VA has two basic cash disability benefits programs. The compensation program pays monthly benefits to eligible veterans who have service- connected disabilities (injuries or diseases incurred or aggravated while on active military duty). The payment amount is based on the veteran’s degree of disability, regardless of employment status or level of earnings. By contrast, the pension program assists permanently and totally disabled wartime veterans under age 65 who have low incomes and whose disabilities are not service-connected. The payment amount is determined on the basis of financial need. VBA and the Board process and decide veterans’ disability claims and appeals on behalf of the Secretary. The claims process starts when veterans submit claims to one of VBA’s 57 regional offices. (See app. I for the overall flow of claims and appeals processing.) By law, regional offices must assist veterans in supporting their claims. For example, for a compensation claim, the regional office obtains records such as the veteran’s existing service medical records, records of relevant medical treatment or examinations provided at VA health-care facilities, and other relevant records held by a federal department or agency. If necessary, the regional office arranges a medical examination for the claimant or obtains a medical opinion about the claim. The regional office adjudicator then must analyze the evidence for each claimed impairment (veterans claim an average of about five impairments per claim); determine whether each claimed impairment is service-connected (VA grants service-connection for an average of about three impairments per claim); apply VA’s Rating Schedule which provides medical criteria for rating the degree to which each service-connected impairment is disabling (disability ratings can range from zero to 100 percent, in 10-percent increments); determine the overall disability rating that results from the combination of service-connected impairments suffered by the veteran; and notify the veteran of the decision. If a veteran disagrees with the regional office’s decision, he or she begins the appeals process by submitting a written Notice of Disagreement to the regional office. During fiscal years 1999-2000, the regional offices annually made an average of about 616,000 decisions involving disability ratings, and veterans submitted Notices of Disagreement in about 9 percent of these decisions. Veterans can disagree with decisions for reasons other than the outright denial of benefits that occurs, for example, in a compensation case when a regional office decides an impairment claimed by a veteran is not service-connected. The veteran also may believe the severity rating assigned to a service-connected impairment is too low and ask for an increase in the rating. In response to a Notice of Disagreement, the regional office provides a further written explanation of the decision, and if the veteran still disagrees, the veteran may appeal to the Board. During fiscal years 1999- 2000, about 48 percent of the veterans who filed Notices of Disagreement in decisions involving disability ratings went on to file appeals with the Board. In fiscal year 2001, VBA began nationwide implementation of the Decision Review Officer position in its regional offices. Now, before appealing to the Board, a veteran may ask for a review by a Decision Review Officer, who is authorized to grant the contested benefits based on the same case record that the regional office relied on to make the initial decision. VBA believes this process will result in fewer appeals being filed with the Board. Located in Washington, D.C., the Board is an administrative body whose members are attorneys experienced in veterans’ law and in reviewing benefits claims. The Board’s members are divided into four decision teams, with each team having up to 15 Board members and 61 staff attorneys. Each team has primary responsibility for reviewing the appeals that originate in an assigned group of regional offices. Board members’ decisions must be based on the law, regulations, precedent decisions of the courts, and precedent opinions of VA’s General Counsel. During the Board’s appeals process, the veteran or the veteran’s representative may submit new evidence and request a hearing. During fiscal years 1999 and 2000, for all VA programs, the Board annually decided an average of about 35,700 appeals, of which about 32,900 (92 percent) were disability compensation cases. The average appealed compensation case contains three contested issues. As a result, in some cases, the Board member may grant the requested benefits for some issues but deny the requested benefits for others. During fiscal years 1999 and 2000, the Board in its initial decisions on appealed compensation cases granted at least one of the requested benefits in about 24 percent of the cases. In some instances, the Board member finds a case is not ready for a final decision and returns (or remands) the case to the regional office to obtain additional evidence and reconsider the veteran’s claim. During fiscal years 1999 and 2000, respectively, the Board in its initial decisions on appealed compensation cases remanded 38 percent and 34 percent of the cases. After obtaining additional evidence for remanded cases, if the regional office still denies the requested benefits, it resubmits the case to the Board for a final decision. If the Board denies benefits or grants less than the maximum benefit available under the law, veterans may appeal to the U. S. Court of Appeals for Veterans Claims. The court is not part of VA and not connected to the Board. During fiscal years 1999 and 2000, veterans filed appeals with the court in an estimated 10 percent of the Board’s decisions. Unlike the Board, the court does not receive new evidence, but considers the Board’s decision, briefs submitted by the veteran and VA, oral arguments, if any, and the case record that VA considered and that the Board had available. The court may dismiss an appeal on procedural grounds such as lack of jurisdiction, but in the cases decided on merit, the court may affirm the Board’s decision (deny benefits), reverse the decision (grant benefits), or remand the decision back to the Board for rework. During fiscal years 1999 and 2000, the court annually decided on merit an average of about 1,800 appealed Board decisions, and in about 67 percent of these cases, the court remanded or reversed the Board’s decisions in part or in whole.Under certain circumstances, a veteran who disagrees with a decision of the court may appeal to the U.S. Court of Appeals for the Federal Circuit and then to the Supreme Court of the United States. In fiscal year 1998, the Board established the first quantitative quality assurance program to evaluate and score the accuracy of its decisions and to collect data to identify areas where the quality of decision-making needs improvement. The accuracy measure used by the Board understates its true accuracy rate because the Board’s accuracy rate calculations include certain deficiencies that would not result in either a reversal or a remand by the court. Even so, the Board’s quality assurance program does not capture certain data that potentially could help improve the quality of the Board’s decisions. Such data include information identifying the specific medical issues involved in cases where a disability decision was judged as being in error. Having such data could enhance the Board’s ability to target training for its decision makers. On the basis of the results of the quality assurance program it established in fiscal year 1998, the Board estimated that 89 percent of its decisions were accurate (or “deficiency-free”). Using these results as a baseline, VA established performance accuracy goals for the Board. One of the Board’s strategic performance goals is to make deficiency-free decisions 95 percent of the time. To calculate its estimated overall accuracy rate, the Board does quality reviews of selected Board decisions. We reviewed the Board’s methods for selecting random samples and calculating accuracy rates and concluded that the number of decisions reviewed by the Board was sufficient to meet the Board’s goal for statistical precision in estimating its accuracy rate. However, we brought to the Board’s attention some issues that caused the Board to fall short of proper random sampling and accuracy rate calculation methods, such as not ensuring that decisions made near the end of the fiscal year are sampled or that the results from quality reviews are properly weighted in the accuracy rate calculation formula. We do not believe the overall accuracy rate reported by the Board for fiscal year 2001 would have been materially different if these methodological issues had been corrected earlier; however, if not corrected, these issues potentially could lead to misleading accuracy rate calculations in the future. The Board agreed in principle to correct these issues. As of June 2002, the Board had not yet instituted corrective actions. According to VA’s performance reports, the Board has come close but has not achieved its annual interim goals for accuracy (see table 1). However, in calculating its reported accuracy rates, the Board includes deficiencies that are not “substantive”—that is, they would not be expected to result in either a remand by the court or a reversal by the court. Consequently, the reported accuracy rates understate the Board’s level of accuracy that would result if only substantive deficiencies were counted in the calculation. Under its quality assurance program, the Board’s quality reviewers assess the accuracy of selected decisions on the basis of six critical areas (see table 2). One error (or deficiency) in any of these six areas means that a decision fails the quality test. However, according to the Board, all six areas would include certain deficiencies that are not substantive. In particular, according to the Board, most deficiencies in the “format” category are not substantive. In fiscal year 2001, the format category accounted for about 38 percent of all recorded deficiencies. At our request, the Board recalculated its accuracy rate for fiscal year 2001, excluding format deficiencies, and the resulting accuracy rate was 92 percent, as compared with the reported accuracy rate of 87 percent. Excluding all other nonsubstantive deficiencies presumably would have resulted in an even higher accuracy rate. In contrast with the Board, beginning in fiscal year 2002, VBA no longer includes nonsubstantive deficiencies in its accuracy rate calculations; however, it continues to monitor them. VBA took this action based on a recommendation by the 2001 VA Claims Processing Task Force, which said that mixing serious errors with less significant deficiencies can obscure what is of real concern.