Under the existing, or “legacy” system, the military’s disability evaluation process begins at a military treatment facility when a physician identifies a condition that may interfere with a servicemember’s ability to perform his or her duties. On the basis of medical examinations and the servicemember’s medical records, a medical evaluation board (MEB) identifies and documents any conditions that may limit a servicemember’s ability to serve in the military. The servicemember’s case is then evaluated by a physical evaluation board (PEB) to make a determination of fitness or unfitness for duty. If the servicemember is found to be unfit due to medical conditions incurred in the line of duty, the PEB assigns the servicemember a combined percentage rating for those unfit conditions, and the servicemember is discharged. Depending on the overall disability rating and number of years of active duty or equivalent service, the servicemember found unfit with compensable conditions is entitled to either monthly disability retirement benefits or lump sum disability severance pay. In addition to receiving disability benefits from DOD, veterans with service-connected disabilities may receive compensation from VA for lost earnings capacity. VA’s disability compensation claims process starts when a veteran submits a claim listing the medical conditions that he or she believes are service-connected. In contrast to DOD’s disability evaluation system, which evaluates only medical conditions affecting servicemembers’ fitness for duty, VA evaluates all medical conditions claimed by the veteran, whether or not they were previously evaluated in DOD’s disability evaluation process. For each claimed condition, VA must determine if there is credible evidence to support the veteran’s contention of a service connection. Such evidence may include the veteran’s military service records and treatment records from VA medical facilities and private medical service providers. Also, if necessary for reaching a decision on a claim, VA arranges for the veteran to receive a medical examination. Medical examiners are clinicians (including physicians, nurse practitioners, or physician assistants) certified to perform the exams under VA’s Compensation and Pension program. Once a claim has all of the necessary evidence, a VA rating specialist determines whether the claimant is eligible for benefits. If so, the rating specialist assigns a percentage rating. If VA finds that a veteran has one or more service- connected disabilities with a combined rating of at least 10 percent, the agency will pay monthly compensation. In November 2007, DOD and VA began piloting the IDES. The IDES merges DOD and VA processes, so that servicemembers begin their VA disability claim while they undergo their DOD disability evaluation, rather than sequentially, making it possible for them to receive VA disability benefits shortly after leaving military service. Specifically, the IDES: Merges DOD and VA’s separate exam processes into a single exam process conducted to VA standards. This single exam (which may involve more than one medical examination, for example, by different specialists), in conjunction with the servicemembers’ medical records, is used by military service PEBs to make a determination of servicemembers’ fitness for continued military service, and by VA as evidence of service-connected disabilities. The exam may be performed by medical staff working for VA, DOD, or a private provider contracted with either agency. Consolidates DOD and VA’s separate rating phases into one VA rating phase. If the PEB has determined that a servicemember is unfit for duty, VA rating specialists prepare two ratings—one for the conditions that DOD determined made a servicemember unfit for duty, which DOD uses to provide military disability benefits, and the other for all service-connected disabilities, which VA uses to determine VA disability benefits. Provides VA case managers to perform outreach and nonclinical case management and explain VA results and processes to servicemembers. In August 2010, DOD and VA officials issued an interim report to Congress summarizing the results of their evaluation of the IDES pilot as of early 2010 and indicating overall positive results. In that report, the agencies concluded that, as of February 2010, servicemembers who went through the IDES pilot were more satisfied than those who went through the legacy system, and that the IDES process met the agencies’ goals of delivering VA benefits to active duty servicemembers within 295 days and to reserve component servicemembers within 305 days. Furthermore, they concluded that the IDES pilot has achieved a faster processing time than the legacy system, which they estimated to be 540 days. Although DOD and VA’s evaluation results indicated promise for the IDES, the extent to which they represented an improvement over the legacy system could not be known because of limitations in the legacy data. DOD and VA’s estimate of 540 days for the legacy system was based on a small, nonrepresentative sample of cases. Officials planned to use a broader sample of legacy cases to compare against pilot cases with respect to processing times and appeal rates; however inconsistencies in how military services tracked information and missing VA information (i.e., on the date VA benefits were delivered) for legacy cases, precluded such comparisons. While our review of DOD and VA’s data and reports generally confirmed DOD and VA’s findings as of early 2010, we found that not all of the service branches were achieving the same results, case processing times increased between February and August 2010, and other agency goals are not being met. Since our December report, processing times have worsened further and the agencies have adjusted some goals downward. Servicemember satisfaction: Our reviews of the survey data as of early 2010 indicated that, on average, servicemembers in the IDES pilot had higher satisfaction levels than those who went through the legacy process. However, Air Force members—who represented a small proportion (7 percent) of pilot cases—were less satisfied. Currently, DOD and VA have an 80-percent IDES satisfaction goal, which has not been met. For example, 67 percent of servicemembers surveyed in March 2011 were satisfied with the IDES. Satisfaction by service ranged from 54 percent for the Marine Corps to 72 percent for the Army. Average case processing times: Although the agencies were generally meeting their 295-day and 305-day timeliness goals through February 2010, the average case processing time for active duty servicemembers increased from 274 to 296 days between February and August 2010. Among the military service branches, only the Army was meeting the agencies’ timeliness goals as of August, while average processing times for each of the other services exceeded 330 days. Since August 2010, timeliness has worsened significantly. For example, active component cases completed in March 2011 took an average of 394 days—99 days over the 295-day target. By service, averages ranged from 367 days for the Army to 455 days for the Marine Corps. Meanwhile, Reserve cases took an average of 383 days, 78 days more than the 305-day target, while Guard cases took an average of 354 days, 49 days more than the target. Goals to process 80 percent of cases in targeted time frames: DOD and VA had indicated in their planning documents that they had goals to deliver VA benefits to 80 percent of servicemembers within the 295-day (active component) and 305-day (reserve component) targets. For both active and reserve component cases at the time of our review, about 60 percent were meeting the targeted time frames. DOD and VA have since lowered their goals for cases completed on time, from 80 percent to 50 percent. Based on monthly data for 6 months through March 2011, the new, lower goal was not met during any month for active component cases. For completed Reserve cases, the lower goal was met during one of the 6 months and for Guard cases, it was met in 2 months. The strongest performance was in October 2010 when 63 percent of Reserve cases were processed within the 305-day target. Based on our prior work, we found that--as DOD and VA tested the IDES at different facilities and added cases to the pilot--they encountered several challenges that led to delays in certain phases of the process. Staffing: Most significantly, most of the sites we visited reported experiencing staffing shortages and related delays to some extent, in part due to workloads exceeding the agencies’ initial estimates. The IDES involves several different types of staff across several different DOD and VA offices, some of which have specific caseload ratios set by the agencies, and we learned about insufficient staff in many key positions. With regard to VA positions, officials cited shortages in examiners for the single exam, rating staff, and case managers. With regard to DOD positions, officials cited shortages of physicians who serve on the MEBs, PEB adjudicators, and DOD case managers. In addition to shortages cited at pilot sites, DOD data indicated that 19 of the 27 pilot sites did not meet DOD’s caseload target of 30 cases per manager. Local DOD and VA officials attributed staffing shortages to higher than anticipated caseloads and difficulty finding qualified staff, particularly physicians, in rural areas. These staffing shortages contributed to delays in the IDES process. Two of the sites we visited—Fort Carson and Fort Stewart—were particularly challenged to provide staff in response to surges in caseload that occurred when Army units were preparing to deploy to combat zones. Through the Army’s predeployment medical assessment process, large numbers of servicemembers were determined to be unable to deploy due to a medical condition and were referred to the IDES within a short period of time, overwhelming the staff. These two sites were unable to quickly increase staffing levels, particularly of examiners. As a result, at Fort Carson, it took 140 days on average to complete the single exam for active duty servicemembers, as of August 2010—much longer than the agencies’ goal to complete the exams in 45 days. More recently, Fort Carson was still struggling to meet goals, as of March 2011. For example, about half of Fort Carson’s active component cases (558 of 1033 cases) were in the MEB phase, and the average number of days spent in the MEB phase by active component cases completed in March 2011 was 197 days, compared to a goal of 35 days. Exam summaries: Issues related to the completeness and clarity of single exam summaries were an additional cause of delays in the VA rating phase of the IDES process. Officials from VA rating offices said that some exam summaries did not contain information necessary to determine a rating. As a result, VA rating office staff must ask the examiner to clarify these summaries and, in some cases, redo the exam. VA officials attributed the problems with exam summaries to several factors, including the complexity of IDES pilot cases, the volume of exams, and examiners not receiving records of servicemembers’ medical history in time. The extent to which insufficient exam summaries caused delays in the IDES process is unknown because DOD and VA’s case tracking system for the IDES does not track whether an exam summary has to be returned to the examiner or whether it has been resolved. Medical diagnoses: While the single exam in the IDES eliminates duplicative exams performed by DOD and VA in the legacy system, it raises the potential for there to be disagreements about diagnoses of servicemembers’ conditions. For example, officials at Army pilot sites informed us about cases in which a DOD physician had treated members for mental disorders, such as major depression. However, when the members went to see the VA examiners for their single exam, the examiners diagnosed them with posttraumatic stress disorder (PTSD). Officials told us that attempting to resolve such differences added time to the process and sometimes led to disagreements between DOD’s PEBs and VA’s rating offices about what the rating should be for purposes of determining DOD disability benefits. Although the Army developed guidance to help resolve diagnostic differences, other services have not. Moreover, PEB officials we spoke with noted that there is no guidance on how disagreements about servicemembers’ ratings between DOD and VA should be resolved beyond the PEBs informally requesting that the VA rating office reconsider the case. While DOD and VA officials cited several potential causes for diagnostic disagreements, the number of cases with disagreements about diagnoses and the extent to which they have increased processing time are unknown because the agencies’ case tracking system does not track when a case has had such disagreements. Logistical challenges integrating VA staff at military treatment facilities: DOD and VA officials at some pilot sites we visited said that they experienced logistical challenges integrating VA staff at the military facilities. At a few sites, it took time for VA staff to receive common access cards needed to access the military facilities and to use the facilities’ computer systems, and for VA physicians to be credentialed. DOD and VA staff also noted several difficulties using the agencies’ multiple information technology (IT) systems to process cases, including redundant data entry and a lack of integration between systems. Housing and other challenges posed by extended time in the military disability evaluation process: Although many DOD and VA officials we interviewed at central offices and pilot sites felt that the IDES process expedited the delivery of VA benefits to servicemembers, several also indicated that it may increase the amount of time servicemembers are in the military’s disability evaluation process. Therefore, some DOD officials noted that servicemembers must be cared for, managed, and housed for a longer period. The military services may move some servicemembers to temporary medical units or to special medical units such as Warrior Transition Units in the Army or Wounded Warrior Regiments in the Marine Corps, but at a few pilot sites we visited, these units were either full or members in the IDES did not meet their admission criteria. In addition, officials at two sites said that members who are not gainfully employed by their units and left idle are more likely to be discharged due to misconduct and forfeit their disability benefits. However, DOD officials also noted that servicemembers benefit from continuing to receive their salaries and benefits while their case undergoes scrutiny by two agencies, though some also acknowledged that these additional salaries and benefits create costs for DOD. DOD and VA are deploying the IDES to military facilities worldwide on an ambitious timetable—expecting deployment to be completed at a total of about 140 sites by the end of fiscal year 2011. As of March 2011, the IDES was operating at 73 sites, covering about 66 percent of all military disability evaluation cases. In preparing for IDES expansion militarywide, DOD and VA had many efforts under way to address challenges experienced at the 27 pilot sites. For example, the agencies completed a significant revision of their site assessment matrix—a checklist used by local DOD and VA officials to ascertain their readiness to begin the pilot—to address areas where prior IDES sites had experienced challenges. In addition, local senior-level DOD and VA officials will be expected to sign the site assessment matrix to certify that a site is ready for IDES implementation. This differs from the pilot phase where, according to DOD and VA officials, some sites implemented the IDES without having been fully prepared. Through the new site assessment matrix and other initiatives, DOD and VA planned to address several of the challenges identified in the pilot phase. Ensuring sufficient staff: With regard to VA staff, VA planned to increase the number of examiners by awarding a new contract through which sites can acquire additional examiners. To increase rating staff, VA filled vacant rating specialist positions and anticipates hiring a small number of additional staff. With regard to DOD staff, Air Force and Navy officials told us they added adjudicators for their PEBs or planned to do so. Both DOD and VA indicated they plan to increase their numbers of case managers. Meanwhile, sites are being asked in the assessment matrix to provide longer and more detailed histories of their caseloads, as opposed to the 1-year history that DOD and VA had based their staffing decisions on during the pilot phase. The matrix also asks sites to anticipate any surges in caseloads and to provide a written contingency plan for dealing with them. Ensuring the sufficiency of single exams: VA has been revising its exam templates to better ensure that examiners include the information needed for a VA disability rating decision and to enable them to complete their exam reports in less time. VA is also examining whether it can add capabilities to the IDES case tracking system that would enable staff to identify where problems with exams have occurred and track the progress of their resolution. Ensuring adequate logistics at IDES sites: The site assessment matrix asks sites whether they have the logistical arrangements needed to implement the IDES. In terms of information technology, DOD and VA were developing a general memorandum of agreement intended to enable DOD and VA staff access to each other’s IT systems. DOD officials also said that they are developing two new IT solutions—one intended to help military treatment facilities better manage their cases, another intended to reduce multiple data entry. However, in some areas, DOD and VA’s efforts to prepare for IDES expansion did not fully address some challenges or are not yet complete. For these areas, we recommended additional action that the agencies could take, with which the agencies generally concurred. Ensuring sufficient DOD MEB physician staffing: DOD does not yet have strategies or plans to address potential shortages of physicians to serve on MEBs. For example, the site assessment matrix does not include a question about the sufficiency of military providers to handle expected numbers of MEB cases at the site, or ask sites to identify strategies for ensuring sufficient MEB physicians if there is a caseload surge or staff turnover. We recommended that, prior to implementing IDES at MTFs, DOD direct military services to conduct thorough assessments of the adequacy of military physician staffing for completing MEB determinations and develop contingency plans to address potential shortfalls, e.g. due to staff turnover or caseload surges. Ensuring sufficient housing and organizational oversight for IDES participants: Although the site assessment matrix asks sites whether they will have sufficient temporary housing available for servicemembers going through the IDES, the matrix requires only a yes or no response and does not ensure that sites will have conducted a thorough review of their housing capacity. In addition, the site assessment matrix does not address plans for ensuring that IDES participants are gainfully employed or sufficiently supported by their organizational units. We recommended that prior to implementing the IDES at MTFs, DOD ensure thorough assessments are conducted on the availability of housing for servicemembers and on the capacity of organizational units to absorb servicemembers undergoing the disability evaluation; alternative housing options are identified when sites lack adequate capacity; and plans are in place for ensuring that servicemembers are appropriately and constructively engaged. Addressing differences in diagnoses: According to agency officials, DOD is currently developing guidance on how staff should address differences in diagnoses. However, since the new guidance and procedures are still being developed, we cannot determine whether they will aid in resolving discrepancies or disagreements. Significantly, DOD and VA do not have a mechanism for tracking when and where disagreements about diagnoses and ratings occur and, consequently, may not be able to determine whether the guidance sufficiently addresses the discrepancies. Therefore, we recommended that DOD and VA conduct a study to assess the prevalence and causes of such disagreements and establish a mechanism to continuously monitor diagnostic disagreements. VA has since indicated it plans to conduct such a study and make a determination by July 2011 regarding what, if any, mechanisms are needed. Further, despite regular reporting of data on caseloads, processing times, and servicemember satisfaction, and preparation of an annual report on challenges in the IDES, we determined that DOD and VA did not have a systemwide monitoring mechanism to help ensure that steps they took to address challenges are sufficient and to identify problems in a more timely basis. For example, they did not collect data centrally on staffing levels at each site relative to caseload. As a result, DOD and VA may be delayed in taking corrective action since it takes time to assess what types of staff are needed at a site and to hire or reassign staff. DOD and VA also lacked mechanisms or forums for systematically sharing information on challenges, as well as best practices between and among sites. For example, DOD and VA have not established a process for local sites to systematically report challenges to DOD and VA management and for lessons learned to be systematically shared systemwide. During the pilot phase, VA surveyed pilot sites on a monthly basis about challenges they faced in completing single exams. Such a practice has the potential to provide useful feedback if extended to other IDES challenges. To identify challenges as they arise in all DOD and VA facilities and offices involved in the IDES and thereby enable early remedial action, we recommended that DOD and VA develop a systemwide monitoring mechanism. This system could include continuous collection and analysis of data on DOD and VA staffing levels, sufficiency of exam summaries, and diagnostic disagreements; monitoring of available data on caseloads and case processing time by individual VA rating office and PEB; and a formal mechanism for agency officials at local DOD and VA facilities to communicate challenges and best practices to DOD and VA headquarters. VA noted several steps it plans to take to improve its monitoring of IDES workloads, site performance and challenges—some targeted to be implemented by July 2011—which we have not reviewed. By merging two duplicative disability evaluation systems, the IDES has shown promise for expediting the delivery of VA benefits to servicemembers leaving the military due to a disability. However, we identified significant challenges at pilot sites that require careful management attention and oversight. We noted a number of steps that DOD and VA were undertaking or planned to undertake that may mitigate these challenges. However, the agencies’ deployment schedule is ambitious in light of substantial management challenges and additional evidence of deteriorating case processing times. As such, it is unclear whether these steps will be sufficiently timely or effective to support militarywide deployment. Deployment time frame notwithstanding, we continue to believe that the success or failure of the IDES will depend on DOD and VA’s ability to quickly and effectively address resource needs and resolve challenges as they arise, not only at the initiation of the transition to IDES, but also on an ongoing, long-term basis. We continue to believe that DOD and VA cannot achieve this without a robust mechanism for routinely monitoring staffing and other risk factors. Chairman Chaffetz and Ranking Member Tierney, this concludes my prepared statement. I would be pleased to respond to any questions that you or other Members of the Subcommittee may have at this time. For further information about this testimony, please contact Daniel Bertoni 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 testimony. In addition to the individual named above, key contributors to this testimony include Michele Grgich, Greg Whitney, and Daniel Concepcion. Key advisors included Bonnie Anderson, Mark Bird, Sheila McCoy, Patricia Owens, Roger Thomas, Walter Vance, and Randall Williamson. Military and Veterans Disability System: Pilot Has Achieved Some Goals, but Further Planning and Monitoring Needed. GAO-11-69. Washington, D.C.: December 6, 2010. Military and Veterans Disability System: Preliminary Observations on Evaluation and Planned Expansion of DOD/VA Pilot. GAO-11-191T. Washington, D.C.: November 18, 2010. Veterans’ Disability Benefits: Further Evaluation of Ongoing Initiatives Could Help Identify Effective Approaches for Improving Claims Processing. GAO-10-213. Washington, D.C.: January 29, 2010. Recovering Servicemembers: DOD and VA Have Jointly Developed the Majority of Required Policies but Challenges Remain. GAO-09-728. Washington, D.C.: July 8, 2009. Recovering Servicemembers: DOD and VA Have Made Progress to Jointly Develop Required Policies but Additional Challenges Remain. GAO-09-540T. Washington, D.C.: April 29, 2009. Military Disability System: Increased Supports for Servicemembers and Better Pilot Planning Could Improve the Disability Evaluation Process. GAO-08-1137. Washington, D.C.: September 24, 2008. DOD and VA: Preliminary Observations on Efforts to Improve Care Management and Disability Evaluations for Servicemembers. GAO-08-514T. Washington, D.C.: February 27, 2008. DOD and VA: Preliminary Observations on Efforts to Improve Health Care and Disability Evaluations for Returning Servicemembers. GAO-07-1256T Washington, D.C.: September 26, 2007. Military Disability System: Improved Oversight Needed to Ensure Consistent and Timely Outcomes for Reserve and Active Duty Service Members. GAO-06-362. Washington, D.C.: March 31, 2006. 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Summary: This testimony discusses the efforts by the Departments of Defense (DOD) and Veterans Affairs (VA) to integrate their disability evaluation systems. Wounded warriors unable to continue their military service must navigate DOD's and VA's disability evaluation systems to be assessed for eligibility for disability compensation from the two agencies. GAO and others have found problems with these systems, including long delays, duplication in DOD and VA processes, confusion among servicemembers, and distrust of systems regarded as adversarial by servicemembers and veterans. To address these problems, DOD and VA have designed an integrated disability evaluation system (IDES), with the goal of expediting the delivery of VA benefits to servicemembers. After pilot testing the IDES at an increasing number of military treatment facilities (MTF)--from 3 to 27 sites--DOD and VA are in the process of deploying it worldwide. As of March 2011, the IDES has been deployed at 73 MTFs--representing about 66 percent of all military disability evaluation cases--and worldwide deployment is scheduled for completion in September 2011. This testimony summarizes and updates our December 2010 report on the IDES and addresses the following points: (1) the results of DOD and VA's evaluation of their pilot of the IDES, including updated data as of March 2011 from IDES monthly reports, where possible; (2) challenges in implementing the piloted system to date; and (3) DOD and VA's plans to expand the piloted system and whether those plans adequately address potential challenges. In summary, DOD and VA concluded that, based on their evaluation of the pilot as of February 2010, the pilot had (1) improved servicemember satisfaction relative to the existing "legacy" system and (2) met their established goal of delivering VA benefits to active duty and reserve component servicemembers within 295 and 305 days, respectively, on average. However, 1 year after this evaluation, average case processing times have increased significantly, such that active component servicemembers' cases completed in March 2011 took an average of 394 days to complete--99 days more than the 295-day goal. In our prior work, we identified several implementation challenges that had already contributed to delays in the process. The most significant challenge was insufficient staffing by DOD and VA. Staffing shortages and process delays were particularly severe at two pilot sites we visited where the agencies did not anticipate caseload surges. The single exam posed other challenges that contributed to delays, such as disagreements between DOD and VA medical staff about diagnoses for servicemembers' medical conditions that often required further attention, adding time to the process. Pilot sites also experienced logistical challenges, such as incorporating VA staff at military facilities and housing and managing personnel going through the process. DOD and VA were taking or planning to take steps to address a number of these challenges. For example, to address staffing shortages, VA is developing a contract for additional medical examiners, and DOD and VA are requiring local staff to develop written contingency plans for handling caseload surges. Given increased processing times, the efficacy of these efforts at this time is unclear. We recommended additional steps the agencies could take to address known challenges--such as establishing a comprehensive monitoring plan for identifying problems as they occur in order to take remedial actions as early as possible--with which DOD and VA generally concurred.