Through its disability compensation program, VBA pays monthly benefits to veterans for injuries or diseases incurred or aggravated while on active military duty. VBA rates such disabilities by using its Schedule for Rating Disabilities. For each type of disability, the Schedule assigns a percentage rating that is intended to represent the average earning reduction a veteran with that condition would experience in civilian occupations. Veterans are assigned a single or combined (in cases of multiple disabilities) rating ranging from 0 to 100 percent, in increments of 10 percent. Basic monthly payments range from $115 for a 10 percent disability to $2,471 for a 100 percent disability. About 58 percent of veterans receiving disability compensation have disabilities rated at 30 percent and lower; about 9 percent have disabilities rated at 100 percent. The most common impairments for veterans who began receiving compensation in fiscal year 2005 were, in order, hearing impairments, diabetes, post-traumatic stress disorder, back-related injuries, and other musculoskeletal conditions. VA performs disability reevaluations for disabilities required by regulation and whenever it determines that it is likely that a disability has improved, or if evidence indicates there has been a material change in a disability or that the current rating may be incorrect. Federal regulations generally instruct VA to conduct reevaluations between 2 and 5 years after any initial or subsequent VA examination, except for disabilities where another time period is specifically mentioned in the regulations. The latter generally require a reexamination 6 or 12 months after the discontinuance of treatment or hospitalization. The reevaluation process starts when a VBA Rating Veterans Service Representative (RVSR) completes a disability compensation claim and determines whether the veteran should be reevaluated at some time in the future. RVSRs base this decision on a number of factors. The disability reevaluation may be mandated by the Schedule for Rating Disabilities. For example, a veteran with a 100 percent disability rating due to a heart valve replacement is required to be reevaluated 6 months after discharge from the hospital. Alternatively, the RVSR may determine that the severity of the disability may change. For instance, medical evidence may suggest that a veteran with limited range of motion will be continuing physical rehabilitation and is expected to improve. To ensure that the disability is reviewed in the future, the RVSR enters a diary date into VBA’s claims processing system, which later generates a reminder that the disability needs to be reviewed. When this reminder is generated, the veteran’s file is retrieved and an RVSR performs a preliminary assessment of whether a reevaluation should be conducted. If the RVSR determines that a reevaluation is no longer needed, the reevaluation is cancelled. For example, staff may cancel a reevaluation when a veteran dies or if the file is already being reviewed by VBA following the veteran’s claim that his disability has worsened. If the RVSR determines that a reevaluation of the disability should be conducted, the RVSR can simply review the information in the file or, if needed, collect supplemental medical information which can include the results of a physical examination. Once all of the information has been analyzed, an RVSR can make a decision to increase, decrease, or continue the current rating. Figure 1 summarizes the disability reevaluation process. VBA maintains a quality assurance review program known as the Systematic Technical Accuracy Review (STAR) program. VBA selects random samples of each regional office’s disability compensation decisions and assesses the regional office’s accuracy in processing and deciding such cases. For each decision, the STAR quality review unit reviews the documentation contained in the regional office’s claim file to determine, among other things, whether the regional office complied with the Veterans Claims Assistance Act duty-to-assist requirements for obtaining relevant records, made correct service connection determinations for each claimed condition, and made correct disability rating evaluations for each condition. VBA has a fiscal year 2008 performance goal that 90 percent of compensation decisions contain no errors that could affect decision outcomes; its long-term strategic goal is 98 percent. In addition to STAR, regional offices conduct their own local quality assurance reviews. The guidance for these local quality assurance reviews calls for reviewing a random sample of an average of five claims for each RVSR, per month. VA is currently projecting that it will fully implement a new processing and benefits payment system—VETSNET, for their disability compensation process in May 2008. VA anticipates that VETSNET will be faster, more flexible, and have a higher capacity than VBA’s aging Benefits Delivery Network (BDN). For the past 40 years, BDN has been used to process compensation and pension benefits payments to veterans and their dependents each month. However, this system is based on antiquated software programs that have become increasingly difficult and costly to maintain. VBA’s operational controls do not adequately ensure that staff schedule or conduct disability reevaluations as necessary. VBA’s claims processing software does not ensure that diary dates are established. To the extent that staff do not enter diary dates, some cases that need reevaluations may never be brought to the attention of claims processing staff. As a result, some reevaluations may not be conducted. Staff can also cancel disability reevaluations and VBA does not track or review cancelled reevaluations. Thus, VBA does not have assurances that reevaluations are being cancelled appropriately. Also, completed reevaluations are not likely to receive quality assurance reviews. VBA plans on improving some of its control mechanisms through its new claims management system, VETSNET. However, VETSNET will not address all of the issues we found regarding VBA’s operational controls. VBA operational controls do not ensure that cases that should be reevaluated are scheduled for disability reevaluations. VA’s regulations require VBA to schedule disability reevaluations either when VBA determines that a veteran’s disability is likely to change or when mandated by the Schedule for Rating Disabilities. For cases where VA determines that a disability is likely to change, VBA staff must manually enter diary dates into VBA’s claims processing system in order to ensure that a reminder is generated. The diary date is the only VBA procedural trigger that alerts regional offices that a claim needs to be reviewed. However, claims processing staff can complete a rating decision on a disability claim without entering a reevaluation diary date. To the extent that staff do not enter a diary date, a case that needs to be reevaluated may never be brought to the attention of claims processing staff. As a result, the case will likely not be reevaluated. The VA Office of Inspector General has found some instances where this has occurred. For example, during a review at the Little Rock, Arkansas regional office, the VA IG found that staff failed to enter required dates for 10 of 41 cases sampled at that office. VBA’s electronic claims processing system also does not automatically set up diary dates for all disabilities where a reevaluation is mandated by VA’s Schedule for Rating Disabilities. According to VA, there are 31 disabilities where reevaluations are required by the Schedule. VBA has automated diary dates for 14 of these disabilities. As a result, staff must manually enter diary dates into the system for the remaining 17 disabilities. VBA does not currently have a plan for expanding its automated diary date protocol to include all disabilities where reevaluations are mandatory. VBA officials said that their first priority is to ensure VETSNET is operational and their conversion plan is completed. Once diary dates have been entered by RVSRs into the claims processing system, the dates are transferred to VBA’s centralized data processing center in Hines, Illinois. When the diary dates mature, the data processing center prints and mails out paper notices to VBA’s regional offices alerting them that reevaluations are needed. However, once the centralized data processing center prints out these notifications, the diary dates are erased from the centralized computer system. In addition, VBA does not track which disability cases were identified for reevaluation. Since the notices are single pieces of paper, they could be lost or misplaced. If this occurs, these disability reevaluations would likely be delayed or not performed at all. VBA is planning on improving its ability to track reevaluations. According to VBA officials, VETSNET will eliminate the paper notification of a matured diary date. Instead, once a disability reevaluation diary date matures, VETSNET will automatically create an electronic record, which can be tracked. Although VA plans on processing all disability compensation claims using VETSNET by May 2008, VBA officials told us that the automatically created electronic record would not be included. These officials were unable to provide us with a timetable for when such a control system would be rolled out. Once the regional office receives the paper notice that a reevaluation is due, staff perform a preliminary assessment of the veteran’s claim file to determine if more comprehensive reevaluation should be conducted. If staff determine during this preliminary assessment that a reevaluation is no longer needed, they can cancel the reevaluation. Regional office staff noted several reasons for canceling reevaluations, such as when a veteran dies. Additionally, a reevaluation would be cancelled if the veteran reopens their claim because the disability has worsened. However, VBA does not track the number or reasons for cancellations. Also, cancelled reevaluations are not subject to quality assurance reviews. VBA plans on improving its ability to track cancellations using VETSNET. According to VBA officials, when VETSNET is fully implemented for disability compensation claims in May 2008, VBA will be able to track the number and reasons for cancelled disability reevaluations. While completed disability reevaluations are subject to quality assurance review, very few are likely to be reviewed. Disability reevaluations represent a small portion of the total disability claims workload that VBA reviews for quality.