VA pays monthly disability compensation to veterans with service- connected disabilities (i.e., injuries or diseases incurred or aggravated while on active military duty) according to the severity of the disability. VA also pays additional compensation for certain dependent spouses, children, and parents of veterans. VA’s disability compensation claims process starts when a veteran submits a claim to VBA (see fig. 2). A claim folder is created at 1 of VA’s 57 regional offices, and a Veterans Service Representative (VSR) then reviews the claim and helps the veteran gather the relevant evidence needed to evaluate the claim. Such evidence includes the veteran’s military service records, medical examinations, and treatment records from Veterans Health Administration (VHA) medical facilities and private medical service providers. Also, if necessary to provide support to substantiate the claim, VA will provide a medical examination for the veteran. Once VBA has gathered the supporting evidence, a Rating Veterans Service Representative (RVSR)—who typically has more experience at VBA than a VSR— evaluates the claim and determines whether the veteran is eligible for benefits. If so, the RVSR assigns a percentage rating. Later, the veteran can reopen a claim to request an increase in disability compensation from VA if, for example, a service-connected disability has worsened or a new disability arises. If the veteran disagrees with VA’s decision regarding a claim, he or she can submit a written Notice of Disagreement to the regional office handling the claim. In response to such a notice, VBA reviews the case and provides the veteran with a written explanation of the decision if VBA does not grant all appealed issues. Appendix II contains more information regarding VBA’s notifications to veterans throughout the disability compensation claims and appeals processes. If additional evidence is provided, VBA reviews the case again and if this new evidence does not result in a grant of all appealed issues, VBA produces another written explanation of the decision. If the veteran further disagrees with the decision, he or she may appeal to the Board of Veterans’ Appeals (the Board). Before transferring the appeal to the Board, VBA reviews the case again and then certifies that the appeal is ready for review by the Board. After the appeal has been certified, the Board conducts a hearing if the veteran requests one, then grants benefits, denies the appeal, or returns the case to VBA to obtain additional evidence necessary to decide the claim. If the veteran is dissatisfied with the Board’s decision, he or she may appeal, in succession, to the U.S. Court of Appeals for Veterans Claims, to the Court of Appeals for the Federal Circuit, and finally to the Supreme Court of the United States. Congress clarified VA’s duties with regard to assisting in the development of claims in the Veterans Claims Assistance Act of 2000 (VCAA). VCAA eliminated the requirement that a veteran submit a “well-grounded” claim before VA could assist in developing the claim and instead obligated the agency to assist a claimant in obtaining evidence that is necessary to establish eligibility for the benefit being sought. Specifically, VA must: (1) notify claimants of the information necessary to complete the application; (2) indicate what information not previously provided is needed to substantiate the claim; (3) make reasonable efforts to assist claimants in obtaining evidence to substantiate claimants’ eligibility for benefits, including relevant records; and (4) notify claimants when VA is unable to obtain relevant records. According to VA regulations, VA efforts to obtain federal records should continue until the records are obtained or until VA has deemed it reasonably certain that such records do not exist or that further efforts to obtain those records would be futile. Timeliness of VA compensation rating claims and appeals processing has worsened in recent years. As a key indicator of VBA’s performance in claims and appeals processing, timeliness is measured in various ways. To measure overall claims processing timeliness, VBA uses two measures: (1) the number of days the average pending claim has been awaiting a decision (Average Days Pending) and (2) the average number of days that VBA took to complete a claim where a decision has been reached (Average Days to Complete). Both measures of claims processing timeliness have worsened substantially over the last several years (see fig.3). VBA also collects data on the timeliness of the different phases of the claims process, which is used to identify trends and bottlenecks throughout the process. In fiscal year 2011, each phase took longer on average than its stated agency timeliness target (see fig. 4). The evidence gathering phase is the most time-intensive phase, taking over 5 months (157 days) on average in fiscal year 2011 and continuing to grow throughout fiscal year 2012. The timeliness of appeals processing at VA regional offices has worsened as well. The average timeframes in VBA’s response to Notices of Disagreement and the certification of appeals to the Board have increased since fiscal year 2009 (see fig. 5). In recent years, VA’s claims processing production has not kept pace with the increase in incoming claims. In fiscal year 2011, VA completed over 1 million compensation rating claims, a 6 percent increase from 2009. However, the number of VA compensation rating claims received has grown 29 percent—from 1,013,712 in fiscal year 2009 to 1,311,091 in fiscal year 2011 (see fig. 6). As a result, the number of backlogged claims—defined as those claims awaiting a decision for more than 125 days—has increased substantially since 2009. As of August 2012, VA had 856,092 pending compensation rating claims, of which 568,043 (66 percent) were considered backlogged. Similar to claims processing, VA regional office appeals processing has not kept pace with incoming appeals received. The number of Notices of Disagreement—the first step in the appeals process when the veteran provides a written communication to VBA that he or she wants to contest the claims decision—received by VBA fluctuated over the last 4 years, yet those awaiting a decision grew 76 percent over that time period (see fig. 7). Moreover, the number of Statements of the Case—an explanation of VBA’s decision on the appellant’s case—that were mailed by VBA decreased 24 percent over the last 4 years—from 100,291 in 2009 to 76,685 in 2012. In addition, the time it took to mail a Statement of the Case increased 57 percent over that time period—from 293 days to 460 days on average. A number of factors have contributed to the substantial increase in claims received. One factor was the commencement in October 2010 of VBA’s adjudication of 260,000 previously denied and new claims when a presumptive service connection was established for three additional Agent Orange-related diseases.and assigned experienced claims staff to process and track them. VBA officials said that 37 percent of its claims processing resources nationally were devoted to adjudicating Agent Orange claims from October 2010 to March 2012. VBA officials in one regional office we spoke to said that all claims processing staff were assigned solely to developing and rating Agent Orange claims for 4 months in 2011, and that no other new and pending claims in the regional office’s inventory were processed during that time. Also during this time period, special VBA teams—known as brokering centers—which previously accepted claims and appeals from regional offices experiencing processing delays, were devoted to processing Agent Orange claims exclusively. According to VBA, other factors that contributed to the growing number of claims include an increase in the number of veterans from the military downsizing after 10 years of conflict in Iraq and Afghanistan, improved outreach activities and transition services to servicemembers and veterans, and difficult financial conditions for veterans during the economic downturn. In conjunction with an increase in claims received, VBA officials said that claims today are more complex than in the past. As we reported in 2010, VBA said it is receiving more claims for complex disabilities related to combat and deployments overseas, including those based on environmental and VBA gave these claims a high priority infectious disease risks and traumatic brain injuries. Claims with many conditions can take longer to complete because each condition must be evaluated separately and then combined into a single percentage rating. According to VA, in 2011, the number of medical conditions claimed by veterans who served in Iraq and Afghanistan averaged 8.5, an increase from 3-4 conditions per claim for Vietnam veterans. As we reported in 2010, VBA’s goal is for newly hired VSRs to be proficient within 18 months and new RVSRs to be proficient within 2 years. See GAO-10-213. However, becoming proficient often takes longer—about 3 to 5 years for RVSRs. While VBA hired additional temporary staff using American Recovery and Reinvestment Act of 2009 funds, they were given limited training and less complex claims processing tasks. According to VBA officials, in 2011, VA received authority to convert temporary employees into permanent staff, which required additional training and mentoring. officials at one regional office said the number of claims processing staff assigned to outreach activities has increased. Specifically, at the time of our review, 37 out of 302 claims processing staff were conducting outreach activities to servicemembers and veterans, such as giving briefings and distributing materials at military bases about pre-discharge and transition assistance programs. According to VBA officials, a primary reason that appeals timeliness at VA regional offices has worsened is a lack of staff focused on processing these appeals. VBA officials at each of the five regional offices we met with stated that over the last several years appeals staff have also had to train and mentor new staff, conduct quality reviews, as well as develop and rate disability claims to varying degrees. For example, at one regional office, all staff on the appeals team focused exclusively on rating disability claims for a 9-month period in 2010 instead of processing appeals.