[Senate Hearing 111-829]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-829
 
                 REVIEW OF VETERANS' CLAIMS PROCESSING:
                      ARE CURRENT EFFORTS WORKING?

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 14, 2010

                               __________

       Printed for the use of the Committee on Veterans' Affairs


        Available via the World Wide Web: http://www.fdsys.gov/


                  U.S. GOVERNMENT PRINTING OFFICE
63-480                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  


                     COMMITTEE ON VETERANS' AFFAIRS

                   Daniel K. Akaka, Hawaii, Chairman
John D. Rockefeller IV, West         Richard Burr, North Carolina, 
    Virginia                             Ranking Member
Patty Murray, Washington             Lindsey O. Graham, South Carolina
Bernard Sanders, (I) Vermont         Johnny Isakson, Georgia
Sherrod Brown, Ohio                  Roger F. Wicker, Mississippi
Jim Webb, Virginia                   Mike Johanns, Nebraska
Jon Tester, Montana                  Scott P. Brown, Massachusetts
Mark Begich, Alaska
Roland W. Burris, Illinois
Arlen Specter, Pennsylvania
                    William E. Brew, Staff Director
                 Lupe Wissel, Republican Staff Director


                            C O N T E N T S

                              ----------                              

                        Wednesday, July 14, 2010
                                SENATORS

                                                                   Page
Akaka, Hon. Daniel K., Chairman, U.S. Senator from Hawaii........     1
Burr, Hon. Richard, Ranking Member, U.S. Senator from North 
  Carolina.......................................................     2
Brown, Hon. Sherrod, U.S. Senator from Ohio......................     3
Johanns, Hon. Mike, U.S. Senator from Nebraska...................     5
Tester, Hon. Jon, U.S. Senator from Montana......................    38
Burris, Hon. Roland W., U.S. Senator from Illinois...............    40
Begich, Hon. Mark, U.S. Senator from Alaska......................    42
Brown, Hon. Scott, U.S. Senator from Massachusetts...............    44
Webb, Hon. Jim, U.S. Senator from Virginia.......................    47

                               WITNESSES

Walcoff, Michael, Acting Under Secretary for Benefits, Veterans 
  Benefits Administration, U.S. Department of Veterans Affairs; 
  accompanied by Thomas J. Pamperin, Associate Deputy Under 
  Secretary for Policy and Program Management; Diana M. Rubens, 
  Associate Deputy Under Secretary for Field Operations; Mark 
  Bologna, Director, Veterans Benefits Management System 
  Initiative; Richard Hipolit, Assistant General Counsel; and 
  Peter L. Levin, Chief Technology Officer.......................     6
    Prepared statement...........................................     8
    Response to post-hearing questions submitted by:
      Hon. Daniel K. Akaka.......................................    13
      Hon. Richard Burr..........................................    23
        Attachment...............................................    24
      Hon. Bernard Sanders.......................................    28
      Hon. Roland W. Burris......................................    29
Thompson, Joseph, Former Under Secretary for Benefits, U.S. 
  Department of Veterans Affairs;................................    51
    Prepared statement...........................................    53
Avant, Linda Jan, Rating Specialist and 1st Vice President, AFGE 
  Local 2054, VBA Regional Office, Little Rock, AR, on behalf of 
  American Federation of Government Employees, AFL-CIO and AFGE 
  National Veterans Affairs Council..............................    57
    Prepared statement...........................................    59
    Response to post-hearing questions submitted by:
      Hon. Bernard Sanders.......................................    64
      Hon. Mark Begich...........................................    65
      Hon. Roland W. Burris......................................    66
Cohen, Richard Paul, Executive Director, National Organization of 
  Veterans' Advocates, Inc.......................................    67
    Prepared statement...........................................    69
    Response to post-hearing questions submitted by:
      Hon. Richard Burr..........................................    76
      Hon. Bernard Sanders.......................................    78
      Hon. Mark Begich...........................................    81
Violante, Joseph A., National Legislative Director, Disabled 
  American Veterans, on behalf of The Independent Budget.........    83
    Prepared statement...........................................    85

                                APPENDIX

Percoco, Rick, USN Veteran; prepared statement...................    99
Scott, Carol Wild, Chairman, Veterans Law Section, Federal Bar 
  Association; prepared statement................................   101


  REVIEW OF VETERANS' CLAIMS PROCESSING: ARE CURRENT EFFORTS WORKING?

                              ----------                              


                        WEDNESDAY, JULY 14, 2010

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room 418, Russell Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Committee, presiding.
    Present: Senators Akaka, Brown of Ohio, Webb, Tester, 
Begich, Burris, Burr, Johanns, and Brown of Massachusetts.

     OPENING STATEMENT OF HON. DANIEL K. AKAKA, CHAIRMAN, 
                    U.S. SENATOR FROM HAWAII

    Chairman Akaka. This hearing of the Senate Committee on 
Veterans' Affairs will come to order. Aloha and good morning to 
all of you here.
    This morning, the Committee continues our work on reviewing 
the VA Disability Compensation System. Having had several 
hearings on many aspects of the claims problem, I can say with 
certainty that it is the most challenging problem facing VA 
today.
    Compensating disabled veterans is among VA's most solemn 
obligations, and fixing the current system demands our very 
best thinking. VA's Veterans Disability Compensation System 
consists of two separate but linked elements: one, how VA 
compensates veterans with service-connected disabilities; and 
two, how VA processes claims from individuals regarding those 
disabilities. Today, we will focus on claims processing and 
hear about the several of VA's short- and long-term claims 
processing improvement initiatives, some of which are showing 
process.
    Agreeing on the desired outcome of claims processing is 
easy. Timely and accurate resolution of claims, how VA meets 
that goal is, of course, the issue. We cannot continue to 
accept a flawed system because we have not been able to agree 
on the perfect solution or because changing the system will be 
difficult.
    Last month, I introduced a bill intended to move the 
discussion forward. The proposed Claims Processing Improvement 
Act of 2010, which is S. 3517, draws from recommendations from 
veterans service organizations, years of Committee oversight, 
and proposals from the administration. Since we have ample 
discussion on the bill during today's hearing and in the time 
before the Committee considers the bill in early August, I will 
highlight just a few of its elements.
    The central part of S. 3517 is a pilot program that is 
intended to have VA test some significant modifications to the 
current system for rating disabilities. This provision would 
require VA to use universally accepted medical codes to 
identify disabilities and develop a new method of rating 
claims. The current system is outdated and frequently overly 
complicated. Because over 50 percent of veterans from the 
current conflicts who have received VA health care have muscle 
and skeletal conditions, the pilot program would begin with 
conditions in this area.
    S. 3517 would also allow VA to issue partial ratings so 
veterans with multiple disabilities can start to get 
compensation and health care earlier. The bill also would 
establish a fast track for fully developed claims, so claims 
that are ready for approval do not have to wait to be 
completed. VA would also give equal deference to private 
medical opinions during the rating process. Right now, private 
medical opinions carry little weight.
    The bill also includes a number of other changes to cut 
down delay and replace red tape with common sense solutions. I 
look forward to hearing from the witnesses and my colleagues on 
how we can improve or add to those provisions. I am open to 
workable changes.
    Finally, I note that a year and one-half into this 
administration, VBA lacks a confirmed Under Secretary for 
Benefits. This lack of leadership comes at a very pivotal time 
for VBA and must be resolved quickly.
    Again, I welcome everyone to today's hearing. I look 
forward to testimony from our two panels and to continuing to 
work with the many interested parties as we seek to craft a 
workable reform of the VA Disability Compensation System.
    And now I will call on our Ranking Member, Senator Burr, 
for his opening remarks. Senator Burr?

        STATEMENT OF HON. RICHARD BURR, RANKING MEMBER, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Burr. Thank you, Mr. Chairman. Aloha.
    Chairman Akaka. Aloha.
    Senator Burr. Mr. Chairman, good morning. Welcome to our 
witnesses, our VA panel. We thank all of you for joining us 
today to discuss the ongoing efforts to improve VA's delivery 
of benefits to our Nation's veterans, their families, and their 
survivors.
    It is clear that many of our veterans and their survivors 
are not well served by the current claims process system, which 
has been plagued by backlogs, delays, and inaccurate decisions. 
As the Government Accountability Office put it, and I quote, 
``VA has faced challenges not only in decreasing the time it 
takes to decide claims, but also with improving accuracy and 
consistency.''
    In recent years, Congress has mainly responded to these 
problems by adding additional funding for more claims 
processing staff, which has more than doubled in the last 10 
years. But as staff indicated, individual productivity has 
dropped. Quality has dropped, and the backlogs have been 
increasing. And with even more staff increases requested for 
fiscal year 2011, VA is expecting the backlog to nearly double 
and the delays to increase by almost 30 days.
    I have said this before and I will say it again, that 
staffing alone is not the answer to this chronic problem. We 
must try new approaches.
    As we will hear today, VA has a number of initiatives 
underway to try to find a different solution. I appreciate 
these efforts and look forward to hearing more about them. For 
starters, I want to discuss how to determine if these 
initiatives are, in fact, successful, when those determinations 
should be made, and more importantly, when veterans and their 
families will start to see improvements in the delivery of 
their benefits.
    Also, in delivering a path forward, I think it is important 
to rely on the knowledge and experience of the individuals who 
deal with the VA system every day. That is why in April I held 
a roundtable-style meeting with a number of stakeholders to 
discuss how they think the system should be improved. They 
provided a number of constructive suggestions, such as 
simplifying the Disability Rating Schedule and improving the 
communications with veterans. I have also heard suggestions 
from service officers in North Carolina such as focusing 
additional resources on the front end of the process so more of 
the incoming claims will be accurate and complete. Today, I 
hope to discuss those and other ideas for bringing timely, 
quality decisions to our Nation's veterans.
    To that end, we should also consider whether there are any 
common sense legislative changes that could help streamline 
this cumbersome system. But in doing so, we should carefully 
consider whether legislation will lead to lasting improvements 
in the delivery of benefits and whether it will have any undue 
impact on veterans or on the claims process and appeal system.
    Mr. Chairman, finding ways to fix the chronic problems with 
VA's claims processing must be a top priority so the men and 
women who have sacrificed for our Nation will not face hassles 
and delays in accessing the benefits they need, and more 
importantly, that they deserve.
    To do this right, the Committee, VA, the veterans service 
organizations, and other stakeholders must work together to 
identify the best approaches for updating and streamlining the 
system. So, I look forward to a productive discussion today and 
to working closely and collectively to make this system work 
better for our veterans and for their families in North 
Carolina and across the Nation. Again, I welcome our witness.
    I thank the Chair.
    Chairman Akaka. Thank you very much, Senator Burr.
    Now we will hear the opening remarks of Senator Brown of 
Ohio.

               STATEMENT OF HON. SHERROD BROWN, 
                     U.S. SENATOR FROM OHIO

    Senator Brown of Ohio. Thank you, Mr. Chair. Aloha and 
thank you for your work on this important issue. Your 
leadership, particularly with the introduction of the Claims 
Processing Improvement Act of 2010, illustrates the commitment 
needed to end this ongoing injustice. I understand you are 
continuing to make improvements in the bill. I look forward to 
working with you on its passage.
    Unfortunately, we know that the backlog problem is not new. 
Eight years ago, June 6, 2002, Under Secretary for Benefits 
Daniel Cooper testified before the House Subcommittee on 
Benefits and he said, ``The three priority areas where we are 
focusing our attention are, one, reducing the size of the 
backlog and the time veterans must wait for decisions on their 
claims; two, ensuring high-quality decisions while producing 
large numbers of claims; and three, establishing greater 
accountability and consistency in regional office operations,'' 
unquote. It is either back to the future or we never left the 
past.
    Today, we look forward again to hearing about reducing the 
backlog, ensuring quality decisionmaking, establishing greater 
consistency and accountability.
    Veterans have a right to be skeptical. Like us, they have 
heard this before. For too many years, we have heard the 
bureaucratic fast talking about how VA had a plan to solve the 
backlog, but it apparently never did and we know, painfully, 
the backlog continues.
    Claims that are easier for the veteran to understand and 
for the VA to process will result in fairer and clearer 
results. It would help reduce the appeals backlog and provide 
veterans better answers on the front end. We know what happens 
when this doesn't happen.
    A veteran in Dayton, Ohio, contacted my office in December 
2007 for help with his VA claim. After two and one-half years 
of appeals, paperwork, Congressional intervention, bureaucratic 
runaround, he was finally awarded 80 percent service-connected 
disability from the VA. His conditions included diabetes, 
cancer, mellitus Type 2, hypertension, and diabetic 
retinopathy. While he is finally getting his earned benefits, 
the system clearly isn't working when it delays and compounds 
the physical and emotional stress that too many veterans 
already experience.
    This is one veteran. We have heard it from constituents 
with similar stories in Nebraska, North Carolina, Hawaii, and 
all over this country. All of our reactions are the same. This 
can't be allowed to happen. It must never happen.
    I have talked many times with Secretary Shinseki about his 
plan to end the backlog by 2015. Unlike the other plans we have 
heard in the past, he is attacking this with skills and vigor 
that made him such a great general. Instead of bureaucratic 
double-speak, he has brought a sense of purpose and dedicated 
needed to end the backlog. It is clear we have a lot of work in 
front of us.
    During a recent meeting with a group of Ohio veterans that 
came to my Senate office, I heard about how excited veterans 
are in my State about the plan to eliminate the backlog in 5 
years. But they also recognize the urgency. One veteran told 
me, ``We don't have 5 years.''
    In just a year and one-half, the VA, with the support of 
this Committee, has taken bold steps to reduce the backlog. 
Pilot projects will help find the best and most efficient ways 
to handle claims. Electronic filing and reduced size of claim 
forms will make filing claims easier and more user friendly. 
Done right, filling out a thorough, accurate, and easily 
understood claim can lead to a more timely review and fewer 
appeals.
    I expect the VA to be back in front of this Committee to 
give us updates on progress made as we attack this problem and 
finally do it right for veterans in our country.
    Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Brown.
    Senator Johanns, your opening statement.

                STATEMENT OF HON. MIKE JOHANNS, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Johanns. Thank you, Mr. Chairman. Mr. Chairman and 
Ranking Member, I want to say thank you for holding this 
hearing. We all agree on one thing: this is about as important 
an issue as we could deal with on the Committee.
    I want to say thanks to the witnesses for coming to 
testify. Michael, let me say thank you for stopping by my 
office. I appreciate that immensely.
    As you know, we spoke about some of the steps and the pilot 
projects that VA is doing to help with the backlog problem, as 
well as the request for the additional staffing. One of the 
things that I am anxious to hear about, because it caught my 
attention and it has caught the attention of others, is the 
productivity of the raters, because that seems to have slipped 
some. There may be an explanation for that, but I would like to 
have some more information.
    I want to say that I found when Michael and I met and when 
I met with the Secretary, there really is commitment to trying 
to get through the backlog. I appreciated the honesty in what 
you are dealing with. It is daunting. I like the commitment of 
the leadership and the staff to getting this right and figuring 
out the best combination.
    I have been impressed with the dozens of claims pilot 
projects that VA has got up and running.
    I do know from my own experience at the local level that 
innovative policy solutions most easily begin not here in 
Washington, but back on the front lines, in this case the VA 
regional offices and other smaller facilities. I say with some 
degree of pride that, for example, the Lincoln office in my 
home State of Nebraska is well ahead of the VA's national 
average for processing claims. These folks do a great job, and 
if they are listening today, way to go. I am proud of you. It 
is not one of VA's pilot projects, but it does show that in 
specific cases with maybe a mixture of good people and 
procedures, the backlog can be attacked and reduced.
    I also have to say, and I know it is a relatively small 
part of VA's initiatives, that I commend your Pittsburgh pilot 
program for exploring phone calls to veterans about their 
cases. I can't tell you how reassuring that must be for a 
veteran to get a call out of the bureaucracy saying, ``You are 
important to us.'' It really drives home to me how personal 
these issues are.
    So there are some good initiatives out there and I want to 
applaud those. But I also want to be very candid in expressing 
my concern. We are all concerned. We have to spend the time on 
these initiatives and pilot programs to try to figure out what 
is the right combination. What is making this work or not work, 
and then try to see if we can replicate that.
    Well, I will wrap up my comments and just say that I do 
appreciate the dedication. I am anxious to hear from the 
witnesses and try to work with you to figure out what the best 
approaches are. Thank you.
    Chairman Akaka. Thank you very much, Senator Johanns.
    Now I would like to welcome the first panel. Our first 
witness is Michael Walcoff, the Acting Under Secretary for 
Benefits. Joining him at the table are Tom Pamperin, Associate 
Deputy Under Secretary for Policy and Management; Diana Rubens, 
Associate Deputy Under Secretary for Field Operations; Mark 
Bologna, Director, Veterans Benefits Management System 
Initiative; Peter Levin, Ph.D., Chief Technology Officer; and 
Richard Hipolit, Assistant General Counsel.
    In addition to those who are witnesses at today's hearing, 
other VA employees who are significantly involved in the 
overall claims process are with us in the audience. I would 
like to acknowledge James P. Terry, who is Chairman of the 
Board of Veterans Appeals; Donnie Hachey, Chief Counsel for 
Operations at the Board of Veterans Appeals; Phillip Matkovsky, 
VHA's Deputy Chief Business Manager Officer; and Susan Perez, a 
Benefits Program Officer for the Office of Information and 
Technology. I want to thank all of you for being here.
    Of course, VA's full testimony will appear in the record. 
Under Secretary Walcoff, will you please begin.

   STATEMENT OF MICHAEL WALCOFF, ACTING UNDER SECRETARY FOR 
BENEFITS, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF 
VETERANS AFFAIRS; ACCOMPANIED BY THOMAS J. PAMPERIN, ASSOCIATE 
DEPUTY UNDER SECRETARY FOR POLICY AND PROGRAM MANAGEMENT; DIANA 
     M. RUBENS, ASSOCIATE DEPUTY UNDER SECRETARY FOR FIELD 
     OPERATIONS; MARK BOLOGNA, DIRECTOR, VETERANS BENEFITS 
   MANAGEMENT SYSTEM INITIATIVE; RICHARD HIPOLIT, ASSISTANT 
 GENERAL COUNSEL; AND PETER L. LEVIN, PH.D., CHIEF TECHNOLOGY 
                            OFFICER

    Mr. Walcoff. Thank you, sir. Chairman Akaka, Ranking Member 
Burr, Members of the Committee, thank you for the opportunity 
to appear before you today to discuss VA's disability and 
compensation programs.
    You have already introduced the witnesses that are 
accompanying me and you have also introduced some of the other 
VA employees in the audience. I want to point out that having 
those individuals with us from VBA, from VHA, from the IT 
organization, I think is an example of the commitment that all 
organizations in VA have made toward this goal of ``breaking 
the back of the backlog.'' The Secretary has emphasized over 
and over throughout VA that this is not a VBA problem, it is a 
VA problem, and I think you will see that several of the 
initiatives that we are undertaking involve the cooperation and 
support of these other agencies. Maybe during this hearing, we 
will talk a little bit about that so you can see how the 
organization as a whole is unifying behind this goal of getting 
rid of this backlog.
    VA leadership fully shares the concerns of this Committee, 
Congress as a whole, VSOs, the larger veteran community, and 
the American public regarding the timeliness and accuracy of 
disability benefits claims processing. As you know, Secretary 
Shinseki has set the critical goals of eliminating the 
disability claims backlog by 2015 and of processing disability 
claims so no veteran has to wait more than 125 days for a 
quality decision. And by a quality decision, he defines that as 
a 98 percent level of quality.
    We are attacking the claims process and backlog through a 
focused, multi-pronged approach. At its core, our approach 
relies on changing our culture, reengineering current business 
processes, and developing our infrastructure with technology 
that supports a paperless claims environment. Throughout VA, we 
are rededicating ourselves to the mission of being advocates 
for our veterans.
    Before going further, let me give you an update on our 
current disability claims workload. Our pending claims 
inventory is rising due to the unprecedented volume of 
disability claims being filed. In 2009, for the first time, we 
received over one million claims during the course of a single 
year. We expect that growth to continue this year and in 2011. 
The growth is driven by our successful outreach efforts, 
improved access to benefits, increased demand as a result of 
nearly 10 years at war, and the impact of a difficult economy. 
We now average over 97,000 new disability claims added to the 
inventory each month and we project to receive 1.2 million 
disability claims this year.
    These projections do not take into account important 
decisions made by Secretary Shinseki to establish presumptions 
of service connection for veterans exposed in service to 
certain herbicides, including Agent Orange, for three 
particular diseases based on the latest evidence presented by 
the Institute of Medicine of an association between those 
diseases and exposure to the herbicides.
    On July 2, VA awarded a contract to IBM to develop an 
online application system by November. This system will permit 
veterans easier and faster access to VA and more accurate and 
quick claims processing, and hopefully we will talk more about 
that during this hearing.
    VA's transformation strategy for the claims process 
leverages the power of 21st century technologies applied to a 
redesigned business process. We are examining our current 
process to be more streamlined and veteran focused. We are 
harvesting the knowledge, energy, and expertise of our 
employees, VSOs, and the private and public sectors to bring to 
bear ideas to accomplish this transformation.
    Our end goal is a smart, paperless, IT-driven system which 
empowers VA employees and engages our veterans. While we work 
to develop this system, we are making immediate changes to 
improve our business process and simultaneously incorporating 
the best of these changes into the larger effort, our signature 
program, the Veterans Benefits Management System.
    VA has developed a plan to break the back of the backlog, 
which includes short- and long-term initiatives running in 
parallel and feeding into continuous improvement efforts. Some 
of these initiatives are quickly implemented changes to build 
momentum and reach out to veterans. For example, in an effort 
to speed up our work and connect with veteran clients, VBA now 
requires staff to call veterans during the claims process 
rather than just solely rely on written communication. The 
results of the short-term efforts feed directly into the long-
term high-impact technological solution, VBMS, to support 
paperless processing in an electronic management system to 
process claims from start to finish.
    Contributing to the components of VBMS and as a part of the 
overall strategy to eliminate the backlog, we have four main 
pilot initiatives that are integral to our overall 
transformation plan. Two of the four pilots, the Little Rock 
Compensation Claims Processing Pilot and the Virtual Regional 
Office, are complete. The other two pilots, the Business 
Transformation Lab in Providence and the Pittsburgh Case 
Management Development Pilot, are underway. Each pilot 
functions as a building block and test bed for the development 
of an efficient and flexible paperless claims process. The 
results of all four pilots will be incorporated in the 
nationwide deployment of VBMS in 2012.
    I have outlined a plan in my written testimony highlighting 
the many different improvement initiatives that are ongoing. 
VBA recently partnered with the Department of Defense to create 
the eBenefits portal, providing servicemembers, veterans, 
families, and care providers with a secure, single sign-on 
process to online benefits information and related services. We 
recently met separately with VSOs, our labor partners, and out-
of-the-box thinkers from various organizations to brainstorm 
new ways to improve the services that we provide to our 
veterans. We will continue to examine every new idea that may 
assist us in our mission.
    Secretary Shinseki's goal is to transform VA into an 
organization that is veteran-centric, results driven, and 
forward looking. VA must deliver first rate and timely health 
care, benefits, and other services to the Nation's veterans, 
families, and survivors. We look forward to working with 
Congress, VSOs, and other partners to meet the needs of 21st 
century veterans and their families.
    Mr. Chairman, this concludes my testimony. I would be happy 
to respond to any questions that you or Members of the 
Committee may have.
    [The prepared statement of Mr. Walcoff follows:]

   Prepared Statement of Michael Walcoff, Acting Under Secretary for 
Benefits, Veterans Benefits Administration, U.S. Department of Veterans 
                                Affairs

    Chairman Akaka, Ranking Member Burr, and Members of the Committee: 
Thank you for the opportunity to appear before you today to discuss the 
Department of Veterans Affairs (VA) disability compensation and pension 
programs. Accompanying me today are Ms. Diana Rubens, Associate Deputy 
Under Secretary for Field Operations; Mr. Tom Pamperin, Associate 
Deputy Under Secretary for Policy and Program Management; Mr. Mark 
Bologna, Director for the Veterans Benefits Management System (VBMS) 
initiative; Dr. Peter Levin, Senior Advisor to the Secretary and Chief 
Technology Officer; and Mr. Richard Hipolit, Assistant General Counsel. 
My testimony will provide preliminary views on the Chairman's bill, the 
Claims Processing Improvement Act of 2010. I will also focus on the 
Secretary's goal to eliminate the claims backlog by 2015 so as to 
ensure timely and accurate delivery of benefits and services to our 
Veterans and their families.

         S. 3517: THE CLAIMS PROCESSING IMPROVEMENT ACT OF 2010

    First, let me commend you Mr. Chairman and your staff for your 
efforts to put forward ideas on how to improve the disability claims 
processing system. I would like to acknowledge your work and we 
appreciate your staff keeping the Department informed as you developed 
the legislation.
    S. 3517, the ``Claims Processing Improvement Act of 2010,'' would 
establish a pilot program on evaluation and rating of service-connected 
musculoskeletal disabilities and would revise a number of statutes 
affecting VA's adjudication of claims and appeals. The Department is in 
the final stages of coordinating the Administration's full position and 
developing cost estimates on the legislation. However, I will provide 
you with a brief overview of VA's initial reactions to Title I of the 
bill and, with your permission, we will provide more detailed 
information on the entire bill in writing for the record.
    Title I of S. 3517 would direct the Secretary of VA to conduct a 4-
year pilot program in 6 to 10 regional offices using an alternative 
rating schedule to assign ratings to service-connected disabilities of 
the musculoskeletal system. Under this program, VA would establish an 
alternative method of rating claims taking into account the use of the 
International Classification of Diseases (ICD) as adopted by the 
Secretary of Health and Human Services under the Social Security Act. 
This type of assessment would focus on the impact of the disability and 
specifically consider the frequency, severity, and duration of symptoms 
of the disability in rating the claim. Each Veteran who opted to 
participate in the pilot program would be assigned a single residual 
functional capacity rating for all limitations of the musculoskeletal 
system.
    VA does not support this section of the bill for several reasons. 
First and foremost, this bill, on its face, would not treat Veterans 
equally. This pilot program is only available to a select group of 
Veterans based on their geographic location and it is possible that 
individuals rated under the pilot could potentially receive higher 
ratings than similarly situated Veterans not in the pilot. While VA has 
supported other pilot programs that focused on processing changes, this 
pilot program focuses on substantive changes, thus creating a potential 
equity issue.
    In addition, VA does not support using the ICD to rate 
musculoskeletal disabilities. While use of the ICD would provide more 
specificity in naming disabilities, its adoption in an alternative 
rating schedule would result in a far more cumbersome and complex 
system of ratings, particularly given the sheer number of ICD codes for 
musculoskeletal disabilities. Further, the pilot program would require 
extensive efforts on the part of VA to develop a comprehensive computer 
tracking system, draft detailed regulations governing the alternative 
rating schedule, and then train frontline adjudicators on the specifics 
of the new system all within an extremely short time period. All of 
these efforts would divert VA resources from working on existing 
disability claims and appeals as well as our transformation 
initiatives, while at the same time creating a new area of potential 
litigation with the end result being additional delay in the claims and 
appeals process, and an increase in the backlog.
    Title II of this bill addresses several matters relating to the 
adjudication process for claims and appeals. We appreciate the 
inclusion of a number of provisions drawn from Secretary Shinseki's 
proposed legislation, known as the Veterans Benefit Programs 
Improvement Act of 2010, which he submitted to Congress for 
consideration on May 26, 2010. We look forward to the opportunity to 
provide our views on the legislation in the coming weeks.

               MISSION, TRANSFORMATION STRATEGY AND GOALS

    Our mission at VA is to fulfill President Lincoln's promise--``To 
care for him who shall have borne the battle, and for his widow, and 
his orphan''--by serving and honoring the men and women who are 
America's Veterans. VA is also to transform into a 21st Century 
organization that is Veteran-centric, results-driven, and forward-
looking. This transformation is demanded by a new era, emerging 
technologies, the latest demographic realities, and renewed commitments 
to today's Veterans. To this end, VA must deliver first-rate and timely 
health care, benefits, and other services to our Nation's Veterans, 
families, and survivors.
    Secretary Shinseki, the Veterans Benefits Administration (VBA), and 
the entire VA leadership fully share the concerns of this Committee, 
Congress as a whole, the Veterans Service Organizations (VSOs), the 
larger Veteran community, and the American public regarding the 
timeliness and accuracy of disability benefit claims processing. As you 
know, Secretary Shinseki has set the critical goals of eliminating the 
disability claims backlog by 2015 and of processing disability claims 
so no Veteran has to wait more than 125 days for a quality decision 
(98% accuracy rate) on that claim. In short, timeliness and accuracy 
are the goals, and achieving them is our unwavering commitment. We are 
collaborating across the Department and with our partners in the 
Department of Defense to achieve these important goals on behalf of our 
Nation's Veterans.
    Under the leadership of Secretary Shinseki, we are attacking the 
claims process and backlog through a focused and multi-pronged 
approach. At its core, our approach relies on three pillars:

    1. Culture: A culture change inside VA to one that is centered on 
accountability to and advocacy for our Veterans;
    2. Reengineering business processes: Collaborating with internal 
and external stakeholders (VA employees, administrations and staff; 
Congress; VSOs; public and private entities) to constantly improve our 
claims process using best practices and ideas; and
    3. Technology and infrastructure: Deploying leading edge, powerful 
21st century IT solutions to create a smart, paperless claims system 
which simplifies and improves claims processing for timely and accurate 
completion the first time.

    Transforming our disability claims processing system involves 
identifying short-term changes with immediate impact to streamline the 
way we currently do business, improving business processes, enabling 
practices which will best leverage technology, and hiring staff to 
bridge the gap until we fully implement our mid-range plan. We expect 
these transformational approaches to begin yielding performance 
improvements in 2011 and gain in significance beyond; nonetheless, it 
is important to mitigate the impact of the increased workload until 
that time.
    Our aggressive efforts are at the heart of our requirements for the 
large increase in our 2011 budget request for the VBA. The President's 
2011 budget request for VBA is $2.1 billion in discretionary funding, 
an increase of $460 million, or 27%, over the 2010 enacted level of 
$1.7 billion. The 2011 budget supports an increase of up to 4,048 FTEs, 
including maintaining some of the temporary employees funded through 
the American Recovery and Reinvestment Act of 2009. Importantly, the 
budget also includes $145.3 million in information technology (IT) 
funds in 2011 to support the ongoing development of a 21st Century 
smart, paperless claims processing system. We greatly appreciate this 
Committee's consideration and support for our fiscal year (FY) 2011 
budget request as we continue this important work for our Veterans.
    All of us working inside VA are well aware that from the outside, 
Congress and the VSOs are not yet seeing sufficient external results, 
but we are confident that that will change by the end of 2011. Our 
budget request is central to our disability claims process 
transformation initiatives.
    We recognize the frustration of many Veterans and our employees 
over the time it takes to reach a decision on Veterans' disability 
claims. Throughout VA we are rededicating ourselves to the mission of 
being advocates for our Veterans. This agency-wide commitment flows 
from the Secretary down to the VA leadership to our dedicated employees 
in the field. Our leadership team is deeply committed to improving our 
relationship with Veterans and other stakeholders, so that we are seen 
as their advocates and partners, no matter the circumstance. Before 
going further, let me provide an update on our current disability 
claims workload.

                            CURRENT WORKLOAD

    Our pending claims inventory is rising due to the unprecedented 
volume of disability claims being filed. In 2009, for the first time, 
we received over one million claims during the course of a single year. 
The volume of claims received has increased from 578,773 in 2000 to 
1,013,712 in 2009 (a 75% increase). Original disability compensation 
claims with eight or more claimed issues increased from 22,776 in 2001 
to 67,175 in 2009 (nearly a 200% increase). Not only is VA receiving 
substantially more claims, but the claims have also increased in 
complexity. We expect this level of growth in the number of claims 
received to continue in 2010 and 2011. VBA experienced a 14.1% increase 
in annual claims received in 2009, while we projected an increase of 
13.1 % and 11.3% in 2010 and 2011, respectively. This substantial 
growth is driven by a number of factors including our successful 
outreach efforts, which is a priority of the Secretary as well as this 
Committee and Congress; improved access to benefits through initiatives 
such as the Disability Evaluation System, Quick Start, and Benefits 
Delivery at Discharge Programs; increased demand as a result of nearly 
ten years at war; and the impact of a difficult economy prompting 
America's Veterans to pursue access to the benefits they earned during 
their military service. As a result, we now average over 97,000 new 
disability claims added to the inventory each month, and we project to 
receive an astounding nearly 1.2 million disability claims this year.
    The projections listed above do not take into account important 
decisions made by Secretary Shinseki over the last year. On October 13, 
2009, Secretary Shinseki announced his decision to establish 
presumptions of service-connection for Veterans exposed in service to 
certain herbicides, including Agent Orange, for three particular 
diseases based on the latest evidence presented by the Institute of 
Medicine of an association between those diseases and exposure to 
herbicides.
    Due to this policy change alone we expect the number of 
compensation and pension claims received to increase from 1,013,712 in 
2009 to 1,318,753 in 2011 (a 30% increase). Without the significant 
investment requested for staffing in the FY 2011 budget request, the 
inventory of claims pending would grow from 416,335 to 1,018,343, and 
the average time to process a claim would increase from 161 to 250 
days. If Congress provides the funding requested in our budget, we will 
be able to increase production in order to lower the inventory to a 
projected level of 804,460 claims pending with an average processing 
time of 190 days. This Agent Orange decision, which is the right 
decision for our Veterans, will add to the disability claims inventory 
in the near term but with the aggressive actions VA is taking, will not 
prevent us from eliminating our backlog by 2015.
    Through 2011, we expect over 186,000 claims related to the new 
presumptions, and we are dedicated to processing this near-term surge 
in claims as efficiently as possible. Included in the claims projected 
through 2011 are approximately 93,000 claims from Vietnam Veterans and 
survivors previously denied for these conditions. We have a plan to re-
adjudicate these decisions, as required under the court orders in the 
U.S. District Court for the Northern District of California case of 
Nehmer v. U.S. Department of Veterans Affairs. VA is also soliciting 
private-sector input to design and develop an automated system for 
faster processing of new Agent Orange presumptive claims--we already 
have over 40,000 new claims and are receiving about 8,000 more per 
month.
    While the volume and complexity of claims have increased, so too 
has the overall production effort of our claims processing workforce. 
In 2009, the number of claims processed was 977,219, an increase of 
8.6% over the 2008 level of 899,863. The average time to process a 
rating-related claim was reduced from 179 to 161 days in 2009, an 
improvement of 11 percent. We recognize that these improvements are not 
enough. VA currently has approximately 508,000 pending disability 
claims, 35% of which have been pending for longer than our strategic 
target of 125 days, and are therefore considered to be part of VA's 
claims backlog. VBA continues to aggressively hire and train claims 
processing staff across the Nation, and we currently employ over 11,600 
full-time claims processors.
    Hiring more employees is not a sufficient solution. The need to 
better serve our Veterans requires bold and comprehensive business 
process changes to transform VBA and therefore VA into a high-
performing 21st century organization that provides the best services 
available to our Nation's Veterans, survivors, and their families. That 
is exactly the effort currently underway in VA.

                        IMPROVEMENT INITIATIVES

    VA's transformation strategy for the claims process leverages the 
power of 21st century technologies applied to redesigned business 
processes. We are examining our current processes to be more 
streamlined and Veteran-focused. We are also applying technology 
improvements to the new streamlined processes so that the overall 
service we provide is more efficient, timely and accurate. We are 
harvesting the knowledge, energy, and expertise of our employees, VSOs, 
and the private and public sectors to bring to bear ideas to accomplish 
this claims process transformation.
    Our end goal is a smart, paperless, IT-driven system which empowers 
our VA employees and engages our Veterans. While we work to develop 
this system, we are making immediate changes to improve our business 
processes and simultaneously incorporating the best of those changes 
into the larger effort, our signature program, the Veterans Benefits 
Management System (VBMS). Our efforts are also synchronized and 
coordinated with VA's Virtual Lifetime Electronic Record (VLER) and 
Veterans Relationship Management (VRM) System programs.
    VA has developed a plan to ``break the back of the backlog'' which 
includes short, medium, and long term initiatives running in parallel 
and feeding into continuous improvement efforts.

                         SHORT-TERM INITIATIVES

    There are a number of claims process improvement initiatives in 
various stages of concept development or execution. Some of the 
initiatives are quickly implemented changes to build momentum and reach 
out to our Veterans. For example, in an effort to speed up our work and 
to connect with our Veteran-clients, VBA now requires staff to reach 
out and call Veterans more often during the claims process rather than 
to rely solely on written communication. VA is also currently working 
to develop over 60 new medical questionnaires to take the place of 
current VHA examination templates to improve rating efficiency.
    Another initiative is being conducted at our St. Petersburg 
Regional Office (RO) to identify and pay Veterans at the earliest point 
in time when claimed disabilities are substantiated by evidence we 
already have on record. In addition, four ROs are testing the concept 
of an ``Express Lane'' to expedite single-issue claims to improve 
overall processing efficiencies and service delivery. Yet another 
initiative will allow employees and Veterans to communicate regarding 
VA benefits using on-line live chat capabilities through the new portal 
called e-Benefits. All of the initiatives I have described and a number 
of others are being tracked by a Program Management Office within VBA 
for impact on timeliness and quality, and we will launch the successful 
initiatives nationally if they produce results and use resources 
efficiently. For example, VA just initiated a new shorter application 
form--cutting the previous 23-page form down to 12 pages. We expect to 
see significant increases in Veterans' satisfaction with the 
improvements to our application process.
    On October 10, 2008, then President Bush signed the Veterans' 
Benefits Improvement Act of 2008, Public Law 110-389. Members of this 
Committee played an integral role in developing that legislation. 
Section 221(a) of the Act directed VA to carry out a one-year pilot 
program to assess the feasibility and advisability of expeditiously 
processing fully developed compensation and pension claims within 90 
days after receipt of the claim. In 2009, ten ROs implemented the fully 
developed claim program. Gathering the information and evidence needed 
to support a Veteran's disability claim often takes the largest portion 
of the processing time. If VA receives all of the available evidence 
when the claim is submitted, the remaining steps in the claims-decision 
process can be expedited without compromising quality. VA has expanded 
this program for implementation at all ROs.

                     MID- TO LONG-TERM INITIATIVES

    The results of the short term efforts feed directly into our mid-
range high-impact technological solution, VBMS, to support paperless 
processing and an electronic management system to process claims from 
start to finish.
    To inform the components of VBMS and as a part of our overall 
strategy to eliminate the backlog, we have four main pilot initiatives 
underway that are integral to our overall transformation plan. Each 
pilot functions as a building block and test bed for the development of 
an efficient and flexible paperless claims process. The results of all 
four pilots will be incorporated into the nationwide deployment of VBMS 
in 2012.
    The Little Rock Compensation Claims Processing Pilot began in 
July 2009 following completion of the VBA Claims Development Study by 
Booz Allen Hamilton. The Little Rock pilot focused on a ``Lean Six 
Sigma'' approach to streamlining current processes and procedures. The 
Veterans Service Center converted from the VBA's existing claims 
processing model into new fully integrated claims processing teams or 
pods. The pilot concluded in May 2010, and VBA is evaluating the 
outcomes to determine next steps.
    The Business Transformation Lab (BTL) in Providence, RI, serves as 
a ``test ground'' for defining processes and testing functionality that 
will be incorporated into the development and deployment of VBMS. The 
primary purpose of the BTL is to utilize a structured approach to 
identify the most efficient way to process claims in an electronic 
environment incorporating current technology. As part of this process, 
the Providence RO is testing paperless claims processing using a small 
population of claims. The business process improvements identified by 
the BTL will be supported by technology enhancements and be integrated 
into VBMS.
    The Pittsburgh RO began the Case-Managed Development Pilot in 
January 2010. The purpose of the pilot is to identify opportunities to 
reduce the time required to request and receive evidence, providing 
direct assistance to Veterans in compiling the necessary documentation 
for their claims. A second important aspect of the pilot is to enhance 
relationships and partnerships with our Veteran-clients through 
personal communications. Goals of the pilot include more personalized 
service to Veterans and greater advocacy on their behalf; more accurate 
decisions; and a more transparent understanding of VA's claims process.
    The fourth pilot, the Virtual Regional Office (VRO), has already 
produced excellent results. The single and focused purpose of the VRO 
was to deliver the specifications for an implementable, professional-
grade technical user interface of the new VBMS system. In other words, 
this pilot developed the specifications for the software screens that 
VBMS users will interface with as they process claims more efficiently 
and effectively. Based on the business process role of that individual 
user, the software will provide relevant information about a Veteran's 
claim that will enable faster and more accurate processing of claims. 
The VRO enabled developers to work side-by-side with VBA employees to 
create a living demonstration of the specification. The initial field 
use of a production version of VBMS is scheduled to begin in 
November 2010, and will be primarily focused on testing the software. 
Each iterative version of the software will add improved functions and 
tools. In 2012, we will begin nationwide deployment of the end-to-end 
paperless claims process and software platform, VBMS. As mentioned 
earlier, VBMS is a critical business transformation initiative 
supported by the latest technology, and designed to improve VBA's 
ability to deliver important benefits to our Veterans, their families 
and survivors. VBMS is a holistic solution that integrates both a 
business transformation strategy (BTS) and a web-based, 21st Century 
paperless claims processing system which will significantly reduce 
VBA's reliance on the receipt, movement, and storage of paper. By 
eliminating the dependence on paper, VBA will be best positioned to 
make better use of available resources, regardless of geographic 
location.
    As noted earlier, VBMS will also provide services to other critical 
initiatives underway at VA including the VRM initiative and the VLER. 
Data captured through VBMS will be used to provide information to 
Veterans through VRM on the status of their claims and to update VLER. 
Integration of the various initiatives will allow us to provide our 
Veterans with new ways of interacting with VA in ways that meet their 
needs and are convenient for them.
    We recognize that technology is not the sole solution for our 
claims-processing challenges; however, it is the hallmark of a forward-
looking organization and must be at the core of our efforts. Combined 
with a renewed commitment and focus toward increasing advocacy for our 
Veterans, the VBMS strategy combines a business transformation and re-
engineering effort with enhanced technologies, giving an overarching 
and clear vision for improving service delivery to our Nation's 
Veterans.

                              PARTNERSHIPS

    VBA recently partnered with the Department of Defense (DOD) to 
create the eBenefits portal (www.ebenefits.va.gov). The portal provides 
Servicemembers, Veterans, families, and care providers with a secure, 
single sign-on process to on-line benefits information and related 
services (such as military personnel records and status of VA claims). 
Servicemembers can use this eBenefits account while on active duty and 
as Veterans following separation, allowing both DOD and VA to provide 
benefit updates and to deploy the right benefit information at the 
right time. Future eBenefits releases will provide additional self-
service capabilities that empower users to electronically communicate 
with VA and DOD about their benefits and services from anywhere at 
anytime.
    VBA continues to meet with stakeholders to improve communication 
and to promote innovation. On April 8, 2010, VBA met with several of 
the largest VSOs to partner on ideas to help eliminate the backlog and 
increase quality. In June 2010, several VSOs traveled to Pittsburgh and 
Providence to observe pilot operations. We continue to meet with VSOs 
on a regular basis to collaborate and develop proposals that have 
potential to boost our overall strategy. On June 8, 2010, we met with 
``out of the box'' thinkers from various organizations to brainstorm 
new ways to improve the services that we provide to our Veterans. On 
June 10, 2010, we also met with our union partners, the American 
Federation of Government Employees (AFGE), to develop strategies to 
improve client service and eliminate the backlog. We will continue to 
examine every new idea from our employees and stakeholders that may 
assist us in our mission.

                               CONCLUSION

    Secretary Shinseki's goal is to transform VA into an organization 
that is Veteran-centric, results-driven, and forward-looking. At the 
same time, VA must deliver first-rate and timely health care, benefits, 
and other services to our Nation's Veterans, families and survivors. 
Nothing less will do. All of VA is moving forward aggressively and 
comprehensively to transform our claims process through a focused and 
multi-pronged approach. At its core, our team approach relies on three 
pillars: culture, reengineering business processes, and technology and 
infrastructure. We look forward to working with Congress, VSOs, and 
other partners to meet our critical goals and the needs of 21st Century 
Veterans and their families.

    Mr. Chairman, this concludes my testimony. I will be happy to 
respond to any questions from you or other Members of the Committee.
                                 ______
                                 
Response to Post-Hearing Questions Submitted by Hon. Daniel K. Akaka to 
 Michael Walcoff, Acting Under Secretary for Benefits, U.S. Department 
                          of Veterans Affairs

    Question 1. The Veterans' Disability Benefits Commission 
recommended that VA adopt the use of universally accepted medical 
codes--ICD codes. However, because ICD codes are updated regularly, 
placing them in the Rating Schedule could result in continued use of 
outdated information. Please explain how VBA could utilize ICD codes to 
identify disabilities.
    Response. Veterans Benefits Administration (VBA) could feasibly 
utilize International Classification of Diseases (ICD) codes as a 
supplement to its existing disability classification system. As 
mentioned in VA's 2009 report to Congress, required by section 213 of 
Public Law 110-389, the objective of the recommendation to map the VA 
Schedule of Rating Disabilities (VASRD) to the ICD system could be 
achieved by adding an informational field to VA's disability rating 
program and corporate database where ICD codes associated with specific 
VA diagnostic codes assigned in each Veteran's claim could be stored.
    Replacing the existing system of diagnostic codes in its entirety 
is not a viable option at this time. The principal function of VA's 
current system of diagnostic codes is to describe levels of functional 
loss, and the ICD system is not designed for this purpose. The ICD 
system is designed for detailed diagnostic identification purposes, 
such as insurance billing, research, and studies. VA also notes that 
ICD-9 codes do not include mental health codes. The existing system has 
extensive codes for this body system. Replacing the existing system of 
diagnostic codes would require significant reprogramming of VA systems.

    Question 2. Please describe the use of ICD codes in the Veterans 
Health Administration.

    Question 2a. Is the use of ICD codes mandatory in VA's electronic 
record system?
    Response. International Classification of Diseases, 9th edition 
(ICD-9) codes are mandatory to reflect diagnosis and certain procedures 
for every clinical encounter or episode of care and are captured as 
administrative data.

    Question 2b. Are VA electronic medical records searchable by ICD 
codes?
    Response. VHA cannot use the International Classification of 
Diseases, 9th edition, Clinical Modification (ICD-9-CM) code to search 
within a patient's Electronic Health Record (EHR). ICD-9 codes are 
administrative data elements that are not stored as part of the 
electronic health record. ICD-9 codes can be searched in the 
administrative databases.

    Question 2c. Describe the policies and practices VA uses in 
associating a particular medical condition with ICD codes.
    Response. VHA follows national standard coding guidelines as 
approved by the four organizations that make up the Cooperating Parties 
for the ICD-9-CM: the American Hospital Association (AHA), the American 
Health Information Management Association (AHIMA), the Center for 
Medicare and Medicaid Services (CMS), and the National Center for 
Health Statistics (NCHS). VHA does provide guidance when national 
standard coding guidelines are not developed, such as utilizing a V 
code for TBI cases.

    Question 2d. Are there instances where a VA physician would not use 
ICD criteria in evaluating a veteran's disability? Please explain when 
this might happen.
    Response. Standard operating procedures requires clinicians to 
identify and associate a diagnosis with the each clinic ``visit or 
appointment'', with appropriate internal controls to ensure the 
completion of this requirement. Compliance with the identification of a 
diagnosis is required to close out a ``visit/appointment.''

    Question 2e. Does VA report cancer incidence to the National Cancer 
Registry using ICD codes?
    Response. International Classification of Diseases for Oncology, 
Third Edition (ICD-O-3) codes are transmitted as part of the incidence 
report on cancers.

    Question 2f. Under what circumstance does VA accept or not accept 
and use the International Classification of Diseases for Oncology, 
Third Edition to identify and code malignancies?
    Response. ICD-O-3 is used for coding malignancies in compliance 
with national standards-setters; however, the identification of 
malignancies is done primarily using Systematized Nomenclature of 
Medicine (SNOMED) coding from the pathology departments.

    Question 3. Please detail VA's plans for processing Agent Orange 
claims that will come as a result of the Secretary's decision to add 
three new presumptive conditions? Please also provide an update on the 
Agent Orange Fast Track project.
    Response. VA's Compensation and Pension (C&P) Service ran a broad-
spectrum match across VA's systems for potential entitlement. VA must 
re-adjudicate previously denied claims for newly added herbicide-
related presumptive diseases and provide retroactive benefits from the 
date of the prior claim under the 1989 Nehmer settlement. C&P Service's 
match yielded approximately 93,500 potential Nehmer cases. This number 
includes living Veterans and potential survivor beneficiaries.
    VA developed a Nehmer Project team to coordinate efforts and ensure 
work processes operate within the parameters of the court-ordered 
Nehmer stipulation.
    VA's operational plan for reviewing and re-adjudicating the 
identified potential Nehmer cases includes dedicating approximately 
1,000 personnel stationed in 13 regional offices to complete this work. 
The actual number assigned to the task will decline as this workload is 
diminished. Three of the offices will process all survivor claims with 
the other 10 handling Veteran claims. Extensive training on eligibility 
and processing requirements under the Nehmer stipulation has been 
provided to personnel reviewing and re-adjudicating the identified 
potential Nehmer cases.
    All new claims received prior to the publishing of the final rule 
also fall within the scope of the Nehmer stipulation. To date, VBA has 
received approximately 53,000 new claims and we expect to receive more 
claims before the final rule is published. Notably, 10,200 of the new 
claims received were previously identified as potential Nehmer cases. 
Local regional offices will complete all new claims received for the 
three presumptive disabilities that are received after the date of the 
final rule.
    The Agent Orange Fast Track contract was awarded on July 1, 2010 to 
IBM and is proceeding with the development of a working prototype. The 
IBM team, working in collaboration with VA, began testing an end-to-end 
demonstration model in late August 2010.
    The Nashville Regional Office will conduct a pilot of the Agent 
Orange Fast Track prototype for 60 days following release by the 
contractor. Subject matter experts from across VBA will assist 
personnel from Nashville in testing the system. Utilizing feedback from 
the pilot, the contractor will adjust the Agent Orange Fast Track 
System to ensure the highest level of accuracy in the development of 
Agent Orange claims for the three new presumptive conditions. The Agent 
Orange Fast Track System is planned to be deployed nationwide in 
October 2010.

    Question 4. Committee oversight has found inconsistent rating 
decisions for disabilities not specifically listed in the rating 
schedule. For example, some of the most common knee conditions, such as 
chondromalacia of patella, lead to a wide variation in ratings ranging 
from an erroneous denial of the claim for lack of presumptive 
eligibility to a rating of 40 percent for bilateral knees with 
consideration of Deluca factors. Does VA believe that the use of ICD 
codes to identify a disability would improve consistency of the review 
and evaluation of medical evidence and promote the ability of VBA to 
move toward an electronic claims file using common medical terms, such 
as those used by hospitals, clinics, and insurance companies? If not, 
please explain why?
    Response. VA does not believe that using ICD codes instead of VA's 
current diagnostic codes will improve consistency of rating decisions. 
Supplementing VA's current system (as described in #1 above) will 
enhance inter-operability between VA and the rest of the medical 
community. However, the major factor in improving consistency of rating 
decisions rests with the current VASRD Modernization project. This 
project is a comprehensive program to update medical terminology and 
ensure proper classification of diagnostic codes and conditions, as 
well as ensure the VASRD accurately compensates Veterans for average 
earnings lost due to service-connected disabilities. The EconSystems 
study, about which VA has previously provided a report to the 
Committee, identified the need to add a limited number of diagnostic 
codes to the schedule. One of the conditions identified in that report 
is chondromalacia. We anticipate that that condition will be addressed 
in the revision of that section of the rating schedule currently under 
way.

    Question 5. VA's written testimony noted that the effort required 
to implement the pilot program proposed in S. 3517 would divert 
critical resources from working on existing claims. What additional 
resources would be needed for the pilot program?
    Response. The resources required to develop and implement the pilot 
program directed by S. 3517 would be extensive. Within a limited 
timeframe, VA would be developing an adjudicative construct for what is 
the largest section of the rating schedule (both in terms of number of 
current diagnostic codes and number of veterans affected) that is 
foreign to its traditional way of doing disability evaluations (i.e., a 
single evaluation for all conditions of this body system as opposed to 
individually evaluating each condition). The pilot would require 
extensive study, testing, and evaluation of any proposed change to 
ensure equity. VBA would have to suspend virtually all modifications, 
updates and enhancements to existing regulations to accomplish the 
task. Further, we would have to divert critical IT and business 
resources from the Secretary's key transformational projects including 
the Veterans Benefits Management System (VBMS), Veterans Relationship 
Management (VRM), Virtual Lifetime Electronic Records (VLER) and others 
to accomplish the task.

    Question 6. VA expressed concern that the rating system proposed by 
the pilot program could lead to inconsistent results. Please provide 
data from at least five VBA Inter-rater Reliability (IRR) Studies 
showing the consistency of rating musculoskeletal disabilities under 
the current rating schedule. If data is not available for at least five 
musculoskeletal conditions, please provide data from all available 
studies and for any other conditions in order to provide a sample of at 
least five studies.
    Response. We would like to clarify that the testimony of the Acting 
Under Secretary for Benefits expressed concern about the pilot because 
the pilot would create a situation where similarly situated Veterans 
would likely receive different benefits based solely on geography as 
opposed to disability.
    We have conducted four IRR studies on musculoskeletal disabilities 
since the inception of IRR studies in 2008. We conducted a study on 
diagnostic code (DC) 5237--low back strain, in July 2008 with a follow 
up for the same condition on April 2009. We also conducted an IRR study 
on a bi-lateral knee condition, DC 5260 in February 2009. Results from 
the four IRR studies on musculoskeletal disabilities are provided. In 
addition, we included results from an IRR study on sleep apnea 
conducted in May 2010 to meet your requests for results of five 
studies.




    Question 7. I continue to be concerned about the length of time 
that VBA has gone without permanent leadership. What steps are being 
taken to prepare for the eventual transition of leadership within VBA 
when a confirmed Under Secretary finally comes on board?
    Response. A list of nominees for a new Under Secretary for Benefits 
has moved forward for review at the White House. When a final selection 
is made and the confirmation process is complete, VA will be prepared 
for a smooth transition. VA has developed a plan to ``break the back of 
the backlog'' which includes short, medium, and long term initiatives 
running in parallel and feeding into continuous improvement efforts. 
When a nominee is selected, the organization will continue to focus on 
the Secretary's goal to eliminate the claims backlog by 2015 so as to 
ensure timely and accurate delivery of benefits and services to our 
Veterans and their families.

    Question 8. VA's written testimony notes that ``transformational 
approaches [will] begin yielding performance improvements in 2011.''
     How will this be measured?
    Response. VA transformation initiatives attack the claims process 
and backlog through a focused and multi-pronged approach, which relies 
on three pillars: Culture, Reengineering business processes, and 
Technology and infrastructure. VA is currently researching and testing 
performance measurements for each initiative as they are developed, 
tested, and piloted within their specific target group. Performance 
criteria will center on customer and employee satisfaction for Culture 
initiatives, and reduction of processing time within specific claims 
processing cycles and quality improvement for Reengineering and 
Technology initiatives. As each initiative is stood up, parameters for 
performance and expected outcomes will be identified, documented, 
evaluated, and supported.
     What is the expected change?
    Response. VA anticipates that integrated transformation initiatives 
will yield improvements through a series of short-term, mid-term, and 
strategic initiatives that are integrated or aligned within or across 
each pillar. The life cycle for deployment of each initiative includes: 
concept development, execution planning, localized execution, and full-
scale execution. It is expected that the majority of VA transformation 
initiatives will move into the localized execution or full-scale 
execution phase during 2011, thereby yielding performance improvements 
in claims processing timeliness, quality, and Veteran advocacy.
     What will happen to stations and/or personnel who do not 
meet expected improvements?
    Response. VA will establish specific performance expectations using 
clearly defined measures to evaluate and support transformation of 
claims processing within the organization. VA leadership and regional 
office management will ensure all personnel have sufficient knowledge 
of performance expectations stemming from each initiative; associated 
training, tools, and resources; and proper oversight to ensure 
successful transformation. Performance will be tracked at the national, 
area, and local levels to determine improvements needed, and a system 
of accountability will be adhered to, ensuring sustainability of 
performance gains. Pilots that do not meet goals will not go forward.

    Question 9. VA's testimony notes that $145.3 million was included 
in the President's budget request to support the ongoing development of 
a 21st Century smart, paperless claims processing system. How 
specifically will this funding be used? How will such a system replace 
or be coordinated with VETSNET, the Benefits Delivery Network (for 
payment) and the proposed VBMS? What office will be responsible for 
coordination of the various systems?
    Response. The Veterans Benefits Management System (VBMS) is a 
business transformation initiative supported by technology and designed 
to improve delivery of benefits to Veterans. It is a solution that 
integrates a Business Transformation Strategy (BTS) to address process 
and people, along with a paperless claims processing system.
    In FY 2010, the VBMS initiative began with development of the 
Virtual Regional Office (VRO). The VRO concept involved subject matter 
experts (SMEs) working with a vendor to develop business requirements 
and detailed specifications. The vendor used the input from the SMEs to 
create a graphical user interface (GUI), which became a means of 
validating the requirements as well as building the front-end interface 
for the business user.
    The President's budget includes nearly $190 million dollars to 
support the VBMS initiative, including $145.3 million in IT funding. 
These dollars are focused on continuing development of VBMS. 
Specifically, in FY 2011 VA will deploy the first iteration of software 
for testing at a pilot site in November 2010, followed by a second 
software deployment at an additional pilot site in May 2011.
    Claims processors at the first pilot site will use the new software 
to validate and harden the business requirements, as well as to 
generate new business requirements for future software releases. This 
pilot will utilize a new electronic claims repository and scanning 
solution, as well as new claims processing software, which will 
integrate with existing core business applications (VETSNET) that 
support claims processing. The first pilot is scheduled to last six 
months.
    Concurrent with the development of VBMS, the VETSNET user interface 
is being completely replaced with a services-based platform. The VBMS 
and VETSNET organizations have been working closely together to develop 
requirements and schedules. In order to coordinate this complex 
development, a Joint Executive Board (JEB) has been established to 
provide governance over the development of these services.

    Question 10. VA's testimony notes that you are aware that Congress 
and veterans service organizations are not seeing sufficient results 
despite VA's efforts to transform the disability claims processing 
system. By the end of 2011, VA is confident that there will be change 
that produces results that can be viewed externally.
     What is the basis for that confidence?
    Response. Our confidence is based on early results in several of 
the pilot initiatives currently in progress. An example includes the 
Interim Ratings/Quick Pay initiative (QPD), which has already provided 
full or partial payments within 30-days for disabilities meeting QPD 
criteria by utilizing specialized interim rating procedures. As of 
July 2010, VA has served over 1,000 Veterans and paid out more than 
$1.2 million in benefits for Quick Pay claims.
     What are the expected changes that can be viewed 
externally?
    Response. VA is piloting several initiatives which, when deployed 
more extensively, will have immediate visibility to our external 
stakeholders. The following four initiatives are examples:

    1. The Rapid Evaluation of Veterans Claims (REV) Initiative was 
established to improve processing time and increase quality outcomes. 
The REV initiative gives Veterans who are receiving disability 
compensation more control in preparing their own claims for increased 
disability evaluations by guiding them in organizing and submitting 
required medical evidence. The initiative reduced the average days to 
complete these claims to 25 days. This initiative provides direct 
service and one-on-one support to beneficiaries, increasing our 
advocacy role on behalf of those we serve.
    2. The Walk-in Claims initiative is being piloted at the Wichita 
and Milwaukee regional offices. This initiative maximizes on-site 
interaction with claimants to expedite claims development, with the 
potential for immediate decisions on Veterans' claims. Walk-in claims 
processing improves timeliness and transparency of claims processing 
and public perception of VA service delivery, and supports Veteran 
advocacy. As of June 2010, the average number of days to complete a 
walk-in claim was 3.1 days.
    3. To minimize the need for VA medical examinations and avoid 
processing delays in scheduling and completing those examinations, VA 
is also developing over 60 new medical questionnaires that are 
specifically aligned with the VA Schedule for Rating Disabilities for 
use by Veterans' personal physicians. Use of these medical 
questionnaires will minimize the need for Veterans to also be examined 
by VA in connection with their disability claims.
    4. Under the Fully Developed Claims initiative Veterans are 
provided a checklist that clearly outlines the evidence necessary to 
substantiate their claims, resulting in more frequent and timely 
receipt of evidence and faster decisions.

     How will results be measured?
     Response: As referenced in question 8, VA is identifying 
and testing performance measurements for each pilot initiative. 
Performance criteria will include customer and employee satisfaction, 
reduction in processing time, productivity, and quality improvements.

    Question 11. VBA experienced a 14.1 percent increase in annual 
claims in 2009 and projected an increase of 13.1 percent in 2010 and 
11.3 percent in 2011. What are the current projections for 2010 and 
2011?
    Response. Through July, receipts have increased by 17.9% in FY 
2010. VBA projects receipts will increase by 16.2% in FY 2011.

    Question 12. Please provide a timetable for when the Committee will 
receive VA's evaluations of the four claims-processing pilot projects 
you referred to in your testimony. During testimony, a representative 
of VA stated that VA has received the contractor's report on the Little 
Rock pilot project. Please provide a copy of that report and any other 
written evaluations or reviews of these projects that are available.
    Response. The Claims Processing Pilot at the Little Rock RO 
concluded in May 2010. An Executive Summary and the final report from 
Booz Allen Hamilton was received August 11, 2010, and is currently 
under VA review.
    The Business Transformation Lab (BTL) in Providence, RI, serves as 
an ongoing ``test ground'' for defining processes and testing 
functionality that will be incorporated into the development and 
deployment of VBMS. The business process improvements identified by the 
BTL will be supported by technology enhancements and be integrated into 
VBMS. VBA will continue to analyze and assess the impact and utility of 
the testing at the BTL. However, no formal report is planned as this is 
an ongoing pilot in support of VBMS.
    VA continues to evaluate and monitor the progress of the Case-
Managed Development Pilot at the Pittsburgh Regional Office. No formal 
report has been generated, as testing continues through the end of FY 
2010. VBA leadership will assess lessons learned and best practices at 
the end of December 2010 to determine whether additional rollout would 
have positive impact.
    The Virtual Regional Office (VRO), co-located at the Baltimore 
Regional Office, served as a business and functional requirements 
development and validation pilot. The outcome of the VRO was validated 
business requirements needed for the Veterans Benefits Management 
System (VBMS). The specifications produced by the VRO have been used to 
inform the development of VBMS. The final deliverables (requirements, 
use cases, user guide, etc) of the VRO were received and accepted by 
VBA. The VRO was a successful effort due to on-time delivery and 
quality of deliverables, and subsequent incorporation of the 
specifications into VBMS.

    Question 13. What is the average caseload of rating specialists 
within and among regional offices? Is there a correlation between the 
length or level of experience of the rater and the rater's caseload? 
Please explain the criteria VA uses to prioritize claims for review and 
disposition. Please describe each of the incentive programs and 
specific criteria VA uses to improve the quality or quantity of claim 
decisions, including the criteria for awarding each incentive.
    Response. Work is allocated on a local level by regional office 
management based on several different factors and can vary within each 
station and across stations. Such factors include experience level, 
case complexity, and other duties and responsibilities such as 
training, mentoring, and special projects. Therefore, it is difficult 
to determine a specific correlation between caseload and any of these 
factors alone. As of July 30, 2010, 529,372 rating-related claims were 
in the inventory. Of that number 68,841 were considered ready to rate. 
VA had 2,647 Rating Veteran Service Representatives (RVSRs) of all 
experience levels as of July 31, 2010.
    VBA utilizes national and local workload management practices to 
prioritize claims for review and disposition. National priority claims, 
such as seriously injured and homeless claims, are case-managed by 
local coordinators at each regional office. Currently a number of 
``quick pay'' pilots are in process as well. Remaining claims are 
reviewed in each phase of the claims life cycle based on age of claim 
and timeliness in that phase. All regional offices are required to 
create and utilize local plans outlining the priority of claims 
processing and utilization of available resources for workload 
management.
    VBA utilizes a three-tier incentive program to recognize 
individuals and regional offices for excellent performance during the 
fiscal year.
    Individual recognition (level I), awards are given to those 
employees whose performance significantly exceeds their performance 
requirements. All performance requirements for claims examiners contain 
critical elements for both quality and timeliness/production. At the 
heart of the performance award program is a foundational focus on 
quality. Funding for level one of the program is distributed to 
regional offices based on a percentage of total salary for each office. 
Level one funds are paid out to individual employees locally as 
incentive awards, and the criteria for performance are determined 
locally and vary across regional offices.
    Group awards (level two) are made to offices or elements of offices 
that achieve and exceed performance targets. Funding for level two of 
the program is distributed to regional offices for meeting key 
performance targets during the fiscal year, including all claims 
accuracy goals. Funding for level two awards is pro-rated based on 
total salary for employees in each business line for which the regional 
office met the level two criteria.
    Special contribution awards (level three) of the program are 
reserved for recognition by the Under Secretary for Benefits. 
Recommendations at this level are made by the Associate Deputy Under 
Secretary for Field Operations.

    Question 14. VA testified that the actual time it takes to review a 
fully developed claim typically is just 20 to 30 days and that most of 
the rest of the time is spent gathering or developing the information 
VA needs to decide the claim. How much time, as a percentage of the 
total claim processing time, is spent transporting the claim file 
between locations within the regional office or between different 
regional offices--for example, during brokering?
    Response. VA transfers claims between offices via United Parcel 
Service (UPS) ground shipping, which is typically one to five business 
days. Folder movement within an office occurs within the same day. The 
percentages of time spent transporting claims vary, and an average 
percentage may be viewed as misleading.

    Question 15. At a number of places in VA's testimony, there is 
reference to VA employees being advocates for Veterans. How do you 
envision a VA employee, who is required to judge the merits of a 
Veteran's claim for benefits, simultaneously serving as an advocate for 
the Veteran? Are those two roles inconsistent?
    Response. VA decisionmakers also have a key role as Veterans' 
advocates. The advocacy portion of their responsibilities relate to 
ensuring that Veterans, Servicemembers, and their family members are 
empowered with the information they need to submit the best claim 
possible. As decisionmakers our employees are guided by the eligibility 
and entitlement requirements to apply facts to the law, resolving 
reasonable doubt in favor of the claimant to arrive at decisions. We do 
not see these as inconsistent.

    Question 16. During the hearing VA testified that the use of VA 
employees and contractors to evaluate PTSD claims results in 
consistency across the system and that consistency is monitored by 
CPEP. During Committee oversight consistency in evaluations has not 
been identified. For example, at one regional office, marked 
differences have been noted in the evaluation of PTSD claims by VHA and 
contract providers at the same location, resulting in marked 
differences in the evaluation of the veterans. Two of the examiners 
appeared to follow VHA Best Practices and provided testing to support 
the findings, while another examiner at the same location provided no 
testing and submitted examination results using templates which result 
in virtually identical reports, distinguishable only by the name of the 
veteran, the veteran's file number and the GAF score assigned with no 
discussion of veterans treatment history, symptoms and findings of 
treating physicians.
     Is the number of examinations reviewed by CPEP adequate to 
measure the quality of individual PTSD examiners?
     Will VA be taking any additional action to monitor the 
quality of PTSD examinations, for example by using a sample size for 
CPEP evaluations, which would be adequate for statistical analysis?
     Please provide a list of VA funded research currently 
underway concerning the evaluation of PTSD for purposes of evaluating 
medical examinations and opinions using different techniques and the 
expected completion dates for such studies.
    Response. VA's current system for reviewing the quality of 
disability examination reports is administered by the Disability 
Examination Management Office (DEMO--formerly the Compensation and 
Pension Examination Program, or CPEP).
    Under the current centralized program design, exam quality review 
findings are valid at the VISN level based on three months of 
accumulated data. They are not valid at the individual examiner level. 
The sample size that would be needed to achieve validity of quality 
findings at the examiner level is far larger than can be accommodated 
in this design using currently available resources.
    VA has, however, recognized limitations in its exam quality review 
program and is working creatively to address issues such as the one 
raised in your question (that is, inter-examiner reliability). DEMO is 
currently designing a disability examination peer-review program that 
will involve review and feedback by and for clinicians who conduct 
these exams. The reviews will be targeted at the clinician level, and 
the process will be centrally tracked to identify those who require 
additional training and support to bring their exam reports up to the 
expected level of quality.
    The peer-review program will include an intervention training 
mechanism to address individual examiner weaknesses. DEMO will create 
the Disability Evaluation Resource Academy (DERA, working title), which 
will be responsible for providing mandatory enrichment training to 
examiners identified by peer review as needing additional support. The 
DERA will be a joint venture involving DEMO staff and the Employee 
Education System.
    Components of the peer-review standards include attention to 
matters addressed in your question. For example, quality elements will 
include adequacy of support for diagnoses, to include indicated test 
results and clear interpretation of their findings.
    VA is currently funding a major study titled ``Enhancing Equitable 
and Effective PTSD Disability Assessment.'' This study is testing 
consistency, quality, and uniformity of practice in conducting and 
reporting PTSD examinations. Included in the study are assessments of 
the effects of administering structured clinical screening instruments 
and structured functional assessment tools on the quality and usability 
of the resulting exam reports.
    The ultimate aim of the study is to ``improve the reproducibility, 
consistency, and validity of the PTSD examination process while 
maintaining a level of efficiency and cost restraint that provides 
Veterans with an exam process that is fair, accurate, and equitable 
across VHA.''
    Data collection will end September 30, with an interim analysis 
expected to be released in October. Additional analyses are anticipated 
through the rest of the year. In addition, there will be an effort to 
associate rating decisions in these cases with the study groups to 
assess the effects of separate disability data collection methods with 
claims outcomes.

    Question 17. I am encouraged by the focus on developing 
``templates'' for medical examinations necessary to evaluate disability 
compensation claims.
    Please provide an estimate of when each new or improved medical 
examination template will be approved and made available to the medical 
personnel who conduct the examinations.
     Which templates, if any, will VA make available to private 
physicians and other medical professionals whose evaluations could be 
accepted in place of an examination conducted by VA or VA-contractor 
personnel?
     For each examination template expected to be approved by 
the end of this year, please provide an estimate of the average length 
of time it will take a qualified medical professional to conduct the 
examination and fill out the template and compare this to the time it 
takes under current procedures (either without any template, or with an 
existing template that will be revised).
     Once VA has developed a template, are VA and contract 
personnel who conduct medical examinations required to use the 
template, or is the template optional? If use is optional, what 
alternative reporting methods are allowed?
    Response. VBA's goal is to have C&P Examination worksheets, called 
Disability Benefits Questionnaires (DBQs), prepared to replace the 
current 67 worksheets by October 1, 2010. A VBA/VHA/OGC/BVA working 
group is composing each DBQ; groups of 3-5 completed DBQs are then sent 
to OMB to obtain approval for public display on the VA internet site, 
for use by private physicians.
    VA's DBQ Project Management Plan requires that all DBQs be made 
available to private clinicians of the Veteran's choosing. The PTSD 
DBQ, however, because of the new PTSD regulation, is only available to 
private physicians for claims for increased disability evaluations. All 
DBQs, with the exception of an original PTSD claim, when completed by a 
clinician, whether VA or otherwise, will be accepted in place of an 
examination conducted by VA or VA-contractor personnel.
    The strength of the DBQs lies in collecting only essential rating 
criteria-related medical information that a Rating Veterans Service 
Representative (RVSR) needs to make a decision. Additionally, use of 
the DBQs by private physicians, which is optional, is expected to 
reduce the number of VA exams needed, which will improve processing 
timeliness. VHA and contract personnel are required to use DBQs.
    Our initial testing of the DBQs was limited to the substantive 
adequacy and accuracy of both the questions asked and the answers 
garnered from each form. The test involved the completion of a DBQ 
based on a review of the medical records of sample Veterans and a 
subsequent rating decision utilizing the DBQ and all available medical 
information. The DBQ-assisted rating decision was then compared to the 
current rating decision on record. This test did not capture average 
completion time. However, the DBQs are currently being field tested at 
several medical centers throughout the country, which will allow us to 
estimate the average completion time when accompanying a full 
examination.
    Currently, VHA schedules a minimum of one hour for every 
examination. However, that time increases with the addition of factors 
such as number of body systems involved, number of symptoms, severity 
of symptoms, existence of co-morbidities, etc. Therefore, it is 
difficult to estimate the time required to examine a Veteran, either 
utilizing the DBQ or the current worksheets. However, physicians 
experienced in conducting VA disability examinations indicate that 
current documentation requirements account for about one-half of the 
required examination time. The DBQs reduce the documentation 
requirement by more than half. Therefore, we estimate that the DBQs 
will reduce the required examination time by at least one-half.

    Question 18. Good IT solutions are central to fixing the claims 
problem--to help with processing and to ensure a seamless transition 
with DOD, among other things. Is there more Congress can do to help VBA 
in this regard?
    Response. VA is fully committed to achieving the goals the 
President mandated of us--to create a Virtual Lifetime Electronic 
Record (VLER). Utilizing information technology to ensure healthcare 
and benefits providers have secure access to authoritative source 
information supplemented by health data created by the private sector 
will facilitate the seamless transition of Servicemembers to Veteran 
status. We appreciate your continued support and oversight to ensure 
appropriate resources are committed to accomplishing these efforts.

    Question 19. During the hearing, it was stated that VA's current 
electronic claims processing systems are built on proprietary software 
that has been customized repeatedly over a long period of time to serve 
the unique purposes and needs of processing claims for veterans' 
benefits. It was stated that VA is rapidly moving toward replacing 
these proprietary systems with software built on open standards. Please 
explain why VA is making this change and how a system based on open 
standards can serve veterans better than a proprietary system that has 
been customized over many years to serve the unique needs of disabled 
veterans.
    Response. The Veterans Benefits Management System (VBMS) initiative 
is designed to address inefficiencies in the claims process as well as 
modernize the existing legacy applications in order to break the back 
of the backlog. VBMS is based on open architecture and commercial-off-
the-shelf (COTS) products that will allow VA to react more methodically 
to emergent claims processing needs.
    VBMS will dramatically reduce the amount of paper in the current 
claims process and will employ rules-based claim development and 
decision support where possible. Additionally, by using open 
architecture and COTS products, VA will be positioned to take advantage 
of future advances in technology developed in the marketplace and to 
respond to the changing needs of Veterans over time.

    Question 20. VA's testimony refers to a contract with IBM to create 
an online claims application system by November of this year.
     Is this project on track for completion by the November 
deadline?
    Response. The Agent Orange Fast Track contract was awarded on 
July 1, 2010 to IBM and is proceeding with the development of a working 
prototype. The IBM team, working in collaboration with VA, began 
testing an end-to-end demonstration model in late August, 2010. The 
Agent Orange Fast Track System is planned for nationwide deployment in 
October 2010.
     Will the new system actually ``go live'' in November? If 
not, when will veterans be able to use the new system to file a claim?
    Response. The Agent Orange Fast Track System is planned for 
nationwide deployment in October 2010.
     How will the system differ from the current Veterans 
Online Application (VONAPP) system?
    Response. The Agent Orange Fast Track System will utilize the 21-
526EZ (Fully Developed Claim) application form, and will initially only 
be applicable to claims involving the three new herbicide presumptive 
conditions. The legacy VONAPP system supports filing the 21-526 
(Veterans Application for Compensation and/or Pension), 21-4138 
(Statement in Support of Claim), 21-686c (Declaration of Status of 
Dependents), and the 21-530 (Application for Burial Benefits). 
Additionally, VONAPP supports claim submissions for Education and 
Vocational Rehabilitation benefits. The Agent Orange Fast Track System 
will deploy with additional functionality that goes beyond just 
collecting information online. This includes a business rules component 
to provide a recommended disability evaluation, as well as scanning 
capability to store all of the information in an eFolder.
     When a veteran files a claim through VONAPP, does VA 
maintain the claim in electronic form or print out the information to 
insert in a hard-copy claims file? How would the improved online claim 
filing system affect the way that VA maintains and uses the information 
provided by the veteran?
    Response. At the current time, VA does not maintain the claim in 
its electronic form, but rather prints this information for insertion 
in the hard-copy claims file. An advanced online claim filing system 
offers several advantages to VA in terms of electronically reusing 
information provided by the Veteran. In VA's future on-line application 
system, Veterans will gain access via the eBenefits portal. This 
provides for authentication of the Veteran, allowing VA to associate 
known information about the Veteran. Using information from VA systems, 
applications for benefits can be prefilled with such information as 
service data and demographics. Information provided by Veterans can be 
used to automatically establish claims and automatically compile the 
required Veterans Claims Assistance Act (VCAA) notice to the Veteran 
based on what is being claimed. The Agent Orange Fast Track System is 
taking advantage of these capabilities to enable more efficient 
processing and quicker initial turn-around time.
     Under both the current and new online claims-filing 
systems, which entities within VA (or any other agency or organization) 
have remote electronic access to the information provided in the online 
claim?
    Response. With the legacy VONAPP application, that information is 
not available electronically until the claim control is established in 
VETSNET. At that point, any employee or Veterans Service Officer (VSO) 
with access to VETSNET MAP-D (Modern Award Processing--Development) can 
see the details of the claim. Additionally, as VETSNET is the feeder 
system for the eBenefits Claim Status Service, any properly 
authenticated Veteran can see information about his/her claim(s) 
through the eBenefits portal. Because of the automated claim 
establishment, Veteran will be able to see the initial information 
faster through the eBenefits portal, and will have online access to 
their information in the Agent Orange Fast Track System.
     On average, how long does it take a veteran to fill out 
the current online claim form?
    Response. The OMB Respondent Burden for the 21-526 is one hour and 
thirty minutes. By contrast, the Respondent Burden for the 21-4138 is 
fifteen minutes. The 21-4138 is commonly used to file claims subsequent 
to an original claim. The Respondent Burden for the 21-526EZ, the 
baseline for collection of information in the Agent Orange Fast Track 
System, is twenty-five minutes.
     Does VA need statutory authority to authorize electronic 
signatures on applications submitted electronically?
    Response. In May 2008, the Secretary of Veterans Affairs approved 
elimination of the ``wet signature'' (i.e., an original signature on a 
piece of paper) requirement for VBA online claims submissions. Instead, 
the claimant is provided with a ``claimant certification.'' That 
certification is in lieu of the prior wet signature requirement, and 
meets the existing statutory requirements for a ``signature.'' Other 
Federal agencies, including the Social Security Administration, deploy 
the same methodology to online claims submissions. VHA recently 
eliminated the wet signature requirement when applying online for VA 
healthcare benefits.

    Question 21. How will VETSNET be impacted by the Veterans Benefit 
Management System (VBMS)?
    Response. VETSNET has two major components- the Visual Basic user 
interface (VBUI) and the Corporate database behind it.
    VETSNET development continues to be focused on completing the 
conversion of records out of the BDN system. As of June 2010, no new 
C&P records were being created in the BDN system, and approximately 90 
percent of all records have been converted. The remaining records will 
be converted over the next year, and the VETSNET development teams are 
making only minimal VBUI and database changes needed to support the 
conversion.
    Separate from conversion, VETSNET will continue to provide 
production support for both the user interface and database.
    Development of any new functionality for VETSNET is being carefully 
examined by VBA and OI&T leadership to ensure it is mission critical. 
Any non-mission critical development is being deferred for inclusion in 
VBMS. Any approved development will be designed to ensure ease of 
integration with VBMS by focusing on minimizing code changes to the 
VBUI and maximizing development in a service-oriented framework.
    Currently the only major new development in VETSNET supports Combat 
Related Special Compensation, which is scheduled for delivery in 
November 2010.
    VETSNET resources not engaged on conversion, production support, or 
leadership-sanctioned new development are engaged with the development 
of services needed to support VBMS.

    Question 22. As VBMS comes online, is there a need to upgrade the 
IT infrastructure at Regional Offices?
    Response. VA's Office of Information and Technology (OI&T) has a 
plan in place to upgrade the IT inter-office network infrastructure 
separate from the VBMS initiative. At this time, there are no 
additional upgrades needed to specifically support VBMS. However, part 
of the pilot testing of VBMS will be a review of the IT infrastructure 
to ensure no additional upgrades are required. If any additional needs 
are identified through the VBMS pilots, the VBMS project team will work 
with OI&T to address them in advance of national deployment.

    Question 23. Does the VBMS initiative fall under Project Management 
Accountability System and if so, can you please share the PMAS 
scheduled milestones?
    Response. VBMS has a major IT component and as such does fall under 
PMAS. Major PMAS milestones in FY 2011 include Pilot I and Pilot II 
software deployments.
    The VBMS initiative is currently in Pilot 1 development. The Pilot 
1 customer-facing software deployment (PMAS milestone) is scheduled for 
November 2010. Pilot I will run for a period of six months during which 
time the software will be tested. The second PMAS deliverable in FY 
2011 will be deployment of VBMS software for Pilot II. This second 
deployment will refine and improve capabilities provided in the initial 
deployment in November 2010.
                                 ______
                                 
 Response to Post-Hearing Questions Submitted by Hon. Richard Burr to 
 Michael Walcoff, Acting Under Secretary for Benefits, U.S. Department 
                          of Veterans Affairs

    Question 1. Witnesses on our second panel expressed concerns about 
whether VA is placing a high enough priority on developing smart, 
rules-based automated systems to help claims processing. Would you 
please clarify for us whether rules-based processing will be a part of 
the paperless claims processing system that VA plans to roll out in 
2012?
    Response. The VBMS system will include a rules-based processing 
engine when national deployment commences in 2012. VA will build 
automated workflow processes as well as automated decision support 
where appropriate. VBMS will have the functionality to readily accept 
additional rules in the future as the needs of our Veterans change, 
and/or as more efficient business processes are developed.

    Question 2. Former Under Secretary for Benefits Joe Thompson 
testified that it is his understanding that the Government Performance 
Results Act required VA to conduct a program evaluation of VA's 
disability compensation program but that an evaluation has never been 
done.
    A. Is that accurate? Has VA conducted such a program evaluation?
    B. If not, when does VA plan to conduct that evaluation?
    Response. VA did not conduct a program outcomes study for the 
compensation program because Congress created the Veterans Disability 
Benefits Commission as a three-year commission to examine the 
compensation program to see if it was meeting the needs of Veterans. We 
believe the report of that commission meets the intent of the law.

    Question 3. The Acting Under Secretary for Benefits testified that 
VA has an incentive program for claims processing employees through 
which funds are distributed to offices that meet certain goals and 
those offices then distribute the funds as they deem appropriate.
    A. Please provide a copy of any guidance provided to offices on how 
those incentive funds should be distributed.
    B. Under this incentive program, is it possible for claims 
processing employees to receive incentive funds if their individual 
productivity has declined from prior years?
    Response. VBA utilizes a three-tier incentive program to recognize 
individuals and regional offices for excellent performance during the 
fiscal year. Guidance provided to our regional offices is attached. 
[Attachment follows response.]
    Individual recognition (level one), awards are given to those 
employees whose performance significantly exceeds their performance 
requirements. All performance requirements for claims examiners contain 
critical elements for both quality and timeliness/production. At the 
heart of the performance award program is a foundational focus on 
quality. Funding for level one of the program is distributed to 
regional offices based on a percentage of total salary for each office. 
Level one funds are paid out to individual employees locally as 
incentive awards, and the criteria for performance are determined 
locally and vary across regional offices.
    Group awards (level two) are made to offices or elements of offices 
that achieve and exceed performance targets. Funding for level two of 
the program is distributed to regional offices for meeting key 
performance targets during the fiscal year, including all claims 
accuracy goals. Funding for level two awards is pro-rated based on 
total salary for employees in each business line for which the regional 
office met the level two criteria.
    Special contribution awards (level three) of the program are 
reserved for recognition by the Under Secretary for Benefits. 
Recommendations at this level are made by the Associate Deputy Under 
Secretary for Field Operations.

                        Attachment to Question 3
     Performance Awards Program For VBA Field Operations, June 2002

                               OBJECTIVE

    The Performance Awards Program is designed to provide meaningful 
incentives to individuals and stations in the field for high 
performance. Awards will be based on the achievement of performance 
targets that are set by the Under Secretary for Benefits (USB) in 
response to priorities and goals established by the Secretary. 
Performance indicators will be tied directly to the needs of veterans 
and their families, and will reflect not only production targets but 
also rigorous quality standards. The criteria for earning an award will 
also include indicators that reflect the Secretary's commitment to 
improve timeliness and reduce the pending workload. The performance 
awards program is also designed so that it is easy for employees to 
understand what they must accomplish as individuals and as part of the 
Regional Office (RO) or VA Medical and Regional Office Center (VAMROC) 
to be eligible for a performance award.

                   VBA PERFORMANCE MANAGEMENT POLICY

    All performance award distribution plans at the national and local 
levels within VBA must be linked directly to the achievement of 
individual and/or organizational performance targets and goals. 
Directors will be expected to ensure that the allocation methodology is 
tied directly to performance, and that there are meaningful 
distinctions in the amount of award dollars granted.

            DESCRIPTION OF THE THREE PERFORMANCE AWARD POOLS

Level I--Basic Incentive Awards:
    Every station will receive the equivalent of 0.65 percent of their 
salary funds (including locality pay) as of pay period 1 for FY 2002 
and pay period 21 for subsequent years. In subsequent years, the funds 
will be paid out in the beginning of the first quarter of the fiscal 
year. This pool of dollars is intended to fund the various incentive 
awards programs (e.g. ``special act,'' ``extra step,'' and ``on the 
spot'') and performance awards programs (e.g. special contributions) 
established by an office. While a station may not reach its performance 
goals as outlined in Level II, the Level I station distribution 
recognizes the fact that there will be some individual employees within 
an office that are high performers who deserve recognition during the 
operating year. Additional/supplemental incentive award funds for these 
high performing employees may be earned if the station meets its 
performance targets as part of the Level II Pay for Performance award 
distribution.
    Since the following unique functions do not have sufficient 
performance targets set for this year (FY 02), they will receive a 
Level I payout that is equivalent to 0.80 percent of their salary 
funds. Although they will not be eligible for a Level II payout, they 
may compete for Level III recognition. If appropriate performance 
targets can be set for these functions, they will be included in the 
Level II pool in subsequent fiscal years.

     Pension Centers
     Resource Centers
     Human Resources Centers
     Network Support Centers
     The Records Management Center
     The Portfolio Loan Oversight Unit
     Tiger Team
     Huntington SRA
     Muskogee Direct Deposit Unit
Level II--Pay for Performance:
    The total amount of this pool will be equivalent to 0.90 percent of 
the salary funds (including locality pay) in the field as of pay period 
21. The funds will be sub-divided (based on salary) into the following 
award pools:

     Veterans Service Centers*
---------------------------------------------------------------------------
    * The overhead payroll dollars for Executive Direction, Information 
Resources Management, Human Resources Management, and Support Services 
at each of the Regional Offices will be added to the program/business 
line pools on a proportionate basis (e.g. if Compensation and Pension 
represents 72 percent of the business line salary dollars in the field, 
then 72 percent of the overhead salaries would be added to the 
Compensation and Pension award pools). If the business line divisions 
make their performance targets, the elements that support them would be 
expected to receive an appropriate share of the Level II award payout.
---------------------------------------------------------------------------
     Regional Loan Centers* (Including funds for the LG 
activities that still remain at the Regional Offices)
     Regional Processing Offices*
     Vocational Rehabilitation and Employment Divisions*
     Loan Guaranty Eligibility Centers

    To be eligible for a Level II business line pay out, a station must 
meet key performance targets established by C&P, LGY, VR&E, and 
Education Services; the Associate Deputy Under Secretary for Field 
Operations; and the Associate Deputy Under Secretary for Policy and 
Programs. These targets must have the concurrence of the Under 
Secretary for Benefits. The ADUS for Field Operations, the ADUS for 
Policy and Programs and the ADUS for Management will appoint a 
committee at the end of each Fiscal Year to review the performance 
award program and recommend any necessary revisions to the performance 
indicators or distribution process to ensure that the program continues 
to support the priorities of the organizations.
    The total amount in each business line pool will generally be 
distributed to qualifying stations on a pro-rata basis (i.e. based on 
their proportionate share of the total business line salary dollars for 
the stations that qualified for a Level II payout). However, each 
service is capped at the following: VSC 15, RLC 3, RPO 1, and VR&E 15. 
If the number of stations is less than the cap, the award funds will be 
limited to the salaries for one pay period for that service divided by 
the number of FTE on board (per capita). For example, if 14 stations 
achieve the VSC target, the per capita would be $1,816 if the salaries 
were $12,387,689 divided by 6,821. A station of the size of 10 FTE 
would receive $18,160 for Level II payout. If the entire pool for a 
business line is not paid out because only a limited number of stations 
make their performance targets, the excess funds will roll over into 
Level III. The payouts under Level II will occur once a year in the 
beginning of November and will be distributed based on the performance 
achieved in the prior FY. This timeframe should allow stations to 
authorize performance awards prior to the end of the calendar year and 
traditional holiday seasons.
    The Regional Loan Centers (RLC) and the Regional Processing Offices 
(RPO) that achieve their performance targets will be responsible for 
allocating an appropriate amount of funds from their award pool for the 
outbased employees assigned to their area of jurisdiction. The salary 
dollars for all Loan Guaranty employees, even those still assigned to 
an RO, are rolled into RLC salary dollars. Therefore, the RLC will be 
responsible for distributing Level II awards to all Loan Guaranty 
employees, including those assigned to an RO. The San Juan and Honolulu 
Loan Guaranty functions are treated like an RLC, but are not included 
in determining whether the payout is capped.
    The Insurance program, which is funded primarily by Trust Funds, 
will be expected to develop a similar awards program that is consistent 
with the objectives and dollar amounts in this plan.
    The performance targets that must be met in FY 2002 to qualify for 
a Level II payout in November of this year are as follows:
            Veterans Service Centers
    A VSC must meet three of the following four performance targets to 
be placed in the pool:

     Meet or exceed the station's Rating Related Production 
target for the year
     Achieve an accuracy rate of 85% for Ratings and 70% for 
Authorization on the national STAR reviews
     Rank among the top one-third (19) stations for average 
processing time for the rating- related end products, and reduce their 
total pending workload from the beginning of the FY to the end of the 
FY by 15%
     Reduce pending appeals by 10% for the year
            Regional Loan Centers
    A Regional Loan Center must meet both of the following performance 
targets to be placed in the pool:

     96% accuracy under the SQC program index
     39% or better FATS ratio
            Loan Guaranty Eligibility Centers
    A Loan Guaranty Eligibility Center must meet both of the following 
performance targets to be place in the pool:

     96% eligibility accuracy for the SQC review of this 
program
     6 day timeliness standard for processing eligibility 
applications
            Regional Processing Offices
    A Regional Processing Office must meet three of the following four 
performance targets to be placed in the pool:

     38 day timeliness standard for original claims
     21 day timeliness standard for supplemental claims
     94% payment accuracy
     A blocked call rate of 20% or less
            Vocational Rehabilitation and Employment Divisions
    A Vocational Rehabilitation & Employment Division must meet three 
of the following four performance targets to be placed in the Level II 
pool:

     Entitlement determination accuracy will be at least 91%
     Outcome accuracy will be at least 84%
     The rehabilitation rate will be at least 65%
     The serious employment handicap rehabilitation rate will 
be at least 65%
Level III--Under Secretary for Benefits' High Performance and Special 
        Contribution Awards:
    This discretionary award pool is for the use of the Under Secretary 
for Benefits to recognize contributions by stations that exceed normal 
expectations. The amount of the fund will be equivalent to .20 percent 
of field station salaries (including locality pay) as of pay period 21.
    Stations will be given the opportunity to nominate their office for 
a share of this pool based on exceptional contributions they made 
during the FY to help VBA and the Under Secretary meet their 
performance goals. Nominations must be submitted by September 15th to 
an Awards Panel that will make recommendations to the Under Secretary 
on which organizational elements should be rewarded and on the amount 
of the award. The Awards Panel will consist of the Associate Deputy 
Under Secretary for Field Operations, Associate Deputy Under Secretary 
for Policy and Programs, Associate Deputy Under Secretary for 
Management, and Area Field Directors. The ADUS for Field Operations 
will serve as the Chairperson of the Panel, and the Director of the 
Office of Human Resources will provide administrative and advisory 
support to the Panel.
    Since this is a discretionary fund, the Awards Panel may recommend 
paying out none, some or all of the funds depending on the extent of 
special contributions. The USB may also decide to use a portion of the 
fund for special recognition during the year prior to the convening of 
the Awards Panel. Criteria and a nomination format will be provided to 
all field sites by July 2002.
    Payouts will be combined with the Level II payouts in early 
November.
    The following is a list of examples of the types of contributions 
that might be recognized by a Level III award. The list is intended to 
be illustrative and not all-inclusive:

     Outstanding levels of performance in key indicators that 
far exceeded the stations targets (e.g. exceeding the production target 
for ratings by 150 percent);
     Volunteering and contributing to the successful testing of 
a new application or process;
     Performing significant amounts of additional work 
(brokering and/or help teams) for other stations;
     Developing a new initiative or process that improves 
performance or service to veterans;
     Exceptional performance in support of the veterans in 
communities served by an RO or VAMROC that experienced a natural 
disaster or other devastating event;
     Exceptional outreach programs;
     Initiatives that support and enhance the ``One VA Vision'' 
or other priority programs identified by the President and Secretary;
     Creative initiatives that improve relationships with key 
stakeholders (e.g. VSO's, congressional staffs, mortgage brokers, 
schools, and the military services at the local RO and VAMROC level).

    Question 4. At the hearing, we discussed factors that contributed 
to the failure of prior VA claims processing initiatives, including 
unclear goals, lack of integration of various efforts, and failure to 
coordinate with stakeholders. We also discussed the on-going claims 
processing initiatives.
    A. Please provide a list of the goals for each on-going initiative.
    Response. VA has set goals for eliminating the disability claims 
backlog by 2015, processing disability claims in no more than 125 days, 
and achieving a 98 percent or greater accuracy rate on every completed 
claim for disability. All on-going claims processing initiatives were 
established based on this mandate and are continually evaluated to 
ensure they support VA's strategic transformation goals.
    B. Please provide a list of the metrics that will be used to gauge 
whether each initiative should be continued, expanded, or discarded.
    Response. VBA's Claims Transformation Plan will ``break the back of 
the backlog'' through a series of short-term, mid-term, and strategic 
initiatives that are integrated or aligned within or across each 
pillar. The life cycle for deployment of each initiative includes: 
concept development, execution planning, localized execution, and full-
scale execution. During each phase, VA will assess the efficacy, 
sustainability, and return on investment to determine which 
initiative(s) will be continued, expanded, or discarded. All 
initiatives will be evaluated based on VA's strategic goal of no claims 
pending more than 125 days, 98% accuracy rate of claims outcomes, and 
Veteran advocacy.
    C. Are the various initiatives being integrated and, if so, how?
    Response. VBA has established a dedicated program office to 
monitor, evaluate and promote the successes of the initiatives; the 
Office of Strategic Planning (OSP). OSP fosters collaboration and an 
environment for integration of results. For example, a weekly 
conference call with the 10 Innovation Initiative Project Managers 
provides a forum to learn from the experience of others in addressing 
challenges and provide opportunities to build upon successes. 
Integration also will be realized through the anticipated synergistic 
accomplishments of similar initiatives. For example, in the case of new 
Agent Orange presumptive disabilities, one initiative is developing a 
Web-based portal for claims filing and development to address an 
expected surge of workload with these new claims, while another 
initiative is building better medical evidence-gathering routines for 
the same disabilities for integration into the automated system that 
guides disability examinations. Private doctors are offered paper 
versions of the examination questionnaires that can be uploaded through 
the new Web portal when complete.
    D. What input did veterans' organizations and other stakeholders 
have in crafting each of the on-going initiatives?
    Response. Veterans service organizations have been involved in the 
Transformation Plan from the nationwide Innovation Initiative 
competition through advising VA during ongoing execution. Activity 
ranges from VBA pilot initiative teams communicating with local 
Veterans organizations about their activities, to a pilot for improving 
claims contention quality in which representatives of Veterans service 
organizations are active pilot management committee members. Veterans 
groups have been provided information on all initiatives and VA will 
continue to brief them, as well as employees, labor groups, and 
Congressional Members and staffs.
    E. What input will veterans' organizations and other stakeholders 
have as VA determines whether to continue, expand, or disband each of 
these initiatives?
    Response. Veterans organizations' and other stakeholders' input and 
understanding are vital to the success of the Claims Transformation 
Plan. VA managers are committed to ongoing dialog with organizations 
representing Veterans, labor groups, state and county Veterans affairs 
offices, and Congress. VBA plans to continue monthly meetings with 
representatives of major Veterans organizations, and will encourage a 
robust exchange of ideas as initiatives mature.
                                 ______
                                 
Response to Post-Hearing Questions Submitted by Hon. Bernard Sanders to 
 Michael Walcoff, Acting Under Secretary for Benefits, U.S. Department 
                          of Veterans Affairs

    Question 1. Do you think hiring more Veterans in VBA would be a 
good place to start that culture change?
    Response. Veterans currently represent a large percentage of VBA's 
workforce. VBA actively recruits Veterans through job fairs, and 
emphasizes VA as an employer of choice during Transition Assistance 
Program briefings. In addition, Veterans are made aware of the special 
hiring authorities available to assist with obtaining Federal 
employment. VBA will continue to aggressively recruit and hire 
Veterans.

    Question 2. Of your new hires, what percentage of the VBA employees 
are service-connected disabled Veterans?
    Response. Currently, 27 percent of VBA's workforce is service-
connected disabled Veterans.

    Question 3. Of your new hires, what percentage was hired through 
work with VA's own Vocational Rehabilitation Program?
    Response. VBA does not capture this information.

    Question 4. Of your new hires, what percentage of the employees are 
Veterans?
    Response. Currently, 48 percent of VBA's newly hired workforce is 
Veterans.

    Question 5. Of your new hires, what percentage was hired through 
working with the Department of Labor's Veterans' Employment and 
Training Services?
    Response. VBA does not capture this information.

    Question 6. Are these positions listed with the Local Veterans' 
Employment Representatives or Disabled Veterans' Employment Program 
Specialists?
    Response. These positions are not listed with the Local Veterans' 
Employment Representatives or the Disabled Veterans' Employment Program 
Specialists. However, through our partnerships with the Department of 
Labor Veterans Employment and Training Service and VA's Veteran 
Employment Coordination Service, Veterans with disabilities are 
presented employment opportunities with VA.
    VR&E Employment Coordinators (ECs) work closely with VA's Regional 
Veterans Employment Coordinators, who have direct knowledge of 
employment opportunities within VA. ECs help Veterans with disabilities 
apply for VA jobs by:

     Assisting with use of the USAjobs.gov Web site to develop 
a Federal resume;
     Helping Veterans understand special hiring authorities for 
Veterans, such as Veterans Preference, and Schedule A; and
     Providing assistance with interviewing skills and 
techniques.

    Question 7. Of your new hires, what percentage are recently 
separated servicemembers? (By ``recently separated,'' I am referring to 
Veterans of Iraq or Afghanistan.)
    Response. Specific service information is not captured in VBA's 
hiring database.
                                 ______
                                 
 Response to Post-Hearing Questions Submitted by Hon. Roland W. Burris 
     to Michael Walcoff, Acting Under Secretary for Benefits, U.S. 
                     Department of Veterans Affairs

    Question 1. Can you give us a better estimate on the number of 
projected backlog in the year 2015?
    Response. The goal of the Transformation Plan is to eliminate the 
backlog of cases pending greater that 125 days by 2015.

    Question 2. Given the increased effort that the VA has put into 
outreach in getting Veteran's to take advantage of their benefits, what 
is the plan to address an overwhelming success in enrolling more 
veterans, or an unanticipated increase in disability claims to process?
    Response. The President's 2011 budget request for VBA is $2.1 
billion in discretionary funding, an increase of $460 million, or 27 
percent, over the 2010 enacted level of $1.7 billion. The 2011 budget 
supports an increase of up to 4,048 FTEs, including maintaining some of 
the temporary employees funded through the American Recovery and 
Reinvestment Act of 2009.
    Hiring more employees is not a sufficient solution. The need to 
better serve our Veterans requires bold and comprehensive business 
process changes to transform VBA into a high-performing 21st century 
organization. The budget includes $145.3 million in information 
technology (IT) funds in 2011 to support the ongoing development of a 
smart, paperless claims processing system.
    VA's transformation strategy for the claims process leverages the 
power of 21st century technologies applied to redesigned business 
processes. We are examining our current processes to be more 
streamlined and Veteran-focused. We are also applying technology 
improvements to the new streamlined processes so that the overall 
service we provide is more efficient, timely and accurate. We are 
harvesting the knowledge, energy, and expertise of our employees, VSOs, 
and the private and public sectors to bring to bear ideas to accomplish 
this claims process transformation. Our end goal is a smart, paperless, 
IT-driven system that empowers our VA employees and engages our 
Veterans.
    While we work to develop this system, we are making immediate 
changes to improve our business processes and simultaneously 
incorporating the best of those changes into the larger effort, our 
signature program, the Veterans Benefits Management System (VBMS).

    Question 3. When do you think the training process is going to have 
to adapt to the wide spread availability of new technologies?
    Response. Delivery of the initial VBMS user guide and the change 
and communication training modules is expected in September 2010, two-
months prior to deployment of Pilot 1. As additional business and 
technical requirements are identified through the VBMS pilots, 
adjustments to any hands-on training and refinement of the training 
materials will be made accordingly. Training will occur prior to each 
pilot and in advance of national deployment. For national VBMS 
deployment, user training will begin in the 3rd quarter of FY 2012.

    Question 4. Are the people that have been trained in the last few 
years going to have to go through additional training?
    Response. Yes, the training curriculum is continuously updated to 
incorporate legislative and regulatory changes as well as new 
initiatives and technological advances. We currently require at least 
85 hours of refresher training annually for experienced employees. 
Ongoing training is essential to maintain a high performing workforce.

    Question 5. Are we going to have to increase the budget for 
training down the road, to train the next generation of claims 
processors that utilizes VBMS?
    Response. Training costs associated with the national deployment of 
VBMS will be included in the FY 2012 budget, and will be based on our 
experience conducting training for other large national software 
deployments.
                                 ______
                                 
 Response to Post-Hearing Questions Submitted by Hon. Roland W. Burris 
to Peter L. Levin, Ph.D., Chief Technology Officer, U.S. Department of 
                            Veterans Affairs

    Question 1. You have previously voiced that we need to build a 
totally new claims processing system. I think you understand, as I do, 
that our aim shouldn't be to just fix the backlog, but to drastically 
improve the claims process itself. How do you propose that we do this?
    Response. The VMBS initiative is designed to address inefficiencies 
in the claims process, as well as modernize the existing legacy 
applications in order to break the back of the backlog. VBMS is based 
on open architecture and commercial-off-the-shelf (COTS) products that 
will allow VA to react more methodically to emergent claims processing 
needs. Additionally, VBMS will dramatically reduce the amount of paper 
in the current claims process, and will employ rules-based claim 
development and decision support where possible. The paperless 
environment will ensure shorter wait times for the adjudication of new 
claims. The new process will help VA meet the Secretary's target of 
slashing wait times from an average 165 days to a maximum of 125 days 
or less.

    Question 2. What level of Information Technology spending do you 
think is necessary to achieve and sustain a functional adoption of a 
paperless system?
    Response. VBMS is a large and complex program involving 
development, deployment, and sustainment costs. The FY 2011 Budget 
Submission includes the appropriate funding to meet our needs.

    Question 3. How do we capitalize on the effectiveness of single 
pilot programs aimed at technological fixes that seem intended to only 
solve, in isolation, only a few problems at a time and successfully 
scale the initiatives nationwide?
    Response. The VBMS technology platform will be built using a 
Services Oriented Architecture (SOA) framework. SOA-based architecture 
allows for the flexibility to make changes quickly and incrementally to 
the business processes system functionality. The use of Agile 
development will enable VBA to respond rapidly to new requirements, 
such as those captured from nationwide initiatives. These do not simply 
address ``problems in isolation.'' The purpose is to fix systematic 
issues in a methodical and scalable way.

    Chairman Akaka. Thank you very much, Mr. Walcoff.
    VA's testimony notes that Secretary Shinseki, and you 
mentioned this, his goal is to have no veteran wait for more 
than 125 days for a quality decision with a 98 percent accuracy 
rate. Will you please explain what that accuracy rate entails. 
How is it measured, by appeal rate, remands, or reversals?
    Mr. Walcoff. OK. The quality rate right now is 83.4 
percent, and that number is arrived at through a quality 
assurance program that we run out of the Nashville area. The 
program is called STAR, and what that program consists of is 
randomly selected cases called in from every regional office, a 
statistically valid sample from each office are reviewed by 
employees who have no association with the regional office 
structure. These employees work for the C&P Service, so they 
are not in any reporting line that would involve the regional 
offices.
    They do a review. They look to see whether the obvious 
things, whether the right amount of disability is being paid, 
whether it is being paid from the correct effective date. They 
look to see whether any inferred issues were missed. There is a 
whole checklist of things that they go through in order to 
determine if the case is correct or not.
    Once they have done that, they track the types of errors 
that are being made and then report back to the regional 
offices where there are trends to say, ``These are the types of 
errors that are being made in your office. We need to 
incorporate training for that particular type of thing in your 
curriculum for your employees as we go through training for the 
next year.''
    You had mentioned possibly appeal rates, that type of a 
thing, and that is not the way we do it. I will tell you, 
anecdotally, but I will tell you, 3 years ago, I actually 
looked to see whether there was a connection between the STAR 
results and appeal rates and I found that in some cases there 
was, in some cases there weren't. There are a lot of different 
reasons why cases are appealed and it doesn't necessarily mean 
that it is directly related to whether the case was correct or 
not.
    In terms of reversals by the Board and remands, that is 
often suggested as a possible reason. The one thing I want to 
point out on those is that the case which the Board reviews at 
the time that the judge actually looks at it is not necessarily 
the same case that was done at the regional office, and by that 
I mean the system allows veterans to submit additional evidence 
throughout the life of the appeal, so that very often, the 
judge in reviewing the case will be looking at evidence that 
was not available and not submitted to the regional office at 
the time they made the decision. That is why we really can't 
say that a remand or a reversal is necessarily an error made by 
the regional office. Now, it could be, and certainly some of 
them are, but you can't say that because a case was remanded, 
the RO made a mistake.
    Chairman Akaka. Mr. Walcoff, recent oversight conducted by 
the Committee showed that the denial rate for claims processed 
through the Pittsburgh pilot was high. Committee staff has 
shared its findings with VBA. Would you please comment on this 
issue.
    Mr. Walcoff. Yes. We are currently reviewing all the cases 
that came out of the Pittsburgh pilot. We don't have the 
results yet. We have called the files in from the regional 
office so we can review them. The one concern I have about the 
methodology that was used by the member of your staff was that 
it is important to remember that the pilot is really geared at 
development. Once the case is developed through the pilot, it 
goes into our regular rating boards. They have one rating 
specialist that does work for the pilot, but basically, he only 
does a small percentage of them. The rest of them get mixed in 
with all the other cases that are rated from the Pittsburgh 
Regional Office.
    What I would think might be a better way to look at it is 
let us look at the cases, the error rate of the cases that are 
started in the pilot versus the error rate of other Pittsburgh 
cases, because the rating board from Pittsburgh is doing both 
of those sets, and that would really enable us to distinguish 
whether the cases coming out of the Development Unit are 
treated any differently than the cases that are done in the 
rest of the office.
    Chairman Akaka. Thank you very much.
    Let me call on Senator Burr for his questions. Senator 
Burr?
    Senator Burr. Thank you, Mr. Chairman. Welcome, Mike.
    More than 12 years ago, former Under Secretary for Benefits 
Joe Thompson--he will be on later--said this about the VA's 
efforts to improve the claims processing. ``The Veterans 
Benefits Administration has undertaken a number of initiatives 
to bring about needed change. The reasons for the lack of 
success include inadequate planning, unclear goals and 
objectives, poor integration and interrelated efforts, a lack 
of coordination with other stakeholders, and insufficient 
implementation, planning, and follow-up.'' Since VA again has a 
number of initiatives to try to improve the claims processing, 
I think it is important to look at whether past mistakes will 
be avoided, so let me ask a few questions.
    What do you see as the lessons learned from past 
initiatives?
    Mr. Walcoff. Well, first of all, Senator, I am familiar 
with that statement that Mr. Thompson made. I might have 
written that statement, for all I know, if we think back.
    I think the question is very valid. Obviously, as has been 
said by many on this Committee, this is a problem that has 
existed for many, many years. I first came into central office 
in 1990 and we had a backlog. We are now in 2010 and we have a 
backlog. So this has been a long existing problem. I think 
there have been sincere efforts made during this period to try 
to fix the problem, but obviously they have not succeeded. So 
the question is, why haven't they succeeded?
    I think part of the problem is lack of follow-through in 
some cases. I think that sometimes a lot of these initiatives 
take time and I think that as personnel change and transition, 
sometimes a program is started, and just before you have the 
time for it to show results, different people come in, might 
have different ideas, and sometimes those programs aren't given 
the opportunity to go to their full fruition where we can see 
the benefits of it.
    I think one of the positive things about what is going on 
now is we got it started very early in the administration. I 
think that there will be a period of continuity where we can 
get the stuff implemented. Certainly, the keystone to our 
program is the VBMS system and that had, to a certain extent, 
started before the new administration came in. They have made, 
I think, significant improvements to the planning.
    Having a Chief Technology Officer on board, I think is a 
major difference in terms of all the IT plans that we have had 
over the years. This is the first time that we have had 
somebody who really has that level of expertise in technology 
and whose whole job is focusing on what technologies can be 
used to address our problems.
    And I think that the timeframe that has been set up for the 
VBMS project of 2012 is very realistic. I feel very confident 
that we are going to reach that and I believe that we will have 
that continuity to be able to get that in place, and that is 
the program that I believe is going to make the biggest 
difference in eliminating the backlog.
    Senator Burr. I am certain that you have got metrics that 
you are using for all of the pilot programs, but do you also 
have a target date for final evaluation of the pilot programs, 
at which time a decision would be made as to whether you roll 
them out more broadly?
    Mr. Walcoff. Each program is different; we have different 
amounts of time. We have several programs that are up for 
review in August. They will have been piloted for 90 days. I 
wanted to set a time up that was relatively short, where we 
could at least see whether there is enough definitive 
information to make a decision on whether we could move forward 
or not. So we have several pilots that are coming up in August 
to make a decision on.
    The Little Rock Pilot finished in late June. We got a 
report in from the contractor. We are still reviewing that to 
make a determination as to what we want to expand from that. We 
know there are a lot of good things that came out of it. The 
decision that we are making is exactly how do we take out what 
we think are really positive things that would translate 
nationally and how do we export that nationally. That decision 
is being made right now.
    Senator Burr. Let me ask, just for the record, if you would 
share with the Committee in writing what the target dates are 
for each of the pilot programs.
    Mr. Walcoff. Absolutely.
    Senator Burr. And I would also ask that once you have made 
the evaluations, let us not wait for a hearing to provide the 
Committee with your observations on the success or failure of 
those pilot programs.
    Just real quickly, a last one. You and I talked about 
service officers in North Carolina that had shared with me a 
deep desire on their part to get claims accurate before they 
are ever submitted, and to do that, it would be a wise 
investment to beef up the funding prior to claims coming in the 
door to make sure that they were complete.
    What do you think of that idea, and is having an 
application that walks in the door complete beneficial to the 
overall processing of these claims?
    Mr. Walcoff. Senator, I absolutely agree. When people talk 
about how long does it take to process a claim and we talk 
about 160 days, the interesting part of that 160 days is that 
about 65 to 70 percent of it is getting all the evidence 
together. The actual rating doesn't take long at all. We do our 
ratings in 20 days, 3 weeks. I mean, we can get a case rated 
and promulgated.
    The long pole in the tent is getting all that evidence 
together so that the case is ready to rate, is available to 
rate; so, yes, accumulation of the evidence is absolutely the 
key part. If we could get claims coming in to us fully 
developed, in other words, with all the different things that 
are needed to be able to rate the case, we could turn it around 
very quickly. We have a pilot right now in Atlanta which says 
that if certain conditions are met in terms of the filing of a 
claim, on a claim for increase, that we will turn it around in 
30 days, to give you an example.
    We have several things that we are doing right now to try 
to get to the point where claims come in fully developed. One 
of the biggest things is a pilot in Pittsburgh involving 
templates for exams. One of the problems we have is there was a 
statement made concerning the fact that we don't rely enough on 
private medical exams. I think the Chairman made that 
statement. We know that we are going to have to rely more on 
private medical exams, because, frankly, with all this work 
coming in, it is going to be a lot of work if we send it all to 
VHA for exams there. I am not sure that they, no matter how 
many people they had, could handle that.
    So we want to encourage veterans to be able to go to their 
private physicians to get their exams done. The problem is that 
when these private doctors do their exams, they send them in 
and we don't have the information we need in order to rate the 
case because there are certain things that the rating schedule 
calls for. So what this pilot does is it sets up templates for 
every disability--we are going to have 67 of them--that are 
really simple. I mean, basically, it has got a bunch of fill-
in-the-blank type of things where a private physician, all he 
has to do is answer five questions and we will have an exam 
that is sufficient for us to rate on.
    Number 1, that allows veterans to go to their private 
physicians. Number 2, it makes it so that when he comes back 
with that exam, he is giving us something that we can rate on. 
Those are the types of things that we are doing to try to get 
exactly where you said, which is get the claim right before it 
comes in the door so that we can rate it right away.
    Senator Burr. Great. Thank you. Thank you, Mr. Chairman.
    Chairman Akaka. Senator Brown?
    Senator Brown of Ohio. Thank you, Mr. Chairman.
    Mr. Walcoff, how do I explain to people in Finley, Ohio, or 
Youngstown, Ohio, that a bum knee in Ohio is worth a lot less 
than a bum knee in San Diego?
    Mr. Walcoff. Senator, that is----
    Senator Brown of Ohio. Well, let me say one more sentence 
about it. Ohio ranks 49th in the 50 States, and I am not sure 
what the 50th State is, but in terms of compensation for any 
illness or injury, and nobody can understand why that is when 
you tell them that if they were living in another place, they 
would get higher compensation.
    Mr. Walcoff. Senator, that is a really key issue. I mean, 
it is absolutely a problem, not just that it is Ohio, but that 
anybody in any State could get rated differently depending on 
where they live. Frankly, that is one of the concerns that I 
have even about the pilot, sir, that is in the proposed 
legislation. Consistency is really absolutely a key.
    The fact that we know statistically that a case submitted 
in Des Moines could possibly be rated differently than a case 
submitted in Cleveland is a problem to me. I don't know that I 
would say, in terms of Ohio that Ohio should be first. I don't 
know that----
    Senator Brown of Ohio. I think it should be tied for first 
with 49 other States.
    Mr. Walcoff. I think they should be 29th. I think they 
should be 29th.
    Senator Brown of Ohio. No, they should--we have to work 
toward----
    Mr. Walcoff. The middle.
    Senator Brown of Ohio. Right.
    Mr. Walcoff. Exactly right, sir, when this first came up a 
couple of years ago, everybody wanted to be first, and my whole 
thing was, I am just as worried about the person who is way 
above the middle as I am the person who is way below the 
middle. Really, everybody should be the same because we are 
using the same rating system.
    You know, in terms of the situation with Ohio, what I would 
say is that you have to understand that statistic you are 
looking at is a accumulation of ratings that have been done for 
everybody who is on the rolls, going back to people who came on 
in World War II that are still on the rolls. If you look at it 
year by year, the ranking of Ohio is actually a little bit 
higher.
    But I think the real point on this is that we can't allow a 
system that has the amount you get paid dependent on what State 
you live in. We have got to make it so that we have consistency 
from one State to the other, and anything that we do has to 
work toward that goal of having everybody get the same 
treatment no matter where they live.
    Senator Brown of Ohio. OK. It reminds me a bit of the 
story, there was a secret ballot taken in the U.S. Senate on 
who should be the next President and it was a 100-way tie for 
first. [Laughter.]
    And I would think perhaps we should strive toward a 100-way 
or 50-way tie for first here.
    A recent GAO report stated that despite previous GAO and VA 
Inspector General findings, the VA had only recently begun 
reviewing the extent to which veterans with similar 
disabilities, as we were talking about, receive consistent 
ratings across regional offices and individual raters. The GAO 
reported on May 24 that it was too early to determine the 
effectiveness of some of these new efforts.
    What can we expect in terms of as you work assiduously, and 
I really, really, really applaud what you and the Secretary are 
doing because I think the focus is exactly right. I liked when 
he and Joan Evans came in and explained to Doug Babcock and me 
how you were doing the regional pilots and all of that, how 
much sense it makes as you are working to reduce that backlog. 
I just don't understand why it is taking so long to begin to 
figure out this disparity in ratings. I just want to be 
reassured that this disparity in ratings among VISNs is going 
to go along--the progress there is going to be consistent with 
the progress of reducing the backlog.
    Mr. Walcoff. OK. Let me answer that in two ways, first, 
from the longer term. We believe that, to a large extent, 
technology is going to play a key role in this. In the new VBMS 
system, we believe that built into that system will be certain 
rules-based principles that will kind of, I think, assist us in 
making sure that every rating specialist working a case, no 
matter where he is working it, is guided toward the right 
answers. The machine is not going to make the decisions, but I 
believe that there are certain types of errors procedurally 
that a system of technology would be able to help us with to 
make it so that when he starts going down the wrong road, it 
kind of pops up and says, why don't you reconsider that and 
think about going the other way.
    Dr. Levin can maybe explain that idea a little bit more, 
and then I will come back and talk about what we are doing in 
the short term.
    Senator Brown of Ohio. Thank you, Dr. Levin.
    Mr. Levin. Very, very briefly, exactly what Mike said is 
correct, that we do not propose to create a rules-based system 
that is going to take the place or replace or substitute a 
human being making a final decision. But there are clearly 
things that you can identify--pattern matching capabilities--
that we can build in. Do you want to be the first RVSR to not 
compensate for a debilitating illness, or do you want to be the 
first one who compensates at 100 percent for one that doesn't 
have a medical record? There are very simple checklists that we 
can provide guard rails for, a framework to make sure that the 
decisions are, in fact, being made according to, I would say, 
common sense or otherwise procedurally sensible guidelines, and 
that will be part of the design specification. It is part of 
the design specification.
    Mr. Walcoff. And let me answer just quickly on the short 
term. Obviously, that is 2012. I don't propose that we wait 
until 2012 to begin addressing the problem that you have 
raised, so we have done some things. First of all, I think it 
is important that we make sure that we have training that is 
consistent, that the curriculum is consistent so that everybody 
who is learning the job, no matter where they are learning it, 
is learning the same things. And that is something that we have 
made several efforts toward over the last couple of years, to 
make sure that it is a national curriculum.
    We have the National Challenge Training, which every rating 
specialist in VSR attends in their first 3 weeks in this 
curriculum. It is done in Baltimore. They all get the same 
instructor. They all hear the same thing.
    And third, the C&P Service is involved in doing consistency 
matches to try to determine statistically what stations are out 
of line on particular types of decisions and then look into 
those cases to figure out what they are missing as to why their 
decisions are out of line and then correcting those decisions.
    Senator Brown of Ohio. Thank you. Mr. Chairman, thanks.
    Chairman Akaka. Thank you, Senator Brown.
    Senator Johanns?
    Senator Johanns. Thank you, Mr. Chairman.
    In your testimony, Mr. Walcoff, you talk about complex 
claims. There was a statistic cited that veterans claiming 
eight or more disabilities have increased from about 23,000 in 
2001 to 67,000 in 2009. Give us a sense of what is driving 
that, number 1. And number 2, is that impacting the backlog at 
all, or are those triaged in a way that they move more quickly? 
Walk me through that.
    Mr. Walcoff. Well, first of all, they definitely have an 
effect on the backlog, and actually, they take longer to do 
because they are more complex. A lot of that is the influence 
of the work that we are getting through our Benefits Delivery 
at Discharge sites. A good program that we have is that we are 
out at these discharge sites. We are meeting with servicemen 
before they get out of the service and getting claims from them 
before they get out with the idea that we will be able to 
provide an answer to them more quickly once they become 
veterans.
    One of the things that we have found is that servicemembers 
who file claims at those points file a lot more claims. We have 
two places where those cases are rated, Winston-Salem and Salt 
Lake City, and on average, we have between 11 and 12 issues per 
claim through those BDD claims, whereas a normal claim coming 
in would average somewhere around four issues per claim. So you 
can see that there is a much higher volume in terms of issues 
from the claims coming from those sources.
    Now, some of it is we get retirees that are coming out at 
those places. Retirees, because they have been in so long, they 
have had a lot of different experiences that may cause 
incidents and injuries that they want to claim, which they are 
entitled to.
    But what we do find is that the number of claims that we 
are getting with these multiple issues are dramatically 
increasing, as you said. I am not going to say this is the 
rule, but we get some claims with 70, 80 issues, and they are 
more complex. They take longer to do.
    Senator Johanns. Let me go a little further on that, 
because I think this relates to that, but it relates to the 
whole picture. I oftentimes--and I am sure other Committee 
Members also hear this--I hear about the difficulty of 
interfacing recordkeeping with DOD and VA. I found your 
comments to be very, very interesting, that if you can 
conceptualize this, if the veteran literally walked in with the 
full packet of information, that claim could be sent out in 3 
weeks, 4 weeks.
    So is that a point at which there needs to be better 
technological interface between the two areas, DOD and VA? Is 
it just for recordkeeping? What is going on that makes that so 
difficult and how much impact does that have on processing a 
claim?
    Mr. Walcoff. I am going to start. I am going to answer it, 
and then I am going to ask Peter to jump in in terms of where 
we are going with this, because it is a very good question.
    One of the reasons that we are able to process Benefits 
Delivery at Discharge cases quicker than we do our regular 
cases is because we have the veteran there with all of the 
service treatment records. Everything is there so that we can 
get it all into the system, and then we are able to make a 
decision quicker. That is as compared to somebody who files 
after they have been out a year or 2 years and then we have got 
to go out and find the records. And it is particularly an issue 
with Guard and Reserve records. So it is a big part of why it 
takes so long.
    But we are making progress, and Peter, I would like you to 
talk about some of the things going on with the VLER project 
and some of those things.
    Mr. Levin. My pleasure, Senator. This is really not a 
technology problem. This ends up being more a process and 
policy problem. That said, the systems that we have in place 
today are largely proprietary and customized systems. So these 
are systems that were built by folks back in the mid- to late-
1990s when some of these standards hadn't existed yet, or for 
reasons of expediency or convenience, they were built one time, 
never expected to expand.
    So, one of the charges of the Secretary in this 
administration is to migrate from these proprietary custom 
systems to something we call openly architected--you can read 
the standards on the Internet--and componentized standards-
based system, things that would allow you, for example, to use 
G-mail to communicate with somebody who is using Outlook.
    We are about halfway done with that project right now. We 
have two pilot projects that are already very, very successful 
using these standards-based components. It is a big project, 
not just because we are trying to have these two different e-
mail systems communicate with each other. It is a little bit 
more complicated than that. We are also including this as part 
of the Electronic Health Record Interoperability Project, this 
thing called the Virtual Lifetime Electronic Record, or VLER, 
and so the benefits component of that is coupled to the health 
record component of that. We are doing them both at the same 
time and we are making big progress. I expect we will be able 
to report to the Committee at the end of this year or the 
beginning of next year about those pilots, as well.
    Senator Johanns. I ran out of time, but I will wrap up with 
this. I think if you had a breakthrough here, and I continue to 
hear about the appeals process which I think has a whole 
separate backlog, if somehow we could deal with those two 
issues and have a breakthrough, you would make some pretty 
significant strides forward. Now, it doesn't solve all the 
problems. You still have complex claims and a whole host of 
other issues. But it just occurs to me as I kind of dug into 
this that those two areas are ripe for remedy, and if you can 
find the remedy, you are going to be able to report really 
significant success.
    Mr. Walcoff. I agree, sir.
    Senator Johanns. OK. Thanks.
    Chairman Akaka. Thank you very much, Senator Johanns.
    Senator Tester?

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Well, thank you, Mr. Chairman.
    Many of the questions that I had have been asked, although 
what I want to do right now is give you my statement, and 
though it is information for you it is also about taking this 
information back.
    I think this is a very key moment for the VA on the claims 
issue, and I think Secretary Shinseki has laid out, in my 
opinion, a pretty good mission of outlining the goals to 
finally get to a place where we can handle the backlog.
    Initial reaction is to agree with most folks who are 
asking, why does it take 5 years to get here? This is an urgent 
problem. It has been an urgent problem for a while and I wished 
we could have an immediate solution, but solutions aren't that 
simple and I know that. It takes a great deal of time to get 
new claims processors trained and contributing. It takes time 
to modernize a recordkeeping system that has been shockingly 
behind the times in the area of technology. It takes time to 
get veterans, the VSOs, and State veterans agencies familiar 
with a brand new form that the VA will be using.
    But just like with Electronic Medical Record sharing 
between the VA and the DOD, we only meet that goal if there is 
a daily concentrated focus by the VA leadership to get that 
done. Secretary Shinseki knows that. I know that Secretary Gold 
knows that and I assume that you, too, Mr. Walcoff, know that. 
Hopefully, we will do better with the disability backlog than 
we have with the VA/DOD record sharing aspects, because with 
the policy changes for Agent Orange exposure, changes to PTSD 
claims, which I strongly support both, we are going to see more 
claims. And with our troops still very much engaged in two 
wars, we are going to see more claims.
    Like all disability compensation claims, it is critical 
that we get them done quickly and accurately. If we fall short 
on either front, we are not keeping up our end of the bargain 
to take care of those who were injured serving our country. And 
shame on us if we fail. These are real folks and struggling 
families behind those 500,000 disability claims. In my veterans 
town hall meetings, I hear them tell me that they fear the VA 
is trying to outlive them. They tell me that the VA doesn't 
give a damn about them. And this is a place where the regional 
office is doing better at reducing the backlog than in most 
other States in the country.
    So right now, I am not as optimistic as I wish I could be. 
The number of claims exceeding 125 days in review is up. The 
accuracy of the claims is down. Today, one of six claims are 
decided incorrectly, according to the IG. That doesn't work for 
our veterans and it should not be acceptable to anyone in this 
room, and I am not saying that it is.
    I again want to thank Secretary Shinseki for making this a 
priority. My fear is that we will be back here next year and 
the year after discussing the same issue and wishing the 
numbers were better. I hope that is not the case, but only time 
will tell.
    Mr. Walcoff, I do hope that you will take this message away 
from the Committee here today. I am sure you will. We are here 
to help and we are partners with you in this effort, and so are 
the other witnesses. I hope you are getting to hear directly 
from the DAV and from your employees about how to improve the 
process. If they don't have direct input, which I think that is 
critically important, we need to find a way to get them to give 
direct input. This is an all-hands-on-deck problem and we 
cannot afford to miss out on a single idea.
    Like I say, the challenges are many. Many of the folks here 
today have said that they were here before. It hasn't gone 
away. And to be honest with you, I think the people who serve 
this country deserve better.
    Do you have any response to that, in general?
    Mr. Walcoff. Senator, first of all, I agree that veterans 
deserve better. Everything we are doing is to make it so that 
veterans don't have to wait as long as they do to get their 
decisions and that we don't have one in every six claims 
decided incorrectly. I agree with you that that is unacceptable 
and we have got to do better than that.
    We are working with--you mentioned VSOs, you mentioned our 
employees. We had a competition for our employees where they 
had the opportunity to submit ideas. We received 3,200 ideas 
from our employees, and many of the things that we are doing 
that I am talking about today are ideas that came from 
employees.
    Senator Tester. Good.
    Mr. Walcoff. And I will take everything you have said, I 
will take it back to the Secretary.
    Senator Tester. I just want to touch on one issue, though 
there are many. Like I said, Senator Brown touched on one of 
them--we are 43rd, by the way. I thought maybe we were 50th, 
but my staff set me right.
    Disability claims filed by Guardsmen have a 14 percent 
rejection rate, compared to a 5 percent rejection rate for 
active duty claims. We have got about 650 National Guardsmen 
from Montana who are getting ready to be deployed or are 
already deployed. You have indicated some opposition to the 
part because it takes focus off of other things that VA is 
trying to work on in relationship to claims. What are you doing 
to fix this disparity, or is it a concern right now?
    Mr. Walcoff. I think we need to know more about why there 
would be a difference in terms of approval rates. I can tell 
you that one of the things right off the top that I know is 
different is that it is much more difficult to get treatment 
records from Guard units. You know, when regular soldiers come 
back to a base to be discharged, they are there for a period of 
time. We can usually get to them. We can brief them. We can get 
records from them, that type of a thing.
    Whereas, often Guard units disperse quickly. They are in a 
hurry to get back. I don't blame them. But it is difficult 
sometimes to make contact with them while everything is there. 
And then stuff goes back to the units and it is much more 
difficult for us to get access to them, and that is a problem. 
It is certainly not the soldiers' problem. It is our problem 
which we have got to work out with the units to do better.
    Senator Tester. It is fixable. Thank you. Thanks, Mr. 
Chairman. Thank you, Mr. Walcoff.
    Chairman Akaka. Thank you very much, Senator Tester.
    Senator Begich?
    Senator Burris. Mr. Chairman?
    Chairman Akaka. Senator Burris?
    Senator Burris. Mr. Chairman, are you taking us in the 
order we come, because I do have to leave in a few minutes.
    Chairman Akaka. Yes. Well, Senator Burris?

              STATEMENT OF HON. ROLAND W. BURRIS, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Burris. Thank you, Mr. Chairman. I appreciate the 
Senator yielding. I came because I have a load of questions, 
Mr. Chairman, and I don't know if I can even get to all of 
them, because I am very concerned about what is happening with 
these claims.
    My staff came and briefed me the other day about this and I 
just about fell out of my chair, because I have been telling 
the veterans in Illinois, oh, yes, we are improving our claims 
processing, things are improving, things are getting better. 
Now my staff is telling me that they are not, and then I hear 
this information is correct. Our veterans, especially in 
Illinois, are having all kinds of problems and I am concerned 
about the history that was there, because when President Obama 
was a Senator and Senator Durbin, Illinois veterans were number 
50 in terms of benefits that they were receiving, in terms of 
medical benefits. We are going to check to see how that has 
improved, but I have been trying to defend the VA, Secretary 
Shinseki, saying that we got a little bit more money, we have 
got all these benefits coming for VBA, and then we hear that it 
is taking just so much time to process these backlogs.
    I find the timetable just a little--well, I have a great 
deal of concern about the time that we are talking about. You 
have got a 2015 date when we hope to be--assume to be--caught 
up with the processing of the backlog, and that is when we have 
got, what, 23 million veterans and only 3.1 million are now 
currently receiving some type of compensation.
    Another question I have is there is an economic difference 
between our different States and I hope that you don't think 
that an injury that is obtained would help a veteran in Chicago 
or a veteran in, let us say because of cost and living 
standards, a veteran in Southern Illinois. Are you making 
adjustments for those economic standard of living differences 
in the compensation for the veterans? Is that taken into 
consideration?
    Mr. Walcoff. The rates of compensation that we pay are 
national rates. They don't vary by State and certainly not by--
--
    Senator Burris. And they don't vary by cost of communities?
    Mr. Walcoff. The actual compensation rate itself?
    Senator Burris. Right.
    Mr. Walcoff. No, sir.
    Senator Burris. So if I have got a bad knee and I am living 
in Chicago or even Carpenter, Illinois, and I got $20 a month 
in Chicago and $20 a month in Carpenter, that is what you are 
saying.
    Mr. Walcoff. That is correct, sir.
    Senator Burris. That is something new.
    Another question I have, what is your timetable in hiring 
these 4,000 full-time processors to process these? I understand 
it is going to take 2 years to train these people, to be fully 
staffed. Is your budget allocated over the next 2 years to 
cover 4,000 employees, or are you all going to make internal 
adjustments in the finances of VA to accommodate this 
additional hiring blow-up that you are going to have?
    Mr. Walcoff. Senator, the proposed budget for 2011 is a 
very generous budget for VBA and certainly we are looking at 
the hiring of a significant number of people as part of the 
solution. But we don't believe that staffing alone is going to 
solve this problem. We believe that there are other things that 
have to be done.
    I think that the culture of the organization has to be 
changed. I think we need to change the viewpoint of all of our 
employees to make sure they understand that they are advocates 
for veterans and that everything they do should be to help 
veterans. I don't think necessarily that our employees don't 
feel that way, but I think they need to understand and 
basically do things that are more indicative of an advocate. An 
advocate is the initiative that we have to follow up with all 
veterans who file a claim with a phone call where it says, you 
received a letter from us recently. Did you understand the 
letter? Let me go over it with you. Do you understand that we 
are asking you to submit evidence to us, that you have 30 days 
to do that. Whereas in the past, we would just send the letter 
out and if they understood it, great. If they didn't, well, 
then we would move on when they didn't respond. That is not 
what an advocate does, and I think that is an example of trying 
to change the culture of our organization.
    We are looking at our business processes. I don't think 
that it makes sense to change our technology, which obviously 
has to be done, but to change it with our old processes. We 
need to be looking at what new processes we need to be more 
consistent, to fit into the new technology. So that is 
something else we are doing.
    And then the technology, most of all, I believe, is what is 
going to allow us to be able to achieve the goals that we have 
talked about. Just hiring people is not going to be enough. We 
have got to do all of these things.
    Senator Burris. One last question. Now, have you all been 
impacted by the addition of the GI Bill? Is VA being impacted 
overall by those claims that are now being made for the 
veterans as to workload coming into the office, overloading the 
overall system?
    Mr. Walcoff. The GI Bill is under me. It is under VBA. But 
the education claims are only processed in four offices, 
Muskogee, Buffalo, Atlanta, and St. Louis. So most offices 
don't even have an education processor, and the ones that do, 
those four, it is a separate division, separate employees.
    Senator Burris. So, the educational GI Bill, is not 
impacting this problem?
    Mr. Walcoff. Not the compensation problem, no.
    Senator Burris. Right. Mr. Chairman, I will submit 
questions for the record. I thank the other Senator for 
yielding. I appreciate that.
    Chairman Akaka. Thank you very much, Senator Burris.
    Senator Begich?

                STATEMENT OF HON. MARK BEGICH, 
                    U.S. SENATOR FROM ALASKA

    Senator Begich. Thank you very much, Mr. Chairman. Thank 
you all for being here today. I have just a couple of general 
questions and then I want to follow up on some folks' 
conversations here.
    First, to be very parochial about Alaska and the need for 
understanding the rural aspect of Alaska in delivering services 
by the VA into rural Alaska and also understanding the 
uniqueness of cultural differences, especially the Alaska 
Native community that participates significantly in the 
military and Armed Forces as well as the Guard; can you give me 
a couple of comments on how the VA views--we had a hearing here 
maybe a month ago on rural veterans care and veterans outreach. 
Could you give me kind of a feeling of how the VA views their 
effort or what they need to be doing in the future?
    Mr. Walcoff. Senator, there are definitely some unique 
challenges with the State of Alaska. Just the sheer size of it 
and the pattern of the population really present some 
challenges that we sometimes struggle with coming up with the 
right answer, but it is something we absolutely need to do.
    I am going to ask Diana Rubens, who is the head of our 
Field Operations organizations, to address this.
    Senator Begich. Very good.
    Ms. Rubens. Thank you, Mr. Walcoff. I appreciate your 
attention to the benefits piece. I will tell you that we have 
worked very hard with folks from your staff to talk about some 
of the issues, not only as they pertain to the outreach, but 
just to make sure that we have got the right staffing level up 
there, that we are paying the right attention to the claims 
process.
    As we look particularly to the rural veterans in Alaska, we 
are working very closely, hand in glove, not only with our 
counterparts from VHA, but with DOD to ensure we are doing the 
right level of outreach, that we are working to make sure that 
we are accessible. To the degree that technology will help us, 
if it is through video teleconference, whether that is to get 
exams done or to be accessible to veterans, those are the kinds 
of things that we recognize will help us as we work to serve 
those veterans living in rural Alaska.
    Senator Begich. Very good. I know you have been 
aggressively working with the staff. It is just a very complex 
issue, especially as more and more are returning, how we 
deliver that, also how we ensure those advocates, and I think 
that is the right word to use, are going to be available 
because that is what is critical for delivering these services. 
It is not about someone having to find these services. It is an 
advocate who reaches out and gets the services to the members 
who earned them and deserve them. So I appreciate that.
    Let me, if I can, Mr. Walcoff, I was actually not going to 
bring up this area because honestly it wasn't on my list until 
now, but I am following the discussion. Let me ask you a kind 
of general philosophic question. Do you think you have the 
capacity within the organization to make those cultural changes 
with the delivery of services? I am asking that from experience 
being a former mayor who had to take a library system and 
change it because there was a little confusion in how we 
operate. I say that only because I had to radically change it 
and reorganize it, and that is how we honestly cleaned out dead 
wood. We focused on what we were delivering and increased the 
services dramatically over the next 3 years, so now the system 
is very healthy, very strong.
    Do you have the capacity to do that? Do you have the rules 
to do that? In other words, it is great to have 4,000 people, 
but I will tell you, if the training is not started from point 
A reflecting a cultural change and you have people who are--I 
know they do a lot of good work, I agree with you, but it 
doesn't take many to create a system that clogs up, where they 
believe that they are there to question everything the veteran 
does rather than advocate for the veteran. So what tools do you 
need?
    Mr. Walcoff. That is a great question, and I am going to 
answer your question from the perspective of somebody who has 
worked for the VA for 36 years and has seen a lot of things in 
those 36 years. But I really believe we have a unique 
opportunity right now, because we are at a point where there 
has been a lot of turnover within the organization. The 
combination of the employees that were hired in the Vietnam era 
that are now my age and retiring and the fact that our budgets 
have been so good over the last couple of years, which has 
allowed us to hire additional FTE, means that if you look at 
our workforce, and I don't have the exact numbers, but I bet 
you close to 50 percent of our workforce has been hired in the 
last 5 years.
    This really gives us an opportunity to shape the 
perspectives of these guys, to get them to understand that it 
is an honor to do this job, that you really have an 
opportunity--every day you come in, you have the opportunity to 
help somebody and to pay somebody back for sacrifices that they 
made to this country.
    And that has always been the primary attraction, I believe, 
about working for the VA. I mean, you can work a lot of other 
places and make a lot more money. But you can come here and 
really help people and pay people back for things that they 
have done for you. And to me, this is an audience, this is a 
group of people that are really receptive to that kind of 
thinking.
    Second, I am going to be very frank, the leadership coming 
from the Secretary's office, if you listen to the Secretary you 
can feel the sincerity that he exudes. When he talks about us 
being advocates, he is not just saying words; he really 
believes it. So I think the combination of those two things 
puts us in a situation where, yes, I think we can do it.
    Senator Begich. My time is up, but let me ask this. Do you, 
from the smallest item to the largest item, I mean, I think of 
everything when I was mayor of how you reshape an organization. 
There is nothing wrong with saying you are molding them or 
reshaping, to be very frank with you, because you are trying to 
shape the culture using a new approach. Are these folks--if I 
walk in there and say, ``I am looking for my advocate,'' is 
there such a job title that exists in the VA?
    Mr. Walcoff. It doesn't, but I will tell you that----
    Senator Begich. It should.
    Mr. Walcoff [continuing]. It should----
    Senator Begich. If they are going to be advocates, make 
them--it is all about attitude.
    Mr. Walcoff. But, you know, it is interesting----
    Senator Begich. If a person walks in there and says, ``I am 
an advocate,'' they are an advocate.
    Mr. Walcoff. In the position description, it used to be, 
back when I was working in the adjudication area for the VSR, 
what was then called a Claims Examiner, it was in there about 
being an advocate for a veteran.
    Senator Begich. All right.
    Mr. Walcoff. I don't know that that language is in there 
anymore, but it was and it should be.
    Senator Begich. I just would encourage you--you have got a 
great challenge ahead of you because if you can't change the 
culture within an organization, it doesn't matter how much 
money we put in, how many great efforts we have, how many great 
Committee meetings we will have here, we will never move the 
system. And you have some great people who work within the 
system over there and I think there are a lot of people who are 
anxious to kind of bust out----
    Mr. Walcoff. Yes.
    Senator Begich [continuing]. And be ready to take on this 
new challenge. They are looking for that moment, and I think 
your description is good.
    I would just end by saying I encourage you, as you work--
again, back to the Alaska issues--to continue to reach out to 
the veteran communities and our office. We will be happy to 
help you in any way we can to make sure the veterans 
communities are well connected, because the communications is 
sometimes the problem or the challenge of delivery. So let me 
say, thank you all very much.
    Mr. Walcoff. Thank you.
    Chairman Akaka. Thank you very much, Senator Begich.
    Senator Brown?

                STATEMENT OF HON. SCOTT BROWN, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Brown of Massachusetts. Thank you, Mr. Chairman. It 
is good to be back. Sorry I was late. I had to speak to the 
summer interns, bright-eyed and bushy-tailed, so I apologize 
for being late. I want to thank you for holding this hearing, 
once again.
    Obviously, claims are important and it is something of 
great concern, which I know you are making an effort to tackle 
with the new hires and the like. How do you actually forecast 
claims and relate that to the amount of hires? Is there a 
mechanism we can use? It seems like we are always playing 
catch-up. We are always on the defense versus offense.
    Mr. Walcoff. We do have models that we use in terms of 
those projections, but I will tell you that those models aren't 
necessarily as accurate as we would like. I will give you an 
example.
    If you look at last year, our incoming went up 14 percent. 
We had projected it to go up about 6.5 percent. So you say, 
well, how could you possibly have been so far off? Well, if you 
look at the 3 years before it went up by 14 percent the 
increases were 2 percent, 4 percent, and 5.5 percent. So we saw 
2, 4, 5.5, and 14 percent. I guess all that shows is that there 
are some things that we are just not as good as we need to be 
at predicting.
    I believe in that situation the economy played a big part 
of it in terms of why we saw such a big increase. If you look 
at what types of claims have shown the biggest increase, it is 
reopened compensation, people claiming that their conditions 
have gotten worse, and original pension claims. Pension is a 
program that is income-based. To me, when I look at those few 
things, one of the conclusions I draw is that the economy is 
playing a factor in why the large increase.
    But we do have models. We do try to project as closely as 
we can. Then, obviously, our budget requests are tied in with 
those projections.
    Senator Brown of Massachusetts. Do you prioritize which 
backlog claims are handled first? For example, settlement of 
the oldest claims? Is there a process that you can share with 
us on that?
    Mr. Walcoff. We are always looking at the oldest claims and 
certainly trying to figure out why they are old, if they ready 
for decision, and trying to get them out. We don't do a strict 
first-in/first-out, because if you do that, you are always 
going to have old claims because you are never getting to the 
ones that are ready but aren't the oldest. I mean, what I don't 
want is a case that comes in, within 30 days I have got 
everything I need to rate it, but I don't want a system that 
says, I am not going to rate that case until it becomes the 
oldest case.
    So there is really an art to it in terms of making sure 
that we are attacking those old claims, but at the same time, 
when a new one comes in and it is ready, grabbing it, getting 
it out so that it doesn't become old. And that is what we train 
our managers to do in running these service centers.
    Plus we look at certain indicators. The average age of the 
pending inventory is one that we look at to make sure that our 
employees are not ignoring the oldest cases. If that average 
days pending metric is going up, that means that they are not 
doing the old cases and we will intervene in that situation.
    Senator Brown of Massachusetts. Is there a plan to retain a 
new generation of managers and personnel? And also, is there an 
incentive program of any kind to stimulate people, you know, 
cranking these claims out and kind of getting them off the 
desk?
    Mr. Walcoff. Absolutely. About 6 or 7 years ago, we 
dramatically increased the amount of money that we put into our 
incentive plan and we also rewrote the plan to make it so that 
instead of just giving money to all the offices and saying, OK, 
this is your money, spend it as you wish, we took a large part 
of it and said at the beginning of every year to every station, 
if you achieve these goals, then you will be eligible for this 
bigger pot of money. If you meet those goals, we will give you 
your share of that money and you decide how you want to 
distribute it among your employees.
    Senator Brown of Massachusetts. Let me interrupt for a 
second on that. So, is the incentive plan, though, to not 
settle cases, like if you save money for the government, or is 
the incentive to actually service the soldier and get it out 
the door? What is the nature of the incentive plan?
    Mr. Walcoff. Well, first of all, I want to jump to one 
thing you said right away because I hear this once in a while 
and it just drives me crazy. There is absolutely no incentive, 
no pressure from anybody ever since I have been working for the 
VA to not pay cases because VA wants to save money. I mean, we 
read that every once in a while. No administration, Republican, 
Democrat, no administration has ever pressured me or any of my 
employees that I know of to do that. So I want to be clear on 
that.
    The things that we measure are things like production, 
quality, timeliness; basically the things that would tell us 
whether we are doing a good job or not. Very often we will say, 
for instance, you have to meet three of four goals in order to 
qualify for a program. But we will also say that the one goal 
you always have to meet is quality. We want to emphasize that 
quality has to be considered the most important indicator, 
because what I don't want is our employees putting out twice as 
many cases and having them all wrong.
    Senator Brown of Massachusetts. Yes, right.
    Mr. Walcoff. I mean, that wouldn't do anybody any good.
    Senator Brown of Massachusetts. Mr. Chairman, do I have 
time for one more question?
    Chairman Akaka. Go ahead.
    Senator Brown of Massachusetts. Thank you. Just briefly, is 
there something that we can do through the Chairman's 
leadership? Is there something in the Senate, for example, that 
we are not doing that can provide the tools and resources for 
you to do it better? Is there something that we can convey, 
either through the leadership or the administration, like, what 
are we missing? It seems like something is missing here in 
terms of, is it more people? Is it more computers? Is it better 
technology? What is it?
    Mr. Walcoff. Senator, I believe that the Congress has been 
very generous to us, certainly over the last couple years. I 
think that our budgets have been good. I think we have 
resources. I think we are on the right track now in terms of 
technology. And I think what I am asking for is just to give us 
an opportunity to carry out this program. Monitor us.
    I mean, I think coming up for these types of hearings is 
not a bad thing. I think that I should have to report back in 
terms of how we are doing and are we making progress; you know, 
are we using the resources wisely. But I believe we have the 
tools we need in order to accomplish what we are set out to 
accomplish.
    Senator Brown of Massachusetts. Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Brown.
    Senator Webb?

                  STATEMENT OF HON. JIM WEBB, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Webb. Thank you, Mr. Chairman. And Mr. Chairman, I 
would like to express my appreciation and support for you 
holding these kinds of hearings. As the Chairman well knows, 
there is a great percentage of veterans law that gives an 
enormous amount of discretion to the executive agency itself. 
It has the ability with the sweep of a pen to move billions of 
dollars. These types of hearings, I think, are vital to ensure 
that the executive discretion does not operate independently 
from strong legislative oversight, so again, I hope we can have 
more of these types of hearings.
    Mr. Walcoff, I would say to you, listening to what you just 
said a minute ago about having spent 36 years at the VA, I 
first came into veterans law 33 years ago. I am boot to you. I 
thought I was probably the senior guy in the room here. You 
have seen a lot of ups and downs in 36 years, for sure.
    Your comment about 50 percent of the workforce having been 
hired over the last 5 years, I think, if accurate, is an 
incredible statement. It also reinforces what I am suggesting 
about the need for more oversight here to make sure that this 
agency is headed in the right direction.
    This is kind of an age-old battle in terms of the claims 
process, and I think that the questions that are being raised 
about timeliness and responsiveness versus accuracy, first of 
all, they depend on the quality of people and how you train 
them, obviously.
    Second, I think it is really important in this particular 
area for the Department to be working closely with and 
listening to the veterans service organizations, the DAV 
particularly, which has a rich history with respect to how to 
handle claims and how to help people.
    But let me make one suggestion here. Maybe you can take it 
back to people who are above you. I am pretty concerned about 
the timeliness and the quality of the cooperation between the 
top of the Department of Veterans Affairs and the Congress. I 
will just speak from my own office on that. You are getting a 
reputation, quite frankly, for less than full coordination and 
cooperation on a lot of issues--the homelessness issue in terms 
of my own office, the Agent Orange issue, the way that it was 
handled procedurally and the lack of coordination even in my 
case when we asked Secretary Shinseki directly for information 
and some actions on the homeless issue before it came up.
    This is a classic example, if you want to talk about 
responsiveness. I wrote a letter to Secretary Shinseki more 
than a year ago asking about--and it was signed, actually, by 
the Chairman, as well--talking about the difference in the 
numbers of people being categorized as prisoners of war between 
DOD and the VA. There have been news reports on this. We wanted 
to get some clarification. I wrote that letter on July 7. I got 
a response on May 17. That is more than 10 months.
    Now, when I worked in the Pentagon as a young Marine 
Captain, anything that hit my desk, I had a 48-hour turnaround 
on. We had to do some pretty detailed information on a lot of 
these point papers. Ten months to respond to a U.S. Senator on 
an issue that basically is data oriented is--it may be a 
comment about the overall mentality of the Department as much 
as anything else, if you look at the difficulty with claims 
processing.
    We examined that reply of May 17, then sent something back 
in June. We have been waiting now another month just to get 
data clarification. I don't quite understand why that needs to 
happen and it makes me wonder also in terms of a lot of these 
claims, is this a bureaucratic mindset in the agency or what 
are we to make of this? You know, I am not going to--I am not 
holding you personally accountable, but take the message back, 
if you would.
    Mr. Walcoff. I will, sir, and I will tell you that the POW 
letter, I believe that I probably should take some of the 
responsibility for that because I believe that was a VBA 
assignment. Now, I think we went through some steps that we had 
to do in terms of checking data and getting back to DOD. Sir, I 
am not trying to excuse it, but I don't want to just say I will 
take it back without saying that VBA played a large part in 
that delay and I apologize for that.
    Senator Webb. Well, the Department of Defense--I spent 5 
years in the Pentagon, as you know--the Department of Defense 
was the greatest data resource center in the government. I can 
remember when I was a Counsel on the Veterans Committee and we 
were doing these hearings on a Carter Discharge Review Program. 
One day I turned around to the DOD representative, an Army 
Lieutenant Colonel, and I asked him for a breakdown of 
casualties in Vietnam by year, by service, by rank, and by 
ethnicity, and I had an answer in 24 hours. So, I am a little 
perplexed here.
    We need to be working together in order to resolve these 
issues, and I just hope--take the message back, if you would, 
and again, my thanks to you for having dedicated your life to 
those who have served.
    Mr. Walcoff. Thank you, sir.
    Senator Webb. Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Webb.
    Mr. Walcoff, this question concerns a recently published 
PTSD regulation. I appreciate VA's continuing efforts to take 
into consideration the circumstances of individuals' service 
when determining service connection. A Marine Corps Times 
article yesterday indicated that you do not anticipate more 
veterans will receive benefits for PTSD under this regulation, 
which is contrary to what many believe, as evidenced by Senator 
Tester's comments a few minutes ago. Can you please elaborate 
on this?
    Mr. Walcoff. Mr. Chairman, at the press conference where 
some of this came out, there were questions about the 
increasing claims. At the same time, there were questions about 
increasing costs, and I think some of those answers got kind of 
laid on top of each other and not necessarily worded correctly.
    I said a couple things at that press conference. One was 
that there is one set of veterans who had applied for PTSD 
benefits where we required proof of the stressor who had to go 
through a lot of difficult and frustrating processes and waited 
a long time in order to get benefits; and that one of the 
advantages of this new regulation is that people in that 
situation would not have to go through the frustration of that 
process, that they would get it much quicker, OK, not 
necessarily that the original people were turned down, but just 
that they had to go through a large process.
    So, in that sense, there is not an increase because of 
that, but I do believe that certainly publicity surrounding 
this--there probably are some veterans who heard if you apply 
for these type of benefits, they are going to jerk you around 
and really give you a hard time. A lot of them might have said, 
well, I don't want to have to go through that. And when the 
word gets out that we had liberalized this process and made it 
easier for them to apply for these benefits, I do think that 
there will be some more people applying. So I do think there 
will be somewhat of an increase.
    What I said was, in terms of the costs, the biggest thing 
about having people apply for this benefit is that, hopefully, 
we will get them into our treatment programs. That is really 
the key here. I mean, the payment of the benefits, certainly 
they deserve that, but what we are really looking for is to get 
them into a treatment program, because untreated, this type of 
a condition has all kinds of hidden costs. You know, people 
with serious PTSD who don't get treated wind up very often with 
substance abuse problems, alcoholism. They wind up homeless in 
many cases. They wind up incarcerated. These are all things 
that cost society money, a lot of money.
    All I was saying was that any additional costs that these 
additional people who are going to be applying will cause would 
be offset by what we won't have to pay in terms of homelessness 
and incarceration and that type of a thing. And that was the 
statement that I made.
    Chairman Akaka. Thank you, Mr. Walcoff.
    VA's testimony states that under the pilot proposed in my 
legislation, veterans would not be treated equally. Since by 
definition a pilot program is only carried out in selected 
locations, isn't that a risk with any pilot program, including 
those that VA is currently undertaking?
    Mr. Walcoff. Sir, this issue of consistency is one that 
obviously is, I think, something that weighs on all of us. We 
have had several Members of this Committee refer to it in 
today's hearing, and it is certainly something that I have been 
aware of for quite a while, and it is difficult to justify why 
a veteran who lives in a particular State, when presenting a 
set of facts, should be treated differently than a veteran who 
lives in a different State.
    What concerns me about the proposed legislation is that it 
would actually establish that exact situation. Now, you say, 
well, what about other pilots; other of our pilots. We are 
piloting different processes. We are not actually piloting the 
actual criteria we use to make the decision. So a pilot that 
has us doing, let us say, the case management pilot in 
Pittsburgh where we are working one-on-one with a veteran when 
he comes in to file his benefit, that is a pilot of a new 
process.
    What this is doing is piloting the actual criteria we use 
to make the selection--to make a decision, so that a veteran 
who lives in one of these six States will have a decision made 
based on different criteria than a veteran who lives in any of 
the other States. That is going to very possibly cause them to 
get two different decisions based on the same set of facts, and 
that is what I object to in terms of the--and that is me. We 
haven't officially presented an opinion from the 
administration. That is my own, again, from me in my job as the 
Acting Under Secretary. As I looked at this, that was the 
concern that I had right away.
    Chairman Akaka. Thank you very much.
    I understand Senator Burr does not have another question, 
but Senator Begich, do you have a question for this panel? 
Otherwise, we will move on.
    Senator Begich. I do have a quick question, and I can't 
stay for the second panel, so I am going to have a list of 
questions I will just submit, if that is OK, Mr. Chairman.
    This is more of a comment, and that is I know we are going 
to do a follow-up meeting in Alaska with the Tribal communities 
and with the VA, which I really appreciate. I think this might 
be one of the first times for you. I am hopeful that as you do 
that meeting, that you have the perspective that one, 
specifically, because I think there are some very specific 
action opportunities, that it be really focused as an action 
meeting. It is great to have meetings. We go to plenty of them 
around here that will last us until midnight at times. So it 
would be great if, as you attend--because I know it is the 
first time and they are very motivated to assist you in some 
action items, I would hope that you would take that as an 
action item kind of a meeting.
    Mr. Walcoff. We will, sir.
    Senator Begich. Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Mr. Begich.
    If it is OK, Senator Brown, we will move to the second 
panel.
    Thank you very much to the first panel, Mr. Walcoff and all 
of you.
    Mr. Walcoff. Thank you.
    Chairman Akaka. Thank you.
    Before the second panel sits, I am going to call for a very 
brief recess.
    [Recess.]
    Chairman Akaka. This hearing will be in order.
    I want to welcome our second panel. Our first witness is 
the former Under Secretary for Benefits, Joe Thompson, who 
served as the head of VBA from 1997 to 2001.
    Next is Linda Jan Avant, Rating Specialist at the Little 
Rock, Arkansas, Regional Office and First Vice President for 
Local 2054, American Federation of Government Employees. Ms. 
Avant is on the front lines of bringing down the claims 
inventory. Ms. Avant, I understand that today is your birthday 
and that your mother is here in the audience, so happy birthday 
and welcome to mom here.
    Our next witness is Richard Cohen, who is the Executive 
Director of the National Organization of Veterans Advocates.
    The final witness today will be Joe Violante, National 
Legislative Director for Disabled American Veterans, testifying 
on behalf of The Independent Budget.
    I thank you all for being here. Your full testimony will 
appear in the record.
    Mr. Thompson, please begin with your testimony.

   STATEMENT OF JOSEPH THOMPSON, FORMER UNDER SECRETARY FOR 
         BENEFITS, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Thompson. Good morning, Mr. Chairman and Ranking Member 
Burr. Thank you for inviting me here today to present my views 
on veteran claims processing and current VA initiatives.
    The Veterans Benefits Administration, in my view, is at a 
critical juncture in its institutional history. It is 
undergoing things today that are with the great changes that 
followed the Vietnam War and World War II. That order of 
magnitude.
    VA's Disability Claims Evaluation process is likely the 
most complex one in the world. Over the last 10 years, it has 
only gotten increasingly complex. Not only have the laws 
changed and additional requirements been added to VBA's 
processes, the claims volumes have risen significantly, as was 
mentioned earlier, and the sheer number of claims and the 
number of issues embedded in each claim just makes the work 
much more difficult for the people trying to administer these 
programs.
    Compounding this is the fact that VBA has fallen behind in 
terms of using information technology to help make things 
better. It just hasn't kept up with the times and it faces the 
prospect, and I heard what was described earlier, of really 
trying to play catch-up before it can even move ahead.
    And just as the baby boomers, my generation, replaced the 
class of 1946, the men and women who came to work for the VA 
after World War II, today, the millennial generation is coming 
into VA in great numbers and replacing the baby boomers. So 
given all of this, given this complexity and the size and scope 
of change, it is important that VA gets it right.
    Now, VA has used a number of different approaches to 
process claims over the last several decades. I won't go into 
detail as to what those approaches were, but I would suggest 
that the model they are looking at today is very similar to 
ones we were using in the 1990s. I will just very briefly to 
describe the current initiatives, as I see them.
    The Little Rock pilot is creating cross-functional teams 
that have end-to-end ownership of claims, using modern 
management techniques to improve the process steps within that 
team concept. That is important, because instead of the claims 
being spread out throughout the regional office, you have all 
the skills in one area to decide that claim from start to 
finish, and you also have the ability of the team to look at 
the processing steps to make sure that they don't waste time 
with a claim sitting idly there that could be processed more 
readily.
    The Pittsburgh Regional Office is case managing claims. I 
heard one of the Committee Members ask about having veterans' 
advocates in regional offices. This is exactly what case 
management is--having a person in the regional office with the 
responsibility for making sure that claim gets done right. I 
can't tell you how much I think that is absolutely the right 
thing to do. Instead of having a phone number that you call and 
never speaking to the same person twice, you now have a person 
who will pick up the phone and talk to you and try to work you 
through the complex issues. To me, there is no substitute for 
that level of service.
    The Providence pilot's Business Transformation Lab is 
moving to a paperless system. If the requirement is that you 
need to have a claims folder open in front of you for you to do 
your job, then that requirement dictates how, when, and where 
that claim gets done. If you can get claims into an electronic 
format, you have broken all those bonds. You have given the 
agency tremendous flexibility to process claims when, where, 
and how they see most fit. So I think that is a key element of 
this improvement process.
    And I think the Baltimore pilot, the last piece, is really 
about building a virtual regional office that pulls all of 
these elements together.
    I think all of those things are really positive steps and I 
encourage the agency in pursuing them. There are however, some 
things I think they need to be cautious of and there are some 
challenges to these efforts.
    First of all, deciding on the correct solution. You can 
make things work in a pilot setting that don't translate well 
when you try to implement them across America. There are 
reasons it can work in the pilot. You might have put your best 
people in there. You might have provided more resources. Or 
just the fact that everybody is watching makes people do a 
better job. So, I caution VA to be sure that when they get the 
results from the pilots, they understand what they are seeing 
and how well that will translate into the broader VA.
    Scaling the initiatives is also going to be a challenge. VA 
is stretched to its limit right now. It is, I think, using all 
of its available resources just to get current work done. 
Trying to bring in new processes is also going to be a 
challenge and one that has to be managed carefully.
    I also believe that they need to put a higher priority on 
using rules-based systems. I recognize that they are looking at 
these systems right now, but I believe that the reason that 
claims decisions can be made differently in one regional office 
versus another is because the rules are very broad. You can 
legitimately decide claims differently based on the same 
evidence because the rules provide that much flexibility. 
Putting in rules-based systems that start to not only remember 
the nuts and bolts rules, but also start to narrow the 
decision-making ``sidelines'' down is important both in terms 
of making the process more efficient and also making it more 
accurate.
    I also think VA needs to keep their eye on quality, because 
when push comes to shove, the default position for VBA, and I 
say this as somebody who loves the organization, is that in a 
tradeoff between quality and production, they will choose 
production every time.
    Now, I think the current leadership and certainly the 
Secretary has the appropriate emphasis on quality, but you need 
to understand that when people are pushed and they have 
performance metrics to meet, they are going to try to get the 
work out even if sometimes is not entirely correct.
    Improving electronic data exchanges is also needed. It is 
disheartening for me to hear that we still don't have that 
capability with DOD, that they still mail paper to VA. Those 
discussions began a dozen years ago with DOD and still it 
doesn't look to me like a lot of progress has been made. I also 
think there are opportunities between VBA and the Veterans 
Health Care Administration to improve their electronic 
exchanges and using templates, which I heard mentioned earlier, 
for exam ratings. Those templates were developed 8 or 9 years 
ago. I haven't seen them in use as yet, so I wonder if VA is 
utilizing all the tools that I think are available.
    And finally, I would mention blending new hires into the 
organization is going to be a challenge. Adding 4,000 people to 
this organization is an enormous lift. When people come into 
the organization, they are actually a net negative because you 
have to train, equip, provide space for them to work, and most 
importantly, you have to pull experienced people offline to 
help train the new people. So I mention this just to recognize 
it as an issue. I mean, it is a problem I would love to have 
had: getting 4,000 new people. However, in the beginning at 
least, there is a lag time before the training kicks in and 
really makes a significant difference in performance.
    In conclusion, I would just like to say I think VA faces 
major challenges in its attempts to improve and modernize the 
claims process. I believe the current efforts appear to be on 
the right track in terms of developing solutions. But I think 
the far greater challenge will be in the implementation end of 
it. The good ideas are there and I think they can see what they 
are, but scaling that up and making that work in 56 or 57 
regional offices throughout the country is really going to be a 
tremendous challenge.
    As noted earlier, VA, I believe, is at a critical juncture 
in veterans claims processing. Although they face daunting 
challenges, they do have the advantage of strong senior 
leadership support. They have excellent budget and staffing, 
thanks to the Administration and the Congress; and the 
technology available today has capabilities that, when I was in 
that job 10 years ago, I could only dream about. I think that 
by continuing with their current initiatives and by taking some 
of the steps mentioned above, VA can be successful in 
transforming this most critical process for helping our 
Nation's veterans.
    [The prepared statement of Mr. Thompson follows:]

   Prepared Statement of Joseph Thompson, Former Under Secretary for 
                Benefits, Department of Veterans Affairs

    Good morning Mr. Chairman and Members of the Committee. Thank you 
for inviting me here today to present my views on veterans' claims 
processing. Your invitation letter asked that I comment on the claims 
pilot programs in the Baltimore, MD; Little Rock, AK; Pittsburgh, PA; 
and, Providence, RI regional offices as well at the claims processing 
legislation you recently introduced. I was also asked by committee 
staff to provide my perspective on how the claims process has changed 
over the years. Given the highly technical nature of the proposed 
legislation, I do not believe I have the necessary expertise and would 
like to pass on providing comments about its various provisions. Before 
I respond to the other topics, I would like to state that I believe the 
Veterans Benefits Administration is at a critical juncture in its 
institutional history, one that holds both great promise and great 
challenges.
    The veterans' claims process is as old as our Nation, tracing its 
origins to the early years following the ratification of the 
Constitution when the responsibility for providing compensation to 
veterans moved from the individual states to the Federal Government. 
Although much has changed from the quill pen and inkwell days of claims 
adjudication, the essence of the process has remained the same: having 
trained experts gathering and reviewing the best available evidence and 
deciding if the veterans' disabilities are related to service and if 
so, the extent to which they are disabling. In essence, VA is charged 
by the American people with fulfilling the social contract that arises 
when a young enlistee raises his or her hand and swears an oath to 
``support and defend the Constitution of the United States against all 
enemies * * *.''

                           CURRENT SITUATION

    Deciding veterans' disability claims is a complex and often time-
consuming task. Research conducted by VA staff in the 1990's concluded 
that the veterans' claims process is likely to be the most complicated 
disability determination process in the world. This intricacy is driven 
by a number of factors including the number of claimed disabilities 
filed by each veteran, the complexity of claims received (e.g., 
environmental and infectious diseases, Traumatic Brain Injuries, etc.) 
and the often significant lapsed time between the disabling event and 
the filing of a claim. It is not unusual for VA to have to decide 
issues that are a half a century or more old. The claims process has 
gotten increasingly complicated since that study was conducted, driven 
by significant new legislation over the last ten years coupled with 
disability claims arising from the wars in Iraq and Afghanistan.
    Things have changed considerably for the Veterans Benefits 
Administration (VBA) over the last ten years. From Fiscal Year 2001 to 
Fiscal Year 2011 (estimated) the number of claims received per year 
will have grown by 70% while the overall staff employed by VBA, as 
proposed in the President's 2011 Budget, will have grown by 80%. The 
number of veterans receiving Disability Compensation or survivors 
receiving Dependency and Indemnity Compensation (DIC) will have grown 
by 47% and total payments for these programs will have increased by 
156%.
    The scope of the transition of the VBA workforce from baby boomers 
to the millennial generation will rival those of the other great 
transitions in VA that followed World War II and the Vietnam War and 
the increases in disability claims and outlays are unmatched in recent 
history. Given these facts, it is imperative that VA ``get it right'' 
with its improvement initiatives.

                    EARLIER CLAIMS PROCESSING MODELS

    VA and its predecessor agencies have utilized numerous 
organizational strategies for handling claims; a number of the more 
recent efforts are very similar to the aforementioned pilot programs. 
From my perspective, there are three basic approaches to claims 
processing that have been followed by VBA over the last several 
decades.
    The first approach, referred to in VA as the ``unit concept,'' was 
prevalent from the Vietnam era through the Gulf War era. Each claims 
unit had responsibility for a certain percentage of the overall claims 
work and unit staff members typically had many of the skill sets needed 
to handle claims, including putting claims under electronic control, 
developing evidence, and making certain determinations. However, some 
key tasks were outside the purview of the claims unit such as making 
the actual disability rating decision (this was the responsibility of 
rating boards) and speaking with veterans on the phone or in person 
(this fell to Veterans Services Division staff). ``Ownership'' of the 
overall process was a senior management responsibility. Complaints 
about slow service and poor quality fueled a number of management 
improvement initiatives in the 1990's which ultimately led to a move 
away from this model by VBA.
    The next approach, referred to as Business Process Reengineering 
(BPR), utilized cross-functional work teams with individuals 
responsible for the full range of actions for processing a claim from 
receipt through to the final decision. Each team was assigned a 
percentage of the overall claims workload and was responsible for 
managing the entire process from end to end. Each claim was also ``case 
managed'' that is, an individual on the team would be responsible for 
helping the veteran through the process and keeping him or her apprised 
of the status of their claim.
    As the Director of the Regional Office in New York City, I helped 
develop this model and utilized it for handling claims in New York. 
Later, as the Under Secretary for Benefits, I began the process of 
expanding Business Process Reengineering nationwide. This short-lived 
model (1999-2001) was being implemented across VBA when efforts were 
halted because of concerns about growing claims backlogs stemming from 
legislation passed in 2000.\1\
---------------------------------------------------------------------------
    \1\ The Veterans Claims Assistance Act of 2000 required the re-
adjudication of approximately 100,000 previously-decided claims which 
added to the claims backlogs commensurately.
---------------------------------------------------------------------------
    The third approach, VBA's current Claims Processing Improvement 
(CPI) process, has been in place since 2002. It relies on a strict 
division of labor with a focus on specialization of claims processing 
functions and roles, with each employee working in a highly 
circumscribed fashion. Work moves through specialized elements, each of 
which is responsible for a part of the process, but with no individual 
element responsible for overall outcomes. As with the Unit Concept, 
responsibility for the overall process rests with senior managers. This 
is an assembly-line approach used successfully in manufacturing.
    Each of these models offers advantages and disadvantages. The 
current CPI model offers the benefits of process standardization and 
makes training somewhat easier because individual roles and 
responsibilities are narrowed. However, it is inflexible, requires 
extensive process controls, reduces accountability, and keeps employees 
limited in terms of their knowledge and capabilities. Most importantly, 
it makes it difficult for employees to see how their actions ultimately 
affect veterans and their family members. The connection between the 
internal claims work and outcomes can and should be a potent 
performance motivator given the profound importance of VBA's mission to 
help veterans and their families.
    The Unit model was more flexible than CPI but it too erected 
barriers between employees engaged in different parts of the same 
overall claims process and disconnected claims staff from the impacts 
of their activities on their veteran clients.
    The BPR model was the one which, in my view, tied VA claims 
processing staff most closely to outcomes, expanded employee 
capabilities, and provided the best service to veterans. It was also, 
at least in the short run, the most labor and resource-intensive 
process to implement and administer. Nonetheless, I believe it is well 
worth the effort. As VBA's senior statistician remarked as the first 
data was being analyzed from BPR pilot sites in 2001, it was the only 
initiative in her experience to ``move the needle'' on customer 
satisfaction. Not only were claims processed more quickly, veterans' 
satisfaction with the process also increased significantly and their 
substantive appeals of the decisions, which constitute a major 
percentage of VBA's work, were cut in half.
    A key element of the BPR model was a simultaneous effort to improve 
and expand Information Technology (IT) to support claims processing. 
Many, if not most of these initiatives have been implemented over the 
last decade and constitute the core of VBA's current disability claims 
IT infrastructure.\2\
---------------------------------------------------------------------------
    \2\  These efforts included: modernizing the corporate database 
structure (VETSNET); building a Data Warehouse; improving claims 
processing capabilities (RBA 2000, MAP-D); imaging veterans records 
(Virtual VA); on-line claims applications (VONAPP); electronic requests 
for claims information (CAPRI/VHA, PIES, DMDC Link, SSA Link, CURR 
Link) and development of rules-based claims systems (CAPER). CAPER was 
dropped as an initiative in 2002.
---------------------------------------------------------------------------
                           CURRENT VA EFFORTS

    Since retiring from VA in 2002, I have had the opportunity to work 
with leaders in a number of Federal agencies on business process 
improvements, primarily as a senior advisor at the National Academy of 
Public Administration\3\ (NAPA). NAPA conducted a study of VA in 
2008\4\ which considered the Department's organizational capacity, 
management strategy, and implementation challenges related to improving 
service to veterans, including those returning from Iraq and 
Afghanistan. Noting that VA often tends to over focus on internal 
requirements, the study Panel strongly urged VA to take a more 
``veteran-centered'' approach toward dealing with veterans' issues. I 
am encouraged to see that VA seems to be following that recommendation 
as evidenced by its new veteran-centered approach to claims processing 
in its four pilot sites.
---------------------------------------------------------------------------
    \3\ The National Academy of Public Administration is a 
congressionally chartered, non-profit, independent coalition of top 
public management and organizational leaders who tackle the nation's 
most critical and complex challenges.
    \4\ After Yellow Ribbons: Providing Veteran-Centered Services. A 
Report by A Panel Of The National Academy Of Public Administration for 
the U.S. Congress and the U.S. Department Of Veterans Affairs. October 
2008.
---------------------------------------------------------------------------
    The Little Rock pilot has created cross-functional teams that have 
the end-to-end ownership of the claims assigned to them. Using 
management improvement tools (Lean Six Sigma), each team focuses on 
minimizing the time required for each step in the claims process and 
eliminating processing errors. This approach should provide the 
necessary mechanisms for VBA staff to significantly reduce barriers to 
processing efficiency and take complete ownership of all the claims 
assigned to them.
    Dovetailing nicely with the Little Rock effort are the efforts of 
the Pittsburgh pilot to case manage claims. This case management 
approach, directly championed by VA Secretary Eric Shinseki, appears to 
be making improvements both in terms of the timeliness of claims and 
veterans' satisfaction with the process. Using ``old school'' 
approaches such as telephoning the veteran to ensure that he or she 
understands the process and is given the opportunity to help with the 
evidence-gathering, Pittsburgh is working to fundamentally change the 
relationship between veterans and the VA.
    The Providence pilot's Business Transformation Lab (BTL) is working 
to develop a paperless claims processing system. Using VBA's current 
imaging system (Virtual VA) as a starting point, the goal is to provide 
VBA with the capability to decide claims, end-to-end, in a paperless 
environment. This is a key initiative for VBA's transformation. Having 
to review paper files, as is currently required in the claims process, 
determines how, when, where and by whom claims are processed. This 
paper ``tether'' severely restricts VBA's flexibility in handling 
claims. Allowing access to claims information to VA staff working in a 
secure IT environment, regardless of location, will provide significant 
flexibility in how veterans' claims work is accomplished. As an 
example, VBA currently ``brokers'' many thousands of claims annually. 
That is, they physically move veterans' claims files from offices with 
too much work to offices that have the resources to help with the work. 
This adds time and costs and reduces accountability in the claims 
process and creates the potential for losing one-of-a-kind records. A 
paperless process can eliminate this need to broker work.
    The Baltimore pilot is designed to pull together the best practices 
of all three efforts to create the ``virtual regional office'' of the 
future. The location was chosen to leverage the proximity to VA 
Headquarters as well as the Social Security Administration which has 
gone through a paperless transformation. The objective is to completely 
replace the existing claims system and eliminate the claims backlog.

                     CHALLENGES TO CURRENT EFFORTS

    I believe VA is off to a good start in terms of transforming the 
disability claims process. In my opinion, however, success is 
contingent on getting a number of important elements right:

     Deciding on the correct solutions. The initial results 
from the pilots are encouraging but they have also been engineered to 
succeed through the use of additional staff, additional expertise, or 
the possibility that the Hawthorne Effect\5\ is contributing to 
results. Determining how these initiatives will work in a non-pilot 
site will be critical to a successful expansion. As noted above, many 
aspects of these pilot initiatives were attempted earlier but later 
abandoned.
---------------------------------------------------------------------------
    \5\ The Hawthorne effect describes a situation whereby subjects 
improve or modify an aspect of their behavior being experimentally 
measured simply in response to the fact that they are being studied, 
not in response to any particular experimental manipulation.
---------------------------------------------------------------------------
     Scaling the initiatives nationwide. The pace and scope of 
expanding these initiatives to all regional offices are severely 
constrained by how busy these offices are with existing workloads. 
There is very little, if any, slack in the system and introducing a 
major change to business processes will be problematic, at best.
     Making rules-based systems a higher priority. VA should 
focus on developing rules-based/expert systems to help with the claims 
process. Currently, new employees go through an extensive training 
process, much of which is focused on memorizing rules that could 
readily be programmed into the claims processing system. This not only 
contributes to process delays but also drives up errors. The current 
plans I have seen do not seem to include the development of rules-
based/expert systems in the near future. The use of such tools, 
particularly in the evidence development process, could have 
significant impacts on claims timeliness and quality.
     Keeping the focus on quality. Secretary Shinseki has 
publicly committed to improving the quality of VA claims decisions. If 
workloads remain high and major new processing changes are implemented 
as scheduled, there will be increasing pressure to get the claims work 
done quickly. That is when VBA tends to move to its organization 
default position of processing claims instead of deciding claims. 
Simply put, the emphasis will be on meeting production goals, sometimes 
at the sacrifice of quality. Leaders overseeing this change process 
need to remain vigilant to this tendency.
     Improving electronic data exchanges. More than a decade 
after initial discussions were held between VA and DOD on the 
electronic exchange of service treatment records, the process remains 
paperbound. With the tremendous growth in claims activity, this is a 
problem that should not be allowed to continue. The electronic exchange 
of examination requests and results between VBA and VHA is also in need 
of improvements and updates. Electronic rating exam templates were 
developed eight years ago but never implemented. These templates would 
significantly improve the quality of exams if implemented.
     Protecting the existing IT infrastructure. Despite their 
limitations, current VBA IT systems mail out millions of checks or send 
direct deposit transactions to the accounts of millions of veterans and 
family members, unfailingly, on the first of every month. This has been 
the case for decades. In the move toward improved technology, there 
needs to be a continuing focus on ensuring that these existing payment 
systems remain robust.
     Blending new hires into existing organizations. Training 
and integrating VA's large influx of new staff will be a major 
challenge for VA leaders. In the short run, substantial new hiring will 
draw resources away from claims processing and strain existing human 
capital systems.
     Focusing on the mission. VA's programs trace directly to 
the American Revolution. Its major benefits programs were signed into 
law by presidents Washington, Madison, Lincoln, Wilson and Franklin 
Roosevelt. For over two centuries, these programs have succeeded in 
transitioning generations of warriors successfully back into civilian 
society and VA leaders should take every opportunity to remind 
employees of the Agency's rich history. They also need to remind staff 
that people who come to VBA for help are dealing with some of the most 
significant events in life: disability, illness, death, buying a home 
and going to school. The actions of VBA employees make a critical 
difference in the lives of these veterans and their families. An 
ongoing and consistent message to reinforce that fact can be an 
important driver for bringing about needed change.

                               CONCLUSION

    VA faces major challenges in its attempts to improve and modernize 
the claims process. Many initiatives have been undertaken over the 
years to improve veterans' claims processing and the supporting IT 
infrastructure. Most have struggled, many have failed. Nonetheless, the 
current efforts appear to be on the right track in terms of developing 
solutions to existing problems. The critical, and far more difficult, 
aspect of this change process will be in implementing the solutions on 
a nationwide basis. My experience with VA and other Federal agencies 
has shown that having a well-formulated and executed change management 
strategy is essential to taking solutions from development to 
successful implementation. During my research for this hearing, I was 
unable to find clear documentation of how the strategy, technology, 
structure and organizational culture will fit together in the new 
claims processing environment. This type of comprehensive plan, coupled 
with continuous management attention and support, is vital to success.
    As noted earlier, VA is at a critical juncture in veterans' claims 
processing. Although the change efforts face daunting challenges, they 
also have the advantage of strong senior leadership support, excellent 
budget and staffing, and widely available and ever improving 
technologies. I believe that by continuing with their current emphasis 
on improvements and by taking some of the steps mentioned above, VA can 
be successful in transforming this most critical process for helping 
our Nation's veterans and their families.

    Chairman Akaka. Thank you. Thank you very much, Mr. 
Thompson.
    Ms. Avant, your testimony.

 STATEMENT OF LINDA JAN AVANT, RATING SPECIALIST AND 1ST VICE 
 PRESIDENT, AFGE LOCAL 2054, VBA REGIONAL OFFICE, LITTLE ROCK, 
 AR, ON BEHALF OF AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, 
       AFL-CIO AND AFGE NATIONAL VETERANS AFFAIRS COUNCIL

    Ms. Avant. Chairman Akaka, Ranking Member Burr, and Members 
of the Committee, thank you for the opportunity to testify 
about the experiences of the front line employees working on 
VBA pilot programs. My name is Jan Avant, and as you mentioned, 
I am the First Vice President of AFGE Local 2054 at the Little 
Rock Regional Office.
    I have worked with the VA for 26 years, and for the last 13 
years, I have worked as a Rating Specialist, serving as a 
mentor and trainer for VSRs and Rating Specialists. My goal 
when I come to work every day is to do what is right for the 
veterans of our Nation, and often in order to do this, we, as 
employees, have to sacrifice higher production to process 
veterans' claims correctly the first time.
    Part of why my experiences with the Little Rock RO PODs/
Lean Sigma Process Pilot Program, or POD, have been so positive 
is that management and labor worked very closely together from 
the start, always jointly focused on the ultimate goal of 
ensuring that our veterans are well served. However, I feel it 
is too early to roll out most components of the POD nationally. 
We need more time to train new employees as well as employees 
that have been promoted.
    My initial role in the pilot was as a union representative. 
I regularly met with management and the Booz Allen Hamilton 
consultants to address workplace safety and other questions 
like: how do we staff each POD so they reflect a true picture 
of the mixed experience levels of our workforce, and do we have 
sufficient space? How do we keep the work flowing in the rest 
of the office when 20 percent of the employees are in POD 
training? I began participating in the third phase of the PODs 
after some of the initial kinks and processes had been ironed 
out.
    The POD structure is an asset to the VBA organization and 
to veterans we serve. Blending multiple positions into one team 
enables employees to communicate with each other both 
efficiently and quickly. With the varying levels of experience, 
the POD facilitates training and mentoring of employees because 
they receive the immediate feedback and support of other POD 
team members. This also allows for better quality assurance.
    What makes all the PODs especially effective is that we 
work the case from what we call ``cradle to grave'' and we keep 
the veteran's file within the team area until it is completed. 
For employees who only worked under specialized CPI teams, this 
POD gave them their first experience to the entire claims 
process.
    The PODs reduced development time and mail control time, 
along with the number of days to complete a claim. For example, 
a post-development VSR is now aware of the timeframes that 
apply to pre-development. The POD creates a valuable incentive 
to coordinate different timeframes because our blended team is 
rewarded for completion of the entire claim. The reorganization 
of our mailroom into an intake processing center or IPC has 
also been extremely beneficial. It greatly improved our ability 
to associate incoming mail with the veteran's file, thus 
dramatically reducing the amount of search mail from about 
1,600 pieces to an average of 50.
    Like other ROs, we suffer from a growing gap in 
experienced, trained staff to do the work of training and 
mentoring. Lots of experience has also been depleted from our 
regional offices due to promotions and retirement. After 
internal promotions, our office filled many vacancies with 
temporary employees from the ARRA stimulus dollars. In the end, 
only about 30 percent of our employees have 2 or more years of 
experience, leaving about 70 percent unable to completely 
function independently, and sometimes this takes about 2 years.
    The stimulus employees, who are now permanent, are like 
brand new VSRs just hired off the street because they were 
never sent to initial Challenge Training and were only given 
limited or basic tasks, such as copying documents and checking 
for duplicate records. This lack of fully-trained personnel 
directly affected the production of most regional offices and 
only time will provide us with the experience and confidence we 
need to move closer to the Secretary's 98 percent accuracy 
goal.
    Last, I would like to address VBA flexiplace policies. We 
all hear officials in Washington talk about how the work-at-
home policies attract and retain good Federal employees, cut 
down on traffic, and alleviate space issues. Yet flexiplace is 
not offered to enough employees. Even more harmful, VBA insists 
on higher production standards for employees who work at home. 
I feel strongly that the same production standards should apply 
regardless of where you sit and do the work. For consistency, 
all employees should have equal time to look for errors and 
missed benefits. It requires employees working at home to 
produce as much as 30 percent more work, adds too much 
pressure, and it sacrifices quality, especially when office-
based employees are already struggling to meet their lower 
quotas.
    Work-at-home employees have to spend time performing 
additional tasks, such as preparing their cases for 
transportation, in order to meet the new security measures. And 
because of technology problems, they must also spend time at 
the office printing medical evidence and rating decisions and 
associating them with the C-file.
    In short, VBA's flexiplace policies have resulted in the 
loss of many experienced and valued employees. Therefore, we 
urge VBA to offer flexiplace to all experienced VSRs, RVSRs, 
and DROs, and also to apply equal production standards to all 
employees. This would lessen the need for second shifts, which 
are proving very difficult to staff, especially with the loss 
of seasoned employees. Thank you.
    [The prepared statement of Ms. Avant follows:]

 Prepared Statement of Linda Jan Avant, Rating Specialist and 1st Vice 
 President, AFGE Local 2054, VBA Regional Office, Little Rock, AR, on 
Behalf of American Federation of Government Employees, AFL-CIO and AFGE 
                   National Veterans Affairs Council

    Chairman Akaka, Ranking Member Burr and Members of the Committee: 
Thank you for the opportunity to share the perspective of the American 
Federation of Government Employees (AFGE) and the National Veterans 
Affairs Council (NVAC), the exclusive representatives of Veterans 
Benefits Administration (VBA) front line employees who process 
disability claims.

                                OVERVIEW

    Our testimony focuses on three areas: (1) The Little Rock, 
Providence and Pittsburgh VBA Pilot Programs\1\ (2) S. 3517, Claims 
Processing Improvement Act of 2010; and (3) Telework production 
standards at the ROs and other personnel issues related to claims 
improvement.
---------------------------------------------------------------------------
    \1\ Information about the Baltimore RO Pilot Program is not yet 
available.
---------------------------------------------------------------------------
    Pilot Programs: Our members have largely positive comments about 
all three pilots, both in terms of effectiveness and inclusion of front 
line employees. However, there is a general consensus that it is too 
early to replicate these experiments on a national scale. Additional 
adjustments to the claims process and more advanced scanning technology 
are needed to adequately handle large numbers of claims; the gains in 
production have been modest to date. The features that drew the 
greatest praise were the revamped mail system, POD case management 
structure, medical templates for private physicians and phone 
assistance.
    S. 3517: While AFGE and NVAC are generally supportive of an effort 
to address the ambiguities and weaknesses in the current rating 
schedule, we have a number of concerns about the proposed pilot program 
in Title I, particularly the use of one combined rating code for all 
musculoskeletal disabilities. Our members were generally supportive of 
the use of ICD codes. Both RO adjudicators and Board of Veterans' 
Appeals (BVA)
    Telework Production Quotas: We strongly urge VBA to eliminate 
higher production standards for employees who work from home. Telework 
is valuable tool for retaining senior claims processors with valuable 
experience, especially as VBA faces a wave of retirements. VBA has not 
offered any persuasive justification for this unfair practice, 
especially in light of severe space shortages at many ROs and a 
nationwide effort by OPM to increase the use of telework in the Federal 
sector. VBA's telework policies have no more merit than the telework 
policies that BVA abandoned in 2008 at the urging of Congressman Frank 
Wolf (R-VA).

                           VBA PILOT PROGRAMS

Little Rock RO
    The experiences of employees participating in the Little Rock RO 
PODs/Lean Sigma Process Pilot Program have been very positive. 
Employees had a great deal of pre-decisional input. Everyone on the 
team, including front line employees, management and consultants, 
shared a commitment to helping veterans. Our ability to work together 
toward this goal was a key ingredient in its overall success and 
enabled us to identify unnecessary steps in the claims process that 
could be eliminated
    Space was a challenge throughout the pilot, and required us to have 
seven, instead of eight pods.
    We also faced another significant challenge: lack of experienced 
personnel. A number of employees were promoted from within from Claims 
Assistant (CA) to Veterans Service Representative (VSR), and from VSR 
to Rating VSR (RVSR), and both VSRs and RVSRs were promoted coach and 
assistant coach positions. leaving vacancies below. Currently, we have 
several unfilled RVSR positions.
    Temporary employees with no more than one year of VBA experience 
and minimal training were hired on a permanent basis for portions of 
the VSRs duties. At the same time, some RVSRs were hired from outside 
the VBA, which also lowered our numbers. As a result, only about 25% of 
the pilot workforce had at least two years of experience.
    It was helpful that when POD employees went to training, other PODs 
covered the work. The only weak link in the training was the 
``behavioral'' portion on interoffice behavior taught by the 
contractor. This provided very few useful skills for carrying out the 
pilot.
    The ``cradle to grave'' structure of the PODs worked extremely 
well. Each POD consisted of at least one claims assistant that brought 
in the mail, pre- and post-VSRs, at least Super Senior (authorizer) and 
several RVSR. The ability to work closely together as a team gave us 
all a strong sense of responsibility and ownership over our work.
    The conversion of the old mailroom to an Intake Processing Center 
(IPC) was very helpful. A GS 12 Super Senior and two mail clerks worked 
effectively together to distribute the mail to the PODs, reducing the 
number of pieces of ``search mail'' (mail that has to be associated 
with a claims file) from approximately 600 down to 50. I understand 
that other ROs are replicating the IPC model.
    Communication with the contractor was excellent. However, at a 
later stage of the pilot, the use of in-house employees instead of 
contractors as manager apprentices proved to be very cost effective. 
These employees were also more familiar than the contractor with the 
inner workings of the claims process.
    The quality of on-the-job training also increased as a result of 
POD structure. RVSRs were able to coach VSRs on a regular basis. More 
generally, our productivity shot up because we worked in close 
proximity to the other team members.
Providence RO
    Overall, AFGE/NVAC members who participated in the Providence, 
Rhode Island Business Transformation Lab are satisfied with how the 
pilot is progressing and their role in the project, especially in light 
of increased efforts by management in recent months to maintain a 
regular dialog with front line employees and their AFGE 
representatives. These employees have high praise for VBA's unwavering 
commitment to ensure that every change in the claims process is 
directed at helping veterans. Our members point to the recent revisions 
to Aspen and CPI as excellent examples of VBA leadership putting 
veterans first.
    A large part of the success of the project has been the ongoing use 
of VSRs to conduct quality assurance (QA) over the scanning, indexing 
and other steps required to convert a paper file to an electronic file 
(``E-file''), using Capture Point. VSRs work closely with File Clerks 
and CAs, and regularly share files to properly index and conduct QA. 
Only original claims are used for the pilot.
    One of the frustrating aspects of the Capture Point program that is 
still unresolved is the inability to categorize every document 
according to preexisting software codes. As one employee noted, in 
Challenge training, new employees are working on hypothetical cases 
that are fully compatible with the software. In contract, Capture Point 
does not have a ``drop down'' box for many of the documents in the 
file, requiring employees to mark these documents as ``unknown'', 
``miscellaneous'' or another category that is a close fit, so as not to 
hold up the claims. (For example, Capture Point does not recognize the 
WD-53-55 which preceded the DD-214). Fortunately, managers at the 
Providence RO were flexible enough to allow this, but other ROs may be 
less receptive to these strategies.
    Our members benefit from the daily morning meetings held at the 
Intake Processing Center (IPC) that include rank and file and 
management staff from the ROs, staff from VA Central Office, VBMS 
Program Analysts, the Service Center manager and at some meetings, the 
RO director. However, even with these meetings, front line employees 
were not kept fully informed about new pilot project developments until 
this month. This communication breakdown was exacerbated by frequent 
rotations of personnel from Central Office. As a result of promotions 
and reassignments, only three of the employees working in the Lab have 
been there since the pilot was launched in October 2009, as compared to 
8-10 employees assigned to the pilot at any one time.
    The situation greatly improved as a result of the promotion of one 
of the front line employees to Program Analyst for VBMS. His direct 
experiences preparing and processing cases under the new procedures 
have been very valuable at improving communication and collaboration 
between rank and file and management, which in turn, has improved the 
functioning of the pilot.
    Our members identified two other weak areas of the pilot that 
should be addressed. First, there is a need for greater consistency in 
indexing. Currently, it is much more difficult to ``flip through a 
file'' electronically, especially if the file is not in the correct 
order. Second, the goal of 99% accuracy for a three month period after 
the end of ``100% QA'' by VSRs is unrealistic, especially after the CAs 
take over the QA responsibility.
    The Providence employees also stated, at this stage in the scanning 
technology, they are ``very scared'' about loss of quality once VBA 
discards the actual paper c- file, especially for damaged files, such 
as those from the St. Louis fire. When damaged files are scanned and 
then entered into Capture Point, and then Virtual VA, some are barely 
readable.
    In short, while our Providence RO members feel positive about the 
Pilot's ability to reduce the backlog, they also feel strongly it is 
unwise to roll out Capture Point nationally at this time. There are too 
many problems that still need to be resolved, including the potential 
lack of consistency between ROs. The Providence RO is only a test lab 
and it started out as one of the top three high performing offices in 
the country.
Pittsburgh RO
    The Delta Team at the Pittsburgh RO also used the POD ``case 
management'' structure. The team consisted of a Claims Assistant, 
several VSRs and RVSRs, and an Authorizer. The close teamwork was very 
effective. However, the Pilot suffered from a great loss of knowledge 
due to a wave of recent retirements, a trend that is likely to worsen 
over the next three to five years.
    The Pilot expedited the mail and also had regular phone contact 
with veterans. There will be a full rollout of four to five more pods 
in the coming months.
    The ability to complete multiple stages of the claims process 
within a single team, rather than shifting between times, was an 
enormous time saver. Here too, having VSRs, RVSRs and Authorizers on 
the same team allowed for a regular exchange of knowledge and best 
practices as well as valuable coaching. The ultimate beneficiary of 
this valuable synergy is the veteran.

                                S. 3517

Title I
    AFGE and NVAC commend Chairman Akaka's effort to update and improve 
the musculoskeletal rating schedule. However, we question the need to 
make this change through legislation when VBA is already revising the 
rating schedule.
    Our members support that the use of ICD-9/10 codes as a means of 
aligning VHA with other Federal agencies and we urge the use of these 
codes for all body systems. More generally, standardization of the 
rating schedule will reduce errors and increase claims processing 
speed. Our members would also like to see fewer ambiguous terms such as 
``marked'', ``slight'' and ``normally'' that cause frequent 
disagreements between RVSRs, DROs and veterans, which in turn leads to 
more appeals.
    However, we question whether this is the appropriate time to roll 
out a pilot program that applies a significantly different schedule for 
rating musculoskeletal conditions. The musculoskeletal system is the 
most complex segment of the rating code, and any changes should be 
implemented very slowly and on a modest scale. In addition, we fear 
that the use of a single combined rating will further increase the 
backlog and trigger numerous legal challenges.
    A single evaluation for musculoskeletal disabilities could also 
have an adverse impact on claimants by allowing one disability to be 
discounted in favor of another and lead to more under- and over-
evaluations of claims.
    If the alternative schedule is abandoned after the end of the 
pilot, many claims will have to be readjudicated, leading to further 
confusion and delay.
    We are also concerned about exempting this significant change in 
the rating schedule from the Administrative Procedures Act and the 
requirement for public comment.
Title II
    AFGE and NVAC support several individual provisions in Title II, 
but our members had concerns and mixed reactions to many of provisions 
relating to filing deadlines and appeals. Therefore, we recommend 
deferring statutory revisions to the claims process until additional 
insights can be gathered from recent VBA pilot programs and 
innovations.
    More specifically:

    Section 201: This proposal may not be necessary as current VBA 
policy already allows partial adjudication of claims with multiple 
issues.
    Section 202: This proposal may not be necessary as current law 
already allows VBA to notify the claimant of the need for additional 
information as part of the duty to provide notice, except in Aid and 
Attendance cases. Extending this option to A&A cases would be helpful.
    Section 203: This proposal may not be necessary as current law 
already allows VBA to give equal or greater weight to a private health 
care specialist provider over a VA non-specialist. In addition, VBA is 
already developing templates.
    Section 204: The Fast Track Claims Review Process is similar to 
current practice, but could be the most helpful for homeless, 
terminally ill and severe financial hardship cases.
    Section 205: We support this proposed requirement that VBA send a 
notice of disagreement with a rating decision.
    Section 206: Shorter filing periods could disadvantage 
unrepresented veterans. The majority of cases are already filed within 
180 days so this change may not do much to speed up the process.
    Section 207: Shortening the deadline for filing a substantive 
appeal to 60 days could cause further delays. BVA already applies the 
``mailbox'' rule to late appeals; this proposal could increase the 
number of timeliness determinations that have to be made. Furthermore, 
it is not possible to expedite cases because BVA is already at maximum 
capacity.
    Section 208: The statement of the case already fulfills this 
function.
    Section 209: The provision could adversely impact veterans by 
depriving them of another opportunity for initial review of the 
evidence by the agency.
    Section 210: This proposed change could lead to numerous legal 
challenges by claimants seeking a face-to-face hearing. Many veterans 
would be especially opposed to a videoconference or other substitute 
for a ``day in court''.
    Section 211: Authorizing CAVC to determine all issues raised by the 
appellant could hurt veterans by preventing the agency and claimant 
from entering into a settlement about the number of claims to be 
remanded.
    Section 212: No comment
    Section 213: No comment
        telework production standards and other personnel issues
Telework Production Standards
    Recommendation: To alleviate overcrowding at ROs and retain 
experienced adjudicators, VA should apply equal production quotas to 
work-at-home employees, consistent with changes in production standards 
made at BVA in 2008.
    The White House and Office of Personnel Management have stepped up 
their commitment to flexible workplace arrangements for Federal 
employees. Yet, the Department maintains counterproductive telework 
policies across all its ROs. Last year, at our request, Congressman 
Frank Wolf asked the Department to offer telework to more claims 
processors, and to end the arbitrary, unfair practice of requiring 
higher production from work-at-home employees. To date, the Department 
has been unwilling to change these standards.
    VA's telework policies at the ROs make even less sense when so many 
ROs are facing severe space shortages. Many ROs are starting to have 
two work shifts which are difficult to staff and hard on workplace 
morale. More attractive telework policies could alleviate the need for 
many of these second shifts.
Other Personnel Issues
    Recommendation: AFGE and NVAC urge the Subcommittee to increase the 
frequency of its site visits to the ROs, to include opportunities for 
candid discussions with employees and their representatives outside of 
the presence of management.
    Terminations of both experienced employees and newly trained 
employees for failure to meet production standards are on the rise. As 
discussed below, new employees are often pushed into production before 
receiving adequate training and experienced employees are working under 
a broken work credit system that overlooks quality.
    AFGE and NVAC are also concerned about reports of local management 
retaliating against union officials. For example, management recently 
refused to allow a VSR with valuable skills and experience to work 
overtime because of her status as a local president with official time.
    Recommendation:  AFGE and NVAC urge VBA to participate in labor-
management forums at the Area level ( as well as the VA Central Office 
level) pursuant to E.O. 13522.
    It is equally discouraging that VBA is unwilling to proceed with 
regional (``area'') labor management forums mandated by the December 
2009 White House Executive Order on labor-management forums. VBA 
continues to lag behind VHA and NCA in participation in labor-
management forums. These forums offer a valuable opportunity for labor 
and management to work together on effective solutions to the claims 
backlog.
    Recommendation: All VBA managers, including coaches, higher levels 
management and those involved in quality assurance, should be required 
to pass supervisor skills certification tests.
    Many managers at the ROs lack sufficient experience and subject 
matter expertise to carry out quality assurance duties, leading to 
greater errors, which in turn lead to more appeals, remands and other 
delays. In many offices, employees are being supervised by managers 
with only a few years of experience.
    Lack of management expertise also takes a toll on workplace morale. 
Front line employees facing intense production pressures have to answer 
to supervisors who have not experienced these demands firsthand.
    To date, front line employees and their representatives have had 
very limited involvement in the development and administration of 
skills certification tests, despite substantial evidence that the test 
does not properly measure needed skills and repeated incidence of 
testing problems.
    Recommendation: Management's performance measures should include 
quality of training and compliance with training requirements. 
Management performance measures should reflect the quality and 
thoroughness of training program. Also, VBA should be required to use a 
cadre of formally trained instructors from VA Central Office to conduct 
RO trainings.
    Our members report a wide range of deficiencies in the training 
provided at ROs. Most problematic: widespread training shortcuts for 
new and experienced employees. After new employees complete their 
initial classroom training, their on-the-job training at the RO is 
routinely cut short to rush them into production. It is also common for 
new employees to be kept at one station to maximize their short term 
productivity, thus depriving them of exposure to other skill areas that 
are need for their long term productivity.
    Most of the temporary one-year hires who have been converted to 
permanent C&P employees have only received in-house training and are 
not being rotated; the lack of initial training and exposure to other 
teams will deprive them of critical skills in the long term.
    Similarly, experienced employees are routinely deprived of their 
full 80 hours of annual mandatory training by pressured managers who 
have significant discretion as to how much training time is allowed. We 
receive regular reports of ``training by email'', where employees are 
permitted a fraction of the time that was officially allotted to learn 
a new concept, and deprived of the opportunity to learn face-to-face 
from experienced instructors.
    RVSRs on the Appeals Team receive valuable training from the Board 
of Veterans Appeals by videoconference; this training opportunity 
should be extended to RVSRs on the Rating Board.
    Recommendation: Revise Work Credit Systems for the ROs and BVA. 
These systems should be designed based on scientific time motion 
studies and regular input from front line employees, their 
representatives and VSOs.
    Despite its assertions over the years, VBA has never produced 
evidence of a comprehensive reliable time and motion study that would 
enable it properly assign work credits for different tasks in the 
claims process. Nor has VBA adjusted individual employee production 
standards to reflect the increasing complexity and difficulty of the 
claims process. As a result, employees are pressured to short cut those 
tasks that are undervalued, such as additional case development.
    The ultimate harm falls upon the veterans, who are deprived of 
full, fair, and timely consideration of their claims, and a growing 
backlog.
    The recently issued VSR standards have exacerbated this problem by 
eliminating credit for other routine, critical steps in the claims 
process. Under the old standards, VSRs received work credit based on 
their performance in 60 criteria; under the new VSR rules, there are 
only 5 criteria. Most problematic is the complete loss of credit for 
follow-up development.
    Similarly, the current method in which VBA provides credit for RVSR 
work adversely affects timeliness and quality. More specifically, these 
standards fail to provide any credit for additional development or 
completion of VA examination requests, both of which may take an RVSR 
multiple hours of production time to complete. The lack of credit for 
additional development of completion of VA examination request often 
forces the RVSR to choose between serving the claimant's needs and 
meeting production standards.
    VBA is also in the process of developing new production standards 
for DROs. Our members fear, based on the ongoing pilot project, that 
DRO standards will also deny work credit for much of the work they 
currently perform. As one member noted, under new the data capture 
tool, it will often appear as if the DROs produced zero work, for 
example, on days they hold hearings or work SSOCs, partial grants and 
prepare medical opinions or other directed development. They are also 
concerned that there is no consideration given to the number of issues 
on the appeal, and they would like to see weighted action credit 
assigned for development and medical opinion requests
    Attorneys at the Board of Veterans Appeals are also calling for an 
independent study of their work credit system. The BVA work credit 
system--known as ``Fair Share'' Production--overemphasizes quantity 
over quality. For example, managers at the Board focus on weekly 
decision production numbers that quantitatively measure individual and 
BVA- wide work product without regard to the complexity of the 
individual claims or the quality of decisions produced. As a result, 
the number of remand cases is steadily rising.
    Production standards should also be adjusted for new VBA employees. 
Currently, they are given only 90 days to reach a production standard 
following a period without any production requirements. Also, they are 
not given any deductible time to correct prior work. In contrast, the 
mentors who review their work for errors receive deductible time for 
their work.

    Thank you for the opportunity to testify on behalf of AFGE and the 
National VA Council.
                                 ______
                                 
Response to Post-Hearing Question Submitted by Hon. Bernard Sanders to 
 Linda Jan Avant, Rating Specialist and 1st Vice President, AFGE Local 
2054, VBA Regional Office, Little Rock, Arkansas, on Behalf of American 
Federation of Government Employees, AFL-CIO and AFGE National Veterans 
                            Affairs Council

    Question 1. From your perspective, what additional training would 
you recommend new VBA employees receive prior to assuming duties and 
responsibilities?
    Response. Currently new VBA employees are given an introductory 
crash course to all systems and programs that employees need to be 
familiar with prior to attending a 3-week training academy. They then 
return to the Regional Office to complete about 12 weeks of follow-up 
training. Six months after returning to the Regional Office, the 
employees are expected to produce a set production level of cases in 
order to be considered ``successful''. This level continues for 6 
months when the level is again raised, then raised again in 12 months, 
then at 24 months they are considered ``journeyman'' level and the 
level is raised again.
    It is not necessarily ``what additional training'' new VBA 
employees need before assuming duties and responsibilities, but ``what 
changes should we make in our current training''. The best answer is 
``hands-on training at a learning pace, not a racing pace'' is the only 
thing that will render good sound employees with quality decisions! And 
we still need a 2-year training period with good trainers. Employees 
need time to have a complicated case and search for the answers to 
reach a quality decision. I think our 2-year training program will show 
better quality processors, if it is accompanied by slow hands-on 
application and quality trainers. Due to this ``fast pace'', for 
employees hired over the last several years, I am seeing the 
``analysis'' of decisions become a ``lost art'' which is spiraling into 
the downfall of the VA!
    I feel this ``required production level'' during a period of 
training negatively affects the employees as they are so worried about 
meeting their production and learning enough to keep their jobs, that 
they do not learn how to locate and apply the complicated regulations 
and laws that will be needed in the future to work pending cases. To 
move faster, the direct route to obtain an answer for a trainee is to 
ask a journeyman who has more experience; thus, working the claim 
faster to reach the production needed-which is the main focus for VBA 
and management. In essence, this weakens the quality that this person 
will be able to present to the organization during the training period 
and in the future to process claims accurately and independently. 
Another asset that is sacrificed is the future ``training staff'' 
needed to rebuild the organization in the future.
    I worked for VBA as a claims examiner when there was no individual 
production level. We were able to focus on training and research needed 
to complete each case, work the oldest cases first, and provide the 
veteran much better quality decisions. The supporting argument made by 
management is that without production, we cannot properly reward the 
workers who do more since there is no way to know statistics without 
reporting numbers-believe it or not, the ``real VA employees'' are not 
in our Regional Offices for the little rewards outside our salaries, 
but we ``feel'' the reward when we are able to have the time to resolve 
a veteran's pending case that affects his livelihood. When numbers 
desired by Congress are raised, the solution to VBA is to ``raise the 
employee's production'' so that offices will produce more cases so we 
can show Congress we are successful. Higher production levels just mean 
less quality cases, and this is sad! The majority of VBA employees have 
never seen the side of the government that ``really cares'' for the 
soldier that bore the burden of our wars, so your help is greatly 
needed!
                                 ______
                                 
  Response to Post-Hearing Question Submitted by Hon. Mark Begich to 
 Linda Jan Avant, Rating Specialist and 1st Vice President, AFGE Local 
2054, VBA Regional Office, Little Rock, Arkansas, on Behalf of American 
Federation of Government Employees, AFL-CIO and AFGE National Veterans 
                            Affairs Council

    Question 1. Do you believe VA claims processing personnel receive 
adequate training? If not, can you explain what training is required 
and how long do you think training should be required?
    Response. Currently new VBA employees are given an introductory 
crash course to all systems and programs that employees need to be 
familiar with prior to attending a 3-week training academy. They then 
return to the Regional Office to complete about 12 weeks of follow-up 
training. Six months after returning to the Regional Office, the 
employees are expected to produce a set production level of cases in 
order to be considered ``successful''. This level continues for 6 
months when the level is again raised, then raised again in 12 months, 
then at 24 months they are considered ``journeyman'' level and the 
level is raised again.
    I believe that that training topics and programs provided to claims 
processors at Regional Offices are adequate, BUT* * * . What is 
inadequate is the minimum time allowed to have ``hands-on application 
of the regulations, laws, and Court decisions'' without having the 
overhanging requirement to meet a production number. We need ``hands-on 
training at a learning pace, not a racing pace''  * * *as this is the 
only thing that will render good, sound employees with quality 
decisions! Employees need time to have a complicated case and search 
for the answers to reach a quality decision. I think our 2 year 
training program, which is really needed, will show better quality 
processors, if it is accompanied by slow hands-on application and 
quality trainers. Due to this, for employees hired over the last 
several years, I am seeing the ``analysis'' of decisions become a 
``lost art'' which is spiraling into the downfall of the VA.
    I feel this ``required production level'' during a period of 
training negatively affects the employees as they are so worried about 
meeting their production and learning enough to keep their jobs, that 
they do not learn how to locate and apply the complicated regulations 
and laws that will be needed in the future to work pending cases. To 
move faster, the direct route to obtain an answer for a trainee is to 
ask a journeyman who has more experience; thus, working the claim 
faster to reach the production needed--which is the main focus for VBA 
and management. In essence, this weakens the quality that this person 
will be able to present to the organization during the training period 
and in the future to process claims accurately and independently. 
Another asset that is sacrificed is the future ``training staff'' 
needed to rebuild the organization in the future.
    I worked for VBA as a claims examiner when there was no individual 
production level. We were able to focus on training and research needed 
to complete each case, work the oldest cases first, and provide the 
veteran much better quality decisions. The supporting argument made by 
management is that without production, we cannot properly reward the 
workers that do more since there is no way to know statistics without 
reporting numbers--believe it or not, the ``real VA employees'' are not 
in our Regional Offices for the little rewards outside our salaries, 
but we ``feel'' the reward when we are able to have the time to resolve 
a veteran's pending case that affects his livelihood, be it 2 issues or 
64 issues. When numbers desired by Congress are raised, the solution to 
VBA is to ``raise the employee's production'' so that offices will 
produce more cases so we can show Congress we are successful. The 
majority of VBA employees have never seen the side of the government 
that ``really cares'' for the soldier that bore the burden of our wars, 
so your help is greatly needed!
                                 ______
                                 
Response to Post-Hearing Question Submitted by Hon. Roland W. Burris to 
 Linda Jan Avant, Rating Specialist and 1st Vice President, AFGE Local 
2054, VBA Regional Office, Little Rock, Arkansas, on Behalf of American 
Federation of Government Employees, AFL-CIO and AFGE National Veterans 
                            Affairs Council

    Question 1. I was happy to see that the budget supports an increase 
of 4,000 claims processors. At first I thought that this would be a 
quick hit in our fight against the backlog. I then heard that it takes 
almost two years for a processor to reach the pace and accuracy at 
which is expected of a full-time processor.
     How do you think we can reduce the time it takes to train 
claims processors to increase their efficiency without decreasing the 
rating quality?
    Response. Currently new VBA employees are given an introductory 
crash course to all systems and programs that employees need to be 
familiar with prior to attending a 3-week training academy. They then 
return to the Regional Office to complete about 12 weeks of follow-up 
training. Six months after returning to the Regional Office, the 
employees are expected to produce a set production level of cases in 
order to be considered ``successful''. This level continues for 6 
months when the level is again raised, then raised again in 12 months, 
then at 24 months they are considered ``journeyman'' level and the 
level is raised again.
    Yes, for years, the time determined to train a producer and 
accurate claims processor has been stated to be 2 years. In years past, 
I feel that this worked to produce a quality decisionmaker within the 2 
years, because the employee was allowed this entire time to research 
answers, laws and regulations, and then to apply them to all types of 
cases without being on production.
    I believe that that training topics and programs provided to claims 
processors at Regional Offices are adequate, BUT* * * . What is 
inadequate is the minimum time allowed to have ``hands-on application 
of the regulations, laws, and Court decisions'' without having the 
overhanging requirement to meet a production number. We need ``hands-on 
training at a learning pace, not a racing pace''* * * as this is the 
only thing that will render good, sound employees with quality 
decisions! Employees need time to have a complicated case and search 
for the answers to reach a quality decision. I think our 2-year 
training program, which is really needed, will show better quality 
processors, if it is accompanied by slow hands-on application and 
quality trainers. Due to the current ``fast pace'', for employees hired 
over the last several years, I am seeing the ``analysis'' of decisions 
become a ``lost art'' which is spiraling into the downfall of the VA.
    I feel this ``required production level'' during a period of 
training negatively affects the employee's quality as they are so 
worried about meeting their production and learning enough to keep 
their jobs, that they do not learn how to locate and apply the 
complicated regulations and laws that will be needed in the future to 
work pending cases. To move faster, the direct route to obtain an 
answer for a trainee is to ask a journeyman who has more experience 
(hopefully they learned their manual references); thus, working the 
claim faster to reach the production needed--which is the main focus 
for VBA and management. In essence, this push of production weakens the 
quality that this person will be able to present to the organization 
during the training period and in the future to process claims 
accurately and independently. Another asset that is sacrificed is the 
future ``training staff'' needed to rebuild the organization in the 
future, as these new processors will not be able to successfully train 
upcoming processors, which will not benefit our veterans in the future. 
As mentioned, high expectations of finalized cases were the goal when 
4,000 claims processors were hired. Not considered was the complexity 
of these cases, with not one being like another, and due to promotions 
within, EVERYONE was at a training status as they had not been in their 
job for even a year.
    I worked for VBA as a claims examiner when there was no individual 
production level. We were able to focus on training and research needed 
to complete each case, work the oldest cases first, and provide the 
veteran much better quality decisions. The supporting argument made by 
management is that without production, we cannot properly reward the 
workers that do more since there is no way to know statistics without 
reporting numbers--believe it or not, the ``real VA employees'' are not 
in our Regional Offices for the little rewards outside our salaries, 
but we ``feel'' the reward when we are able to have the time to resolve 
a veteran's pending case that affects his livelihood, be it 2 issues or 
64 issues. When numbers desired by Congress are raised, the solution to 
VBA is to ``raise the employee's production'' so that offices will 
produce more cases so we can show Congress we are successful, which in 
turn shows a decreased quality of work since proper training 
application was not properly used initially. The majority of VBA 
employees have never seen the side of the government that ``really 
cares'' for the soldier that bore the burden of our wars, so your help 
is greatly needed!

    Question 2. You mention how important communication, coordination 
and feedback are between rank and file and higher management is to the 
success of a pilot program.
     How do you think we can ensure this communication happens 
not only within the pilot program, but in all of VBA?
    Response. Real communication (listening) and trust between 
employees, Union, and Management are the keys to success in VBA. Trust 
is the first step and since the employees are the ``tools'' which allow 
management to reach the goals VBA sets, the employees have to see that 
if they trust management, their livelihood is not in jeopardy and they 
are ``safe'' to step out and try changes in work processes, which must 
be implemented to improve the working of veteran's cases. If both sides 
do not listen to each other or are not open and honest with each other, 
VA is defeated before we start. I believe blended training nationwide 
at each local station, with both sides that have the authority to 
negotiate, would be a huge start in building this bridge.

    Chairman Akaka. Thank you very much, Ms. Avant.
    Mr. Cohen, your testimony.

 STATEMENT OF RICHARD PAUL COHEN, EXECUTIVE DIRECTOR, NATIONAL 
           ORGANIZATION OF VETERANS' ADVOCATES, INC.

    Mr. Cohen. Aloha, Chairman Akaka----
    Chairman Akaka. Aloha.
    Mr. Cohen [continuing]. And hello, Ranking Member Burr, and 
thank you to the Members of the Committee to allow NOVA to 
testify here today.
    I am going to start off by talking about the claims 
processing initiatives. NOVA is not very optimistic, and in 
fact, we are very much concerned because of two things, the 
bureaucracy and the culture. And two recent events have caused 
us more concern than we had in the past.
    The first one was the May 26 request by the Secretary for a 
piece of legislation which the Secretary called the Veterans 
Benefit Programs Improvement Act of 2010. That piece of 
legislation to anyone who is a veteran or anyone who represents 
veterans represents an indication that rather than putting the 
veteran first and rather than advocating for the veteran, the 
VA intends to abdicate adjudicating appeals. In that piece of 
legislation, the Secretary asked to slash the time for a 
veteran to file an appeal from 1 year to 6 months, even though 
the Secretary is well aware of the fact that we are dealing 
with an aging veterans population and we are dealing with slews 
of veterans who are coming out of the Global War on Terror who 
have Traumatic Brain Injury and Post Traumatic Stress Disorder. 
These veterans need the 1-year time.
    In addition, the Secretary proposed to make it more 
difficult to file an appeal to the Board of Veterans Appeals. 
Mr. Walcoff told you and Mr. Thompson told you that the claims 
are more complex now. We know we have an aging population of 
veterans. We know they have serious medical conditions. To make 
those complex claims more difficult to appeal makes no sense if 
you want to be helpful to veterans.
    So the inconsistency of the messages that are coming out of 
the VA, on the one hand, the Secretary is going around the 
country saying we are going to put veterans first, and on the 
other hand, coming up with a request for legislation which 
would hurt veterans. It doesn't make any sense, and the only 
explanation for this is that this bureaucracy is a giant 
behemoth which cannot maintain a consistent message from the 
top through the bottom. The people who generated this were not 
communicating with the Secretary and didn't get the message.
    The same thing is with the recent regulation which was just 
enacted, 38 CFR Sec. 3.304(f), trying to make it easier for 
combat veterans to get PTSD benefits. Instead, what this does 
is put an additional hoop that the veterans have to jump over 
if they want the special benefit. What they have to do is 
convince a doctor hired by the VA that they have PTSD or that 
their stressor is sufficient. The information that service 
organizations have been telling the VA is that we are having 
trouble getting VA doctors to diagnose PTSD, to accept 
stressors. We are getting combat medics who are told their 
stressor isn't sufficient, or people with Purple Hearts told 
that their stressor isn't sufficient.
    The VA, in their regulation says we are not aware of any 
problems, yet everyone is aware of the problem in Texas with 
the Perez scandal which was in the newspapers. And then there 
was another situation where a veteran came into an exam with a 
tape recorder in his pocket and showed that the examiner said, 
``I am sorry. I can't diagnose you for PTSD even though I 
believe you have it.''
    So these things cause us to say that the organization is 
faulty and the organization must be fixed. All the initiatives 
in the world won't help unless the culture changes. It hasn't 
changed. This demonstrates it.
    Now, to the contrary, Congress has been working very hard, 
and S. 3517, the Claims Processing Improvement Act, takes a lot 
of the bad provisions that the Secretary asked for and makes 
them veteran helpful. On behalf of the National Organization of 
Veterans' Advocates, the tens of thousands of veterans who we 
represent and the veterans out there, I tell you, Mr. Chairman, 
I have a thumbs up, a giant thumbs up for you and the Committee 
because it is very clear that you get it. You understand what 
is necessary.
    In changing the 1-year period and adding on the possibility 
of equitable tolling, you are going to help the people who are 
severely injured or have bad PTSD symptoms and cannot file 
their appeals on time. The triage system that you recommend, 
the post-NOD decision, all these things will help veterans.
    Now, Section 207, however, of this bill is a problem. You 
may have been told, Mr. Chairman, that Section 207, which 
requires a highly specific substantive appeal to file to the 
BVA within 60 days will not hurt veterans because many of them 
are represented. Sadly, the truth is to the contrary. In 2009, 
the statistics coming out of the BVA Chairman's Report shows 
that 5,000 veterans whose appeals were decided by the BVA were 
unrepresented. Forty-thousand were underrepresented in that 
they did not have someone who is trained in VA law who is an 
attorney to file these things. We are dealing with very complex 
claims and we cannot have a more specific requirement to 
appeal.
    In the Social Security Administration, if a veteran files 
for benefits there, he doesn't have to file an overly complex 
appeal. In the Workers' Compensation System, the veteran 
doesn't have to file it. But here, in the VA system, he would 
be required to file it. That just is a problem.
    The other problem is giving the discretion to the BVA in 
Section 210 to decide whether they are going to do a video 
conference or an in-person conference. For elderly and impaired 
veterans, that likewise presents a problem.
    That concludes my remarks and I am prepared to answer your 
questions.
    [The prepared statement of Mr. Cohen follows:]

Prepared Statement of Richard Paul Cohen, Executive Director, National 
               Organization of Veterans' Advocates, Inc.

    Mr. Chairman and Members of the Committee: Thank you for the 
opportunity to present the views of the National Organization of 
Veterans' Advocates, Inc (``NOVA'') concerning the claim processing 
initiatives of the Veterans Benefits Administration (``VBA'') and 
S. 3517, the Claims Processing Improvement Act of 2010.
    NOVA is a not-for-profit Sec. 501(c)(6) educational organization 
incorporated in 1993. Its primary purpose and mission is dedicated to 
train and assist attorneys and non-attorney practitioners who represent 
veterans, surviving spouses, and dependents before the Department of 
Veterans Affairs (``VA''), the Court of Appeals for Veterans Claims 
(``CAVC''), and the United States Court of Appeals for the Federal 
Circuit (``Federal Circuit'').
    NOVA has written amicus briefs on behalf of claimants before the 
CAVC, the Federal Circuit and the Supreme Court of the United States of 
America. The CAVC recognized NOVA's work on behalf of veterans when it 
awarded the Hart T. Mankin Distinguished Service Award to NOVA in 2000. 
The positions stated in this testimony have been approved by NOVA's 
Board of Directors and represent the shared experiences of NOVA's 
members as well as my own 18 year experience representing claimants 
before the VBA.

                      THE VBA HAS OBVIOUS PROBLEMS

    NOVA's previous testimony and reports from the Department of 
Veterans Affairs Office of Inspector General have detailed the VBA's 
problems including:

     an antiquated and insecure paper claims file;
     inadequately trained employees;
     ineffective supervision;
     inadequate metrics resulting in inability to determine 
whether work is performed correctly;
     a work credit system which induces employees to rate 
claims which have not been completely developed;
     an institution which is more concerned with finding 
fraudulent claims than timely granting meritorious claims; and
     an institution which is so out of control that it takes 
years to promulgate needed regulations and which is incapable of 
effectively communicating policy to its employees.

    VBA, under pressure from Congress and from various stakeholders, 
has recently initiated pilot projects incorporating techniques intended 
to solve, in isolation, only one problem at a time.
    The four main pilots include testing of:

    1. Processing claims using fully integrated claims processing teams 
or pods, from July 2009 to May 2010 (at the Little Rock Regional 
Office);
    2. Paperless claims processing as part of the VA's ``Business 
Transformation Lab'' (at the Providence Regional Office);
    3. Providing direct assistance and personal communications to help 
veterans compile documentation to complete their claims (at the 
Pittsburgh Regional Office); and
    4. Software designed to allow users of the (soon to be created) new 
Veterans Benefits Management System (``VBMS'') to obtain relevant 
information about a claim from a ``dashboard'' which can be used for 
faster and more accurate claims processing. The pilot will begin in 
November 2010 and deployment of the system is planned for fiscal year 
2012.

    Additional short term projects include:

    1. An ``Express Lane'' (in four Regional Offices) to expedite 
single-issue claims;
    2. To identify and pay claims at the earliest time, when the 
evidence substantiates the claim should be paid (at the St. Petersburg 
Regional Office);
    3. On-line live chat between veterans and VA employees through the 
``e-Benefits'' portal;
    4. Phone calls from VBA staff directly to veterans; and
    5. Shortening the application form to 12 pages from the previous 23 
pages.

    Still the veterans' claims adjudication system limps along month 
after month incorrectly deciding claims and thereby adding thousands of 
appeals to the system and adding to the frustrations of veterans and 
other claimants. During the past year, from May 15, 2009 to May 15, 
2010, the VBA's Monday Morning Workload Reports show an 11% increase in 
pending appeals from 171,716 to 190,778. http://www.vba.va.gov/REPORTS/
mmwr/historical/2009/index.asp; http://www.vba.va.gov/REPORTS/mmwr/
index.asp.
    The VBA knows that improperly developed claims lead to erroneous 
decisions and that, in the rating process, the most time is consumed by 
claim development. To solve those problems in claim development, the 
VBA continues to try different plans to generate fully developed claims 
prior to rating. One part of the VBA's efforts has been placing the 
burden on veterans to submit what the VA refers to as ``fully developed 
claims''. Remarkably, the VBA has never advocated that veterans be 
permitted to hire a lawyer, for pay, from the time that the claim is 
initially filed to assist in claim development.
    Yet, having lawyers involved to help veterans yields positive 
results, as is shown by the most recent annual report of the Chairman 
Board of Veterans' Appeals. Following enactment of the Veterans 
Benefits, Health Care, and Information Technology Act of 2006, Public 
Law 109-461, and in FY 2009, those claimants who had attorney 
representation at the BVA received a larger percentage of favorable 
results than did those without attorney representation. They also 
received a larger percentage of favorable results than did those who 
were represented by VSOs. The chart below was created by NOVA from data 
in the BVA's Report of the Chairman, Fiscal Year 2009.

                                                     FY 2009
----------------------------------------------------------------------------------------------------------------
                                                            Allowed            Remanded        Positive Outcome
                   Representation                    -----------------------------------------------------------
                                                         No.        %        No.        %        No.        %
----------------------------------------------------------------------------------------------------------------
VSO's Overall.......................................      7,688     24.8     11,714     37.8     19,402     62.6
  American Legion...................................      2,100     23.5      3,469     38.8      5,569     62.3
  AMVETs............................................         65     25.6         91     35.8        156     61.4
  DAV...............................................      3,853     25.5      5,607     37.1      9,460     62.6
  MOPH..............................................        179     31.7        191     33.8        370     65.4
  PVA...............................................        118     28.7        156     38.0        274     66.6
  VFW...............................................      1,138     24.2      1,746     37.2      2,884     61.3
  VVA...............................................        235     23.8        454     46.0        689     69.8
  State Svs. Org....................................      1,975     24.1      2,802     34.2      4,777     58.3
Attorney............................................        853     22.7      1,743     46.4      2,596     69.0
Agents..............................................         21     23.1         32     35.2         53     58.2
Other Rep...........................................        304     28.1        357     33.1        661     61.2
No Rep..............................................        886     18.7      1,554     32.9      2,440     51.6
                                                     -----------------------------------------------------------
      Total.........................................     11,727     24.0     18,202     37.3     29,929     61.3
----------------------------------------------------------------------------------------------------------------


    A recent law review article published in The Federal Circuit Bar 
Journal quantifies the value to veterans of attorney representation and 
concludes that the denying veterans the right to hire a lawyer at the 
outset of a claim ``may cost a single veteran millions of dollars'' 
Benjamin W. Wright, The Potential Repercussions of Denying Disabled 
Veterans the Freedom to Hire an Attorney, 19 FCBJ 433,435 (No. 3, 
2009).
    Not only has the VA failed to recognize the value of allowing 
veterans the right to hire lawyers at the evidence development stage, 
but the VA's pilot projects and other initiatives ignore the value of 
direct communication and partnering with a veteran's representative 
during the rating and appeals stages of claims adjudication. Instead, 
the Pittsburgh pilot is directed at improving communications directly 
with veterans.
              solutions require an organizational overhaul
    NOVA focuses on three primary deficiencies which the VA must 
correct, simultaneously, if the system is to be fixed. They are lack of 
a well defined business model and plan, lack of adequately trained 
staff and administrators to carry out the plan, and lack of accurate 
and reliable metrics to monitor performance.
    NOVA has observed that there are too many levels of management in 
the VA's organizational chart which has led to institutional ``stove 
piping'', institutional paralysis, and the inability to act 
expeditiously and properly. It has also resulted in the VA issuing 
mixed messages to veterans.
    Additionally, the VBA must become user friendly and must consider 
the needs and limitations of veterans in order to efficiently and 
accurately assist veterans. The only way the VA can design a system 
which is user-friendly is by including veterans, attorneys who work in 
the system (and their associations, such as NOVA), together with 
Veterans' Service Organizations and VA employees in the redesign 
process.
    Veterans must be given all the help they need and desire in 
processing their claims, including the right to hire an attorney. The 
VA should operate under the assumption that veterans generally file 
meritorious claims which should be fully and quickly granted. Such a 
change in outlook would logically lead to a triage system for claims 
management, such as has been proposed in S. 3517, which would 
dramatically reduce backlogs.
    Veterans and their families must not be overburdened by useless 
paperwork and redundant, indecipherable requests for information. Ill 
and impaired veterans should not be required to initiate their claims 
with more than a simple one page form. Presently, the VA offers 
claimants a new eight page combined compensation and pension 
application form, VA Form 21-526, which is still too long and too 
complicated for many veterans. Although the Fully Developed Claim form, 
VA Form 21-526EZ, is two pages long, it requires the veteran to 
complete a certification that the veteran has no more information or 
evidence which will support the claim. Additionally, the veteran is 
required to submit with the form all private medical records. There is 
no reason why applications for VA compensation must be more than one 
page long if workers compensation benefits applications are one page 
long.
    In a system which truly treats veterans as clients, they would be 
given face-to-face interviews and the right to participate in hearings 
and review claim files without the need to travel four or more hours to 
participate in the adjudication of their claims. Rather than the 
present system containing 57 Regional Offices which requires many 
veterans to travel large distances, a veteran friendly system would 
disperse most of the functions of the present Regional Offices to 
locations in or in close proximity to each VA Hospital, or Vet Center. 
Decentralizing the VA would allow veterans to be interviewed, complete 
forms, assist in evidence development, and attend hearings close to 
home. Centralized state offices could house the rating boards. Active 
veteran participation would result in more complete and accurate claim 
development. Obviously, the previously discussed recommendation to 
decentralize the VA would not work without a 21st century veterans' 
claim system which is paperless and which allows access by veterans and 
their representatives. Also, the VA will never deserve the confidence 
of our country and our veterans until it can demonstrate that claims 
files are tamper proof and safely stored. A somewhat analogous system 
has been utilized by the Social Security Administration which has a 
paperless file, centralized offices for reviewing the evidence, and 
multiple local offices dispersed throughout each state for taking 
applications, dispensing information and conducting interviews.
    A user-friendly system would begin the claim development phase by 
clearly and precisely requesting specific documentation from the 
veteran, such as a necessary DD-214 or current medical records. Rather 
than utilizing an assembly line approach with six teams performing 
separate tasks, an efficient system would utilize one decision unit to 
handle everything from reviewing the application for completeness in 
predetermination through gathering the evidence and producing rating 
decisions. It is crucial that the combined development/adjudication 
unit be directed to partner with the claimant and the claimant's 
representative (if the claimant is represented) to fully understand and 
develop the claim. If additional information is necessary, the team 
should issue an understandable and case-specific VCAA notice, assist 
with any additional development, and then issue the rating decision.
    Because most of the delay in processing claims involves 
development, particularly waiting for and obtaining C&P exams\1\, NOVA 
suggests that the VBA utilize 38 U.S.C. Sec. 5125(a) to forego 
obtaining an additional exam where the record already contains an exam 
sufficient for rating purposes which would result in a grant of the 
benefit requested. In addition, veterans who apply for benefits should 
have the advantage of the treating physician rule so that the opinion 
of their treating physician is given more weight than that of an 
examining physician employed by the VA to provide an opinion. This 
would place veterans who apply for benefits in the VA system on par 
with those who apply for benefits in the Social Security system and 
have the benefit of that rule.
---------------------------------------------------------------------------
    \1\ March 17, 2010, Report from the VA Office of Inspector General, 
``Audit of VA's Efforts To Provide Timely Compensation and Pension 
Medical Examinations'' Report 09-02135-107, pages i, 11; September 23, 
2009, Report from the VA Office of Inspector General, ``Audit of VA 
Regional Office Claims Processing Exceeding 365 Days'' Report 08-03156-
227, pages iii, 4, 8, 9; Booz Allen Report, page 12.
---------------------------------------------------------------------------
    A user friendly system must also no longer deprive veterans of the 
same rights citizens have in any other circumstance: the option to hire 
a lawyer for assistance from the very beginning of the process. 
Presently, veterans who are notified of the possibility that their 
rating will be reduced are not permitted to hire an attorney, for a 
fee, to represent them even after they formally object to the notice of 
reduction. A veteran must wait until after his rating has actually been 
reduced (when he has less income) to hire a lawyer, for a fee. 
Similarly, veterans who believe that an earlier denial was the result 
of clear and unmistakable error must prepare a request for revision of 
the erroneous decision without being allowed to hire a lawyer, for a 
fee. Not only should the veteran's right to choose to hire a lawyer be 
expanded, but after a lawyer or other representative is hired, neither 
the VBA nor the BVA should view the veteran's representative as having 
interests opposed to the VA's central mission of providing proper 
benefits to veterans and their families. Rather, the VA should partner 
with the claimant's representative and use informal conferences to 
speed claim development and to narrow the issues to be decided.
    Because the present rating system is difficult for veterans to 
understand, and for rating boards to apply, the complexity of the 
Rating Schedule frequently leads to erroneous decisions. It is 
essential that the VA rework the entire Schedule for Rating 
Disabilities in 38 CFR Part 4 to simplify and update the ratings. The 
pilot project mandated by Section 101 of S. 3517 presents the 
opportunity to begin the overhaul process. Being mindful of the 
increasing number of veterans whose lives are in shambles because of 
PTSD or TBI, in rewriting the Schedule for Rating Disabilities, the VA 
should comply with the recommendation that ratings be designed to 
compensate veterans for loss of quality of life in addition to loss of 
earning capacity.
    To control the ever increasing backlog, the VBA must adequately 
triage claims. Increased use of presumptions would eliminate the need 
for development of evidence regarding the incidents of military service 
for all those who were deployed to a war zone regardless of their 
military occupational specialty or place of assignment within that 
zone. Thus, for example, anyone who was deployed to a war zone, whether 
during WWII, Korea, Vietnam, the Gulf War or the GWOT who is 
subsequently diagnosed with PTSD should have the sole inquiry (during 
the rating stage of their claim) concentrate on the severity of their 
symptoms. Anyone who is diagnosed with a medical condition while on 
active duty and who is presently being treated for that condition 
should not be required to prove a medical nexus between the conditions. 
Additionally, veterans who are receiving Social Security Disability or 
Supplemental Security Income benefits based on conditions which are 
related to service should be presumed to be unemployable.
    Following an unfavorable rating decision, the claimant should only 
be required to file one request for an appeal instead of both a notice 
of disagreement (``NOD'') and a substantive appeal to the BVA. Section 
208 of S. 3517 which substitutes a meaningful post-notice of 
disagreement decision for the often useless statement of the case is a 
welcome change. Eliminating the requirement of filing a substantive 
appeal would save additional time and paperwork. After filing the 
single request for appeal, the claimant and his representative should 
have the right to submit further evidence or argument and to have a de 
novo review on the record, or a hearing by a Veterans Law Judge (VLJ) 
sitting in a BVA office close to the decentralized Regional Offices.
    Adequate training, supervision and accountability are essential to 
create a system which fulfills the mission to correctly decide all 
claims. This requires reworking the organizational chart to provide 
reporting and direct accountability from the Regional Offices to the 
Secretary. Presently, there is an excessive number of layers of 
executives in the system which impedes the flow of knowledge and 
inhibits accountability. Files do not get lost, shredded or compromised 
in a modern business with direct accountability. Also, in a system with 
direct accountability, poorly trained workers are not called upon to 
perform functions essential to the mission. It is essential that the 
pressures placed on rating specialists and VLJs to turn out decisions 
be replaced with a system which expects the right decision to be made 
at all levels of the process. Veterans deserve a system which does not 
issue a decision until the claim is fully developed, which involves a 
true partnership between the claimant and the VA, and which rewards 
prompt and correct decisionmaking. NOVA's experience confirms the 
findings in the 2005 report of the Office of Inspector General that the 
present work credit system is providing a disincentive to properly 
deciding claims. It should be replaced. To complement new expectations 
of increased accuracy and accountability, it is essential that VA 
employees be repeatedly and adequately trained and supervised. 
Additionally, the high rate of VLJ decisions which are returned by the 
CAVC to the BVA because of inadequate reasons and bases is unacceptable 
and contributes to the backlog and to the reputation of ``hamster 
wheel'' adjudications. Doing away with the requirement for adequate 
reasons and bases is not the answer. Doing away with poor 
decisionmaking is.
    In a system with adequate training and accountability VLJs do not 
write decisions which are affirmed on appeal only 20% of the time. To 
ensure efficient, convenient, timely and proper appellate review at the 
administrative level, the Board of Veterans' Appeals should be 
decentralized and dispersed within reasonable distances from the many 
Regional Offices. Not only should the VLJs be moved out of their 
fortress in Washington, DC, but they must be reconfigured into a corps 
of truly independent and well trained Federal Administrative Law 
Judges.
    Appeal from the VLJ's decision should go to the CAVC and then to 
the Federal Circuit. NOVA recommends two changes to the operation of 
the court. First, the CAVC should be granted class action jurisdiction 
so as to be able to remedy situations which affect a broad class of 
veterans. Second, the CAVC should be required to resolve all issues 
which are reasonably raised, (except for constitutional claims) if the 
appeals can be resolved without reaching the constitutional claims. 
Section 211 of S. 3517 which requires the CAVC to decide all issues 
raised is a good start. To prevent the VA from arguing that veterans 
have waived arguments which only became apparent after a BVA decision 
has been issued, it would be a valuable addition to that section to 
require that the CAVC decide all arguments raised in the Court 
regardless of whether they were raised prior to the BVA's decision.

         S. 3517, THE CLAIMS PROCESSING IMPROVEMENT ACT OF 2010

    S. 3517 is a compilation of some veteran-friendly provisions which 
would help the VA become more efficient and effective and a few ill-
advised provisions which are similar to those which had been suggested 
by the VA during May 2010 in a proposed bill entitled the ``Veterans 
Benefit Programs Improvement Act of 2010'' (``VBPIA 2010'').
       (a) nova supports these sections which would help veterans
Section 101
    This provision requires the VA to create a pilot program to assess 
the feasibility and advisability of utilizing a newly created system to 
identify and evaluate disabilities of the musculoskeletal system. 
Rather that utilizing the archaic Schedule of Ratings, diseases and 
injuries would be identified, for rating purposes, utilizing the same 
nomenclature that is used by physicians in their medical reports to 
insurance companies, i.e. the International Classification of Diseases 
(``ICD''). The next step is to assess residual functional capacity 
(``RFC'') by evaluating frequency, severity and duration of symptoms. 
Finally, a mechanism would be created to convert the RFC into ratings. 
Overall, such a change has the potential to simplify the rating of 
disabilities and to make it easier for physicians to convey accurate 
information to the VA and for the VA to more easily and accurately rate 
impairments.
Section 201
    This provision would eliminate rating delays in multi-issue claims 
and reduce the time a veteran must wait before being paid on one of 
many theories of compensation. It directs the VA to expeditiously 
assign a rating for any condition which is ready to be rated without 
regard to other conditions which may require further development.
Section 202
    This section would save time by eliminating unnecessary 
notifications. It clarifies that a notice of what information or 
evidence would substantiate the claim is required only when the 
necessary information or medical or lay evidence had not previously 
been provided to the VA.
Section 203
    This section may induce the VA to eliminate requests for 
unnecessary medical opinions because it requires the VA to treat 
private medical opinions with the same deference as that given to a VA 
provider's opinion if the private opinion complies with the VA's 
established standards. Additionally, if the private exam is not 
entirely adequate, this section requires the VA to ensure that the VA 
provider has professional qualifications which are equal to or better 
than the qualifications of the provider of the private medical opinion. 
A useful addition to this section would be incorporation of the 
treating physician's rule and an amendment to 38 U.S.C. Sec. 5125(a), 
both of which were previously discussed.
Section 204
    This section requires the VA to introduce procedures to speed up 
the claim review process through use of a triage system and a process 
for identifying developed claims. The triage system requires the VA to 
perform a preliminary review to identify and process claims which have 
the potential to be adjudicated quickly, which could result in a 
temporary disability rating, or those which were filed by claimants who 
are homeless, terminally ill, or who have severe financial hardship. 
For those claims in which the claimant states that there is no 
additional information or evidence to submit (the developed claims) the 
VA is required to take any necessary development and decide the claim 
on the record.
Section 205
    This section will help veterans by more precisely defining the 
basis for an RO decision in requiring the VA to summarize the evidence 
relied upon. This would replace the current requirement to summarize 
all the evidence considered without regard to whether the evidence was 
relied upon in the decision. Veterans will find it easier to comply 
with the technical requirements of the NOD with the addition of the 
provision that the VA must provide a form for it.
Section 206
    This will allow for electronic filing of a Notice of Disagreement 
and will allow for good cause exceptions to timely filing. As was 
previously discussed, considerable time and paperwork would be saved if 
the NOD was the only document required for an appeal to the BVA. The 
requirement to file a substantive appeal is an unnecessary burden on 
veterans.
Section 208
    This substitutes a post-NOD disagreement decision for the statement 
of the case. Veterans will be helped by the requirement that such 
decision must contain a description of the specific facts in the case 
and pertinent laws and regulations that support the agency's decision. 
Similarly, the requirements that each issue be addressed and that 
reasons be provided why the evidence relied upon supports the agency's 
conclusion would lead to better decisionmaking.
Section 211
    This section, which requires the CAVC to decide all issues raised 
by the appellant, would tend to reduce the number of times an 
individual appellant must bring the same issue to the CAVC to finally 
obtain a decision on the issue. As was discussed previously, it would 
also be helpful to include language clarifying the fact that veterans 
are not required to raise arguments before the BVA in order to assert 
those arguments before the Court.
Section 213
    This section mandates a pilot program on participation of local and 
tribal governments in improving the quality of submitted disability 
compensation claims.
     (b) nova opposes these sections which would not help veterans
Section 207
    This section mandates that a request for extension of the 60 day 
period to file a substantive appeal to the BVA must be filed within 60 
days from the date the post-NOD decision is mailed. In restricting 
extensions of time to appeal to the BVA, 17 years of Court precedent 
would be overturned, including Percy v. Shinseki, 23 Vet. App. 37 
(2009) which just last year confirmed that 38 U.S.C. Sec. 7105(d)(3) is 
not a jurisdictional bar to the Board's consideration of a substantive 
appeal filed more than 60 days after the statement of the case is 
mailed. The proposition that the timely filing of a substantive appeal 
is not jurisdictional and that an untimely substantial appeal does not 
bar the appeal follows a long line of cases going back to Rowell v. 
Principi, 4 Vet. App. 9 (1993). It is also ill-advised to adopt the 
provisions which seek to require a veteran to identify the particular 
determinations being appealed and to allege specific errors of fact or 
law. Presently, Sec. 7105 does not require identification of the 
particular determination being appealed although the Board of Veterans' 
Appeals may dismiss any appeal which fails to allege specific error of 
fact or law in the determination being appealed. The large number of 
veterans who are still unrepresented\2\ during the appellate stage 
would have great difficulty in complying with stricter pleading writing 
requirements.
---------------------------------------------------------------------------
    \2\ In 2009 almost 5,000 appellants were unrepresented in BVA 
appeals, Board of Veterans' Appeals Report of the Chairman, Fiscal Year 
2009, p.21 http://www.bva.va.gov/docs/Chairmans_Annual_Rpts/
BVA2009AR.pdf. Similarly in 2009, over 1,200 appellants were 
unrepresented in the CAVC, annual report FY 2009, http://
www.uscourts.cavc.gov/documents/
Annual_Report_FY_2009_October_1_2008_to_September_30_2009.pdf
---------------------------------------------------------------------------
Section 209
    This section provides for automatic waiver of agency of original 
jurisdiction (``AOJ'') consideration of new evidence which is submitted 
with or after the filing of the substantive appeal, unless a request 
for such review is made within 30 days of the evidence submittal. Such 
a change in existing law is harmful to veterans and to the VBA claims 
adjudication system because it denies the AOJ the opportunity to make 
the right decision before the appeal is heard by the BVA. Automatic 
waiver would create long delays for veterans due to the huge delays in 
certifying appeals to the BVA and the long time between certification 
of the appeal and the BVA decision.\3\ The AOJ is in the best position 
to evaluate the new evidence in view of the prior decision.
---------------------------------------------------------------------------
    \3\ In 2009 it took on average 590 days from filing the substantive 
appeal until certification of the appeal to the BVA plus 227 days from 
receipt of certified appeal until BVA decision, Board of Veterans' 
Appeals Report of the Chairman, Fiscal Year 2009, p.16 http://
www.bva.va.gov/docs/Chairmans_Annual_Rpts/BVA2009AR.pdf
---------------------------------------------------------------------------
Section 210
    This section would allow the BVA to determine the location and 
manner of a veteran's appearance for hearings without the opportunity 
for appellate review of the BVA's choice.
    Obviously, the BVA wants to control its budget by not providing 
travel board hearings and by providing video hearings in almost all 
appeals. Yet in terms of judging credibility of appellants and to 
provide a veteran friendly hearing an in person hearing option is 
essential. Imposing video hearing on veterans, many of whom are 
impaired because of PTSD and TBI, violates the Secretary's duty to 
ensure the appearance of fairness, Hodge v. West, 155 F.3d 1356,1363 
(Fed. Cir. 1998); Barrett v. Nicholson, 466 F.3d 1038, 1044 (Fed. Cir. 
2006).
Section 212
    This section provides for an extension, for good cause, of 
additional 120 days of the 120 days within which an appellant must file 
an appeal to the CAVC. By comparison, S. 3192, the bill introduced by 
Senator Specter, is far better in that it provides for tolling ``for 
such time as justice may require'' and applying to all appeals from BVA 
decisions which were issued on or after July 24, 2008.

                              (C) SUMMARY

    In summary, NOVA supports those provisions of the S. 3517 which are 
veteran-friendly, including, sections 101, 201-206, 208, 211 and 213, 
but NOVA opposes sections 207, 209, 210, and 212.
                                 ______
                                 
 Response to Post-Hearing Questions Submitted by Hon. Richard Burr to 
 Richard Cohen, Executive Director, National Organization of Veterans' 
                            Advocates, Inc.

    Question 1. What more needs to be clone to advance the attempt to 
fix the VA's claims adjudication system, move the backlog and provide 
more accurate decisionmaking?
    Question 2. What could be done to insure that claims which are 
submitted are fully developed?
    Response. 
    
    
    
    

                                 ______
                                 
Response to Post-Hearing Questions Submitted by Hon. Bernard Sanders to 
 Richard Cohen, Executive Director, National Organization of Veterans' 
                            Advocates, Inc.

    Thank you for your testimony concerning changes in the Veterans' 
Claims Process. I think you raised some excellent points.
    Clearly, not all veterans can afford to retain legal counsel in 
dealing with their claims for earned benefits. In your testimony, you 
cited that veterans with attorney representation have a higher 
favorable rate than those who are represented by veterans' service 
organization.
    Question. Do you believe the typical claims handled by attorney 
representation closely resemble the typical claims handled by veterans' 
service organizations?
    Response.
    
    
    
    
    
    

                                 ______
                                 
  Response to Post-Hearing Questions Submitted by Hon. Mark Begich to 
 Richard Cohen, Executive Director, National Organization of Veterans' 
                            Advocates, Inc.

    Question 1. Mr. Cohen, You mention the need for a decentralization 
of the VA to allow for a more personal evaluation process. Even with 
greater decentralization, it is unlikely that many veterans living in 
rural Alaska would be able to be interview face to face. Is , there a 
way to guarantee that veterans living in rural locations receive the 
same level of attention as those that live in more accessible 
locations?
    Question 2. Along with making forms and requirements less 
complicated, can you envision better methods to educate veterans about 
the benefits for which they are eligible and the process required to 
receive these benefits?






    Chairman Akaka. Thank you very much, Mr. Cohen.
    And now we will hear from Mr. Violante.

STATEMENT OF JOSEPH A. VIOLANTE, NATIONAL LEGISLATIVE DIRECTOR, 
DISABLED AMERICAN VETERANS, ON BEHALF OF THE INDEPENDENT BUDGET

    Mr. Violante. Aloha, Chairman Akaka----
    Chairman Akaka. Aloha.
    Mr. Violante [continuing]. Senator Burr, and Members of the 
Committee. Thank you for the opportunity to testify today on 
behalf of The Independent Budget, which is comprised of AMVETS, 
DAV, PVA, and VFW.
    Earlier this year, Secretary Shinseki set an ambitious goal 
to have zero claims pending over 125 days, with all claims to 
be completed with 98 percent accuracy. The Secretary has 
forcefully and repeatedly made clear his intention to ``break 
the back of the backlog'' this year. While we welcome his 
intentions and applaud his ambition, we would caution that 
eliminating the backlog is not necessarily the same goal as 
reforming the claims process system.
    Mr. Chairman, the backlog is not the problem. Rather, it is 
a symptom of a very large problem, too many veterans waiting 
too long to get decisions on claims for benefits that are too 
often wrong. To achieve real success, VBA must focus not just 
on a smaller backlog, but on creating a veterans benefits 
claims processing system designed to get it done right the 
first time.
    Mr. Chairman, we applaud VBA for their openness and 
outreach to the VSOs. However, we remain concerned about their 
failure to fully integrate us at the beginning of the process. 
VSOs not only bring vast experience and expertise about claims 
processing, but our service officers hold power of attorney for 
hundreds of thousands of veterans and their families. We would 
encourage VBA to involve us during the planning stages of new 
initiatives and pilots as well as throughout the ongoing IT 
development.
    VBA has stated that there are over three dozen pilots 
underway. The IBVSOs have supported and promoted many of these 
approaches. However, we have concerns about whether VBA will 
successfully extract and then integrate the best practices from 
so many ongoing initiatives. Given the enormous pressure to 
``break the back of the backlog,'' we are concerned that there 
could be a bias toward process improvements that result in 
greater production over those that lead to greater quality and 
accuracy.
    Undoubtedly, the most important new initiative underway at 
VBA is the Veterans Benefits Management System, or VBMS. The 
IBVSOs would encourage VBA to include VSOs on subject matter 
panel reviews. We would also urge the Committee to have an 
independent outside expert review the VBMS System, which is 
still early enough in the development phase to make course 
corrections should they be necessary.
    Several weeks ago, S. 3517, the Claims Processing 
Improvement Act of 2010, was introduced. This legislation would 
create a pilot program to establish a new VA Rating Schedule 
for the musculoskeletal system using a different standard of 
disability, residual function capacity, based upon the 
severity, frequency, and duration of symptoms.
    Mr. Chairman, we have grave concerns about creating a brand 
new rating system using a standard that was developed for 
Workers' Compensation and Social Security Disability Insurance 
programs. Veterans disability compensation is not the same as, 
nor substantially similar to these two civilian programs. 
Permanent injuries and disabilities suffered by veterans must 
be connected to their military service in order to qualify for 
VA disability compensation. To compare service-connected 
disabilities to civilian injuries or disabilities fails to 
value the history and purpose of the Veterans Disability 
Compensation System.
    We also have grave concerns about implementing this pilot 
without any prior study and without the benefit of input or 
comment from stakeholders or the public, and with the waiver of 
the Administrative Procedures Act. While we appreciate the 
urgency of the claims processing problems and the growing 
impatience with VBA's progress, we believe there are better 
ways to address the issues for which this pilot was proposed, 
including VBA's ongoing work updating the Ratings Schedule and 
the work of both the Veterans Disability Benefits Commission 
and the Advisory Committee on Disability Compensation Congress 
created with Public Law 110-380.
    The IBVSOs also have a number of comments and 
recommendations on the other sections of S. 3517. Some we 
support, others we suggest changes, and some we oppose, all of 
which are included in our written testimony.
    Mr. Chairman, the IBVSOs thank you for the opportunity to 
offer testimony before the Committee today. We also want to 
thank Ranking Member Burr and this Committee for the great work 
you have done to improve the lives of America's veterans, 
including enactment of two historic bills during this Congress, 
Advance Appropriations for Veterans Health Care and the 
Caregiver Benefits Program. We look forward to continuing to 
work together with you to address problems within the Veterans 
Benefits Claims Processing System as well as other unmet needs 
of America's veterans.
    I would be happy to answer any questions the Committee may 
have. Thank you.
    [The prepared statement of Mr. Violante follows:]

Prepared Statement of Joseph A. Violante, National Legislative Director 
                   of the Disabled American Veterans

    Chairman Akaka, Ranking Member Burr and Members of the Committee: 
Thank you for the opportunity to testify today on behalf of The 
Independent Budget (IB), which is comprised of four veterans service 
organizations: AMVETS (American Veterans), Disabled American Veterans 
(DAV), Paralyzed Veterans of America (PVA), and Veterans of Foreign 
Wars of the United States (VFW). For a quarter of a century, the IB co-
authors have produced annual budget and policy recommendations to guide 
Congress and the Department of Veterans Affairs (VA) in developing, 
implementing and properly funding programs, services and benefits for 
America's veterans, dependents and their survivors.
    We commend the Committee for holding this hearing on one of the 
most critical issues facing veterans today: receiving adequate, 
accurate and timely benefits, especially disability compensation. 
Today's hearing is focused on the Veterans Benefits Administration's 
(VBA's) ongoing pilot programs, especially the ones in Little Rock, 
Arkansas, Providence, Rhode Island, Pittsburgh, Pennsylvania, and the 
recently concluded Virtual Regional Office (VRO) in Baltimore, 
Maryland, which helped develop the business requirements for the 
Veterans Benefits Management System (VBMS). The hearing will also 
examine new legislation introduced last month, S. 3517, the ``Claims 
Processing Improvement Act of 2010.''
    Mr. Chairman, as you know well, VBA has struggled for decades to 
provide timely and accurate adjudication of claims for veterans 
benefits, and the problem is only getting worse. The number of new 
claims for disability compensation, including both first-time claims 
for benefits and claims for increases or additional benefits, has risen 
to more than 1 million per year. In addition, both the average number 
of issues per claim and the complexity of claims have also increased as 
complicated new medical conditions, such as Traumatic Brain Injury 
(TBI), have become more prevalent.
    To meet the rising workload over the past decade, the IB 
recommended, and Congress provided, significant new resources to VBA in 
order to increase their personnel levels. Yet despite the hiring of 
thousands of new employees in recent years, the number of pending 
claims for benefits, often referred to as the backlog, continues to 
grow. It seems that no matter how much money or personnel are thrown at 
this problem the backlog continues to climb ever higher.
    Even as new laws are enacted, studies completed, and pilot programs 
implemented, one is hard-pressed to find objective evidence that the 
benefit claims processing system today is performing better than it was 
5, 10 or 20 years ago.
    To the contrary, as of July 12, 2010, there were 563,071 pending 
claims for disability compensation and pensions awaiting rating 
decisions by the VBA; 207,568 (37 percent) of the claims exceeded VBA's 
125-day strategic goal. That's a 17 percent increase in pending claims 
(82,137) since the beginning of this year alone.
    Worse, by VBA's own measurement the accuracy of disability 
compensation rating decisions for the 12-month period ending in 
March 2010 was just 83%, continuing a downward trend over the past 
several years. In addition, VA's Office of Inspector General (OIG) 
recently found that even those numbers were inaccurate, citing 
additional undetected or unreported errors within VBA's quality 
assurance program reviews, known as the Systematic Technical Accuracy 
Review, or STAR.
    Earlier this year, Secretary Shinseki set an ambitious long term 
goal of zero claims pending over 125 days and all claims completed to a 
98% accuracy standard. He has forcefully and repeatedly made clear his 
intention to ``break the back of the backlog'' this year. While we 
welcome his intention and applaud his ambition, we would caution that 
eliminating the backlog is not necessarily the same goal as reforming 
the claims processing system, nor does it guarantee that veterans are 
better served.
    The backlog is not the problem, nor even the cause of the problem, 
rather it is just one symptom, albeit a very severe symptom, of a very 
large problem: too many veterans waiting too long to get decisions on 
claims for benefits that are too often wrong.
    While a person with a fever can take an aspirin to reduce that 
symptom, the aspirin will not address the cause of the fever, nor 
prevent the fever from recurring in the future. So too with the 
backlog: if VBA focuses simply on getting the backlog number down, they 
can certainly achieve numeric success in the near term, but they will 
not have solved the underlying problems nor taken the steps necessary 
to prevent the backlog from eventually returning.
    To achieve real success, VBA must focus on creating a veterans' 
benefits claims processing system designed to ``get it done right the 
first time.'' Such a system would be based upon a modern, paperless IT 
and workflow system focused on quality, accuracy, efficiency and 
accountability. The foundation of this new system must be continuous 
improvement; VBA must evolve its corporate culture to focus on 
information gathering, systems analysis, identification of problems, 
creative solutions and rapid adjustments. This process must be a 
circle, not a series of lines with stop lights. While management must 
stress quality control and training, VBA must recognize that training 
is only part of the solution to improved quality. With sufficient 
resources, timeliness will improve and then production will increase, 
and only then can VBA achieve a sustained reduction and eventual 
elimination of the backlog.
    Mr. Chairman, despite all of the problems and challenges discussed 
above, the IB veterans service organizations (IBVSOs) do see many 
positive and hopeful signs of change. Both VA and VBA leadership have 
been refreshingly open and candid in recent statements on the problems 
and need for reform. Over the past year, dozens of new pilots and 
initiatives have been launched, and a major new IT system is now under 
development. VBA has shared information with VSOs about their ongoing 
initiatives and welcomed our feedback and input on ways to improve 
these initiatives. These are all positive developments that we want to 
recognize and build on as we move forward.
    Yet while we applaud VBA for their openness and outreach to the VSO 
community, we still remain concerned about their failure to integrate 
us into their reform efforts or solicit our input at the beginning of 
the process. Mr. Chairman, this is a mistake for a number of reasons: 
VSOs not only bring vast experience and expertise about claims 
processing, but our local and national service officers hold power of 
attorney (POA) for hundreds of thousands of veterans and their 
families. In this capacity, we are an integral component of the claims 
process. We make VBA's job easier by helping veterans prepare and 
submit better claims, thereby requiring less time and resources to 
develop and adjudicate veterans' claims. We would strongly encourage 
VBA to involve us during the earliest planning stages of new 
initiatives and pilots, as well as throughout the ongoing IT 
development.
    As VBA officials have stated, there are over three dozen 
initiatives underway at Regional Offices (ROs) testing ways to increase 
the efficiency of the claims processing system. Some, such as the Fully 
Developed Claim (FDC) and Individual Claimant Checklist pilots, were 
mandated by Congress under Public Law 110-389. Others were developed by 
VA with support from contractors, including the pilots in Little Rock, 
Arkansas and Providence, Rhode Island. Still others, such as the Quick 
Pay Disabilities pilot in St. Petersburg, Florida, the Rapid Evaluation 
of Veterans' Claims pilot in Atlanta, Georgia, and the Case Management 
pilot in Pittsburgh, Pennsylvania, were initiated by VBA regional 
offices with central office approval.
    Last year, VBA solicited new ideas through an Innovation 
Initiative, which received dozens of nominations from ROs around the 
country and resulted in 10 winners being selected, eight of which are 
currently being implemented as pilots. VBA also developed eight new 
``quick hit'' ideas, including phone development and walk-in claims 
rating, from among hundreds proposed at a workshop for VBA's Regional 
Office Directors held earlier this Spring.
    The IBVSOs have supported and promoted many of these approaches, 
especially the increased use of private medical evidence and assignment 
of interim ratings, and applaud VBA for embracing so many bold new 
ideas. We believe that VBA is right to undertake such experimentation 
and believe that many of these initiatives have yielded and will 
continue to yield important information and data to help reform the 
claims process.
    However, we do have concerns about whether VBA will successfully 
extract and then integrate the best practices from so many ongoing 
initiatives, while simultaneously meeting the Secretary's ambitious 
goals with regards to ``breaking the back of the backlog.'' With 
virtually every one of the 57 ROs engaged in one or more of these new 
initiatives, we would encourage the Committee to closely examine and 
monitor VBA's plans to synthesize the data and results of all this 
experimentation into a more efficient and accurate claims processing 
system. Moreover, given the enormous pressure to reduce the backlog, we 
are concerned that there could be a bias toward process improvements 
that result in greater production over those that lead to greater 
quality and accuracy.
    Over the past year, representatives of the IBVSOs have been briefed 
on or visited many of the more prominent pilot programs, including the 
ones at Little Rock, Providence and Pittsburgh, and we offer the 
following comments for the Committee.
    The Little Rock pilot, developed under contract with Booz-Allen-
Hamilton, sought to infuse Lean Six Sigma principles of continuous 
improvement and reduction of waste into the current claims processing 
system. This pilot re-organized a portion of the ROs workforce into 
``pods,'' or integrated teams, which included both Veterans Service 
Representatives (VSRs) and Rating Veterans Service Representatives 
(RVSRs), working as one integrated unit on claims. The pilot also 
developed new changes to their mailroom operations as well as physical 
layout changes to improve oversight of workload. Although the contract 
is complete, the Little Rock ``pod'' pilot continues and is also being 
tried out in some additional locations, such as in San Diego.
    Since moving to the current Claims Process Improvement (CPI) model 
of processing claims, based upon specialization of function, VBA has 
lost some of the benefits inherent in a team-based approach. For 
example, by mixing together more experienced RVSRs and VSRs in Little 
Rock with those less experienced, there has been a natural increase in 
mentoring and unofficial ``on-the-job'' training of newer employees. 
Over time we would expect a measurable improvement in quality 
decisionmaking. This is a good thing. While we do not advocate that VBA 
simply replace the current CPI model with the ``pod'' model, we believe 
that VBA should continue to explore greater use of team approaches, 
whether in particular locations, or for specific types of claims.
    The Providence pilot begun in October 2009 is designated as VBA's 
Business Transformation Laboratory to provide a testing capability for 
future paperless processes in a live environment. In addition, they 
have begun testing a new phone development program. After the RO sends 
a veteran claimant a notification letter explaining the veterans rights 
and what the veteran needs to do in order to prove their claim, a VSR 
calls the veteran to answer any questions they may have about that 
letter as well as to assist them in fulfilling their required burden of 
development. In essence, VA employees help distill the boilerplate in 
development letters into something more understandable for veterans. As 
a result, Providence has been able to significantly shorten development 
and average days to complete claims.
    The phone development program has shown promising results and we 
support continuing to explore this concept. It is imperative, however, 
that VBA develop and implement proper methods to notify and involve 
service officers and other POA-holders for claimants who are 
represented. Further, we believe that VBA might even consider ways that 
VSO service officers could augment this program.
    The Pittsburgh RO has two major initiatives underway: one 
establishing distinct case-management teams and the other developing 
templates for private medical evidence that was borne out of VBA's 
Innovation Initiative. The IBVSOs have long advocated for the expanded 
use of private medical evidence, which has too often been discounted 
because it was submitted in a multitude of non-standard formats, not 
always appropriate or sufficient for rating a disability under the 
Rating Schedule. These templates, constructed to solicit the 
information needed to address specific criteria in the Rating Schedule 
could, if given proper weight during the rating process, save VBA time 
and resources by eliminating unnecessary and redundant VA medical exams 
for claimants. We strongly encourage VBA to move forward expeditiously 
with this initiative and urge them to include electronic medical 
templates as a core component of the final VBMS.
    Undoubtedly the most important new initiative underway at VBA is 
the VBMS, the first phase of which occurred in Baltimore where a 
prototype IT system was tested in a Virtual Regional Office (VRO) 
environment. While VBA has provided several briefings to the IBVSOs and 
other VSOs on the VRO and VBMS, we were dismayed that they did not seek 
our input nor consider the role of our service officers during the 
early phases of development of the VBMS system. When they first 
discussed plans for the VBMS, we were assured that service 
organizations and service officers would be involved in the development 
of this system. Regrettably, despite these assurances and public 
invitations to observe and participate in the VRO phase of the VBMS 
development, the VRO in Baltimore was completed without any VSO 
observation, participation or input.
    VBA has since reached out to the IBVSOs and other VSOs to report on 
their progress and solicit comments. We do appreciate this consultation 
and have been impressed by many of the components expected to be 
included in the final VBMS at rollout. However, it remains imperative 
that input from VSOs be regularly and comprehensively integrated 
throughout the further development of the VBMS, as well as other new IT 
initiatives, including the Veterans Relationship Manager (VRM). As 
stated earlier, we not only have relevant expertise and perspectives 
that will benefit the development of these IT systems, we are also 
direct participants in the claims processing system and therefore must 
be integrated into their initial planning.
    The IBVSOs would encourage VBA to develop regular and ongoing roles 
for VSO participation and input into future VBMS development. We 
understand that the VBMS is regularly reviewed by internal panels of 
subject matter experts (SMEs) and would urge VBA to include service 
officers on those SME panels.
    The IBVSOs also have concerns about whether the VBMS is being 
rushed to meet self-imposed deadlines in order to show progress toward 
``breaking the back of the backlog.'' While we have long believed that 
VBA's IT infrastructure was insufficient, outdated and constantly 
falling farther behind modern software, web and cloud-based technology 
standards, we would be equally concerned about a rushed solution that 
ultimately produces an insufficiently robust IT system.
    For example, in recent discussions with VBA officials, we have been 
told that rules-based decision support will not be a core component of 
the VBMS, but that it will be treated as a component to be added-on 
later, perhaps years later, after rollout. We question whether VBA can 
achieve significant improvements in quality, accuracy and efficiency 
without taking full advantage of the processing capabilities offered by 
modern IT, such as the use of rules-based, decision support. In 
addition, the VBMS must have comprehensive quality control built in, as 
well as sufficient business practices established, to ensure that there 
is real-time, in-process quality control, robust data collection and 
analysis and continuous process improvements.
    We would urge the Committee to fully explore these issues with VBA 
and suggest that it could be helpful to have an independent, outside, 
expert review of the VBMS system while it is still early enough in the 
development phase to make course corrections, should they be necessary.
    The IBVSOs are also concerned about VBA's plans for transitioning 
legacy paper claims into the new VBMS environment. While VBA is 
committed to moving forward with a paperless system for new claims, 
they have not yet determined how they intend to handle re-opened paper 
claims; specifically whether, when or how they would be converted to 
digital files. Since a majority of claims processed each year are for 
re-opened or appealed claims, and since files can remain active for 
decades, until legacy claims are converted to digital, data files, VBA 
would be forced to continue paper processing, perhaps for decades. 
Requiring VBA employees to learn and master two different claims 
processing systems--one that is paper-based and the other digital--
would add complexity and could negatively affect quality, accuracy and 
consistency.
    There are very difficult technical questions to be answered about 
the most efficient manner of transitioning to all-digital processing, 
particular involving legacy paper files. One way forward would be to 
leave paper files as they are in their current format unless or until 
there is new activity. At the time a paper file is pulled, it could be 
sent to a conversion center which would scan and enter data into the 
new VBMS system. The important element would be that it be completely 
converted into usable digital data, not flat images. Whether this is 
technically, logistically or financially feasible in the near term 
remains to be fully explored and reviewed by experts. However, the 
IBVSOs believe that VBA should do all it can to shorten the length of 
time this transition takes to complete, and that they should provide a 
clear roadmap for eliminating legacy paper files, one that includes 
timelines and resource requirements.
    Mr. Chairman, you also asked us to review new legislation, S. 3517, 
the ``Claims Processing Improvement Act of 2010'', which you introduced 
last month. This legislation includes 2 titles with 14 sections that 
address a number of the issues and problems discussed above, and we 
greatly appreciate your continuing efforts to improve and reform the 
claims processing system. We offer the following comments and 
recommendations on the various sections of the legislation.

TITLE I--PILOT PROGRAM ON RATING SERVICE-CONNECTED DISABILITIES OF THE 
                         MUSCULOSKELETAL SYSTEM

    Section 101 would create a pilot program to establish a new rating 
system for service-connected disabilities of the musculoskeletal 
system. The pilot would be conducted at six to ten regional offices for 
veterans whose claims are first filed more than one year after 
separation from the military. The proposed new rating system would 
establish a new standard for veterans disability compensation: 
``residual functional capacity'', which would be measured using a 
``residual functional capacity assessment tool'' based upon the 
severity, frequency and duration of symptoms. Rather than provide a 
rating for each musculoskeletal condition as is currently done, 
veterans would receive a single overall musculoskeletal rating, which 
would then be combined with other ratings for other conditions.
    The pilot program would require that VBA use International 
Classification of Diseases (ICD) codes to identify disabilities in 
order to standardize medical terminology. In addition, the pilot would 
require VBA to develop a ``separate searchable electronic file'' for 
each veteran. VBA would have 240 days to develop this wholly new rating 
system and would have to publish the regulation in the Federal 
Register, but would waive Administrative Procedure Act requirements, 
including public comment.
    Mr. Chairman, our understanding is that the purpose of this pilot 
program is to address several deficiencies in the current claims 
development and rating system, including the lack of contemporary and 
standard medical nomenclature; the failure to consider frequency, 
severity and duration of symptoms when rating musculoskeletal 
conditions; the failure to address flare-ups of symptoms in rating 
disabilities; the rate of denial for veterans who wait more than one 
year after separation before applying for benefits; and the 
disorganization of the current claims filing system.
    Although we agree that VBA must make improvements in each of these 
areas, and in fact they have initiatives addressing many of them 
ongoing right now, the IBVSOs oppose this pilot program for numerous 
reasons.
    First, we have grave concerns about creating a brand new system for 
determining how much compensation a disabled veteran is entitled to 
receive using a standard that was developed for workmen's compensation 
and the Social Security Disability Insurance program. Veterans 
disability compensation is not the same as, nor substantially similar 
to these two civilian programs. Permanent injuries and disabilities 
suffered by veterans must be connected to their military service in 
order to qualify for VA disability compensation. To compare service-
connected disabilities to civilian injuries or disabilities fails to 
value the history and purpose of the veterans' disability compensation 
system.
    Second, we have grave concerns about implementing this pilot 
program using real claims made by disabled veterans while providing 
only 240 days for VBA to develop a brand new, untested rating system, 
without any prior study of its effect on veterans compensation or the 
claims processing system--both intended and unintended--and without the 
benefit of any input or comment from stakeholders or the public, and 
with a waiver of the Administrative Procedures Acts. While we 
appreciate the urgency of the claims processing problems and the 
growing impatience with VBA's progress, we believe there are better 
ways to address the issues for which this pilot was proposed, many of 
which are already under development or should be.
    For example, VBA has already announced that they will be updating 
the rating schedule for the musculoskeletal system beginning later this 
year as part of their commitment to update the entire rating schedule 
every five years. Another approach was put forward by the 
congressionally mandated Veterans Disability Benefits Commission 
(VDBC), established by the National Defense Authorization Act of 2004, 
which spent more than two years examining how the rating schedule might 
be modernized and updated. Reflecting the recommendations of a 
comprehensive study of the disability rating system by the Institute of 
Medicine (IOM), the VDBC in its final report issued in 2007 recommended 
that:

        ``The veterans disability compensation program should 
        compensate for three consequences of service-connected injuries 
        and diseases: work disability, loss of ability to engage in 
        usual life activities other than work, and loss of quality of 
        life.''

    To help implement the recommendations of the VDBC, Congress in 
Public Law 110-389 established the Advisory Committee on Disability 
Compensation (ACDC) to advise the Secretary on ``* * * the 
effectiveness of the schedule for rating disabilities * * * and * * * 
provide on-going advice on the most appropriate means of responding to 
the needs of veterans relating to disability compensation in the 
future.'' The law required the Advisory Committee to report to the 
Secretary this October, and every two years thereafter with their 
recommendations. We understand that the ACDC is preparing those 
recommendations right now, which will include both ideas on how to 
update the current rating schedule as well as how to provide 
compensation for loss of quality of life and other non-economic loss 
suffered by disabled veterans. The IBVSOs urge the Committee to look to 
the VDBC recommendations, the upcoming ACDC report, and the pending VBA 
update of the rating schedule before considering a complete replacement 
of the disability compensation rating system and schedule.
    Similarly, there are other means of addressing the pilot's goal of 
ensuring that VBA employees properly address the frequency, severity 
and duration of symptoms during evaluations and rating decisions. Under 
current law, these factors are already part of the rating criteria at 
38 CFR Sec. 4.10 and 4.40, and would be better addressed through 
greater training and oversight of existing regulations. The use of 
standardized medical evidence templates, such as those under 
development at the Pittsburgh RO, will also help to ensure that this 
criterion is more consistently fulfilled. Moreover, during development 
of the VBMS, a software rule can be established to ensure that 
frequency, severity and duration of symptoms must be completed in order 
for the VBMS to accept medical evidence and move the claim forward.
    Mr. Chairman, we appreciate your willingness to seek ``out-of-the-
box'' solutions to help improve the benefits claims processing system, 
and we greatly value all of your efforts to reform the claims 
processing system, however we cannot support the proposed pilot in 
Section 101.

               TITLE II--ADJUDICATION AND APPEALS MATTERS

Section 201
    This section would create a new requirement that the Secretary 
assign partial ratings to veterans who submit a claim for more than one 
condition whenever the Secretary determines that a rating for one or 
more conditions can be made without further development. The purpose of 
this section is to provide veterans with at least some of the 
disability compensation to which they are entitled more quickly, 
however as drafted it could have unintended detrimental consequences.
    Under this section, the Secretary would be required to assign a 
disability rating without further development for any condition for 
which a rating is assigned. However, it does not require that the 
maximum rating be assigned, nor that if less than the maximum rating be 
assigned, further development should continue to determine if a higher 
rating can be assigned.
    Under current law, there already exists authority to assign 
``interim'' or ``deferred'' ratings, which are not permanent. In this 
situation, the Secretary assigns the minimum rating for which the 
evidence of record already qualifies the veteran, thereby speeding 
compensation and eligibility for other VA programs, while requiring 
that development continue to ensure that the veteran gets the full 
rating to which they are entitled under the law. Rather than create a 
new program for ``partial'' ratings, we would recommend that the 
Committee work with VBA to encourage greater use of ``interim'' and 
``deferred'' ratings.
Section 202
    This section proposes to allow the Secretary to waive notice to 
claimants for claims that are complete or substantially complete and do 
not require any additional information or medical or lay evidence to 
process. This would be a change from current law, which requires the 
Secretary to provide notice in all claims, regardless of whether any 
additional information is needed.
    While the IBVSOs continue to seek ways to reduce delays when there 
are unnecessary steps in the claims process, it is unclear how the 
Secretary would determine whether additional evidence is required to 
properly rate a claim. For example, it is possible that a claim could 
contain all evidence necessary to establish service connection, but 
there might exist unsubmitted evidence unknown to the Secretary which 
if developed would entitle the veteran to a higher disability rating. 
If this provision were enacted, the Secretary could waive notice and 
proceed with development and issue a rating decision, despite the fact 
that the veteran could have been entitled to a higher rating. This 
would then leave the veteran only with recourse to appeal the initial 
disability rating or file a claim for an increased disability rating. 
We believe that the better way to address cases where notice is 
unnecessary would be to allow the veteran, not the Secretary, to waive 
such notice since he or she would know best if any additional evidence 
is available. As such, we oppose this section as it is currently 
written.
Section 203
    This section would require the Secretary to give deference to 
private medical opinions equal to that given to opinions provided by VA 
health care providers. Further, should VA determine that a private 
medical opinion is not adequate for rating purposes, any further 
opinions obtained from VA health care providers must be obtained from a 
provider whose qualifications are at least equal to those of the 
provider of the private medical opinion.
    We have always encouraged VA to use private medical evidence when 
making its decisions, as it saves the veteran time in development and 
VA the cost of unnecessary examinations. We are concerned, however, 
that as drafted, this provision would apply only ``* * * for purposes 
of assigning a disability rating * * *'', and not with regard to 
whether a veteran is entitled to service connection. By modifying the 
language of this section to account for both the establishment of 
service connection and determination of the proper disability rating, 
private medical evidence will be given the weight it deserves, saving 
both veterans and VA time and cost. With this change, the IBVSOs 
support this section.
Section 204
    This section would require VA to make specific changes in personnel 
organization and procedure while processing claims. First, the proposed 
language would require VA to assign ``experienced'' employees to a 
preliminary review of initial claims in order to create a ``Fast Track 
Claim Review Process.'' Under this process, priority would be given to 
claims that could be adjudicated quickly, could be assigned a temporary 
rating, or would otherwise qualify for priority treatment under four 
conditions: claims by homeless veterans, claims by terminally ill 
veterans, claims by veterans suffering severe financial hardship, and 
claims that are already partially adjudicated.
    Second, this section would create a fully developed claims process 
in order to expedite claims that do not require additional development 
by VA. This provision is similar to the Fully Developed Claims (FDC) 
pilot program mandated by Public Law 110-389, which was recently rolled 
out to all ROs by VBA earlier this year.
    While the IBVSOs generally support the initiatives described in 
this section, we would not support codifying them as proposed in this 
section. VA currently expedites processing of priority claims as part 
of its internal procedures, however they also have additional 
priorities that are not included in this section. We also question why 
partially adjudicated claims would be elevated to a priority, since 
those claimants by definition are already receiving some compensation 
and would have some eligibility for other VA benefits and services by 
virtue of their interim rating.
    VA's recently-launched FDC program is substantially similar to the 
program in this section, which we generally support, however the 
program outlined in this section may be missing key protections for 
veterans. First, there is no provision specifying how a veteran could 
file an informal claim to protect their effective date before 
submitting a FDC application. Under the current claims system, a 
veteran may submit an informal claim before beginning development to 
secure an earlier effective date for a disability rating. The FDC 
program, while quicker once adjudication begins, might not protect this 
earlier date, forcing a veteran to choose either an earlier effective 
date or quicker claims processing. Second, while a veteran who elects 
to participate in the FDC program currently must waive some VCAA notice 
requirements, there are no provisions requiring that VA comply with 
notice requirements should that claim be returned to the normal claims 
process. Also, as currently drafted, the Secretary will not undertake 
development of a claim until he determines that the claim is fully 
developed, which would itself be problematic and create additional 
delay in rating the claim.
    For these reasons, the IBVSOs do not support this section as 
drafted, but would support a new provision to require the existing 
Fully Developed Claim program to allow for informal claims filing to 
establish an effective date and require that claims removed from the 
FDC program must then be accorded full VCAA notice.
Section 205
    This section would require VA to provide, at the time an RO 
decision is sent to a veteran, a form that could be used to file a 
notice of disagreement with the decision. Currently, there is no 
standardized form for veterans to use when filing notices of 
disagreement with RO decisions, leading to both confusion for veterans 
and misunderstandings by VA as to what a veteran wanted to appeal.
    The IBVSOs believe that the idea of a standardized form is a good 
one, as it would provide guidance to veterans on what information to 
provide, but that construction of the form should be careful and 
deliberate to meet the needs of all participants in the appeals 
process. Any such form should be developed in close consultation with 
VSOs to ensure not only that veterans are provided with the guidance 
that they need in crafting their appeals but also that VA receives the 
information it needs to expedite the processing of appeals. With the 
inclusion of the additional requirements discussed above, the IBVSOs 
would support this section.
Section 206
    This section would shorten the filing period for notices of 
disagreement from one year to 180 days. It would also allow the Board 
to grant good cause extensions of an additional 180 days in cases where 
a veteran's disabilities prevented filing within the original period, 
when natural disaster or geographic location significantly delayed 
delivery of decisions, or when a veteran's eligibility for benefits and 
services changed due to a change in financial circumstances.
    The IBVSOs support the addition of a good cause exception 
provision, and believe that this section provides a reasonable list of 
such exceptions. However, we do not support reduction of the one-year 
filing period at this time.
Section 207
    This section would limit the time allowed for a veteran to file a 
substantive appeal after receiving a statement of the case (SOC) to 
sixty days, with some good cause exceptions. Under the current system, 
a veteran has until the later date of either sixty days after the SOC 
is issued or one year after the original RO decision is issued to file 
a substantive appeal. Depending on how quickly VA issues a statement of 
the case, this section could significantly reduce the amount of time a 
veteran has to file a substantive appeal. For example, if an RO issues 
a decision on January 1, 2010, and, after the veteran submits a notice 
of disagreement, subsequently issues a statement of the case on May 1, 
2010, the veteran would have until January 1, 2011 to file a 
substantive appeal under the current system but only until June 30, 
2010 to do so under the new system--a six-month difference.
    Additionally, this section would require veterans to allege 
specific errors of fact or law made by the RO. This requirement is, 
particularly for pro se veterans who lack legal training and experience 
in the VA claims process, a heavy burden and could prevent veterans 
from successfully appealing decisions that they otherwise might. 
Further, we believe this section would create a potential conflict of 
interest since it is VBA which is tasked with deciding what are 
properly stated issues and reasons for appeal. There is no mechanism 
save an appeal to the BVA which protects appellants from capricious 
decisions by VBA.
    Because the provisions of this section have the potential to limit 
veterans' ability to appeal, the IBVSOs strongly oppose this provision.
Section 208
    This section would eliminate the current requirement that ROs issue 
a statement of the case after a veteran files a notice of disagreement, 
and instead replace it with a ``post-notice of disagreement decision'' 
that would set out in ``plain language'' the facts used by the RO in 
reaching its decision, including citations to pertinent law, and the 
reasons for the RO's decision. These provisions are in many ways 
similar to current requirements for statements of the case; the main 
difference is the requirement that the decision be written in plain 
language.
    While the IBVSOs understand the desire to make the appeals process 
easier for veterans to understand, we do have a concern about this 
provision. RO decisions typically involve the interpretation of often-
complex statutory, regulatory, and case law, and this kind of analysis 
is not always easily reduced to ``plain language.'' Attempting to 
compose a decision in this manner could, potentially, do a veteran a 
greater disservice by omitting specific--but technical--information 
needed to successfully continue an appeal. For this reason, we do not 
support this section.
Section 209
    This section would modify the appeals procedure so that, if a 
veteran submitted new evidence after his or her appeal had been 
certified to the Board of Veterans' Appeals (Board), that evidence 
would be considered by the Board by default rather than remanded to an 
RO for consideration. A veteran could still request that new evidence 
first be considered by an RO. Under current procedure, the reverse is 
true--new evidence is considered by an RO, not the Board, unless the 
veteran waives RO consideration. If the RO decides that the new 
evidence is not sufficient to grant the benefit sought on appeal, it 
must issue a supplemental statement of the case (SSOC) before the 
appeal can proceed to the Board, often leading to significant delays of 
the veteran's appeal. The proposed procedure allows appellants who 
believe new evidence is sufficient to warrant a grant to waive RO 
review and significantly shorten the appeals process.
    The IBVSOs support this section with the addition of a requirement 
that VA provide sufficient notice to a veteran that new evidence may be 
considered at the RO level should the veteran so desire. Further, a 
veteran should be able to provide electronic notice of his or her 
decision, rather than adding the time and expense of mailing a 
response.
Section 210
    This section would allow the Board to choose the place and manner 
of hearings before it, a decision currently made by the veterans 
requesting the hearings. While the IBVSOs support the use of technology 
and other efficiencies in the benefits system, and do not object to 
providing veterans with accurate information on how long various 
hearing options would take, the choice of how a veteran makes his or 
her case to the Board--the closest many veterans get to a ``day in 
court'' on deeply personal issues--should remain with the veteran. We 
therefore oppose this section.
Section 211
    This section would require the U.S. Court of Appeals for Veterans 
Claims (CAVC) to render a decision on every issue raised by an 
appellant when reviewing decisions of the Board. This provision appears 
to address the numerous instances in which the CAVC has remanded a case 
on a procedural issue that is then re-adjudicated by the Board, re-
appealed by the veteran, and again remanded by the Court on another 
issue that could have been decided during the original appeal. At the 
same time, there are also instances in which such procedural remands 
accrue to the benefit of veterans, such as when a more favorable 
resolution of the issue that caused the remand at the Board or RO would 
provide a stronger basis for the Court, the Board or RO to render more 
favorable decisions on the remaining issues. While language could be 
added to narrow the scope of this provision, the Independent Budget 
VSOs have no common position on this section.
Section 212
    This section would allow the CAVC to grant an extension to the 
period for filing a notice of appeal for veterans who can show good 
cause for such an extension. As the section is currently written, it 
would be left to the CAVC to determine what did or did not constitute 
good cause, which would likely impose an additional burden on the Clerk 
of the Court.
    The IBVSOs strongly support this section. Some Congressional 
guidance on the kinds of things that could constitute good cause, like 
that under Section 206(a)(3)(B) of this bill, would help to direct the 
CAVC's decisionmaking process and alleviate some of the additional 
burden on Court personnel. More importantly, giving veterans the tools 
they need to successfully navigate the appeals process is essential to 
making sure they receive the aid that they deserve.
Section 213
    This section would establish a pilot program to assess the 
feasibility of programs to improve the quality of claims for disability 
compensation by members of tribal organizations who have service-
connected disabilities. The IBVSOs do not oppose enactment of this 
provision.
    Mr. Chairman, the IBVSOs thank you for the opportunity to offer 
testimony before the Committee today. We also want to thank you, 
Ranking Member Burr and this Committee for the good work you have done 
to improve the lives of America's veterans, including enactment of two 
historic bills during this Congress: advance appropriations for VA 
health care and the new caregiver benefit program.

    We look forward to continuing to work together with you to address 
problems within the veterans benefits claims processing system as well 
as other unmet needs of America's veterans. I would be happy to answer 
any questions the Committee may have.

    Chairman Akaka. Thank you very much, Mr. Violante.
    The question I have will be for all of you. While my 
legislation is largely a claims processing bill, I included a 
pilot program to test an alternative to the current Ratings 
Schedule. I did this because I am concerned that progress on 
claims processing will be limited until the Rating Schedule is 
reformed. Do you agree that the status quo on the Rating 
Schedule is unacceptable? Do you have suggestions for specific 
changes on this?
    Mr. Violante. Mr. Chairman----
    Chairman Akaka. Mr. Violante?
    Mr. Violante. Certainly, DAV believes and the IB believe 
that changes are necessary. However, we have some concerns 
about the proposal in the legislation. As has been pointed out 
previously, we believe that there could be a great inequity in 
veterans similarly situated with the same disabilities being 
rated differently, in addition to the fact that the VA will 
have to learn two different systems because not everyone will 
come under this new pilot program.
    If these two veterans, one who is rated under the current 
system, one rated under the new pilot, appeal those decisions, 
then the Board of Veterans Appeals and ultimately the courts 
will also have to make a determination based on two different 
sets of criteria, and we believe there have been other 
proposals out there, again, by the Veterans Disability Benefits 
Commission and the ongoing Advisory Committee, that have made 
recommendations that should be looked at, also, not just 
focusing on this one change.
    Chairman Akaka. Mr. Cohen?
    Mr. Cohen. Thank you, Mr. Chairman. NOVA believes that you 
are on the right track on this proposal. As you suggested, the 
status quo is unacceptable. The present schedule is too 
difficult for rating teams to work with consistently. This is a 
well thought-out system.
    The problems that were perceived by some, and Mr. Violante 
had mentioned it, about the disparate treatment could be 
resolved by taking files that had already been rated into the 
pilot to see what the result would be had they been rated under 
the pilot program, not changing the particular rating that a 
veteran had, but just seeing how it would be rated under the 
new program. That is a way that the program could be tested on 
a pilot basis and then compare the results, and actually, the 
rating team could be requested to provide input on the 
difficulty or ease of using both systems.
    But the proposal that you have come up with is something 
that is time honored. It has been used consistently in the 
Workers' Compensation System and doctors know how to deal with 
frequency of symptoms and severity of symptoms, so it should 
work.
    Chairman Akaka. Thank you. Any other comments?
    Ms. Avant. Yes.
    Chairman Akaka. Ms. Avant?
    Ms. Avant. AFGE also agrees that the Rating Schedule does 
need to be updated. I understand VBA has been working on that. 
There are some sections that have not been updated since 1945, 
and as a Rating Specialist who is reviewing actual medical 
evidence, it is very apparent that there have been a lot of 
changes in the information requested on the VA templates. It is 
easy to see that medical facts the rater receives do not always 
apply easily to the Rating Schedule, and many terminology 
diagnoses have changed over the years. Also, many items seem to 
be under-evaluated. Musculoskeletal are very difficult. If you 
have a knee condition, it easily does not reflect what the 
symptoms are in the VA exams. And some of the mental 
disabilities are also the same way.
    We think it would be beneficial if there are changes. The 
changes to the ICD codes--it will take some adjustment if VA 
does change from our diagnostic codes over to the ICD codes, 
but it is something that is used nationally with all physicians 
and so it would be something easily adapted.
    Chairman Akaka. Thank you very much.
    Mr. Thompson?
    Mr. Thompson. Mr. Chairman, the Government Performance and 
Results Act required that each program administered in the 
Federal Government be put through a program evaluation, in 
other words, to look at the program and ask: is it meeting its 
public policy goals? Regarding disability compensation, my 
understanding is that a program evaluation has never been done. 
The question therefore remains: is what we are doing today to 
help veterans, with the assistance we are providing them, 
actually help them in a way the American people, the Congress 
and the President, intended?
    So that kind of analysis, to me, should take place before 
you start changing the ratings schedule. I think we need to 
understand: what is the current rating schedule doing for 
veterans? Is it undercompensating? Overcompensating? Does it 
have it just right for each condition? I think the program 
evaluation of compensation program should be undertaken as a 
first step before you go in and start pulling the Ratings 
Schedule apart. You need to understand what the current one is 
doing.
    Chairman Akaka. Thank you very much.
    Let me call on Senator Burr for his questions.
    Senator Burr. Thank you, Mr. Chairman.
    I guess I know the answer to my first question for you, Mr. 
Thompson, which was whether you think VA is doing enough with 
the Disability Compensation System and whether it is meeting 
its goals, and the fact is, they are not focused on it.
    Let me make a general statement and then I would like to 
ask just a couple of questions. My statement has no impact on 
the legislation. It has an impact on whether or not I believe 
that all stakeholders are willing to do the things that it 
takes to solve the disability process problem that we have, and 
I have come to the conclusion they are not.
    I think there are efforts that are underway within VBA. 
There are individuals involved in the processing of claims, 
like Ms. Avant. There are deep interests on the part of VSOs, 
yet we cannot find those common intersection points that will 
allow us to solve a very, very big problem. And I share that 
with you because this is very disturbing to me.
    I have made the statement before coming into hearings that 
we talked about the disability process because I believed there 
was real hope that we could solve it. I see a growing number of 
individuals who are going to be relying on our ability to 
navigate this and to redesign the system in a way which can 
work for everybody.
    Well, if we are not allowed to redesign, I can tell you, it 
is not going to work for everybody. There are going to be 
unbelievable delays. They are going to be much longer than they 
are today. We are going to have antiquated requirements on 
individuals in trying to accomplish their jobs that are going 
to make it impossible.
    There are tremendous bright spots. The POD process that we 
have undertaken in Arkansas, gee, I would like to roll that out 
everywhere in the country tomorrow, but I am sure somewhere 
there is going to be opposition to that and it is one of the 
reasons that I asked Mike, at what point can we make 
determinations as to when this works? How far can we roll it 
out? I am tired of talking about this. I am tired of everybody 
raising their hand and saying, ``I want to be part of the 
solution,'' only to get to a point where we have got trial 
programs and demonstration projects. It looks like we are at 
critical mass and everybody is saying, whoa, wait a minute; I 
didn't mean about structural changes, I meant about speeding up 
the process. Well, if we are not going to make fundamental 
changes to this program, we are not going to reduce the amount 
of time.
    I don't point a finger at anybody, I just make a general 
statement as one that has been doing this for a number of 
years, much like many of you at the table. I think that we 
probably didn't include enough people up front. Had we included 
more people in the input, maybe they wouldn't be as critical to 
the structure. I am not sure that the design would have 
changed, but maybe more people would have felt like they had a 
hand in it.
    I have heard the statement made, the status quo is not 
acceptable. Well, let me tell you, we have been locked into the 
status quo for a long, long time. And when you look out and you 
see the population that is getting ready to come in, they 
deserve better and we have all got a responsibility to them.
    So, I hope everybody will rethink what we have got in front 
of us, what we have got to accomplish, and try to figure out 
where we can begin to smooth the edges of where we have staked 
ourselves out and focus on the steps forward that we can make 
that have a visible and substantive impact on the processing of 
these claims.
    Now, I raised with Mike and I won't raise it with the 
panel, it is beyond my comprehension as to how the number of 
applications that come in incomplete have actually grown versus 
gotten better. I am not sure where that problem is, but it 
seems like common sense to me that one of the areas we need to 
focus on is making sure an application for disability claims is 
complete when it walks in the door, that we not bog down the VA 
process with having to go get things, whether it is a VSO who 
is working with a veteran or it is a VA service officer. 
Regardless of who it is, even if it is a hired lawyer, my gosh, 
let us provide a hotline for the lawyers to call so that they 
can at least get the claims right. Even though they are making 
money off of it, it benefits everybody if that claim comes in 
the door and it is complete.
    Mr. Chairman, I apologize because I know that this was a 
hearing designed to try to ask questions and get constructive 
answers, but I just couldn't let it pass without saying we have 
got a real opportunity right now. I think we have some real 
demonstration projects on the table that could--it is early--
could have a dramatic impact on our ability to process these 
claims.
    If we go until next year and Mike is forced to come in and 
say, well, we need 2,000 more employees, I am going to tell you 
now, it is not going to happen. Over my dead body will we just 
continue to throw people at the problem. We have got to find 
the fundamental change. We have got to incorporate what we know 
works with what we can accomplish in IT and we have got to 
learn from past experiences, areas that we go to, and I hope we 
can all go there together.
    I thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Burr.
    My last question is one for all of you. One goal of my bill 
is to allow VA to work seamlessly with the military and the 
outside medical world in dealing with disability issues. The 
proposed pilot program would test the use of ICD codes to 
identify disabilities. My question is, do you believe the use 
of these codes would move VA closer to being able to work with 
other entities on disability issues? Mr. Cohen?
    Mr. Cohen. Yes, Chairman Akaka. NOVA does believe the use 
of ICD codes would be an advantage because most of the medical 
community works in terms of ICD codes. So it would make it 
easier for private physicians and also for VA contract 
physicians who may be working in other hospitals and work with 
ICD codes every day to figure out the system.
    One of the problems, though, with the seamless transition 
is that we are all aware of the problem with the DOD under-
diagnosing PTSD. So if we have a seamless transition and a 
servicemember comes out and now becomes a veteran and has a 
record from the DOD saying that the condition that they have, 
their nervous condition, is a preexisting condition because 
they were forced to sign that before they got out, that is 
going to make it more difficult for them to get their VA 
benefits. So that is a concern that the DOD must look at before 
there is this seamless transition.
    Chairman Akaka. Thank you.
    Mr. Violante. Mr. Chairman?
    Chairman Akaka. Mr. Violante?
    Mr. Violante. I think the IB would agree that, yes, using 
ICD codes could help, but our recommendation would be--I mean, 
if you look--here is the ICD codes on the knee. There are 
roughly two and one-half pages of ICD codes on the knee. The VA 
Ratings Schedule, there are essentially four ratings for the 
knee. What we would like to see is the diagnostic codes lined 
up with the ICD so that a rater would see a condition coming in 
that is one of the ICD codes which would refer them to the 
appropriate diagnostic code and then allow them to rate it.
    But if you have a rating schedule that is using knees, you 
are going to have a lot of duplication of effort; whereas if 
there is just an easy reference to say, OK, ICD Code 1025 is 
the same as diagnostic code 5286, I think you would make the 
transition a lot easier. All you would need then is for 
somebody with a medical background to go through and associate 
the two codes so that you can have a cross-reference.
    Ms. Avant. Sir?
    Chairman Akaka. Ms. Avant?
    Ms. Avant. Under the current system, personally using the 
system on a daily basis, I don't see that the ICD codes will 
make a difference in the amount of work that can be processed 
comparing diagnostic codes. Based on the current medical we 
receive, most examiners right now furnish us a diagnosis, not 
an ICD code.
    I know we have a pilot that is undertaking the rewriting of 
the medical templates that VAMC uses and there is discussion of 
those being rolled out to the private industry. In the event 
that those templates are possibly compacted--at the current 
time, some of them are very lengthy, they have a lot of 
information that I don't need to assign a percentage for 
example, a knee disability. If they were compacted to fewer 
questions just make sure that we get the answers to those 
questions, then these forms could then be sent out to the local 
and the private physicians, making it easier for them to 
complete.
    Currently, some of the templates may take an examiner 45 
minutes to an hour, and in the real world, you don't have a 
private physician that has 45 minutes to sit with a veteran to 
fill out these forms. Now that there have been Medicare cuts, 
the possibility of veteran patients seeing these private 
physicians is dimmer. It just seems like if there were a more 
compact questionnaires for them to fill out, that is what would 
help the VA process more claims versus just changing the ICD 
codes.
    Chairman Akaka. Thank you.
    Mr. Thompson?
    Mr. Thompson. Mr. Chairman, I would defer to the judgment 
of the folks at VA and the VSOs on this issue. I don't think I 
bring the expertise to make much of a difference in this 
discussion.
    Chairman Akaka. Thank you very much.
    In closing, I want to again thank all of our witnesses for 
appearing here today. I would like to thank Under Secretary 
Mike Walcoff and members of his team for remaining here to 
listen to the second panel. Veterans are better served when we 
all work together, as you had said in your comments earlier.
    I look forward to working with all Members of this 
Committee to develop innovative solutions for claims 
adjudication. It is clear that the issues involved are quite 
complex, and working toward a more streamlined, efficient, and 
equitable process will not be easy, but we will strive to do 
that. I pledge my continued support for this goal as we move 
forward and look forward to advancing this effort with an 
amended version of my legislation, S. 3517, that will appear on 
the next agenda for the Committee's markup next month.
    Again, thank you very much. This hearing is adjourned.
    [Whereupon, at 11:57 a.m., the Committee was adjourned.]


                            A P P E N D I X

                              ----------                              


 Prepared Statement of Rick Percoco, US Navy Veteran, Suffolk, Virginia

    My name is Rick Percoco. I am a 25 year old military 
veteran. I joined the military directly out of high school when 
I was 17 years old. I served 4 years in the US Navy where I 
completed a 7 month deployment in the Persian Gulf in support 
of Operation Iraqi Freedom. I was honorably discharged in 2007 
and have been having a tough time making the transition back 
into the civilian lifestyle. Throughout my struggle with this I 
have come to realize that the VA in general is not only making 
it extremely challenging for myself, but all veterans to 
receive the help and support that is needed.
    The problems dealing with VA claims can be summarized with 
the word ``unification''. There are many different systems that 
deal with the big picture of our military and veterans' health 
care. There is nothing united about how our VA/military system 
is set up. For starters, the military and VA have completely 
different records for the same serviceman/woman. How much time 
do you think it takes to request medical records to be pulled 
from military archives in support of VA claims? This is one 
example of wasted time and inefficiency on the VA/military's 
part. Another huge flaw that slows down the process of building 
a claim is with obtaining medical documents from private 
doctors. Since there isn't a unified system across the board 
with easy access for everyone, trying to navigate through each 
different system for one veteran is twice as hard as it needs 
to be in obtaining medical documents. Finding medical evidence 
to build the cases is the leading cause to why the regional 
offices have developed such a back log in processing claims.
    I have come up with the realization that there needs to be 
one universal or ``united'' filing/record system for all 
branches of military, the VA and private doctors throughout the 
patients military career, including post career and death. This 
means a file/record needs to be built at the recruiter's level, 
and will follow each person throughout boot camp, job training, 
military service at each base/command, transition back into 
civilian life, and throughout ones post military life up to, 
and including death with proper burial. Then and only then the 
record needs to be stashed away in an archive. That way, no 
matter who looks at it, at whatever level, at whatever 
location, they will see everything that has happened to the 
person at every stage of service and post service. This 
includes ones service record to prove service dates and duty 
assignments, and medical records for treatment documents. 
Unification is the key to proper record keeping along with this 
simplification tactic. Too much time is being spent trying to 
rebuild ones file and records. The evidence is out there 
lingering around in different medical facilities filing 
systems. The VA shouldn't have to hunt for these treatment 
documents; they need to be accessible at anytime by the VA. 
This lack of unity causes backups at the regional offices which 
results in longer wait times for each veteran.
    Rather than having one organization, or system, trying to 
obtain records from each of the individual medical facilities 
that the patient was treated at, the ability to have one 
unified file/record that everyone can access is the key for 
more efficiently processed claims at the regional office level. 
A file/record system needs to be created via a very secure 
network called the internet to unify the military, VA and 
civilian doctors into one big file for each vet. This will 
allow any doctor/VA personnel anywhere the ability to access 
the vets file. I am sure we can come up with and can organize a 
secure Web site/network/domain name/URL system that will allow 
every doctor at every medical facility the ability to record/
scan documents into one universal file for each vet via the 
internet. This will give the doctor who is treating the vet, 
where ever he/she may go the ability to see what has been 
documented in the past about the present condition. The doctor 
will then add notes in that same network site/system, and have 
it instantly be added to the vets file. The doctor will not be 
able to log off the network site until the patient reviews the 
notes him/herself, and electronically sign to verify he/she 
understand the diagnosis of treatment. This will allow everyone 
at every level the ability to see the same written fact about 
the severity of the condition and the nature of the 
appointment. This will reduce the amount of appeals being 
pushed back into the system. An example being the doctor 
verbally tells one thing to the patient and writes something 
else in the notes that will then be sent up to the regional 
office to be reviewed. Because everyone is not on the same 
page, the vet might be expecting one result, and actually 
receive another based on miscommunication. This will result in 
an appeal, and having the vet re-circulate back into the system 
among everyone else.
    As stated above, the problem with obtaining medical 
evidence to build a vets claim and case is the sole reason why 
the regional offices are getting so backed up with claims. With 
this system in place, all the claim rep will need to do is to 
log on to the system and obtain whatever information is needed 
to properly set up the vets case to be passed along to the 
rating decision process,

    June 22, 2010
                                ------                                


Prepared Statement of Carol Wild Scott, Chairman, Veterans Law Section, 
                        Federal Bar Association












































      

                                  
