VA pays monthly disability compensation benefits to veterans with service-connected disabilities (injuries or diseases incurred or aggravated while on active military duty) according to the severity of the disability. VA also pays additional compensation for some dependents––spouses, children, and parents–of veterans. VA’s pension program pays monthly benefits based on financial need to certain wartime veterans or their survivors. When a veteran submits a claim to any of the Veterans Benefits Administration’s (VBA) 57 regional offices, a veterans service representative is responsible for obtaining the relevant evidence to evaluate the claim. Such evidence includes veterans’ military service records, medical examinations, and treatment records from VA medical facilities and private medical service providers. Once a claim has all the necessary evidence, a rating specialist evaluates the claim and determines whether the claimant is eligible for benefits. If the veteran is eligible for disability compensation, the rating specialist assigns a percentage rating based on degree of disability. A veteran who disagrees with the regional office’s decision can appeal to VA’s Board of Veterans’ Appeals and then to U.S. federal courts. VA continues to experience significant service delivery challenges—large pending workloads, lengthy processing times, and inaccurate and inconsistent decisions. A number of factors contribute to these challenges, such as an increase in the numbers and complexity of the claims veterans are filing and the effects of recent laws and court decisions. These factors have eroded some of the earlier gains VA made in reducing claims backlogs. For example, VA made progress in fiscal years 2002 and 2003 reducing the size and age of its pending claims inventory, but it has lost ground since then. VA’s inventory of claims awaiting a decision and their average time pending has increased significantly in the last 4 years, in part because of an increase in the number of claims received. The number of pending claims increased by more than 50 percent from the end of fiscal year 2003 to the end of fiscal year 2007 to about 392,000. During the same period, the number of claims pending longer than 6 months more than doubled from about 47,000 to about 101,000 (see fig. 1). Similarly, while VA reduced the average number of days claims were pending from a high of 182 days at the end of fiscal year 2001 to 111 days at the end of fiscal year 2003, the average age of pending claims crept back up to 132 days by the end of fiscal year 2007, as shown in figure 2. A number of factors are contributing to this increase in VA’s inventory of pending claims, and their average time pending. First, there has been a steady increase in the number of claims filed—including those filed by veterans of the Iraq and Afghanistan conflicts—from about 579,000 in fiscal year 2000 to about 838,000 in fiscal year 2007, an increase of about 45 percent. VA projects claims receipts to increase to about 872,000 in fiscal year 2009 and cautions that ongoing hostilities in Iraq and Afghanistan, and the Global War on Terrorism in general, may further increase its workload. VA also attributes increased claims receipts to its efforts to increase outreach to veterans and service members. For example, VA reports that in fiscal year 2006, it provided benefits briefings to about 393,000 separating service members, up from about 210,000 in fiscal year 2003. VA has also noted that the number of veterans receiving compensation has increased by about a half million from fiscal years 2000 to 2007. VA anticipates the number of reopened claims will increase as compensation recipients—many of whom suffer from chronic progressive disabilities such as diabetes, mental illness, and cardiovascular disabilities—reopen claims for increased benefits as they age and their conditions worsen. Another factor affecting processing times is the complexity of cases, in both terms of numbers and types of disabilities veterans are claiming. According to VA, some veterans are citing more disabilities in their claims than in the past and these claims can take longer to complete because each disability needs to be evaluated separately. VA reported that the number of cases with eight or more disabilities claimed increased by 168 percent—from about 21,800 to about 58,500—from 2000 to 2007. Additionally, VA notes that it is receiving claims for new and complex disabilities related to combat and deployments overseas, including those based on environmental and infectious disease risks and traumatic brain injuries. Further, VA reports receiving increasing numbers of claims for compensation for PTSD, which is generally more difficult to evaluate, in part because of the evidence required to link the disorder to a particular event. According to VA, from 1999 through 2007, the number of veterans receiving compensation benefits for PTSD increased from 120,000 to nearly 300,000. Further, a number of statutes and court decisions related to VA’s disability claims process have affected VA’s ability to process claims in a timely manner. For example, VA stated that the Veterans Claims Assistance Act of 2000 significantly increased the length and complexity of claims development by adding more steps to the process and lengthening the time it takes to develop and decide a claim. VA also notes that legislation and VA regulations have expanded benefit entitlement, adding to the volume of claims. In recent years, statutes have created new presumptions of service-connected disabilities for many Vietnam veterans and former prisoners of war. Also, VA expects additional claims receipts following enactment of legislation that allows certain military retirees to receive both military retirement pay and VA disability compensation. VA is taking several steps to improve claims processing. Some near-term initiatives include the increased use of overtime and use of retired VA employees to provide training and to assist in processing claims. VA reported it currently employs 70 rehired annuitants. VA expects these annuitants to complete 23,000 rating decisions in 2008. VA has also used other initiatives such as brokering claims between offices to help manage its claims inventory and establishing special teams to assist in the processing of claims. For example, VA established teams to process disability claims for veterans 70 years and older and for expediting claims of OIF and OEF veterans. In 2007, VA announced an initiative to provide priority processing of disability claims for all OIF and OEF veterans’, including active duty, National Guard, and reservists. In VA’s fiscal year 2009 budget justification, an increase in claims processing staff was identified as essential to reducing the pending claims inventory and improving timeliness. The fiscal year 2009 request would fund 10,998 full-time equivalent employees working on compensation and pension claims, and represents an increase of about 2,600 positions, or 32 percent over fiscal year 2007. In keeping with our prior recommendation, VA’s budget justification provides information on actual and planned productivity, in terms of claims decided per full-time equivalent employee. While VA expects a temporary decline in productivity in fiscal year 2008 as new staff are trained and become more experienced, it expects productivity to increase in the longer term. VA is modifying its centralized training program to focus newly hired employees on processing burial and dependency claims. VA reports this will allow them to become productive more quickly, while enabling more experienced staff to focus on disability claims processing. However, incorporating the large number of new employees into the disability claims process will likely present human capital challenges for VA. For example, VA would have to adequately train them. For staff who decide claims, it is estimated that this could take 1 to 2 years. VA would also have to determine where these staff should be deployed. Even as staffing levels increase, however, VA acknowledges that it still must take other actions to improve productivity. For example, VA added more locations where service members can initiate the VA disability claims process up to 180 days prior to separating from the service. VA reports that these locations, known as Benefits Delivery at Discharge sites, now total 140. The goal of the program is to provide benefits within 60 days following discharge. In addition, VA also plans to pilot paperless Benefits Delivery at Discharge, where service members’ disability claim applications, service medical records, and other evidence would be captured electronically prior to discharge. VA expects this new process will reduce the time needed to gather evidence for deciding claims. GAO currently has work underway looking at the Benefits Delivery at Discharge program. Another step to improve claims processing is a pilot program by VA and the Department of Defense (DOD) in which VA completes disability ratings for service members who have been found unfit for duty due to disability by the military services. The goal of the pilot program is to deliver faster and more consistent disability evaluations and compensation to service members and veterans. Because VA rates disabilities while the service member is still in the military service, disability benefits can be awarded soon after the service member is discharged. GAO is currently studying this pilot. In addition to challenges with managing pending claims inventories and deciding claims in a timely manner, VA acknowledges that regional office decisional accuracy needs further improvement. VA reports that it improved the accuracy of decisions on rating-related compensation claims from 80 percent in fiscal year 2002 to 88 percent in fiscal year 2007. However, this figure remains short of its current strategic goal of 98 percent. In March 2007, VA stated it had established an aggressive quality assurance program to assess rating, authorization, and fiduciary program accuracy. Additionally, VA plans to begin routine quarterly monitoring of compensation and pension cases by diagnostic code and to expand quality review staff to complete additional reviews. VA also continues to face questions about its ability to ensure that veterans receive consistent decisions across regional offices. We have identified the need for VA to systematically address this issue to achieve acceptable levels of variation. VA’s Inspector General has studied one indicator of possible inconsistency, which is a wide variation in average payments per veteran from state to state. In May 2005, the Inspector General reported that variation in rating decisions was more likely to occur for some disabilities like PTSD than for others, where much of the information needed to make a determination is susceptible to interpretation and judgment. To improve decision consistency, VA conducted a pilot project to monitor consistency of rating-related claims decisions. VA also conducted a consistency review of post-traumatic stress disorder claims.