VBA's compensation program pays monthly benefits to veterans with service-connected disabilities (injuries or diseases incurred or aggravated while on active military duty), according to the severity of the disability. VBA's pension program pays monthly benefits to wartime veterans who have low incomes and are permanently and totally disabled for reasons not service-connected. In addition, VBA pays dependency and indemnity compensation to some deceased veterans' spouses, children, and parents. In fiscal year 2001, VBA paid over $20 billion in disability compensation to about 2.3 million veterans and over 300,000 survivors. VBA also paid over $3 billion in pensions to over 600,000 veterans and survivors. Veterans may submit their disability claims to any of VBA's 57 regional offices, which process these claims in accordance with VBA regulations, policies, procedures, and guidance. Regional offices assist veterans in obtaining evidence to support their claims. This assistance includes helping veterans obtain the following documents: records of service to identify when the veteran served, records of medical treatment provided while the veteran was in military service, records of treatment and examinations provided at VA health-care facilities, and records of treatment of the veteran by nonfederal providers. Also, if necessary for decision on a claim, the regional office arranges for the veteran to receive a medical examination or opinion. Once this evidence is collected, VBA makes a rating decision on the claim. Veterans with multiple disabilities receive a single composite rating. For pension claims, VBA determines whether the veteran meets certain criteria. The regional office then notifies the veteran of its decision. In May 2001, the Secretary created the VA Claims Processing Task Force to develop recommendations to improve the compensation and pension claims process and to help VBA improve claims processing timeliness and productivity. The task force observed that the work management system in many VBA regional offices contributed to inefficiency and an increased number of errors. The task force attributed these problems primarily to the broad scope of duties performed by regional office staff--in particular, veterans service representatives (VSR). For example, VSRs were responsible for both collecting evidence to support claims and answering claimants' inquiries. In October 2001, the task force made short- and medium-term recommendations for improving the claims process and reorganizing regional office operations. In particular, the task force recommended that VBA change its claims processing system to one that utilizes specialized teams. VBA is in the process of implementing many of these recommendations and has established a new claims processing structure that is organized by specific steps in the claims process. For example, regional offices will have teams devoted specifically to claims development, that is, obtaining evidence needed to evaluate claims. VBA's key timeliness measure does not clearly reflect its timeliness in completing claims because it fails to distinguish among its three disability programs--disability compensation, pension, and dependence and indemnity compensation. The programs' processing times differ, in part because they have different purposes, beneficiaries, eligibility criteria, and evidence requirements to decide each type of claim. Despite these differences, VBA sets an annual performance goal that is an average of all three programs. For the purposes of reporting its performance to the Congress and other stakeholders, VBA adopted one key timeliness measure--the average time to complete decisions on rating-related cases. This measure includes original and reopened disability compensation, pension, and dependency and indemnity compensation claims--in other words, claims for three VBA compensation and pension programs. VBA sets an annual goal for average days to complete rating-related cases in VA's annual performance plans and subsequently reports its actual timeliness--and whether it met its goal--in VA's annual performance reports to the Congress. This one measure does not reflect the differences in the timeliness for the three programs. In general, the disability compensation program requires the most evidence and thus these claims generally take longer to complete, as shown in figure 1. While VBA's average fiscal year 2002 timeliness was 223 days, disability compensation decisions (which represented about 83 percent of total decisions) took almost twice as long to complete as pension decisions. The aggregate measure understated the time required to decide disability compensation claims by 18 days and overstated the time to decide pension claims by 97 days and dependency and indemnity compensation claims by 51 days. Each program has a different claims processing time frame because each has different evidence requirements resulting from their different purposes and eligibility requirements. For example, a major reason why disability compensation claims take longer is that VBA must not only establish that each claimed disability exists, but that each was caused or aggravated by the veteran's military service. This process requires substantial evidence gathering, with VBA actively assisting the claimant. To prove service- connection, VBA obtains the veteran's service medical records and may request medical examinations and treatment records from VA medical facilities. In contrast, pension claims do not require evidence that the claimed disabilities were service-connected. Also, veterans aged 65 and older do not have to prove that they are disabled to receive pension benefits as long as they meet the income and military service requirements. VBA does not yet have adequate data to measure timeliness or set goals for its specialized regional office teams but is making progress in obtaining complete and accurate data. While VBA is in the process of developing performance measures and goals for these teams and has developed a system to report timeliness data, it acknowledges that the quality of its existing timeliness data needs to be improved. Implementation of the task force recommendations to reorganize claims processing requires that VBA measure its performance for its teams. Where teams were once responsible for processing claims from receipt to completion, teams are now responsible for specific phases of the process. With complete and accurate data, VBA will be able to measure the timeliness of the individual teams and, therefore, will be able to hold them accountable for their performance as well as identify processing delays and take corrective actions. VBA expects to be able to obtain more complete and accurate data to measure team performance once it deploys new software applications that should enable it to consistently capture data for all cases and will rely less on manual data entry. VBA expects these applications to be fully deployed by October 2003. The task force recommended that regional office Veterans Service Centers (VSC), which process compensation and pension claims, be reorganized into specialized teams. The task force identified six types of teams--triage, pre-determination, rating, post-determination, appeals, and public contact--based on different phases of the claims process. From February through April 2002, VBA piloted its CPI initiative, which included reorganizing regional offices' VSCs into specialized teams at four regional offices. The CPI task team noted that processing teams needed clearly defined and reasonable performance expectations and recommended timeliness measures for each team, as shown in table 1. VBA began to implement the CPI model at its other regional offices in July 2002. VBA has implemented an inventory management system (IMS) that allows it to measure and report team timeliness, nationally and at the regional office level. This system should provide VBA with the necessary data to develop annual performance goals, which can be used to hold itself and its regional offices accountable for improving timeliness. IMS should also provide useful data to assist VBA management with identifying problems in specific regional offices and allowing regional office management to identify problems with specific teams for further analysis and corrective actions. However, VBA acknowledges that its IMS reports are not as useful as they can be, because IMS receives incomplete data from an existing VBA system--the Claims Automated Processing System (CAPS). Not all regional offices are fully using CAPS; thus, CAPS data that are sent to IMS are incomplete. CAPS was not being used to collect timeliness data for all cases; rather, it was used to provide regional office staff with information on the status of cases expected to take more than 30 days to process. In order to provide a short-term improvement in the completeness of IMS data, in May 2001 VBA instructed regional offices to ensure that certain data were consistently entered into CAPS; for example, dates when evidence was requested and received. In May 2002, VBA instructed regional offices to report on how fully they use CAPS and to provide estimated timeframes for complete compliance with CAPS data entry requirements. As of August 2002, VBA reported that about 81 percent of its pending cases had records in CAPS. According to VBA officials, as the regional offices implement new software applications, the ability of IMS to provide complete and accurate timeliness reports is expected to improve. For example, Share, the new claims establishment application, will automatically input data on a case into other applications, including CAPS. This will help ensure more complete and consistent data in the short term, because there will be a CAPS record for each case. Eventually, the Modern Award Processing- Development (MAP-D) application will replace CAPS as a source of timeliness data for IMS. MAP-D will, according to VBA officials, contain records for all cases and will reduce the amount of manual data entry required, thus reducing the potential for data input errors. VBA plans to have all regional offices using Share and MAP-D by October 2003. VBA has chosen to use one aggregate performance measure for timeliness for its disability compensation, pension, and dependency and indemnity compensation programs. Such a measure does not reflect VBA's performance for programs with different purposes, beneficiaries, and claims processing requirements. In particular, VBA's timeliness in deciding disability compensation claims is assessed under a measure that also covers pension and dependency and indemnity compensation claims, which take much less time. Consequently, the aggregate measure can make the processing time for VBA's largest and most time-consuming workload look better than it really is. As long as VBA uses an aggregate timeliness measure, it will not be able to clearly demonstrate to the Congress, top VA management, and claimants how well it is meeting its objectives to serve disabled veterans and their families. VBA's reorganization of its regional office compensation and pension claims processing operations into specialized teams underscores the need for complete and accurate data on the timeliness of the phases of the claims process. VBA does not yet have adequate data for timeliness measurement purposes but is making progress in ensuring that it does. Once VBA has deployed its new claims processing software applications at all of its regional offices, it expects to be able to better measure the timeliness of its specialized teams, provide baselines for future comparisons, quantify team performance goals, and identify problems needing corrective action. In this way, local and team-specific information can be used to hold regional offices and their specialized teams accountable for improving timeliness. We recommend that the Secretary of Veterans Affairs direct the Under Secretary for Benefits to establish separate claims processing timeliness goals for its three main disability programs, incorporate these goals into VA's strategic plan and annual performance plans, and report its progress in meeting these goals in its annual performance reports. In its written comments on a draft of this report (see app. I), VA concurred in principle with our recommendation. VA noted that VBA plans to develop performance measures for each of its programs, as part of VA's effort to restructure its budget. However, VA believes establishing new goals by program should be deferred until at least fiscal year 2005, because establishing new goals at this time risks obscuring its focus on achieving the Secretary's 100-day goal by the end of fiscal year 2003. We believe developing timeliness measures for each program would not obscure VBA's focus on performance improvement, but would provide a more accurate picture of claims processing timeliness, because the new measures would reflect the differences among the three programs. Because VBA already has the necessary data, we believe that it should report timeliness by program for fiscal year 2004 and set goals by program for fiscal year 2005, at the latest. VA also suggested that we based our calculations of average days to complete disability compensation, pension, and dependency and indemnity compensation decisions, as shown in figure 1, on original claims only. We based our calculations on all eight types of claims (known as end products) that VBA uses to calculate rating-related timeliness. These end products include both original and reopened claims. As agreed with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 1 day after its issue date. At that time, we will send copies of this report to the Secretary of the Department of Veterans Affairs, appropriate congressional committees, and other interested parties. We will also make copies of this report available to others on request. The report will also be available at no charge on GAO's Web site at http://www.gao.gov. If you or your staff have any questions regarding this report, please call me at (202) 512-7101 or Irene Chu, Assistant Director, at (202) 512-7102. In addition to those named, Susan Bernstein, Martin Scire, and Greg Whitney made key contributions to this report.

Summary:
The Chairman and Ranking Minority Member, Senate Committee on Veterans' Affairs, asked GAO to assist the Committee in its oversight of the Veterans Benefits Administration's (VBA) efforts to improve compensation and pension claims processing. As part of this effort, GAO assessed (1) whether VBA's key timeliness measure clearly reflects its performance and (2) whether it has adequate data to measure the timeliness of its newly created specialized claims processing teams. VBA's key claims processing timeliness measure does not clearly reflect how quickly it decides claims by veterans and their families for disability compensation, pension, and dependency and indemnity compensation benefits. Although each program has its own purpose and eligibility requirements, VBA does not set a separate timeliness goal for each in its annual performance plan. This obscures the significant differences in the time required to complete decisions under each program. Fiscal year 2002 timeliness, using VBA's measure, was 223 days; however, disability compensation decisions took significantly longer than decisions under the other two programs. A disability compensation decision requires more evidence, in part because VBA must determine that each claimed disability is related to the veteran's military service. VBA does not yet have adequate data to measure the timeliness of its new specialized regional office claims processing teams but is working to improve its data. VBA's inventory management system, which allows it to report and analyze teams' timeliness, relies on an existing information system that does not provide timeliness data on all cases. VBA is acting to improve the completeness of the data in the existing system. Meanwhile, VBA is deploying new software that it expects should enable it to capture more complete and accurate data. VBA expects to deploy this new software at all regional offices by October 2003.