once veterans begin receiving TDIU benefits, VBA reviews TDIU  beneficiaries’ employment and income annually to determine whether  they continue to meet the eligibility requirements. VA terminates the  supplemental TDIU benefits for those who do not provide the required  information or are determined no longer eligible. VA requires beneficiaries  to annually self-certify their employment and income. Specifically, in an  Employment Questionnaire required for the continuation of TDIU benefits,  the beneficiaries report their employment status during the previous 12  months including the type of work, hours worked, time lost for illness, and  highest gross earnings per month. A beneficiary’s income can exceed  the income threshold for twelve consecutive months before VA  discontinues the TDIU benefit.

section_title: VBA’s Steps to Measure Accuracy of Disability Compensation Claims Decisions
paragraphs: VBA measures the accuracy of disability compensation claim decisions  mainly through its Systematic Technical Accuracy Review (STAR),  including TDIU claims. Specifically, for each of the 57 regional offices,  completed claims are randomly sampled each month and the data are  used to produce estimates of the accuracy of all completed claims. VA  reports national estimates of accuracy from STAR reviews to Congress  and the public through its annual performance and accountability report  and annual budget submission. VBA also produces regional office  accuracy estimates, which it uses to manage the compensation benefits  program. Beginning in October 2012, VBA began using data from STAR  reviews to also produce issue-based estimates of accuracy that measure  the accuracy of decisions on the individual medical conditions within each  claim. VBA also performs local quality reviews conducted by regional  office quality review teams (QRT) formed to assess and monitor quality of  staff performance and decisions. Specifically, QRTs review completed  claims to assess individual rating specialist’s performance. In addition,  QRTs review in-process claims, which are claims that the specialists have  not yet finalized, to identify common errors and help prevent inaccurate  decisions. See appendix II for additional information on these and other  VBA quality assurance measures.

In November 2014, we issued a report on VBA’s quality assurance  efforts. We found, among other matters, that VBA had not always  followed generally accepted statistical practices when calculating  accuracy rates through STAR reviews, resulting in imprecise performance  information. We also identified shortcomings in QRT practices and  implementation that could reduce their effectiveness. We made a number  of recommendations to VA to improve its measurement and reporting of  accuracy, review the multiple sources of policy guidance available to  claims processors, enhance local data systems, and evaluate the  effectiveness of quality assurance activities. VA concurred with our  recommendations. See appendix II for additional information on STAR  and QRT reviews.

section_title: The TDIU Beneficiary Population Is Growing, Especially among Older Veterans
subsections: section_title: The Number of TDIU Beneficiaries and Benefit Costs Increased Over 5 Years
paragraphs: In fiscal year 2013, 332,934 veterans received TDIU benefits, an increase  of 22 percent since fiscal year 2009, as shown in table 2. In 2013, there  were 31,159 veterans who began receiving TDIU for the first time; that is,  new beneficiaries. Moreover, the number of new beneficiaries increased  in each of the 4 years we compared to the subsequent year and  represented about 9 to 10 percent of the overall TDIU population in each  of the 5 years we examined. Similar to the number of new beneficiaries,  the number of beneficiaries whose benefits were discontinued also  increased in each of the 4 years we compared; these discontinued  beneficiaries comprised from 4 to 6 percent of the TDIU population.  Overall, of the 74,224 beneficiaries whose benefits were discontinued  from fiscal year 2009 through fiscal year 2013, 69 percent were  discontinued due to the death of the beneficiary. Benefits were  discontinued for the remaining 31 percent because beneficiaries  generally either (1) earned enough income to exceed the income  threshold, (2) failed to submit the required annual Employment  Questionnaire for the continuation of benefits, or (3) received a change to  their schedular rating.

Overall, TDIU beneficiaries make up a substantial portion of the group of  veterans who receive benefit payments at the 100 percent disability  compensation rate. In fiscal year 2013, there were 3.7 million veterans  receiving disability benefits and those with service-connected disabilities  who receive benefit payments at the 100 percent disability compensation  rate accounted for 712,000 of the 3.7 million, as shown in figure 2. Within  the population of veterans whose benefits were paid at the 100-percent  rate, TDIU beneficiaries made up 45 percent.

According to data provided by VA, TDIU beneficiaries received disability  compensation payments totaling approximately $11 billion in fiscal year  2013, as shown in figure 3, which represented a 30 percent increase—or  approximately $2.5 billion—since fiscal year 2009.

In fiscal year 2013, over two-thirds of TDIU beneficiaries had dependent  family members, which increased their benefits payments, while 31  percent were single with no dependents. These TDIU beneficiaries  received higher benefit payments depending on (1) whether the  beneficiary had a spouse, dependent parent, and/or child and (2) the  number of such dependents. For example, when comparing the  payments beneficiaries received in fiscal year 2013, a TDIU beneficiary  with no dependents received $2,816 per month, a beneficiary with a  spouse and no other dependents received $2,973, while a beneficiary  with a spouse and one child received $3,088.

We estimate that, in fiscal year 2013, the TDIU benefit was a $5.2 billion  supplemental payment above what beneficiaries would have received at  their regular scheduled rating in the absence of TDIU benefits. VA does  not track the overall costs of TDIU benefits, so we used disability  compensation payment rate information, data on the TDIU beneficiary  population, and data on the population of all new beneficiaries to  calculate this estimate. For more information on how we calculated this  estimate, see appendix I.

section_title: The Number of Older TDIU Beneficiaries Has Increased
paragraphs: The number of older beneficiaries (age 65 and older) increased for each  of the 5 years we examined and by fiscal year 2013, they represented the  majority (54 percent) of the TDIU population, as shown in figure 4. By  2013, 180,043 beneficiaries fell within this age group, representing a 73  percent increase from fiscal year 2009. Of these older beneficiaries,  56,578 were 75 years of age and older in fiscal year 2013 while 10,567  were 90 years of age and older. The number of younger beneficiaries  (under 40 years of age) increased by 56 percent from fiscal year 2009  through 2013, although they made up a small proportion (5 percent) of  the overall TDIU population in fiscal year 2013. In contrast to the growth  in the number of older and younger beneficiaries, the number of middle- aged beneficiaries (aged 40 to 64) dropped by 14 percent to about  136,000 beneficiaries in fiscal year 2013.

The increase in older beneficiaries, as described above, was largely  attributable to older beneficiaries who began receiving TDIU benefits for  the first time. Fifty-three percent of the increase in older beneficiaries,  from fiscal year 2009 through fiscal year 2013, was attributed to the new  older beneficiaries. The rest of the increase in older beneficiaries was  attributed to aging of the existing TDIU population, with middle-aged  workers (aged 40 to 64) aging into the age 65 and over population. A  year-by-year breakdown is shown in figure 5. In comparing the new  beneficiary population in fiscal years 2009 and 2013, the number of new  older beneficiaries more than doubled to reach 13,259 beneficiaries. Of  these new older beneficiaries, 2,801 were aged 75 and over while 408  were aged 90 and over. See appendix III for the breakdown of new  older beneficiaries by age groups.

section_title: VBA’s Guidance, Quality Assurance Approach, and Income Verification Procedures Do Not Ensure That TDIU Decisions Are Well Supported
subsections: section_title: VBA Has Provided Incomplete Guidance on How to Determine a Veteran’s Unemployability
paragraphs: VBA provides guidance to rating specialists to help them determine if  veterans meet the eligibility requirements for TDIU benefits. This  guidance tasks rating specialists, based upon the evidence at hand, to  determine veterans’ unemployability; it also recognizes that the process is  subjective and involves professional interpretation. The guidance briefly  lists factors that rating specialists should consider when deciding if a  veteran is unemployable. For example, rating specialists should, as  appropriate, consider medical opinions, treatment records, notes from  vocational rehabilitation efforts, and receipt of Social Security disability  benefits. The guidance also briefly lists factors that rating specialists are  to treat as “extraneous” and therefore exclude from their analysis, such as  a veteran’s age, the availability of work in the community, and the effects  of non-service-connected disabilities on the ability to work.

However, the guidance provided by VBA on which factors to consider  when determining if a veteran is “unemployable” is incomplete in three  ways, creating potential variation in TDIU claim decisions. First, rating  specialists in some (5 of 11) of the discussion groups we held at five  regional offices disagreed on whether they are permitted to consider  additional factors that are not specifically mentioned in VBA’s guidance.  Rating specialists held varying opinions on whether factors such as  enrollment in school, education level, or prior work history should be used  to decide the benefit claim. Some examples of the variability in decisions  this incomplete guidance results in are shown in the examples below:

A rating specialist recently reviewed a claim for TDIU that was  submitted by a veteran suffering from traumatic brain injury. The  rating specialist found that the veteran was enrolled in school part  time and earning A’s in engineering classes, which the specialist felt  clearly demonstrated employability. However, another rating specialist  within the group stated that the veteran’s enrollment in classes would  not be part of her decision-making.

A rating specialist granted benefits to a veteran with an 8th grade  education because the specialist felt the veteran was unqualified for  work other than the lumberjacking he had performed since leaving the  military, despite the fact that the examiner found that the veteran  could work in a job with fewer physical demands. A fellow rating  specialist agreed that the veteran was qualified for few jobs, but would  not have granted the benefit because the veteran’s physical  restrictions did not disqualify the veteran from certain other jobs.

Another rating specialist denied benefits for a veteran who was a  retired dentist. The veteran’s medical examiner submitted a written  opinion that the veteran could not perform dental work due to his  inability to stand; however, the rating specialist decided the veteran’s  prior work in such a high-skilled career was an indication that he could  engage in a different line of work. Yet, another rating specialist stated  that he would have instead relied solely on the opinion of the medical  examiner and consequently granted the TDIU benefit.

Second, rating specialists noted that for those factors that rating  specialists can consider in their decision-making process, the guidance is  silent on which factors, if any, should be given greater priority or weight.  We confirmed that this information was not in the manual or guidance  provided by VBA. As a result, during 5 of our 11 discussion groups with  rating specialists, we heard differences in opinion about the primacy of  factors rating specialists applied when making a decision on  unemployability. The majority of rating specialists in the discussion  groups (7 of 11) specifically noted that they could come to an opposite  decision when reviewing the same evidence if the evidence were weighed  differently. For example, during a few of these discussion groups, rating  specialists told us they relied heavily on medical opinions while others  considered Social Security Disability Insurance (SSDI) payments as the  strongest marker of a veteran’s inability to work. In another instance, a  rating specialist told us that a medical opinion was always weighted more  heavily than all other evidence in the veteran’s file while another specialist  expressed a hesitancy to rely too much on the examiner’s opinion.

Third, the guidance does not provide instruction on how to separate  extraneous factors from allowable ones. Some of the discussion groups  (6 of 11) told us that not having this guidance was a significant challenge  for them. Findings from our case file reviews also illustrate this issue: one  file described a 77-year-old veteran claiming TDIU benefits for blindness  that was caused by (1) a service-connected disability, (2) glaucoma, and  (3) macular degeneration. However, because all three conditions related  to the veteran’s quality of vision, the rating specialist noted in the file her  difficulty separating the effect of the service-connected disability from the  non-service-connected glaucoma and macular degeneration due to the  man’s age. Rating specialists also told us that despite guidance to the  contrary, they still consider age as a factor. At one end of the age  spectrum, specialists in the majority (7 of 11) of the discussion groups  told us that they have difficulty rationalizing granting benefits to veterans  beyond 65 years of age. In each of these groups, at least one rating  specialist provided an example of when they may consider age as a  factor in the TDIU benefit decision. For example, one rating specialist  shared a case of an older veteran who retired from police service more  than 10 years before applying for TDIU benefits. He specifically had a  concern with program rules which did not allow him to consider the  veteran’s age and retirement status. At the other end of the age  spectrum, rating specialists in four of the discussion groups described  difficulties in granting TDIU benefits for younger veterans because they  do not want these veterans, in the future, to be discouraged from  attempting a return to work for fear of losing the benefit.

section_title: Format and Delivery of TDIU Guidance Does Not Support Efficient Claims Decision-Making
paragraphs: Rating specialists in the majority (7 of 11) of our discussion groups at five  regional offices reported that VBA’s guidance for reviewing TDIU claims is  formatted and delivered in ways that make it difficult for them to complete  their decision-making responsibilities in an efficient manner. Federal  internal control standards highlight the need for collecting, consolidating,  and distributing pertinent information in a form that allows employees to  perform their duties efficiently. For several reasons, VBA’s guidance  falls short of this standard. First, TDIU guidance is delivered using  multiple formats, including manuals, policy and procedure letters,  summaries of relevant legal decisions, frequently-asked-question  responses, monthly bulletins, feedback from quality assurance reviews, e- mails, and internal webpages. However, the information provided in these  various forms can also vary, making it challenging for rating specialists to  have a definitive source for TDIU benefit decision guidance. Moreover,  some of the guidance, for example the information provided to frequently- asked-questions, is sent only to the regional office which submitted the  question, according to rating specialists in a couple of the 11 discussion  groups. Second, VBA rating specialists in 8 of the 11 discussion groups  told us they have difficulty finding the most current guidance. While VBA  has a manual for TDIU benefit decisions, officials at all six regional offices  told us that the manual is outdated. VBA officials acknowledged this  condition and stated they issue interim guidance in many forms between  manual updates because such updates are time-consuming and difficult  to do on a regular basis. Third, rating specialists in a couple of the  discussion groups told us that the guidance they receive typically lacks  search features, which may allow them to readily find the most current  TDIU guidance. For example, the rating specialists described having to  read through numerous bulletins to find guidance on TDIU and then look  for the specific guidance they need as opposed to being able to use a key  word search to capture all related information.

Some VBA central and regional office efforts address the disparate nature  of the guidance. To locate guidance more readily, two of the six regional  offices we visited had developed “cheat sheets,” which they said captured  all of the guidance into a single searchable document. VBA officials also  told us they are taking steps to develop an electronic manual that is  intended to consolidate and replace many other forms of guidance,  including manuals and memoranda of policy changes, for processing all  claim types and will include a search feature. VBA is initially creating a  web portal to house all existing guidance and subsequently will  consolidate the guidance into one processing manual. VBA has  completed two of the four stages for the web portal and is in the process  of rewriting the manual. Officials told us they plan to complete the  consolidation by the end of fiscal year 2015.

section_title: VBAs’ Quality Assurance Approach Does Not Provide a Comprehensive Assessment of TDIU Decisions
paragraphs: VBA’s quality assurance approach—accomplished mainly through its  Systematic Technical Accuracy Review (STAR)—may not be providing a  comprehensive assessment of TDIU claim decisions. The agency’s  current approach does not allow it to identify variations in these decisions  or ascertain the root causes of variation which may exist. Federal internal  control standards state that agencies should assess performance using  control activities, such as quality assurance checks, and that performance  information should provide agency officials with information on the extent  to which claims decisions are complete, accurate, and consistent.

However, VBA’s quality assurance standards indicate that a quality  assurance officer reviewing TDIU decisions for errors cannot substitute  his or her professional opinion with the opinion of the rating specialist who  made the original decision. The officer cannot substitute, for example, his  or her interpretation of the medical and vocational evidence, as well as an  interpretation of the underlying regulations governing the benefit. For the  quality assurance officer to decide that the rating specialist made an  error, it must be clear and undebatable. Because of this high standard, a  STAR review of a sample of claims finalized during the first three quarters  of fiscal year 2014 determined that nearly 95 percent of TDIU claims (872  of 920) were error-free. Of the 48 claims found to contain an error, all  the errors were found to be “procedural,” such as an incorrect date for the  onset of unemployability. No “decisional” errors were found, which are  errors in the decision to grant or deny the benefit. According to VBA  officials, it is unlikely that they will find many decisional errors because  there is so much individual judgment allowed in TDIU claim decisions,  and VBA’s quality assurance standards do not allow for the reevaluation  of the professional opinion of the original rating specialist.

Beyond STAR, the regional offices also conduct quality review team  (QRT) reviews for disability compensation claim decisions in general, but  these reviews may not be providing much insight into the completeness,  accuracy, and consistency of TDIU claim decisions. The regional offices  use QRT reviews to identify trends in error and review individual rating  specialist’s performance (for past claim decisions as well as claims still in  review). However, VBA officials in almost all (5 of 6) of the regional offices  told us that these reviews generally include very few TDIU claims.  Moreover, QRT reviews apply a similar approach to calculating errors as  STAR reviews. For example, QRT reviews give deference to professional  opinion and officials we spoke with noted that questionable decisions  made by rating specialists are typically coded as a “training comment”  rather than as an “error.” In such instances, QRT officials discuss the  claim with the rating specialist. Only one of the regional offices we visited  was systematically tracking the type of TDIU errors in its QRT review  process.

Quality assurance approaches that VBA has used with non-TDIU  disability compensation claims suggest that other options may be  available to generate additional insight into a comprehensive assessment  of the completeness, accuracy, and consistency, as well as possible  enhancements, of TDIU claims decisions. For example, as we reported in  2014, VBA conducted a targeted review of military sexual trauma claims  using a consistency questionnaire to test rating specialists’ understanding  and interpretation of policies in response to concerns that post-traumatic  stress disorder claims related to military sexual trauma were not being  accurately decided. Performing a similar review to gauge the degree of  consistency in TDIU claim decisions could help VBA identify differences— perhaps beyond reasonable limits—in how rating specialists interpret the  guidance and apply their professional judgment. Further, measuring  consistency of decisions for specialists working in different regional  offices could provide additional insight. VBA has used other quality  assurance approaches to assess non-TDIU disability compensation claim  decision-making, which are discussed in greater detail in appendix II.  While we recognize that TDIU benefit decisions have an inherently  subjective component, the current approach that VBA uses cannot ensure  that the decisions are comprehensively assessed for completeness,  accuracy, and consistency.

section_title: VBA Does Not Verify Self- Reported Income Eligibility Information
paragraphs: While VBA requires TDIU claimants and beneficiaries to provide  information on their employment earnings, VBA places the benefits at risk  of being awarded to ineligible veterans by not using third-party data  sources to independently verify self-reported earnings. To begin receiving  and remain eligible for TDIU benefits, veterans must meet the income  eligibility requirements. VBA first determines a claimant’s income by  requesting information on the last 5 years of employment on the claim  form and subsequently requires beneficiaries to annually attest to any  income changes. Rating specialists use the information provided by  claimants to request additional information from employers and, when  possible, verify the claimant’s reported income, especially for the year  prior to applying for the benefit. In order to receive verification, VBA sends  a form to the employers identified on the veteran’s benefit claim and asks  them to provide the income earned by the veteran. However, VBA  officials indicated that employers provide the requested information only  about 50 percent of the time. This estimate was consistent with what we  heard from our discussion groups of rating specialists and the number of  completed forms found in the files we reviewed. Rating specialists in 5 of  the 11 discussion groups told us the low response rate is often due to  businesses having closed, lack of incentives to return the form, and staff  at human resources offices being unfamiliar with the veteran. If VBA does  not receive verification from a veteran’s employer after multiple attempts,  it accepts the veteran’s claimed earnings. None of the rating specialists in  the 11 discussion groups we held in five regional offices discussed other  ways of verifying the self-attested income that beneficiaries’ report on the  initial TDIU claim or the annual form that must be submitted to continue to  receive benefits. However, one rating specialist explained that in the rare  instances when beneficiaries indicate earning above the income  threshold, the specialists review additional documents, such as tax  documents, submitted by the veteran.

VBA previously conducted audits of beneficiaries’ reported income by  obtaining income verification matches from Internal Revenue Service  (IRS) earnings data through an agreement with the Social Security  Administration (SSA), but is no longer doing so. For example, VBA  obtained reported income annually and compared lists of TDIU  beneficiaries to their self-reported income. VBA officials told us that the  agency is not performing income verification matches for TDIU claims  despite having standing agreements with the IRS and SSA to do so. In  2012, VBA suspended income verification matches to allow for the  development of a new system that would allow for more frequent,  electronic information sharing. VBA officials told us that they plan to roll  out a new electronic data system that would allow for compatibility with  SSA data sources in fiscal year 2015. They noted that they plan to use  this system to conduct more frequent and focused income verifications to  ensure beneficiaries’ continued entitlement. VBA officials also anticipate  being able to use the system to conduct income verifications for initial  TDIU applicants beginning in fiscal year 2016. However, they did not  provide us with a plan or timeline for implementing this verification  system.

In addition, VA has not fully taken advantage of previous opportunities to  use the National Directory of New Hires (NDNH) to verify self-reported  income information for the TDIU program. The NDNH, which is  maintained by the Department of Health and Human Services (HHS), was  established in part to help states enforce child support orders against  noncustodial parents and contains more timely state wage information.  The NDNH also includes data from state directories of new hires, state  records of unemployment insurance benefits paid, and federal agency  payroll data, all of which can be used to help establish a picture of a  claimant’s work history and earnings. NDNH data are updated at least  quarterly, providing a more recent snapshot of earnings than the IRS  wage information that SSA obtains. However, access to the NDNH is  limited by statute. In our 2006 report on VA’s TDIU benefits, we  recommended that VA use this directory to enforce earnings limits in their  programs. VA was subsequently granted temporary statutory authority,  twice, to access the NDNH for use in employment and income  verification. Specifically, VA had such access from December 26, 2007,  through November 18, 2011, and again for a period of 180 days  beginning on September 30, 2013. VA, however, never reached an  agreement with HHS to use the data during these time periods due to its  limited financial and workforce resources at the time, according to  officials. VA no longer has statutory authority to access the NDNH data.  SSA, on the other hand, does have statutory access to NDNH data, and  SSA’s Office of the Inspector General (OIG) recently reviewed the  accuracy and effectiveness of NDNH data in identifying overpayments for  SSA benefit programs including SSDI. The OIG concluded that NDNH’s  quarterly data specifically aided SSA in identifying $141 million in  improper payments in fiscal year 2009.

section_title: Options for Revising TDIU Eligibility Requirements
subsections: section_title: We Identified Seven Options That Have Been Proposed by Others to Revise TDIU Eligibility Requirements and the Benefit Structure
paragraphs: Based on a review of literature, we identified a number of options  proposed by others for revising the TDIU benefit: six focused on revising  eligibility requirements and one that would change the benefit structure.  More specifically, the six eligibility-related options involve changing  existing requirements in various ways, for example, setting age limits,  lowering the disability rating requirement, or increasing the income  thresholds. The seventh option we identified would affect the benefit  structure by lowering, but not immediately eliminating, the TDIU benefit  payments as beneficiaries earned income beyond the eligibility limit.

Based on interviews with selected experts and representatives of  veterans service organizations (VSO), we identified a range of potential  strengths and challenges associated with each option. When discussing  the potential strengths and challenges of each option, the experts and  VSO representatives commonly mentioned the equity of the proposed  change, an increase or decrease of VA’s management and administration  efforts and cost, and the effect on veterans. There was a range of  opinions from the experts and VSO representatives across the options’  strengths and challenges. Moreover, some stakeholders expressed  opposite views, which could be attributable to differences in the  interpretation of the material as well as differing policy stances. We did  not independently assess the individual merits or accuracy of the views  expressed by these experts and VSO representatives; however, we  recognize that weighing and possibly implementing any of these revisions  would be a complex process. For example, a couple of the options  present possible opportunities for VA to better target TDIU benefits to  veterans who are unemployable, but implementation of these options  could pose challenges in ensuring that all veterans are treated equitably.  Each of the seven options and the potential strengths and challenges  identified by stakeholders that we interviewed are summarized below.

Discontinue beyond retirement age: Discontinue the TDIU payment  when the veteran reaches Social Security’s full retirement age (65 to 67,  depending on birth year). This option was proposed by the Congressional  Budget Office (CBO) in 2013. CBO based this option on the rationale  that most veterans who are older than Social Security’s full retirement age  would not be in the labor force because of their age, and that a lack of  earnings among them would probably not be attributable to service- connected disabilities. CBO also noted that veterans over age 65 who  currently receive TDIU benefits—most of whom began receiving them in  their 50s—would likely have income from other sources, including the  regular VA disability compensation benefit and Social Security retirement  benefits. CBO also provided an argument for retaining the current policy,  noting that the benefit should be based solely on an ability to work and  that using age as a factor would be unfair. CBO stated that some disabled  veterans would not be able to replace the TDIU supplement and that their  Social Security retirement benefit and personal savings are low. If the  option to discontinue TDIU payments when the veteran reaches Social  Security’s full retirement age were implemented, the veteran would  continue to receive disability compensation payments at a dollar amount  appropriate to the underlying VA disability rating. Veterans beyond Social  Security’s full retirement age at the time of their initial application would  be ineligible for TDIU. CBO did not address how the discontinuance of  TDIU benefits could possibly interact with Social Security retirement  benefits.

The age restriction proposed in this option has been implemented in the  federal Social Security Disability Insurance (SSDI) program. In SSDI,  once program beneficiaries reach full retirement age, their benefit  converts to a Social Security retirement benefit, although the amount of  their benefit payment remains the same.

Potential Strengths Identified by Stakeholders

Could better target the intended population—older veterans might  not be likely to work past retirement age.

Benefit costs might be reduced due to the reduction in payments  to older veterans.

Potential Challenges Identified by Stakeholders

Some veterans might not have income replacement available— especially those who had been on TDIU in advance of reaching  retirement age.

Could be unfair to veterans—older individuals might have the  option of working past the retirement age, but older veterans  whose service-connected disabilities stop them from working  cannot.

Consider vocational assessment: Consider the results of a mandatory  vocational assessment before granting TDIU benefits. The Institute of  Medicine of the National Academies (IOM) has reported that there are  vocational counselors with the appropriate education and training to  assess employability, but not all veterans who claim TDIU receive such  an evaluation. The vocational assessment would address whether the  veteran could be rehabilitated in order to maintain employment. In  addition, rating specialists working on TDIU claims would receive training  in how to interpret the findings from the vocational assessment. Rating  specialists would then be able to use this assessment, along with the  results of medical reports and other information, to help determine the  veterans’ ability to engage in work activities.

Potential Strengths Identified by Stakeholders

Could help provide a more complete appraisal of the veteran’s  ability to work.

Potential Challenges Identified by Stakeholders

Could require VA to expand its vocational rehabilitation program to  address the increase in required assessments.

Could cause delays in benefit decisions.

Rating specialists and vocational rehabilitation counselors might  need to receive additional training on how to assess the vocational  rehabilitation findings.

Could increase the burden on veterans as they would likely need  to submit to an additional assessment.

By adding a new factor to consider, could possibly increase the  subjectivity of claim decision-making, thereby possibly creating  more variation in decisions.

Gradually reduce payment: Implement a gradual reduction in the TDIU  payment as the veteran, in returning to work, exceeds the maximum  income that determines eligibility for TDIU, which was $11,888 per year  for an individual in fiscal year 2013. The existing TDIU regulations call for  a discontinuation of a TDIU benefit once a veteran has income above the  maximum after having worked for more than a year. IOM found that, as a  consequence, the beneficiary’s total monthly disability payment could be  reduced by anywhere from 40 percent to 64 percent. This reduction  represented the drop in disability pay from the 100 percent disability  rating, which the veteran received with TDIU, to the pay at their regular  scheduled disability rating. They noted that this drop in disability  payments might deter some veterans from trying to return to work.

The option to implement a gradual reduction in the TDIU payment is  similar to the design of a program SSA is testing for SSDI beneficiaries,  which reduces payments by $1 for every $2 of income earned beyond the  maximum allowed to maintain eligibility. Participants in the program have  also received benefits counseling with the goal of helping them to return  to work.

Potential Strengths Identified by Stakeholders

Beneficiaries could have an incentive to return to work since the  beneficiary would continue to earn benefits even as they earned  income beyond the maximum allowed instead of losing the  benefits entirely.

Could reduce the total amount of benefits paid out by VA since  some beneficiaries would receive reduced benefit payments as  they earn income beyond the maximum income.

Could provide positive mental health improvements as the  beneficiaries return to work.

Potential Challenges Identified by Stakeholders

Beneficiaries could have a disincentive to work if the resulting  earned income above a certain threshold begins to reduce the  benefit payment amount.

Increase earnings limit: Increase the maximum earnings limit for TDIU  eligibility to match that used in the SSDI, which was $12,480 per year (for  a non-blind individual) in fiscal year 2013. Economic Systems, Inc.  (Econosys) noted in its study on VA compensation payments that very  poor veterans with disabilities would also be eligible for SSDI and,  therefore, the maximum earnings limits for TDIU and SSDI should be  aligned.

Potential Strengths Identified by Stakeholders

Could reduce any confusion for veterans and VA regarding the  maximum income allowed to qualify for SSDI and TDIU.

Beneficiaries could have more earnings and still qualify for TDIU.

Could be easy to implement the increase.

Potential Challenges Identified by Stakeholders

Likely increases VA benefit costs and workload as more veterans  qualify for TDIU under the higher earnings limit.

Lower disability rating criteria: Lower the TDIU eligibility criteria for  veterans with multiple disabilities to a combined scheduled disability  rating of 60 percent. The existing TDIU regulation states that a veteran  with multiple disabilities is eligible for TDIU if the combined rating is at  least 70 percent so long as one of the multiple disabilities is rated at least  40 percent. The change in the multiple disability ratings threshold would  also eliminate the requirement that one of the disabilities have a minimum  rating of 40 percent.

Potential Strengths Identified by Stakeholders

Lowering the criteria could make it easier for veterans to qualify  for TDIU if they did not have any disabilities above 40 percent, but  were still considered unemployable.

Could provide consistency in the eligibility criteria since, instead of  requiring a 70 percent rating for veterans with multiple disabilities  and a 60 percent rating for veterans with a single disability in order  for the veteran to be eligible for TDIU, the minimum required rating  of a 60 percent disability would be the same for veterans  regardless if they had a single or multiple disabilities.

Potential Challenges Identified by Stakeholders

Could increase the benefit costs and the workload for VA as more  veterans would qualify.

May overemphasize the effects of a disability rating comprised of  multiple disabilities, which may not be as severe as the effects of  a single disability with the same rating.

Add new unemployability criteria: Amend the criteria for assessing  “unemployability” to include the veteran’s education, work history, and the  medical effects of an individual’s age on his or her potential employability.  For example, an older veteran with a college education could have the  appropriate education and training needed to make it easier to transition  to a new type of employment. As noted by IOM, shifts in the labor market  have reduced the physical demands for labor, potentially making inclusion  of these additional criteria for TDIU decisions appropriate. However, an  older veteran with less education and whose experience is limited to a  more physically demanding trade might not be able to find alternative  employment.

The option to amend criteria for assessing “unemployability” is similar to  the criteria used to assess certain SSDI applicants, which considers an  individual’s education and work history, along with age, to assess the  capacity of the applicant to work in other jobs.

Potential Strengths Identified by Stakeholders

The new criteria would add factors that could be relevant for VA to  consider when determining whether a veteran is employable.

Potential Challenges Identified by Stakeholders

Could be unfair to veterans—veterans who are otherwise similar  might not be treated equally when deciding eligibility.

By adding multiple new factors to consider, could possibly  increase the subjectivity of claim decision-making, thereby  possibly creating more variation in decisions.

Rating specialists might need additional training and guidance to  ensure consistency in their TDIU benefit decisions.

VA could incur additional administrative costs as claims could  require additional documentation before a decision is made.

Use patient-centered work disability measure: Adopt a “patient- centered work disability measure” to evaluate TDIU eligibility. In addition  to assessing the veteran’s work history, as currently performed, VA  would consider other factors, including motivation and interests. To be  sensitive to the veteran’s unique circumstances and areas of concern,  VA staff would measure multiple factors—impairments, functional  limitations, and disability—relevant to health-related work disability.  Particular care would be taken to include measures of physical,  psychological, and cognitive function.

Potential Strengths Identified by Stakeholders

Could provide a more complete appraisal of the veteran’s  employability.

By applying the assessment consistently to all veterans using the  prescribed measures, the results could be standardized— potentially improving the consistency of the decisions.

Potential Challenges Identified by Stakeholders

VA could incur additional administrative cost as the measure  would require collecting additional information.

Could delay the benefit decisions while rating specialists collect  the additional information required for the measure.

Rating specialists could need additional training and guidance  regarding how to apply the measure.

This could require VA to make changes to how the agency  measures disability, such as through the inclusion of their  motivations and interests.

section_title: Advisory Committee Recommended Revisions to TDIU, but VA Has Not Taken Action
paragraphs: In 2012, the Advisory Committee on Disability Compensation made  recommendations to VA regarding potential revisions to the TDIU benefit,  and while VA concurred with those recommendations, it has yet to take  actions in response to them. The advisory committee is composed of  experts with experience in the provision of VA disability compensation or  who are leading medical or scientific experts in relevant fields. The  committee, when consulted by the Secretary of Veterans Affairs, is  required to provide, among other things, an ongoing assessment of the  effectiveness of the schedule for rating disabilities and advice on the most  appropriate means of responding to the needs of veterans with respect to  disability compensation. Taking the committee’s advice into  consideration could better position the agency to meet federal internal  control standards. For example, in its 2012 report, the committee noted  the increase in the number of veterans receiving TDIU benefits as well as  concerns regarding potential internal inconsistencies in TDIU decisions.  As a consequence, the committee recommended that the agency (1)  study whether age should be considered when deciding if a veteran is  unemployable and (2) require a vocational assessment for all TDIU  applicants. VA concurred with the recommendation to study whether  age should be considered. The agency also concurred with the  recommendation that called for it to require a vocational assessment,  though VA noted that before it could proceed, it needed to complete a  study on whether it was possible to disallow TDIU benefits for veterans  whose vocational assessment indicated they would be employable after  rehabilitation. To date, VA officials have told us, without explanation, that  no such studies or analyses, in either area, have been planned or  initiated.

section_title: Conclusions
paragraphs: The benefits veterans are entitled to, as well as VA’s decisions on what  constitutes a work disability, are in need of constant refinement to keep  pace with changes in medicine, technology, and the modern work  environment. Within this broad context, VA can position itself to better  manage the TDIU benefit and look for opportunities to strengthen the  assessments of its eligibility decisions. Unfortunately, the integrity of the  decision-making process for the TDIU benefit is at risk due to incomplete  guidance that leaves much open to interpretation. As a consequence,  rating specialists may be using and interpreting evidence differently to  determine unemployability—this could mean that benefits could be  granted for one veteran and possibly denied for another veteran with  similar circumstances and impairments. Within this environment, VA’s  quality assurance approach may not be fully identifying the extent to  which errors made by rating specialists are occurring or providing  adequate assurance on the overall soundness of the TDIU benefit  decision-making process. Specifically, little if anything is known about the  consistency of TDIU decision-making across individuals in the same  regional office as well as across regional offices. We heard about the  subjectivity and challenges in the claims decision-making process  throughout our visits to VBA regional offices, which elevate the need to  use a thorough process to ensure that rating specialists are bringing  reasonably consistent judgments to benefit decisions—which for some  individual veterans, could result in 50 or more years of benefits. In  addition, VA does not use available third-party earnings data to verify  veterans’ self-attested employment history and income information.  Without such verification, VA cannot adequately ensure that the eligibility  standards are being met, which places these benefits at risk of being  awarded to ineligible veterans. These deficiencies also have the potential  of increasing the cost of TDIU benefits because some ineligible veterans  may be receiving benefits and other deserving veterans could be denied  benefits. Having a strong framework for program integrity is important for  any federal program, and in light of the multi-billion dollar—and growing— TDIU benefit, taking steps to ensure payments are properly awarded to  veterans is essential.

VA is at a junction where it is revising its complex and multifaceted  disability compensation benefits program. As VA works on adjusting the  eligibility criteria and management of the compensation benefits program,  the agency must balance such things as improvements in the assistance  available to those with disabilities, the increasing number of veterans, and  fiscal constraints. Concurrent with this effort, VA has the opportunity to  benefit from the amount of attention the TDIU benefit has received by  various experts. Notably, VA’s own advisory committee has pointed out  the need for VA to study, for example, age as a possible decision-making  factor. The committee members’ expertise and familiarity with VA  compensation benefits and veteran needs are meant to aid VA in  identifying what additional information they need to effectively and  efficiently review the TDIU benefit. By concurring with the committee’s  recommendations, but not taking action, VA has delayed the timely  analysis of the benefit. The options and the potential strengths and  challenges identified by experts and VSO representatives may warrant  consideration in any broader benefit refinement discussions and efforts to  improve the TDIU benefit design and eligibility criteria going forward.

section_title: Recommendations for Executive Action
paragraphs: To help ensure that TDIU decisions are well supported and TDIU benefits  are provided only to veterans whose service-connected disabilities  prevent them from obtaining or retaining substantially gainful  employment, we recommend the Secretary of Veterans Affairs direct the  Under Secretary for Benefits to:  1.  Update the TDIU guidance to clarify how rating specialists should  determine unemployability when making TDIU benefit decisions. This  updated guidance could clarify whether factors such as enrollment in  school, education level, and prior work history should be used and if  so, how to consider them; and whether or not to assign more weight  to certain factors than others. Updating the guidance would also give  VBA the opportunity to re-examine the applicability, if at all, of other  factors it has identified as extraneous.  2.  Identify other quality assurance approaches that will allow the agency  to conduct a comprehensive assessment of TDIU benefit claim  decisions. The approach should allow VBA to assess if decisions are  complete, accurate, and consistent, and ascertain the root causes of  any significant variation so that VBA can take corrective actions as  appropriate. This effort could be informed by the approaches VBA  uses to assess non-TDIU claims.  3.  Verify the self-reported income provided by veterans (a) applying for  TDIU benefits and (b) undergoing the annual eligibility review process  by comparing such information against IRS earnings data, which VBA  currently has access to for this purpose. VA could also explore  options to obtain more timely earnings data from other sources to  ensure that claimants are working within allowable eligibility limits.  4.  In light of VA’s agreement with the recommendations made by the  Advisory Committee on Disability Compensation, develop a plan to  study the complex TDIU policy questions on (1) whether age should  be considered when deciding if veterans are unemployable and (2)  whether it is possible to disallow TDIU benefits for veterans whose  vocational assessment indicated they would be employable after  rehabilitation.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to VA for review and comment. In its  written comments, reproduced in appendix IV, VA generally agreed with  our conclusions and concurs with all of our recommendations. The  agency outlined how it plans to address our recommendations as follows:

Regarding our recommendation to update the TDIU guidance to  clarify how rating specialists should determine unemployability  when making TDIU benefit decisions, VA stated that VBA will  review current TDIU policies and procedures to identify necessary  improvements including developing new policies and procedures  that provide clear guidance on deciding these claims. The updated  guidance will address the extent to which age, education, work  history, and enrollment in training programs are factors that claims  processors must address. VA anticipates that Compensation  Service will complete this review and provide options to VBA for a  decision by the end of January 2016.

Regarding our recommendation to identify other quality assurance  approaches that will allow the agency to conduct a comprehensive  assessment of TDIU benefit claim decisions, VA stated that the  Compensation Service Quality Assurance Staff will add TDIU- specific questions to the In-Process Review checklist at the  regional offices between July and September 2015. Based on the  results of the reviews, VBA will determine the most effective  approach for assessing the accuracy and consistency of TDIU  decisions by October 31, 2015.

Regarding our recommendation to verify the self-reported income  provided by veterans (a) applying for TDIU benefits and (b)  undergoing the annual eligibility review process by comparing  such information against IRS earnings data, VA stated that VBA is  developing an upfront verification process. This involves  expanding the data sharing agreement with SSA, which enables  VBA to receive federal tax information via an encrypted electronic  transmission through a secure portal. VBA expects to implement  this upfront verification process for TDIU claimants by January 31,  2016.

Regarding our recommendation to develop a plan to study (1)  whether age should be considered when deciding if veterans are  unemployable and (2) whether it is possible to disallow TDIU  benefits for veterans whose vocational assessment indicated they  would be employable after rehabilitation, VA stated that  Compensation Service initiated a review of TDIU policies and  procedures in April 2015. Compensation Service is considering  both the use of age and vocational assessments in TDIU benefit  claim decisions and will develop a plan to initiate any studies,  legislative proposals, or proposed regulations deemed necessary.  VBA expects to complete an action plan by July 31, 2015.

VA also provided technical comments, which we incorporated as  appropriate.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date.  At that time, we will send copies of this report to the  appropriate congressional committees, the Secretary of Veterans Affairs,  and the Under Secretary for Benefits. In addition, the report is available at  no charge on the GAO website at http://www.gao.gov.

If you or your staff  have any questions regarding 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. Key contributors to this report are listed in  appendix V.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report: (1) examines age-related trends in the population of Total  Disability Individual Unemployability (TDIU) beneficiaries and benefit  payments, (2)assesses how the Department of Veteran Affairs’ (VA)  procedures position the agency to ensure that TDIU benefit decisions are  supported, and (3) describes suggested options for redesigning TDIU  benefits and eligibility requirements.

To examine these objectives, we reviewed prior GAO, disability  commission,  and expert reports; relevant federal laws, regulations, and  procedures for reviewing new and continuing claims; and program  documentation, including procedure manuals, training materials, and  supporting documents. We also conducted interviews with VA and its  Veterans Benefits Administration (VBA) officials in their central and  regional offices; disability experts; and representatives of veterans  groups. We collected and analyzed data from VA on TDIU benefit claims  and beneficiaries covering fiscal years 2009 through 2013. The data  included information such as the beneficiaries’ age and disability ratings  as well as total amounts paid in disability benefits. To obtain information  and views from VBA regional office officials involved in claim reviews, we  also visited six regional offices where we held discussion groups with  rating specialists and interviewed quality review team (QRT) coaches,  QRT members, and regional office management. In addition, we  conducted a non-generalizable file review from each of the selected  regional offices. We identified options proposed for revising the TDIU  benefit and obtained experts’ views on the opportunities and challenges  the options posed.
subsections: section_title: Analysis of VA Data
paragraphs: To examine the age-related trends in the population of TDIU beneficiaries  and benefit payments, we analyzed data provided by VA for the fiscal  years 2009 through 2013. VA provided data from its Veterans Service  Network, which is the agency’s data entry platform for benefits tracking as  well as its Beneficiary Identification Records Locator Subsystem, a  system used to verify that an applicant is a veteran. Prior to 2009, VA  also used an older system, Compensation and Pension Master Record,  for tracking benefits. Agency officials told us that, while this system  collected similar information to the newer databases, there was some  variation. As a consequence, we limited the years we examined to those  covered by the newer databases in order to ensure the consistency of the  data. The data included information such as the beneficiaries’ age,  schedular disability ratings, benefit discontinuations, and total amounts  paid in disability benefits. To assess the reliability of the data, we  conducted multiple interviews with knowledgeable agency officials. During  these interviews we obtained detailed information on the methods used to  generate the data requested, including limitations and assumptions made  by VBA officials. In addition, we performed electronic logic testing of the  program used to extract the data provided by VA. Based on these efforts,  we found the data to be sufficiently reliable for our purpose.

As part of our data analysis, we estimated the cost of the TDIU benefit  payments in fiscal year 2013. We defined the cost of the TDIU benefit  payments as the difference between the disability payments VA made at  the 100 percent disability rate—which beneficiaries would have received  due to the TDIU designation—in comparison to the amount beneficiaries  would have been paid based on their regular disability rating. We  estimated the TDIU benefit cost because we did not have complete  information on the disability compensation payments made to individual  beneficiaries. For example, the data provided by VA did not include  information such as when a new beneficiary began receiving TDIU  benefits or data on how much each beneficiary received in monthly  disability payments for the full fiscal year—both of which would affect how  much VA paid in benefits for the fiscal year. Due to these limitations, we  made a number of assumptions for the estimate. We assumed that the  population of new beneficiaries had only been receiving payments at the  100 percent disability rate or at their regular disability rate for 6 months  and that the rest of the beneficiary population had been receiving  payments at the 100 percent rate or at their regular disability rate for the  full fiscal year. We also assumed that the beneficiaries’ dependent status  and, when applicable, their regular schedular disability rate remained  constant and that beneficiaries had no more than three children and that  all children were under age 18.

As part of the TDIU cost estimate, we removed the estimated benefit  payments that would have been made to beneficiaries whose benefits  were discontinued. We assumed that the benefit payments had been  discontinued for this population for 6 months, on average. In addition, we  calculated a range for the benefits paid to the discontinued beneficiaries  at their regular disability rating. One estimate in the range assumed the  discontinued beneficiaries were all rated as 60 percent disabled, the  lowest disability rating at which a veteran would be eligible for TDIU. The  second estimate in the range assumed the discontinued beneficiaries  were all 90 percent disabled, which was the highest rating a veteran could  receive before experiencing an increase in payments due to TDIU. We  also assigned dependent categories to the discontinued beneficiaries  where we assumed that the distribution of this population was  proportional to the population of (1) TDIU beneficiaries as a whole, (2)  beneficiaries who were rated as 60 percent disabled, or (3) beneficiaries  who were rated as 90 percent disabled.

section_title: Selection of VA Regional Offices for Interviews and Review of TDIU Claims
paragraphs: We selected six regional offices we would visit to gather additional  information on the TDIU claims review and quality assurance processes,  including the challenges associated with such reviews. These six selected  regional offices were located in Boston, Massachusetts; Denver,  Colorado; Manchester, New Hampshire; New Orleans, Louisiana;  Portland, Oregon; and Seattle, Washington. We selected these regional  offices based on the following criteria:

TDIU caseload size: We used data provided by VA on the caseloads  of the 57 different regional offices. Such data included total caseloads,  completed and pending, by regional office for fiscal year 2013. We  selected regional offices to represent varying caseloads by selecting  from regional offices we categorized as having high, medium, and low  caseloads.

Percentage of TDIU claims resulting in granted benefits: We used  data provided by VA on the percentage of TDIU benefits granted and  denied at each regional office in fiscal year 2013. We selected  regional offices to represent variation of percentages of claims  resulting in granted benefits. We sorted the data by the percentage of  claims resulting in granted benefits and then divided the sorted list  into two main groups representing approval rates of 21 to 40 percent  and 41 to 60 percent. The majority of regional offices fell evenly within  these two groups. A third group contained three outlying offices that  granted benefits in over 60 percent of TDIU claims reviewed. We  selected regional offices from each of these three groups. Through  our review of the data and interviews with VA, we found these data to  be sufficiently reliable for comparing approval rates the different  regional offices.

Accuracy of eligibility reviews: We reviewed quality assurance  data, provided by VA officials, on the accuracy levels of TDIU  eligibility decisions made at each regional office. We used quality  assurance data for claims reviewed from October 1, 2013, through  January 31, 2014. Most accuracy ratings fell between 95 and 100  percent. As a result, we selected regional offices with as much relative  variation in accuracy ratings as possible, given the other selection  criteria, by selecting a regional office with ratings outside the 95 to  100 percent range. We interviewed VBA and found these data to be  sufficiently reliable for comparing accuracy rates at the different  regional offices.

Geography: We selected regional offices in as many different VA  regions as possible, given other selection criteria, to capture a  variation in geographical location. We included regional offices in  three of the four VA regional areas (Western, Central, Eastern, and  Southern) in our review. Our selection did not include a regional office  in the Southern region.

See table 3 for details about the characteristics for each of the regional  offices we visited.

section_title: Interviews and Discussion Groups with Regional Office Officials
paragraphs: To better understand how TDIU claims decisions are made and reviewed  for accuracy, as well as the challenges associated with these duties, we  interviewed officials in the office of Compensation Service including  quality assurance officials, regional office managers, quality review team  (QRT) coaches, and QRT members. In addition, we conducted a total of  11 in-person discussion groups with 2 to 3 rating specialists each across  five of the regional offices after conducting initial interviews in the Denver  regional office. The 31 rating specialists that participated were selected  by VBA and were intended to represent different experience levels with  TDIU claim decisions and lengths of tenure at VA.

During each discussion group we followed an interview protocol to collect  information on TDIU claim decisions. Specifically, we used the following  steps to ask rating specialists about the top challenges in making TDIU  claim decisions, the impact of the challenges, and possible solutions to  these challenges. (1) We asked the rating specialists to brainstorm about  challenges they had experienced while making TDIU claim decisions. We  documented all challenges mentioned and discussed any contradictory  points. (2) We asked the rating specialists to independently identify, in  any order, the five challenges from the brainstormed list they felt were the  most significant. (3) As the rating specialists shared their independent  lists, we tallied their responses and developed a list of the top five  challenges, ensuring agreement of all the members of the discussion  group. (4) Using this list of top challenges, we asked the rating specialists  to brainstorm and share what they felt were the impacts of these  challenges on their ability to make TDIU claim decisions and (5) to  brainstorm possible solutions that would address the challenges. (6) We  asked rating specialists to describe one or two claims decisions that they  felt illustrated the challenges discussed.

section_title: Review of VA Files with TDIU Claims
paragraphs: Across the six regional offices we visited, we reviewed a total of 34 case  files that contained TDIU claim determinations resulting in both granted  and denied benefits made between April 2012 and April 2014. We  reviewed at least five files from each regional office. We reviewed the  claims files using a standardized checklist we developed using the  procedural guidance and forms for TDIU claims. We used the checklist to  determine if the required documents were included in the file and if the  rating specialist followed the guidance. We also collected information  about the veteran and the procedures for reviewing TDIU claims. For  example, we reviewed initial application forms and information; supporting  documentation including medical opinions, work histories from employers,  disability ratings, and vocational rehabilitation services or Social Security  Disability Insurance benefits received; rationale for claim determination;  and continuation of benefit forms and reviews when applicable. While we  reviewed files in the Denver regional office on site, we reviewed the files  from the other regional offices from a single location (VBA’s regional  office in Providence, Rhode Island) using VA’s Veterans Benefit  Management System database.

To ensure an unbiased selection, we selected files with TDIU claims from  a randomly selected sample of files and followed a methodology so that  files from the different field offices were selected in the same way. For the  files with claims determined at five of the regional offices, we selected  files from a list, provided by VBA, of 200 randomly selected files  composed of 40 TDIU claims from each regional office, 20 of which were  granted and 20 denied. All 200 claims had been decided within the last 2  years. For our review of files in Denver, we selected files from a separate  list of 100 files with claims from only the Denver regional office. We  selected files by sorting the list by field office and then approved and  denied claims. We choose every other approved claim and every other  denied claim for each regional office. In the event that there was a  problem with the file, we noted the problem and moved down the list  following the above procedure for the duration of the review. In total, we  selected and reviewed 34 files, 17 with granted TDIU claims and 17 with  denied claims, across the regional offices using this process.

The results of the file reviews are not generalizable to all 57 regional  offices or all TDIU claims.

section_title: Review of Options to Revise TDIU Eligibility Requirements and Benefit Structure
paragraphs: In order to describe options that had been presented to revise the TDIU  benefit and eligibility requirements, we conducted a literature search  which included identifying relevant reports by disability compensation  committees and research organizations. Our search covered reports from  2004 through 2014 using databases such as ProQuest, CQ.com, and the  Defense Technical Information Center. We identified any options in the  reports that either revised the TDIU benefit or the benefit’s eligibility  requirements. We selected and summarized the options for revising TDIU  eligibility requirements or benefit structure from the six reports along with  options presented in a Federal Register notice from 2001. Where similar  options were found in more than one report, we summarized the common  themes across the reports while also including details describing the  proposed option that might be specific to one report’s presentation of the  option. The six reports and Federal Register notice, where the options  were presented, are as follows:

Center for Naval Analyses, Final Report for the Veterans’ Disability  Benefits Commission: Compensation, Survey Results, and Selected  Topics (August 2007).

Congressional Budget Office, Options for Reducing the Deficit: 2014  to 2023 (November 2013).

Department of Veterans Affairs Advisory Committee on Disability  Compensation, 2012 Report to the Secretary of Veterans Affairs  (October 31, 2012).

Department of Veterans Affairs, Total Disability Ratings Based on  Inability of the Individual to Engage in Substantially Gainful  Employment. 66 Fed. Reg. 49,886 (Oct. 1, 2001), subsequently  withdrawn by 70 Fed. Reg. 76,221 (Dec. 23, 2005).

Economic Systems, Inc. (Econsys), A Study of Compensation  Payments for Service Connected Disabilities (September 2008).

Institute of Medicine of the National Academies, A 21st Century  System for Evaluating Veterans for Disability Benefits (2007).

Veterans’ Disability Benefits Commission, Honoring the Call to Duty:  Veterans’ Disability Benefits in the 21st Century (October 2007).

To identify the potential strengths and challenges related to implementing  each option, we conducted semi-structured interviews with experts and  representatives from veterans service organizations (VSO). The experts  and VSO representatives were provided with a written description of each  option as well as the definition for potential strengths and challenges in  advance of the interviews. An option was considered to have potential  strengths if it provided fair and equitable benefits for veterans or, for VA, if  it allowed for administrative improvement or clarity in eligibility criteria.  Additionally, an option was considered to have potential challenges if  implementation faced concerns (for example, among the veteran  community) or impediments (for example, to VA). During the interviews,  we obtained experts’ and VSO representatives’ views on the potential  strengths and challenges of each option. We then categorized the  responses according to their similarity. In order to provide an independent  assessment, we did not obtain VA officials’ views on challenges in  implementing the proposed options.

We identified the experts through the individual’s contributions to the  reports containing the alternative options or someone associated with the  issuing organization. In addition, we identified the VSOs through our prior  knowledge of their work with related topics and the organizations’  participation in Congressional testimonies related to TDIU. Table 4  identifies the five experts and two VSO representatives, including their  respective titles and professional affiliation.

section_title: Appendix II: Veterans Benefits Administration’s Approaches to Assess Disability Compensation Claims Decisions
paragraphs: Additional information is provided below on the two approaches Veterans  Benefits Administration (VBA) uses to review Total Disability Individual  Unemployability (TDIU) claims—the Systematic Technical Accuracy  Review (STAR) and quality review team (QRT) reviews. In addition,  information is provided on other approaches VBA has used to assess  non-TDIU claims.

Since fiscal year 1999, VBA has used its STAR review to measure the  accuracy of disability compensation claims decisions. Through the STAR  process, VBA reviews a stratified random sample of completed claims,  and certified reviewers use a checklist to assess specific aspects of each  claim. Specifically, for each of the 57 regional offices, completed claims  are randomly sampled each month and the data are used to produce  estimates of the accuracy of all completed claims. VA reports national  estimates of accuracy from its STAR reviews to Congress and the public  through its annual performance and accountability report and annual  budget submission. VBA also produces regional office accuracy  estimates, which it uses to manage the program. Regional office and  national accuracy rates are reported in a publicly available performance  database, the Aspire dashboard.

Prior to October 2012, VBA’s estimates of accuracy were claim-based;  that is, claims free of errors that affect veterans’ benefits were considered  accurate and, conversely, claims with one or more errors that affect  benefits were considered inaccurate. Beginning in October 2012, VBA  also began using STAR data to produce issue-based estimates of  accuracy that measure the accuracy of decisions on the individual  medical conditions within each claim. For example, a veteran could  submit one claim seeking disability compensation for five disabling  medical conditions. If VBA made an incorrect decision on one of those  conditions, the claim would be counted as 80 percent accurate under the  new issue-based measure. By comparison, under the existing claim- based measure, the claim would be counted as 0 percent accurate unless  the error did not affect benefits when considered in the context of the  whole claim. VBA uses these STAR review results to guide other quality  assurance efforts. According to VBA officials, the agency has used STAR  data to identify error trends associated with specific medical issues, which  in turn were used to target efforts to assess consistency of decision- making related to those issues.

In March 2012, VBA established QRTs with one at each regional office.  Although regional offices were previously responsible for assessing  individual performance, QRTs represent a departure from the past  because QRT personnel are dedicated primarily to performing these and  other local quality reviews. The QRT reviews individual rating specialist  performance across the parts of claims that an individual processed  (individual quality reviews). Also, QRTs review claims the regional office  is still processing (in-process reviews) to help prevent inaccurate  decisions. In-process reviews specifically aim to help prevent inaccurate  decisions by identifying specific types of common errors and serve as  learning experiences for staff members and are not used to assess  individual performance. Quality reviewers are also responsible for  providing feedback to claims processors on the results of their quality  reviews, typically as reviews are completed, including formal feedback  from the results of individual quality reviews and more informal feedback  from the results of in-process reviews. In addition, according to VBA, the  focus of in-process reviews performed by QRTs has been guided by  STAR review error trend data. Originally, VBA established these reviews  to help the QRTs identify and prevent claim development errors related to  medical examinations and opinions, which it described as the most  common error type. More recently, VBA has added two more common  error types—incorrect rating percentages and incorrect effective benefit  dates—to its in-process review efforts. VBA officials stated that they may  add other common error types based on future STAR error analyses.
subsections: section_title: Other VBA Approaches
paragraphs: VBA has used other approaches to assess the consistency and accuracy  of other types of non-TDIU compensation benefit claims. These  approaches include:

Special accuracy reviews: VBA periodically conducts special  reviews of claims decisions to assess the accuracy in processing  specific types of claims. For example, in our 2014 report on military  sexual trauma, we reported on a special accuracy review VBA  conducted in response to concerns that adjudicators were not making  accurate decisions for post-traumatic stress disorder claims related to  military sexual trauma. The VBA review found errors in 98 of 385  randomly selected claims that had been denied (about 25 percent). In  particular, the review identified 61 cases where the adjudicators  should have identified markers and ordered medical exams rather  than denying the benefit. The VBA reviewers made several  recommendations for improving the adjudication process such as to:  (1) clarify VA policies on markers, (2) build expertise in adjudicating  such claims, and (3) develop training.

Inter-rater reliability (IRR) studies: Since fiscal year 2008, VBA has  used IRRs to assess the extent to which a cross-section of rating  specialists across all regional offices agree on an eligibility  determination when reviewing the entire body of evidence from the  same claim. These studies are, however, time intensive and only  review one claim. The process was administered by proctors in the  regional offices and the results were hand-graded by national VBA  staff. Given the resources involved, IRR studies have been typically  limited to 300 to 500 (about 25 to 30 percent) claims processors,  randomly selected from the regional offices.

Consistency questionnaires: As of 2013, VBA has used  questionnaires as its primary means for assessing consistency of  decision-making across individual rating specialists. A questionnaire  includes a brief scenario on a specific medical condition for which a  rating specialist must correctly answer several multiple-choice  questions. The questionnaires are intended to test for understanding  and interpretation of policy and test takers receive feedback. The  questionnaires are administered electronically through the VA Talent  Management System, removing the need to proctor or hand-grade the  tests, which has allowed VBA to significantly increase employee  participation. For example, a recent consistency questionnaire was  taken by about 3,000 claims processing employees—representing all  employees responsible for rating claims. Further, VBA now  administers these studies more frequently, from about 3 to 24 per  year. According to VBA officials, they plan to further expand the use of  consistency studies from two questionnaires per month to six to eight  per month, pending the availability of additional funding. Regional  offices receive national results; regional office-specific results; and,  since February 2014, individual staff results.

section_title: Appendix III: Number of All Total Disability Individual Unemployability (TDIU) Beneficiaries and New TDIU Beneficiaries by Age, Fiscal Years 2009-2013

section_title: Appendix IV: Comments from the Department of Veterans Affairs

section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Brett Fallavollita (Assistant  Director), Melissa Jaynes (Analyst-in-Charge), and David Reed made  contributions to this report. Sheranda Campbell, David Chrisinger, A.  Nicole Clowers, Beryl Davis, Alexander Galuten, Kirsten Lauber, Sheila  McCoy, Philip McIntyre, Lorin Obler, and Greg Whitney also contributed  to this report.


Question-summary annotations: questions: question: How do VA's procedures not ensure that Individual Unemployability benefit decisions are well-supported?
answer: VA's procedures do not ensure that Individual Unemployability benefit decisions are well-supported. For example, contrary to federal internal control standards, the guidance on determining unemployability is incomplete for ensuring consistency.

question: What did VA rating specialists disagree on?
answer: In discussion groups with GAO, VA's rating specialists said they disagreed on the factors they need to consider when determining unemployability, weighed the same factors differently, and had difficulty separating allowable from non-allowable factors.
child_questions: question: What problems could these disagreements create?
answer: Some specialists said these challenges create the risk that two raters could examine the same evidence and reach an opposite decision to approve or deny a claim.

question: What other issues does VA have that could lead to not well supported benefit decisions?
answer: Also, VA's quality assurance approach primarily checks the procedural accuracy of decisions and does not ensure a comprehensive assessment of whether decisions are complete, accurate, and consistent. In addition, VA does not independently verify self-reported earnings information supplied by applicants and beneficiaries, although the agency has access to Internal Revenue Service data for this purpose.

question: Why is it risky for VA to postpone verification of self-reported earnings?
answer: VA officials said they are waiting for a data system, expected in 2016, to conduct verifications. However, by postponing verification of self-reported earnings, the benefit is at risk of being awarded to ineligible veterans.

questions: question: How did GAO identify options for revising eligibility requirements and Individual Unemployability benefit?
answer: Based on a review of literature, GAO identified various options for revising eligibility requirements and the structure of the Individual Unemployability benefit.
child_questions: question: What options did GAO come up with?
answer: Six options focus on eligibility requirements, such as considering additional criteria when determining unemployability and applying an age cap of 65. The seventh option would change the benefit structure by reducing payments as beneficiaries earn income in excess of the poverty threshold.

question: How were these options analyzed?
answer: Experts and representatives of veterans service organizations (VSO) that GAO interviewed identified the potential strengths of each option (such as improved decision accuracy) and potential challenges (such as increased need for fiscal and administrative resources).

question: What did VA's advisory committee recommend in 2012?
answer: In addition, VA's advisory committee recommended in 2012 that the agency study age and require vocational assessments when weighing veterans' unemployability; VA agreed to study both, but has not yet taken action.