[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]







RECLAIMING THE PROCESS: EXAMINING THE VBA CLAIMS TRANSFORMATION PLAN AS 
               A MEANS TO EFFECTIVELY SERVE OUR VETERANS

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

                                HEARING

                               before the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                         TUESDAY, JUNE 19, 2012

                               __________

                           Serial No. 112-67

                               __________

       Printed for the use of the Committee on Veterans' Affairs





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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

CLIFF STEARNS, Florida               BOB FILNER, California, Ranking
DOUG LAMBORN, Colorado               CORRINE BROWN, Florida
GUS M. BILIRAKIS, Florida            SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
MARLIN A. STUTZMAN, Indiana          LINDA T. SANCHEZ, California
BILL FLORES, Texas                   BRUCE L. BRALEY, Iowa
BILL JOHNSON, Ohio                   JERRY McNERNEY, California
JEFF DENHAM, California              JOE DONNELLY, Indiana
JON RUNYAN, New Jersey               TIMOTHY J. WALZ, Minnesota
DAN BENISHEK, Michigan               JOHN BARROW, Georgia
ANN MARIE BUERKLE, New York          RUSS CARNAHAN, Missouri
TIM HUELSKAMP, Kansas
MARK E. AMODEI, Nevada
ROBERT L. TURNER, New York

            Helen W. Tolar, Staff Director and Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.












                            C O N T E N T S

                               __________

                             June 19, 2012

                                                                   Page

Reclaiming The Process: Examining The VBA Claims Transformation 
  Plan As A Means To Effectively Serve Our Veterans..............     1

                           OPENING STATEMENTS

Chairman Jeff Miller, Prepared Statement Only....................    71
Hon. Gus Bilirakis, Vice Chairman................................     1
    Prepared Statement of G. Bilirakis...........................    72
Hon. Bob Filner, Ranking Democratic Member.......................     3
    Prepared Statement of B. Filner..............................    73

                               WITNESSES

Mr. Jeffrey Hall, Assistant National Legislative Director, 
  Disabled American Veterans.....................................     6
    Prepared Statement of Mr. Hall...............................    74
    Executive Summary of Mr. Hall................................    80
Mr. Gerald Manar, Deputy Director, National Veterans Service, 
  Veterans of Foreign Wars.......................................     8
    Prepared Statement of Mr. Manar..............................    81
Mr. Richard Dumancas, Deputy Director for Claims, Veterans 
  Affairs and Rehabilitation Commission, The American Legion.....    10
    Prepared Statement of Mr. Dumancas...........................    83
    Executive Summary of Mr. Dumancas............................    87
Mr. Sherman Gillums, Jr., Associate Executive Director of 
  Veterans Benefits, Paralyzed Veterans of America...............    12
    Prepared Statement of Mr. Gillums, Jr........................    88
    Executive Summary of Mr. Gillums, Jr.........................    91
Mr. William J. Bosanko, Executive for Agency Services, U.S. 
  National Archives and Records Administration...................    35
    Prepared Statement of Mr. Bosanko............................    92
Ms. Linda Halliday, Assistant Inspector General for Audits and 
  Evaluations, Office of the Inspector General, U.S. Department 
  of Veterans Affairs............................................    43
    Prepared Statement of Ms. Halliday...........................    93
    Accompanied by:

      Mr. Nick Dahl, Director, Bedford Office of Audits and 
          Evaluations, Office of the Inspector General, U.S. 
          Department of Veterans
      Mr. Larry Reinkemeyer, Director, Kansas City Audit 
          Operations Division, Office of the Inspector General, 
          U.S. Department of Veterans Affairs
      Mr. Brent Arronte, Director, Bay Pines Benefits Inspection 
          Division, Office of the Inspector General, U.S. 
          Department of Veterans Affairs
Hon. Allison Hickey, Under Secretary for Benefits, U.S. 
  Department of Veterans Affairs.................................    51
    Prepared Statement of Hon. Hickey............................    97
    Accompanied by:

      Mr. Alan Bozeman, Director, Veterans Benefits Management 
          System, Veterans Benefits Administration, U.S. 
          Department of Veterans
      Hon. Roger Baker, Assistant Secretary for Information and 
          Technology, U.S. Department of Veterans Affairs

                        STATEMENT FOR THE RECORD

American Federation of Government Employees, AFL-CIO and the AFGE 
  National Veterans' Affairs Council.............................   103

                        QUESTION FOR THE RECORD

Letter From: Bob Filner, Ranking Democratic Member to Hon. Eric 
  K. Shinseki, Secretary, U.S. Department of Veterans Affairs....   105
Questions From: Bob Filner, Ranking Democratic Member to Hon. 
  Eric K. Shinseki, Secretary, U.S. Department of Veterans 
  Affairs........................................................   106
Response To Letter From: Hon. Eric K. Shinseki, Secretary, U.S. 
  Department of Veterans Affairs to Bob Filner, Ranking 
  Democratic Member..............................................   106
Response To Questions From: Hon. Eric K. Shinseki, Secretary, 
  U.S. Department of Veterans Affairs to Bob Filner, Ranking 
  Democratic Member..............................................   107

 
RECLAIMING THE PROCESS: EXAMINING THE VBA CLAIMS TRANSFORMATION PLAN AS 
               A MEANS TO EFFECTIVELY SERVE OUR VETERANS

                         Tuesday, June 19, 2012

                     U.S. House of Representatives,
                            Committee on Veterans' Affairs,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 10:41 a.m., in 
Room 334, Cannon House Office Building, Hon. Jeff Miller 
[Chairman of the Committee] presiding.
    Present: Representatives Lamborn, Bilirakis, Roe, Stutzman, 
Flores, Johnson, Runyan, Benishek, Buerkle, Huelskamp, Turner, 
Filner, Brown, Reyes, Michaud, McNerney, Donnelly, Walz, and 
Barrow.

           OPENING STATEMENT OF HON. GUS BILIRAKIS, 
                         VICE CHAIRMAN

    Mr. Bilirakis. [Presiding] The Full Committee hearing will 
come to order.
    Good morning. Welcome to our hearing, Reclaiming the 
Process: Examining the VBA Claims Transformation Plan as a 
Means to Effectively Serve Our Veterans.
    Through their service and sacrifice on behalf of our 
Nation, veterans have ensured that our American way of life can 
continue long into the future.
    Our Committee has the privilege of serving these heroes to 
whom we owe an immense debt of gratitude by ensuring that they 
have reasonable access to the benefits they earned.
    This access to promised benefits have been made ever more 
difficult in recent years in my opinion as VA continues to 
struggle with backlogs and unacceptable delays in getting our 
Nation's veterans the benefits that they need and have earned.
    On several occasions, Secretary Shinseki stated that the VA 
would break the back of the backlog in 2009. And in an effort 
to do just that, VBA has implemented a transformation plan and 
various initiatives that have great potential to ease these 
problems.
    However, despite the development of this transformation 
process, the backlog continues to grow and the rate of accuracy 
and processing time has at best remained stagnant.
    Today we will examine VBA's transformation plan and the 
effectiveness of these initiatives in resolving the core issue 
of processing time, accuracy of decisions, and eliminating the 
backlog.
    We will specifically focus most of our attention on the 
veterans benefits management system or VBMS as you will hear it 
referred to throughout the hearing, again VBMS, which VA has 
consistently referred to as the cornerstone of its 
transformation process.
    I know that I, my fellow Committee Members, and our Ranking 
Member have many questions to ask as to when the system will be 
ready for national rollout and how issues relating to the 
scanning of paper documents will be handled in the future.
    As a matter of fact, VA's contract with the U.S. National 
Archives and Records Administration, the agency currently 
handling VA's scanning needs, expires on June 26, just one week 
from today. I will ask what is going to happen on June 27th. Do 
you have a plan?
    Unfortunately, the VA has waited until the eleventh hour to 
address this need and to the best of my knowledge, I understand 
VA is working on contract solicitations.
    This hearing also will focus on several of VBA's other 
transformation plan initiatives including disability benefit 
questionnaires, simplified notification letters, fully 
developed claims, and the I-lab and the appeals design team.
    Although I applaud VA for taking initiatives to transform 
the claims process, we must ensure that these transformation 
efforts continue to progress in the right direction and they 
are ultimately helping veterans obtain the benefits they have 
earned.
    It is time for VA to uphold its responsibility to our 
veterans and to the American people to break this cycle and 
deliver the benefits that the agency was created to provide.
    Also, I want to bring an additional issue to the attention 
of the VA witnesses. Last week, the chancellor of the Florida 
college system informed the Committee staff that VA has 
determined that 23 of the 28 Florida community colleges were 
not qualified to provide training under the VRAP program that 
was part of the VOW to Hire Heroes Act passed last November.
    The reason given for this denial is that each of the 23 
community colleges awards a very limited number of Bachelor 
degrees, most often in technical and health care fields such as 
Bachelor's degrees in nursing.
    It is clear to me that VA is ignoring the traditional 
community focused approach those schools continue to offer. 
Unlike four-year schools that offer Bachelor's and higher 
degrees generally without regard to the local needs, these 
schools continue to provide education and training that reflect 
what their surrounding communities need.
    In fact, using VA's narrow definition of community college, 
if a school awarded one Bachelor's degree along with hundreds 
or even thousands of Associate's degrees, that school would not 
qualify for VRAP training. It is like saying, and this is an 
analogy, that a bank that offers coffee to patrons is no longer 
a bank and is now a Starbucks.
    This issue is not limited to the State of Florida. 
According to the American Association of Community Colleges, 64 
of their members, again in Florida, Nevada, Georgia, Texas, 
North and South Dakota, Puerto Rico, Arizona, Utah, Kansas, 
Wisconsin, New York, Oklahoma, Pennsylvania, Hawaii, Vermont, 
Indiana, and Washington award or are authorized to award 
limited numbers of Bachelor degrees.
    I will note that several of these states have high 
unemployment rates among veterans.
    Under Secretary Hickey, the VRAP legislation is intended to 
retrain unemployed veterans and we cannot let even one of those 
slots go unfilled.
    I urge you in the strongest possible way to consider the 
spirit of the VRAP provision in defining the term community 
college and to ensure that veterans in these 18 states that I 
mentioned are given the opportunity to retrain for high-demand 
jobs.
    Thank you very much, and now I will yield to our Ranking 
Member, Mr. Filner.
    Thank you. You are recognized, sir.

    [The prepared statement of Hon. Gus Bilirakis appears in 
the Appendix]

             OPENING STATEMENT OF HON. BOB FILNER, 
                   RANKING DEMOCRATIC MEMBER

    Mr. Filner. Thank you, Mr. Chairman.
    Well, here we are again. I think one of the first meetings 
I went to 20 years ago as a Member of the Veterans' Committee 
was on the backlog. We have hired, in the last few years maybe 
12,000 new employees.
    You got 40 so-called transformational initiatives. I do not 
know where the name transformation comes. It does not do 
anything.
    What have we done in the last few years? Doubled the 
backlogs; the rate of inaccuracy recently reported up to 25 
percent. This is disgraceful. This is an insult to our 
veterans.
    And you guys just recycle old programs. You put new names 
on them and here we are again. You know what the definition of 
one definition of insanity is? You try the same thing over and 
over again expecting a different result.
    Somebody has to take responsibility for this. We just keep 
announcing new names and new pilot programs. We are up to 1.2 
million in the backlog by one count. If it was not tragic, it 
would be ridiculous.
    Now, we have not been able to do anything by what I think 
the Secretary called brute force. We are going to hire more and 
more people. We are going to hire more and more people, have 
new pilots, and what happens? We doubled the backlog.
    I think you all know I have been trying to talk about it 
for many years. You got to do something different, radical, 
change the whole nature of the situation. Yes, maybe these 
pilots will work, but you have got to start from zero and try 
the new stuff.
    How do we get it down to zero? There are ways and we have 
talked about them. I do not know why the fear is there. You 
just keep going and going and going and going on. Try something 
new. Try something new.
    You know, the IRS used to be one of the most dysfunctional 
agencies in America. Nobody knew when they would get their 
refund check. Nobody knew what happened to their tax return. 
They never heard from the IRS, yet they went through a 
transformational process and what happens now?
    If you had a refund coming when you just filed your tax 
return, within three weeks guaranteed you got your refund 
check. How do they do that?
    Well, one thing they do is accept your claim subject to 
audit. We all have to be honest because we know we might be 
audited, yet they send you the check.
    You all know that there has been intellectual background 
for adopting a similar system. And I would argue that if a 
claimant has help from the VSOs, either county, state, VFW, 
American Legion, whoever, if they get help from a certified 
veteran service officer which we certify in preparing their 
claim, grant the claim subject to audit. Send out a check, do 
something.
    If you are given amputation, why should you wait three 
years for all the other parts of your claim to be adjudicated? 
I can tell the guy is amputated. I do not need three years of 
study on this. Grant the claim subject to audit. Get those 
things off the books. Do something different. Do something 
radical. It is the only way we are going to solve this.
    And I will tell you what. This is not just backlogs of a 
year or 90 days or two years. I do not know how many of our 
claims, maybe, Madam Secretary, you can tell me roughly, for 
Agent Orange or Vietnam era. I would roughly guess a couple 
hundred thousand. Is that in the ballpark? Do you know off-
hand, Ms. Hickey?
    General Hickey. Yes, it is 260,000.
    Mr. Filner. I am sorry. How many?
    General Hickey. It is 260,000 Agent Orange.
    Mr. Filner. No. But how many are still in the system, are 
waiting adjudication?
    General Hickey. We have all preexisting conditions.
    Mr. Filner. I did not hear.
    Mr. Bilirakis. Maybe you can ask that.
    Mr. Filner. I will ask that question when you are here. But 
I would guess these are not three months, six months claims. 
These are 35-year claims. These are people who have been 
suffering for 35 years.
    I would say to my colleagues on this Committee: let's do 
something. We just had an activities report approved. I am not 
sure what we have done with all that activity. But we have 
never welcomed home, as you all know, our Vietnam vets. They 
have never been welcomed home. Half the homeless on the street 
are Vietnam vets.
    If you have not heard the statistic before, my colleagues, 
you know there have been more suicides by Vietnam vets than 
died in the original war. It is over 55,000. We did something 
wrong.
    Let's grant those claims. Forget the suffering. Forget all 
the presumptiveness. Forget all the studies. These people have 
suffered for 30 or more years. That will wipe out whatever 
hundreds of thousands of claims there are. Say welcome home to 
our Vietnam vets. Let's grant their Agent Orange claims.
    Yeah, one or two will slip by that should not be in there, 
but 99 percent are going to be okay. Let's not worry about one 
percent. Oh, but the cost, the cost, the cost. You know, it may 
cost for those Vietnam veterans, I do not know, a billion 
dollars. It seems to me after 30 years, it is worth it. We have 
got to say thank you.
    You know, we have a $14 trillion debt. I do not think a 
billion is going to add much to that. Let's say thank you to 
the Vietnam vets. Let's welcome them home.
    But I am telling you folks from the VA, you have got a lot 
of activity. I do not call it action. You got a lot of new 
processes. I do not call it progress. The problem has been 
around for decades and decades.
    And I see a list of 40 initiatives. I do not know whether 
there is any plan to actually get to certain goals. And 
certainly the technology is not being used as quickly as it is 
available.
    We got people, like in South Carolina where they are 
planning a protest at the claims site because they do not have 
tools to do their job right. This has gone pretty far if our 
own employees have to go on strike.
    I cannot stress too much if you are going to keep doing the 
same thing, we are going to keep failing. It is time for 
something new.
    Thank you.

    [The prepared statement of Hon. Bob Filner appears in the 
Appendix]

    Mr. Bilirakis. I thank the Ranking Member.
    Now I will recognize Members if they choose to make an 
opening statement. We will start with Mr. Lamborn from 
Colorado.
    Would you like to make an opening statement?
    Mr. Lamborn. No.
    Mr. Bilirakis. And I encourage that it be very brief if you 
do. Okay.
    Ms. Brown, you are recognized.
    Ms. Brown. No, sir. I am going to wait until after the 
presentation.
    Mr. Bilirakis. All right. Dr. Roe?
    Mr. Roe. No.
    Mr. Bilirakis. Okay. Very good. We do have four panels, so 
I really appreciate the brevity.
    Let's go with Mr. Michaud. Would you like to make an 
opening statement, sir?
    Mr. Michaud. I do not think so.
    Mr. Bilirakis. All right. You are set. Okay.
    How about Mr. Flores?
    Mr. Flores. No, sir.
    Mr. Bilirakis. All right. Mr. McNerney, would you like to 
make an opening statement, sir?
    Mr. McNerney. No.
    Mr. Bilirakis. Okay. Great. Thank you very much.
    Dr. Johnson, he is not here, so he waives it.
    Mr. Walz, would you like to make an opening statement?
    Mr. Walz. No.
    Mr. Bilirakis. Thank you, sir.
    All right. Mr. Runyan?
    Mr. Runyan. No thanks.
    Mr. Bilirakis. All right. I believe we have Mr. Barrow. Is 
he here?
    Mr. Barrow. Thank you, Mr. Chairman. The table has been 
set.
    Mr. Bilirakis. Thank you. Thank you.
    Ms. Buerkle?
    Ms. Buerkle. Not at this time. Thank you.
    Mr. Bilirakis. Dr. Benishek?
    Mr. Benishek. No thank you.
    Mr. Bilirakis. Okay.
    Mr. Filner. They all associate themselves with my remarks; 
is that correct?
    Mr. Bilirakis. All right. I think we have just about 
finished here. Is there anyone else? Anyone else choose to make 
an opening statement?
    [No response.]
    Mr. Bilirakis. Thank you. Let's go ahead and proceed. I 
appreciate it very much.
    As you know, veteran service organizations are the primary 
entities walking our veterans through the claims process and in 
my opinion, they do an outstanding job. They are the front 
lines, so to speak, and experienced firsthand what works and 
what does not work in the claims process. We appreciate their 
service to our veterans and the presence of the representatives 
on the first panel of this hearing.
    At this time, I would like to welcome our first panel to 
the table. First we will hear from Mr. Jeffrey Hall, who is the 
Assistant Legislative Director for the DAV. And next we'll hear 
from Mr. Gerald Manar, who is Deputy Director of the Veteran 
Service on behalf of the VFW. And then we will hear from Mr. 
Richard Dumancas, who is the Deputy Director for claims 
representing The American Legion. And finally we will hear from 
Mr. Sherman Gillums, Associate Executive Director of Benefits 
for the PVA.
    And I want to welcome you to the Committee and I appreciate 
your testimony here today.
    You are recognized, Mr. Hall, for five minutes. Of course, 
your complete statement will be entered into the record. You 
are recognized, sir.

  STATEMENTS OF JEFFREY HALL, ASSISTANT NATIONAL LEGISLATIVE 
  DIRECTOR, DISABLED AMERICAN VETERANS; GERALD MANAR, DEPUTY 
DIRECTOR, NATIONAL VETERANS SERVICE, VETERANS OF FOREIGN WARS; 
RICHARD DUMANCAS, DEPUTY DIRECTOR FOR CLAIMS, VETERANS AFFAIRS 
  AND REHABILITATION COMMISSION, THE AMERICAN LEGION; SHERMAN 
    GILLUMS, JR., ASSOCIATE EXECUTIVE DIRECTOR OF VETERANS 
            BENEFITS, PARALYZED VETERANS OF AMERICA

                   STATEMENT OF JEFFREY HALL

    Mr. Hall. Thank you.
    Good morning, Mr. Chairman and Members of the Committee. On 
behalf of DAV and its 1.2 million members who are wartime 
service-connected veterans, we are pleased to be here today to 
offer our views regarding VBA's claims process and 
transformation initiatives, especially the veterans benefits 
management system or VBMS.
    Although there have been many positive changes and progress 
made over the past two years, there are troubling issues 
related to VBMS which raise serious questions about whether 
VBA's transformation efforts will be successful.
    Mr. Chairman, I would like to make clear at the outset that 
DAV is extremely pleased with the continuing partnership 
between VBA and VSOs.
    We know this transformation process is challenging and we 
credit Under Secretary Hickey for setting a positive tone 
within VBA that we hope is a sign of a much needed cultural 
change to better serve our Nation's veterans.
    However, despite General Hickey's leadership, DAV is 
concerned about VBA's failure to effectively resolve basic 
issues which we and other VSOs have repeatedly raised over the 
past two years, issues such as providing VSOs who hold power of 
attorney for claimants with access to VBMS and implementing a 
scanning solution to digitize paper claims files, particularly 
those with legacy claims.
    Regardless of claims being processed in VBMS at the four 
pilot VAROs, as of today, DAV national service officers are 
still without access to the VBMS system. Instead of resolving 
this basic issue, a variety of questionable work-around 
solutions have been implemented so VSOs are able to review 
decisions within the VBMS.
    For instance, in Providence and Wichita, our NSOs are e-
mailed a PDF version of the VBMS rating decision to review but 
must use the old virtual VA system in order to review the 
evidence.
    In Salt Lake City, our NSOs actually have to go outside the 
office to a different building where they are provided a paper 
copy of the VBMS rating decision to review. But in order to 
review the evidence, they must request the paper file which is 
then made available to them. And at Fort Harrison, our NSO must 
go to the RVSR's desk and utilize his or her computer in order 
to review the VBMS rating decision and evidence in the same 
manner as an RVSR.
    DAV has been told the reason that VSOs are not able to 
access VBMS is because the system is unable to provide 
different levels of access for POA holders. As a result, the 
system has blocked all VSO access to veterans' files.
    DAV has been assured that a partial solution to this 
problem will be included in the next release of VBMS scheduled 
for July 16th.
    But, Mr. Chairman, regardless of VBA's assurance to fix 
this problem, the fact that such a basic prerequisite for VBMS 
success, POA access was either unanticipated or ignored until 
now makes us question whether there are similar fundamental 
gaps or work-arounds imbedded in other parts of VBMS.
    Another issue in VBMS that should have been resolved long 
ago is VBA's plan and solution for scanning and digitizing 
paper claims folders. This issue is still unresolved today in 
part because VBA has not yet definitively answered basic 
questions about when and which legacy documents will be scanned 
into VBMS.
    And with the next scheduled VBMS release to 12 additional 
VAROs only a few weeks away, this issue must be resolved.
    Also concerning to DAV is VBA's recent implementation of 
simplified notification letters or SNLs which are an automated 
rating decision and notification letter combined. DAV and other 
VSOs have voiced concerns to VBA about the quality of the SNL 
since they were first implemented.
    For example, I recently reviewed an SNL for PTSD that was 
denied by VBA and in the space of a very short letter, it 
contained a confusing and somewhat contradictory explanation 
that even an experienced service officer would have difficulty 
understanding.
    The SNL stated that VBA had granted entitlement to hospital 
and medical treatment because psychosis or other mental illness 
was diagnosed. However, it did state that the evidence did not 
show a current diagnosed disability.
    The SNL furthered that VBA had determined the claimed PTSD 
was not related to military service, so service-connection 
could not be granted. However, VBA did concede that the veteran 
experienced the stressful event in service for fear of hostile 
or military or terrorist activity.
    Mr. Chairman, clearly the SNLs are intended to streamline 
the rating and notification part of the process and help reduce 
the backlog of claims. However, this should not be at the 
expense of the veteran or the quality of the rating and 
notification.
    The issues we have found in the SNLs lead us to question 
the legal validity of these ratings and whether VBA has cut 
other corners within VBMS in order to meet these self-imposed 
deadlines for reducing the backlog.
    So in closing, Mr. Chairman, due to the highly technical 
nature of modernizing VBA's IT systems, DAV believes it is more 
crucial now more than ever for an outside independent review to 
be conducted.
    We suggest that the best way to accomplish this might be to 
invite a panel of IT experts from leading companies such as 
Google, Amazon, Microsoft, or Apple who may be willing to 
review the VBMS on a pro bono basis to provide an informed 
judgment about whether it is likely to be successful.
    For our Nation's 3.8 million disabled veterans who rely on 
disability compensation to meet all or some of their needs, it 
is imperative that VBA be successful in transforming the claims 
processing system. VBMS is a critical element for that success.
    Mr. Chairman, this concludes my statement. I will be happy 
to answer any questions from you or the Committee.

    [The prepared statement of Jeffrey Hall appears in the 
Appendix]

    Mr. Bilirakis. Thank you, Mr. Hall. Thank you for your 
testimony.
    Now I will call on Mr. Manar who represents the VFW.
    You are recognized for five minutes, sir.

                   STATEMENT OF GERALD MANAR

    Mr. Manar. Mr. Chairman and Members of the Committee, thank 
you for the opportunity to present the views of the more than 
two million veterans and auxiliaries of the Veterans of Foreign 
Wars of the United States on VBA claims transformation.
    After many years of fits and starts, VBA settled on a plan 
to overhaul its claims processing systems. The first step in 
that plan was to determine what computer and software 
infrastructure was necessary to support a 21st century claims 
processing system.
    The result is VBMS, VBA's foundation for that new system. 
It is designed to begin fulfilling immediate needs and to be 
agile enough to accommodate future changes.
    It is important to understand that VBMS is the foundation. 
We anticipate that some efficiencies will be realized from the 
start, but real quality and production improvements will occur 
when VBA adds software that includes rules-based decision-
making, electronic transfer of data from DoD and private health 
care providers to VA, and a redesigned workflow within VBA, as 
well as other features.
    There is a concern that rollout of VBMS may be delayed. 
There is a fine line between rolling out a new program too soon 
and delaying rollout too long while seeking to fix all the 
problems.
    To date, VBMS is in four regional offices and we are told 
fewer than 800 cases have been processed to completion. This is 
hardly thorough testing.
    We believe that rolling out VBMS prematurely is a bad 
business practice, bad for veterans and bad for morale of an 
already demoralized VA workforce.
    VBA has a troubled history of deploying programs too soon. 
BIRLS redesign in the 1980s and RBA 2000 are just two programs 
which were not properly tested before rollout. Tens of 
thousands of man hours in lost productivity occurred while 
programs were being fixed.
    We encourage this Committee to continue its oversight of 
VBA while recognizing that it may be necessary to accept modest 
delays in the deployment of VBMS in order to avert the major 
problems which often accompany premature deployment.
    Simplified notification letters is an initiative thoroughly 
embraced by VBA. An examination of what this initiative does to 
veterans is illustrative of the mind set of VBA in the last 
year.
    Decisions made following World War II contained no 
explanation of why a particular decision was made. Ratings 
contained the name of the disability, a diagnostic code, an 
evaluation, and an effective date, nothing more.
    Over the next three decades, rating decisions began to 
include some of the reasons for decisions. Following creation 
of the Veterans Court in 1988, VA began to include more 
detailed explanations in its ratings, a time-consuming process 
for VA.
    Last summer, VBA established a team to explore the idea of 
creating ratings which require less time to produce. The SNL 
program was the result. This initiative substitutes codes at 
the end of the rating instead of a narrative explaining the 
reasons and bases for VA's decisions.
    The codes are used to select standard paragraphs for 
inclusion in decision notice letters to veterans. These notices 
are generic and do not provide analysis of the evidence, 
information required by law to enable veterans to decide 
whether the decisions in their cases are likely to be correct.
    Veterans are faced with a choice of blindly accepting the 
decision or filing a notice of disagreement in order to obtain 
the reasons for the decision.
    The VFW conducted a review of ratings and decision notice 
letters in the Atlanta regional office last September. We 
concluded that 44 percent of the 65 cases we reviewed contained 
clear errors, poor judgment, or questionable rating practices.
    Over the ensuing months, we pressed VA about the inadequate 
notice provided veterans. Under Secretary for Benefits, General 
Hickey, listened to our concerns and made changes in the SNL 
program in an attempt to address the problems we noted.
    In February 2012, rating specialists were given additional 
instructions on providing sufficient details and discussion to 
explain their decisions. Restrictions on how much free text 
narrative they could use were removed.
    At the time these changes were implemented, we concluded 
that it was possible to create adequate decisions and notice 
letters if the personnel in the field followed those 
instructions.
    In recent weeks, the VFW has conducted a review of SNL 
ratings and letters from several regional offices. Fifty-three 
percent of the cases reviewed failed to provide adequate 
notice. Only a few examples of rating and notice letters 
complied with the latest instructions from VBA and provided 
acceptable notice.
    In conclusion, VBA's apparent inability to compel 
compliance by adjudication personnel with the most recent 
written directives concerning the SNL program force us to renew 
our opposition to this initiative.
    VBA's desire to increase production should not come at the 
expense of a veteran's legal right to know why decisions were 
made in his case. Generic paragraphs are not sufficient to tell 
them why their claims were decided in a particular way.
    VBA should suspend the SNL program until it can ensure that 
veterans receive the adequate notice required by law.
    This concludes my testimony. I would be pleased to answer 
any questions you may have. Thank you.

    [The prepared statement of Gerald Manar appears in the 
Appendix]

    Mr. Bilirakis. Thank you, Mr. Manar. Appreciate it.
    Now we will call on Mr. Dumancas who represents The 
American Legion.
    You are recognized for five minutes, sir.

                 STATEMENT OF RICHARD DUMANCAS

    Mr. Dumancas. Good morning, Mr. Chairman, Ranking Member, 
Members of this Committee.
    On behalf of The American Legion, I want to thank you for 
the opportunity to come here today and talk about the programs 
VA is deploying to change the office operational environment.
    These changes in programs can fall under many headings, 
modernization, tools of the 21st century, but one thing anyone 
who has spent a lot of time around the claims process knows 
they are here to help and try to tame the backlog.
    The American Legion has heard a lot of communication over 
the past few years about the commitment to fix the problem and 
ensure our disabled veterans are enduring needless delays of 
months and years to receive the benefits they earned through 
their hard service.
    Only two years ago at our American Legion convention in 
Milwaukee, Secretary Shinseki boldly set forth the promise that 
this is the year we break the backlog and set out benchmarks, 
98 percent accuracy and no claims pending over 125 days, by 
2015.
    As the numbers of claims filed have soared, VA has deployed 
multiple pilots and programs across the country with the 
promise of being the tools that will help tame the backlog and 
bring the crisis to heel.
    We want to be optimistic. We want to believe the many 
programs being unveiled are going to fix the problems. But it 
is hard to find optimism when so many red flags pop up. The 
VBMS system is in place in only a handful of regional offices, 
yet already we have seen many employees using work-arounds to 
get the job done. That is a big red flag.
    If a system cannot even operate smoothly in limited 
release, how badly will it bog down when it is finally rolled 
out throughout the Nation?
    The DBQ program of disability benefits questionnaires was 
supposed to help alleviate the long wait times for compensation 
and pension exams by making it easier for private doctors to 
submit medical evidence in a format VA could better use to help 
decide cases.
    However, the DBQ forms either do not have the needed space 
for nexus opinions or VA will not release the forms that do 
have the space to the private doctors. This practice is 
essentially undermining the point of the DBQ program. Why 
deploy a program that is crippled to start from the very 
beginning?
    Finally, we are seeing red flags revolving around the 
scanning process for the VBMS which is deeply disturbing as 
accurate. Usable electronic data is the foundation stone for 
everything VA is hoping to do in the future.
    We are told on one hand that NARA will handle all the 
scanning needs. We are told also that some of the regional 
offices have been doing scanning in-house. This does not seem 
to be consistent among ROs either. So it does not appear to be 
part of a coherent plan.
    Are the ROs equipped with the same technology and expertise 
with OCR and other components, key components to provide 
workable data? Why bother to shift to electronic forms if you 
are not going to use siftable and sortable data?
    From early conversations with NARA personnel indicated 
here, there was some confusion as to their role in the long run 
with no clear plan for what is in store following the 
conclusion of the fiscal year in September.
    We hope to learn farther today of what is going to happen 
after October 1st and that most importantly the quality of that 
data is going to be a major factor in determining the success 
or failure of any operating model in the electronic 
environment.
    Ultimately it is not the lack of confidence in VA's 
commitment to rolling out programs to try to address the 
backlog. It is that we fear an over-reliance on the ability of 
tools and programs to fix the problem may put us merely further 
down the road with a lot more money spent and the same problems 
we face today and have faced for many years.
    The backlog is not going to go away because of a wave of a 
magic computer wand.
    I am reminded of what this country did in the 1960s when 
faced with a seemingly unsurmountable challenge of putting a 
man on the moon and returning him safely. To be sure, NASA had 
large budgets. But to be fair, the technology used such as it 
was, was cutting edge for the time.
    The bottom line, however, is that in those rooms full of 
guys with basic tools like slide rules, pencils, paper solved 
perhaps one of the greatest engineering challenges in the 
history of mankind. This Nation succeeded in that goal because 
of a mind set instilled by men like Gene Kranz and his famous 
motto which bears consideration even today, failure is not an 
option.
    This concludes my briefing, my testimony, and I am happy to 
take any questions at this time. Thank you.

    [The prepared statement of Richard Dumancas appears in the 
Appendix]

    Mr. Bilirakis. Thank you for your testimony.
    Mr. Gillums, you are now recognized for five minutes.

                  STATEMENT OF SHERMAN GILLUMS

    Mr. Gillums. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Filner, Members of the 
Committee, on behalf of Paralyzed Veterans of America, I want 
to thank you for this opportunity to discuss VA's 21st century 
transformation, particularly as it is embodied by perhaps this 
most anticipated initiative, the veterans benefits management 
system.
    I will begin by commending VA for recognizing the need to 
answer the emerging demands of our time and explore new paths 
toward a more efficient, more accurate, and more transparent VA 
claims process.
    We also appreciate VBA Under Secretary Allison Hickey's 
standing invitation to the VSO community to participate in the 
constructive discussion on how the claims process can best 
improve and whether steps taken thus far have worked.
    Paralyzed Veterans of America believes any system proffered 
as a solution to an inefficient claims process must be based 
upon modern, paperless information technology that is capable 
of continuous improvement. Whether VBMS meets the standard is 
the unanswered question here.
    What is also unclear is the exact vision for VBMS and its 
objectives. On paper, it is one of, as was said earlier, over 
40 VA pilots and initiatives launched under the 21st century VA 
transformation plan. Conceptually it is explained as a 
paperless system that enables the various processes and 
technologies such as rules-based calculators and fast-track 
processes being tested around the country.
    It was originally going to be an online digital storage 
system for records. It has now morphed into something different 
begging questions on the desired end goal for VBMS. Whatever it 
is, this needs to be made clear to the various stakeholders who 
will be relied upon to make it work.
    We know that VBMS was intended to enable more efficient 
claims process flow, to reduce cycle time through the 
elimination of paper claims, and to support process changes 
like the segmentation of complex claims and auto adjudication.
    VBA launched the pilot in two locations, Providence, Rhode 
Island, and Salt Lake City, Utah. Its success to date is 
qualified by the reality that the system seems designed to 
handle simpler cases than those PVA typically sees.
    Many of our cases entail seeking benefits for veterans with 
catastrophic injury or disease which often triggers entitlement 
to a range of monetary and ancillary benefits. None of these 
484 cases processed through VBMS in Providence were ours and 
only approximately 10 of the 239 processed through Salt Lake 
City have crossed our desks. Thus, the new system remains 
wholly untested in our view.
    Some have fancied a Turbo Tax style solution for claims 
processing. However, degree of disability evaluations and 
situations where overlapping conditions and residual impairment 
are present do not lend themselves easily to rules-based 
technologies such as special monthly-compensation calculators 
and disability evaluation builders.
    An audiogram can provide exact measures of lost audible 
function which is why a hearing loss calculator makes sense. 
But I have yet to see a reliable rules-based tool that 
accurately reconciles spinal cord injury and its residuals 
which can include lower extremity loss of use, neurogenic bowel 
and bladder, neuropathic pain, need for aid and attendance of 
another, need for a higher level of specialized care in some 
cases, and severely diminished quality of life in all cases.
    If it has not done so already, Paralyzed Veterans of 
America recommends that VBA take older previously adjudicated 
ratings and test them against the outcomes achieved, 
particularly hospital codes and ratings given under U.S. Code 
1114(r)(1) and (r)(2) which is typical in the paralyzed veteran 
community, using rules-based calculators in order to determine 
their true accuracy. And, of course, we will be highly 
interested in those findings.
    We do appreciate the other measures VA has undertaken to 
reduce the overall backlog, key among them the disability 
benefits questionnaires or DBQs, the integration lab or I-lab 
concept, and the fully developed claims process. For the most 
part, these initiatives have proven to be adequate remedies for 
curing some of the procedural problems noted in the claims 
development process. None of these are perfect solutions, 
however, and I can offer both pros and cons on each as reported 
by our field staff.
    That said, we are collectively striving for progress, not 
perfection here. So Paralyzed Veterans of America remains 
optimistic about the impact potential of these initiatives.
    Mr. Chairman, all these initiatives seem to have two 
critical aspects in common. They are wholly driven by 
statistics and are very resource intensive. As long as they 
render real results as determined through honest, objective 
assessment, progress is likely despite inevitable setbacks, 
many of which offer lessons learned going forward.
    Most importantly, one cannot lose sight of the simple 
virtue of having well-trained people given the tools they need 
to do quality work.
    And so in closing, Paralyzed Veterans of America 
appreciates VA's effort to aggressively tackle the backlog 
through ambitious, visionary initiatives and General Hickey's 
leadership throughout the process.
    We look forward to making more valuable contributions to 
VA's 21st century transformation effort whenever possible, 
particularly as it impacts the lives of paralyzed and other 
catastrophically disabled veterans.
    This concludes my testimony and I will be happy to answer 
any questions the Committee may have.

    [The prepared statement of Sherman Gillums, Jr. appears in 
the Appendix]

    Mr. Bilirakis. Thank you very much, gentlemen. I appreciate 
it very much.
    I am going to go ahead and recognize myself for five 
minutes to ask questions.
    Again, time and time again, you all pointed to deeper 
cultural and management issues at VBA as the root cause of the 
issues related to the backlog, accuracy, and processing times.
    Please speak specifically to your concerns about the 
culture at VBA and its effect on achieving its goals. For 
example, VA's cultural reluctance to accept private medical 
evidence as adequate for rating purposes. Be as specific as 
possible.
    And who would like to begin?
    Yes, you are recognized, sir.
    Mr. Gillums. It is my impression that these culture issues 
are not new, even though they relate to some of these new 
initiatives. The problem is when you have the cultural problems 
overlaid with this notion that technology is going to cure 
problems, all you are doing is essentially automating a lot of 
the issues.
    We made reference to the disability benefits questionnaires 
and this notion that we can take a check list, give it to a 
doctor, and that solves all of our issues. The problem is a lot 
of the thought that goes into how these DBQs are viewed by VA 
raters, whether they are adequate is an issue here. How quickly 
VA resolves the problems we see with DBQs signals, whether the 
culture recognizes the need to adapt quickly.
    And we are here today because we want to encourage more 
thought as to whether the VBMS is ready for rollout. The 
problem is we need to first take care of the underlying issues 
before we do that.
    PVA has not seen a lot of VBMS cases and so we would like 
to ensure the complex cases actually work in this process 
before it is rolled out. We've been talking about these things 
for sometime. Now, whether that happens is yet to be 
determined.
    Mr. Manar. Mr. Chairman, if I might address this as well.
    Disability benefit questionnaires are on the whole a fine 
tool. They are useful for standardizing data collection and 
providing rating specialists with the minimum that they need in 
order to make real quality decisions.
    However, you are perfectly correct in your concerns whether 
the culture in VA, at least in some regional offices, has to 
change to allow them to accept this outside medical evidence 
when it comes to them without questioning it.
    For many years, for decades, there has been a presumption 
within VBA that veterans cheat, that veterans lie in order to 
obtain benefits. While there may be a few veterans who do that, 
in my experience, and I think I can speak for my friends here 
that the number of veterans or percentage of veterans who 
misrepresent their disabilities are a very small percentage of 
total veterans who seek benefits.
    These veterans are hurting. They are injured in service or 
acquire disabilities later in life because of their experiences 
in service and they come to the VA for help. And most VA 
employees are there to help them, but there is this culture 
that keeps them from doing that.
    There are some other cultural problems: there is this mind 
set especially among VBA managers in regional office of the 
total focus on production. And what happens with that is that 
first you wear out employees, but also at the same time, you 
tell them very clearly even without saying it in words, but 
through their actions that quality does not matter.
    And the problem with that is it drives the overwhelming 
number of appeals, over 250,000 appeals pending right now which 
is another part of VBA's backlog and it is just a travesty when 
it comes to serving the men and women who have served our 
country so well at great sacrifice.
    Thank you.
    Mr. Bilirakis. Anyone else?
    Mr. Hall. Mr. Chairman, I will just expound on a couple of 
points that have been made by my colleagues here and not to be 
redundant, but a specific example might be at a time when I had 
approached a rating specialist at the Chicago VA regional 
office when I worked there with a fully developed claim, there 
was no need for a VA examination. Everything was current. The 
veteran had discharged from military service very recently 
prior to filing his claim. Everything was current.
    When we submitted that claim, the rating specialist had 
told us that there was the need for an examination. After a 
little bit of back and forth, you know, and I approached the 
rating specialist to discuss why he felt that there was a need 
for an examination when we had all current medical evidence and 
he said because I am not here to give the government's money 
away. It is my right to set up an examination for this veteran. 
That is what VA does.
    It was this where it led me to the coach who also supported 
this type of or supported the rating specialist in this and all 
the way up through the service center manager without 
resolution.
    The veteran did get an examination unnecessarily and it was 
just a complete and unnecessary thing. The point being that it 
started with the culture and the very lowest level, meaning the 
rating specialist, who felt that he had the right to do this 
regardless of what he had in front of him. This was supported 
through this chain of command. That is a cultural problem.
    I do not believe that that is much different today, 
especially when considering the disability benefits 
questionnaires as pointed out by Mr. Dumancas here about 
different things regarding certain sections not being on the 
DBQs or even in the development of them, but private medical 
evidence is going to be a key for that disability benefits 
questionnaire to be successful.
    You already have raters that come to us that tell us that 
the disability benefits questionnaires coming back from the VA 
are not filled out correctly and then that requires them to set 
up an examination. So they are already disillusioned by the 
possibility of this being a positive part of the transformation 
initiative.
    We believe that the DBQs can do that, but it is not going 
to be as fully embraced until private medical evidence is 
instituted and accepted in that.
    And one final point about culture. I do believe that a lot 
of the leadership in VA at this level, they are putting out the 
right message. I think the rating specialist at the lowest 
level also who just started with VA is understanding that and 
carrying the mission. It is somewhere in between where the 
message is getting lost about veterans come first.
    VA does not exist without veterans. I do not believe that 
that is necessarily true for a lot of employees in VA. And, 
unfortunately, these are a lot of people that are making key 
decisions in VA, especially local decisions which affect things 
like creating a work-around solution that does not make any 
sense when the issue should have been resolved and it should 
have been resolved equally across the board at every regional 
office or every pilot location.
    So, again, I think the culture is the message is at the top 
and it is being done correctly. It might be received or thought 
of at the lowest level, but somewhere in between there is a 
culture issue.
    Mr. Bilirakis. Thank you very much. I am going to ask one 
more question and then I will yield to my Ranking Member.
    VA has mentioned that the VSOs have been actively involved 
in developing these initiatives. For example, DAV input into 
VBMS.
    And I want to ask you, Mr. Hall, how much input has DAV had 
in this initiative. To what extent does VBA actually involve 
the VSOs in the process? How frequently are you asked for 
input?
    So why don't we start with Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman.
    Actually, yes. And we were very pleased when VA had offered 
VSOs, it was offered VSO wide for to have an individual tasked 
to work alongside of the VBMS development team over at VA 
central office. And we did. We served up our Assistant National 
Service Director, James Marszalek, who went over and spent the 
first 30 days of his time here in Washington, D.C. working 
closely with the VBMS team, whether it was individuals from 
Spawar or Alan Bozeman, the Director of VBMS, and many others.
    And a lot of positive and good things came out of that, I 
guess, tenure or that working relationship on both sides. We 
learned a lot about what VA was doing or what the development 
was of VBMS and also he was able to provide valuable input from 
his experience in the field as a National Service Officer.
    And so we believe that that partnership was definitely 
worthwhile, and currently he continues to participate. That was 
a year ago and he is still twice a week participating in VBMS 
conference calls.
    Mr. Bilirakis. Thank you.
    Mr. Dumancas, how much were you all involved in these 
initiatives? Go ahead and elaborate.
    Mr. Dumancas. Okay. I apologize. I am just recently hired 
with The American Legion, so I am not aware of what came 
before. I mean, I have been with The American Legion here in 
Washington, D.C. for six months. So anything prior to December 
of last year, I am not aware of.
    But recently we have been out to Salt Lake City to view the 
Power Point slides and hear what they had to say. And upcoming 
in July, I will be part of hands-on with the VBA and VBMS out 
in Crystal City. So hopefully we will continue to work.
    Since I have been here, they have been very up front and 
they have been explaining the whole situation and the scenarios 
to me and I bring back to The American Legion. But I apologize. 
Before December of 2011----
    Mr. Bilirakis. Mr. Manar.
    Mr. Dumancas. --I have not had a chance.
    Mr. Manar. Over the last couple of years, we have seen an 
unprecedented reaching out and openness from VBA leadership 
here in Washington. General Hickey has on many occasions, even 
from her earliest days as Under Secretary for Benefits, 
included at least the major service organizations almost 
routinely in many of the things that she has done.
    In my written testimony, I mentioned that in July, I 
believe it was July of last year, she had a two-day conference 
where she sat down with 50 leaders from within VBA and planned 
out or at least began the process of planning out where they 
would be going through these next couple of years with the 
transformation project.
    And she included a representative from the Disabled 
American Veterans and the Veterans of Foreign Wars in that two-
day conference. It opened up the curtain and allowed us to see 
inside. And we certainly thank her for that.
    As far as VBMS is concerned, DAV has participated and 
continues to participate in its development. We would have 
loved to do that, though the problem is that even though the 
Veterans of Foreign Wars is a major service organization, our 
national staff is somewhat limited and we could not 
participate.
    On the other hand, we do meet quite regularly with VBA and 
other service organizations in working on some of the side 
issues of access for veterans, service organization 
representation, how eventually we will get into the computer 
systems to help claimants file their claims and obtain 
information. And VBA is responsive in many of those things.
    Now, having said that, I do have to say that our access is 
not complete and it is regrettable that it is not. There have 
been many times over the last several years where we have 
learned of a major pilot program being implemented in one or 
more regional offices in the field from our field personnel. We 
do not hear it from the Washington staff of VBA before it is 
rolled out.
    As a consequence, service organizations are often left on 
the sideline in the field and they do not have the kind of 
access to the computer systems or voice in the change workflow 
and that kind of thing. But it is necessary to enable us to 
best represent veterans.
    Mr. Bilirakis. Mr. Gillums, what has been your experience? 
Can you give me a specific example where maybe VA has taken 
your suggestion?
    Mr. McNerney. Sir, will the Chairman yield? Will the 
Chairman yield?
    Mr. Bilirakis. Yes.
    Mr. McNerney. Mr. Chairman, I would ask that you show 
courtesy to the other Members of the Committee and limit your 
time.
    Mr. Bilirakis. You are absolutely right. This will be the 
last question and then we will go. Thank you, sir.
    Mr. Gillums. A specific example I talked about in my 
written testimony was the special monthly-compensation 
calculators and some of the inaccuracies that we had noted, 
particularly in higher level disabilities where special 
monthly-compensation becomes a complex formula that even when 
you do it on paper, it is pretty hard.
    We have got a problem with the fact that these rules-based 
tools were flawed in their rules and, therefore, flawed in 
their outcomes.
    We did address the issue with the IT team probably about 
six months ago. I am not sure if it is fixed across the board, 
but we did perceive the recommendation to be warmly received. 
But time has yet to tell whether it has actually been enacted. 
We still do get reports that the calculators still render 
flawed outcomes. The difference is we do have the adjudicators 
and decision review officers willing to entertain the notion 
that these calculators are flawed and review the decisions.
    So that was of importance to me because, I know once you 
have a flawed SMC code or hospital code, we are talking years 
of appeals thereafter. And if VA could fix it now, I believe 
that it will fix what has been a big problem in VA, which is 
retrospective acknowledgement of error versus fixing it the 
first time and getting it right so we do not get into a 
position of having to reverse a decision later on.
    I hope that answered your question, Mr. Chairman.
    Mr. Bilirakis. Thank you very much.
    Now I will recognize Mr. Filner for questioning.
    Mr. Filner. Thank you, Mr. Chair.
    With all due respect to my friends in the VSOs, as I 
listened to you, it seemed like you swallowed the Kool-Aid. I 
mean, you accept the framework that has been laid out for you 
by the VA. You use the terminology, the bureaucracy, the 
acronyms that do not make any sense to your average member.
    If I had a person here waiting for six month, a year, or 30 
years for a rating, what you are saying does not mean anything. 
Why am I not getting an answer and why have I fallen into the 
black hole of bureaucracy?
    I mean, it is like you are trying to fix a mouse trap that 
does not work, does not trap mice, just traps veterans. And I 
do not know what you are so afraid of blowing up the system. It 
does not work for your members. I hear it every day. It does 
not work.
    Mr. Dumancas, you say you want to be optimistic, but you 
see red flags. In most sports, red flags means you are out of 
the game. So throw the red flag on these folks and get out of 
this game.
    Your story, Mr. Hall, about the rating specialist shows the 
system does not work. The guy should have accepted what you put 
in. We can set up the system to do just that.
    What are you so afraid of, of having to accept this 
massive, massive bureaucracy which you said, Mr. Hall, veterans 
comes first, but you yourself are not putting the veterans 
first? You are playing their game. What are you so afraid of 
blowing up the whole system here? Mr. Hall? I mean, why are you 
guys playing their game? You represent the veterans.
    One of you guys said, oh, I have been on the phone with 
them twice a week for a year. Wow. They really got you pulled 
into this thing and it does not work. What are you wasting your 
time on the phone twice a week for two years? Do something 
real. What are you so afraid of?
    You guys know the Bilmes system. Mr. Gould at the VA knows 
her very well. He has worked with her. She has written books 
about it. Why don't you go with it? Every veteran I talk to 
around the country says, yeah, that sounds great, but their 
representatives are brought into this crazy mouse trap here.
    Mr. Manar. Sir, when you blow up something, you do not know 
what you have left.
    Mr. Filner. We know what we have left.
    Mr. Manar. We know what we have now.
    Mr. Filner. You are so afraid that one veteran is going to 
commit fraud. I talked to some of your officers and they said, 
well, there are guys that are going to lie. Come on. Ninety-
nine percent of them are not and we can live with one.
    I am blowing up one part of the system. I am not blowing up 
the VA. I am blowing up the way we act on a claim when it comes 
in that has been medically documented, as Mr. Hall says, that 
has had the certification of a VSO. Accept that claim.
    What are you afraid of about that? Represent your members. 
What are you afraid of?
    Mr. Manar. We do represent our veterans, sir.
    Mr. Filner. Then break this stupid system that we have been 
transforming it for decades and you all said that. Mr. 
Shinseki, I have been at speeches for the last four years, I 
love him, but he said this is the year we are going to break 
the backlog. It has not happened.
    Insanity, doing the same thing over and over again and that 
you expect a different result. The same thing is going to 
happen. You have said it in your answers to the culture. You 
said it every which way, but you are afraid. You just accept 
the same bureaucracy and you are part of it. I think you ought 
to represent your members and break that system.
    I will yield.
    Mr. Bilirakis. Dr. Johnson, you are recognized for five 
minutes.
    Mr. Johnson. Thank you, Mr. Chairman, and thank you for 
holding such an important hearing.
    We have heard Secretary Shinseki state his goal of reducing 
the turnaround time for claims processing to be no more than 
125 days. Now, I do not know what private sector company would 
still be in business today if they required 125 days to process 
a claim.
    And I am even more troubled to hear from today's witnesses 
that almost 600,000, nearly 66 percent, of the claims have been 
pending for over 125 days.
    I look forward to today's discussion on veterans' benefits 
administration (VBA's) transformation plan--what components may 
work and what still needs to be clarified or improved--and also 
to work with my colleagues to find real solutions to once and 
for all reduce the backlog.
    Our veterans sacrificed everything for America and we owe 
it to them to see that they are receiving the benefits that 
they have earned and that any claims are processed efficiently 
and correctly the first time.
    Mr. Hall, you mentioned in your testimony the issue of 
service officers who hold power of attorney for claimants being 
unable to access VBMS.
    What steps have you taken to address this issue with the VA 
and has the VA explained how their solution to enable POAs to 
view unrestricted veterans' files will work?
    Mr. Hall. Yes, sir. Thank you.
    I mean, the issue of the POA access relatively came to 
light recently. And when we address that with VBA, the answer 
given was primarily that the electronic power of attorney, the 
limitation of consent may be an issue where an individual would 
select, they limit the access to certain things like health-
related things like AIDS information or alcohol or drug.
    And when that box is checked just like on the paper power 
of attorney, if that box is checked, then that limits what can 
be accessed in that particular file.
    We rarely see that it is invoked even in the paper form. We 
have not had enough claims in the VBMS to know overall, but I 
would venture to guess based off of the paper form that it is 
probably not going to be invoked, you know, more than what it 
is now.
    And when speaking with VBA as far as a solution to that, 
because here we are two and a half years into and we still do 
not have access to be able to provide answers to when--if you 
were to ask me, you know, are they on the right path. We can be 
optimistic that we think that they are on the right path by the 
signs that we see.
    However, without that full access which we are being denied 
obviously at this point because the POA issue has not been 
resolved, we are not able to give a comprehensive assessment of 
that.
    So at the last assurance which was just last week, we were 
told by VBA that the POA issue, we were assured the POA issue 
will be resolved when the next release happens on July 16th.
    Mr. Johnson. Well, Mr. Hall, what suggestions do you have 
for the VA to establish consistency for notifying service 
officers of determinations for veterans' claims? You got any 
advice for them?
    Mr. Hall. Could you repeat the question?
    Mr. Johnson. Sure. What suggestions do you have for the VA 
to establish consistency for notifying service officers of 
determinations for veterans' claims?
    Mr. Hall. So when the decision come in or I assume what you 
are asking me is within the VBMS pilot locations and that they 
are--or that there is different things happening at different 
locations, I am not sure why that even occurred to begin with.
    I am not sure what was told to them as far as individual 
stations, as far as you figure it out. Maybe it was told to 
them as you figure out a solution to it. I doubt very seriously 
that is what happened or if they were just left--maybe their 
concerns about it locally were not answered from the leadership 
above. I am not sure what really occurred there.
    As far as a suggestion, it is simply is if today my 
testimony is putting VA on notice that something different is 
happening in these four locations, I would be shocked. They 
have to know that these work-arounds are happening at these 
four locations because, again, as we are all talking about 
here, this is the thing that VA is banking on to revolutionize 
the process.
    But I would caution one thing and we may, you know, we may 
hear that. We have heard it before in VA's testimony and that 
is, again, we are talking maybe back a little bit to culture. 
VBA has said in the past that the VBMS system is being created 
to break the back of the backlog when DAV has maintained along 
the way that the backlog is purely a symptom of a broken 
system.
    We are looking for reform of the overall system. And 
without things like something as simple as what your question 
alludes to, what suggestions do we have. The leadership has got 
to make sure that that happens, that the fix, whatever it may 
be, even if it is a temporary fix, is done across the board.
    Mr. Johnson. Thank you.
    Mr. Chairman, I yield back.
    Mr. Bilirakis. Thank you, Dr. Johnson.
    I will recognize Mr. Reyes for five minutes now.
    Mr. Reyes. Mr. Chairman, in deference to the Members that 
were here at the gavel, I will defer to them.
    Mr. Bilirakis. Okay. I believe you were first, but if you 
would like to yield to Mr. Michaud, that would be fine.
    You are recognized, sir.
    Mr. Michaud. Thank you, Mr. Chairman.
    I guess my question talking about the systematic problem 
within the VBA, do you feel it is a problem, for instance, if a 
veteran goes to Veterans Health, see a doctor, the doctor there 
says you are probably eligible for veterans benefit, they go 
over to VBA and they say, well, yeah, you are probably 
eligible, but you have got to see our doctor first, is that a 
problem where VBA does not accept what a VHA doctor says is a 
problem with that particular veteran?
    Mr. Hall. I do not think that is so much a problem.
    Mr. Michaud. Does it occur?
    Mr. Hall. I am not so sure that it occurs as you are asking 
me unless I misunderstood. You are asking if the veteran goes 
to a VHA doctor and that doctor informs the veteran that he may 
or she may be eligible for benefits. I am not sure that occurs.
    Mr. Michaud. Yes.
    Mr. Hall. It should occur, but there is a disconnect 
between VHA and VBA in that particular regard. So as far as the 
information coming in from VHA to VBA to satisfy their needs 
for the claim, that is one of the primary reasons why DBQs are 
being--why they were created was to streamline that process 
because it answers the questions that the rater needs--I should 
say the physician is answering questions that the rater needs 
that are rating specific.
    So whether or not--I do not know--I have not talked to any 
VHA physicians to know what their thoughts are on the DBQs.
    Mr. Michaud. The American Legion.
    Mr. Manar. The question evinces perhaps a misunderstanding 
of the relative roles between physicians and the decision-
makers. Physicians, of course, are trained to diagnose and 
treat disabilities, medical conditions of all kinds. Within 
VHA, that is what they do.
    The disconnect here, though, is where is the decision made 
that that disability is somehow related to service. That is a 
legal decision and that is in the hands of a VBA rating 
specialist.
    The medical information is provided to them. They look at 
the entire record, the nature of the service the veteran had 
while they were in the military, and then they determine 
whether it is more likely than not, sometimes based on medical 
opinion, but sometimes based on the evidence alone, whether 
that disability should be service-connected.
    Mr. Michaud. Okay. So if I understand correctly, so you do 
not think there is a problem between a VBA doctor questioning 
the medical problems with a particular veteran versus what a 
VHA doctor might have said? You do not think they are 
duplicative in that regard?
    Mr. Manar. I do not think that there is a real duplication 
there. VHA doctors normally treat and the VHA doctors or 
contract physicians that do compensation or pension 
examinations are often the same doctors, however doing a more 
administrative kind of examination.
    Mr. Michaud. Okay. Are there any successful pilot programs 
that the VA has implemented as part of a comprehensive plan 
that have been successful but have not been well utilized 
through the VA system? I know they do a lot of pilot programs.
    We will start with Mr. Hall and work down.
    Mr. Hall. Yes, I think the FDC program is an example of 
that that is currently operating. I do not have the latest 
statistics on that, but it definitely is one of the more 
positive pilot programs that have been instituted.
    Mr. Michaud. Anyone else?
    Mr. Gillums. The integration lab as a concept has worked 
well, at least in the areas where it has been tested, 
particularly the express lane and fast-track processes. There 
you have a situation where there may be a terminal illness, for 
example, at issue. Our service officers have enjoyed being able 
to quickly get these claims adjudicated. The interim pay 
initiative has worked well also. So I think the I-lab concept 
offers promise.
    And I will just quickly remark on your earlier question 
about the VHA, VBA collaboration. I do think there is some 
sense, at least in my experience, that the VHA doctors are not 
inclined to get involved with the benefit side of things. That 
is just one thought.
    The other thought I have is the problem may lie with the 
raters who see the VBA physicians' expertise or opinion as 
superior to a VHA doctor because of that treating physician 
relationship. There is almost a sense that because a doctor 
treats this veteran, he is going to be overly deferential in 
his medical opinion. So that is something that probably would 
be good to address pursuant to your question.
    Mr. Dumancas. I would also like to comment on his statement 
about VBA and VHA.
    One of the problems out there that I have seen is when we 
get a specialist, a private specialist doctor out there who 
diagnoses and makes the links to the military service has 
reviewed everything the VBA requests, but then there is 
something that is missing and then they go with an opinion of a 
VHA doctor or a VHA nurse practitioner. Nothing against nurse 
practitioners or PAs, but they take the opinion of the PA or NP 
over a specialist such as a pulmonary specialist. That is very 
frustrating for the veteran when they go out there and they see 
the specialist and then the VBA turns around and says, well, 
you know, you see a doctor all the time so, of course, you are 
going to be more bias towards what you want.
    And, of course, in my circumstances, that is when I have to 
go the appeal route and we are successful that way. But it is 
very frustrating that way.
    And if we could just do the DBQs. Sometimes when the DBQs 
first came out, not all VHA facilities accepted those or would 
do them. Now, we have many veterans out there who rely on the 
VHA for their primary care because they cannot afford private 
health care. So we have to work with the local VHAs also. So I 
hope that answers.
    Mr. Runyan. [Presiding] The gentleman yields back.
    The chair now recognizes himself for five minutes for 
questions.
    And I want to start with Mr. Hall and you can all weigh in 
on this, but dealing specifically with DBQs, I have three 
questions. I am going to get them all out and let you answer 
each one of them.
    Have DBQs been effective in ensuring that adequate medical 
evidence is available to rate a veteran's disability? How 
effective have they been thus far in improving the claims 
process? And, based on your experience, are fully developed 
claims processed more quickly than traditional claims? If so, 
by how many days?
    Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman.
    Regarding whether DBQs are adequate, we have not seen 
enough of them to know. So I have to rely on the feedback I get 
from those individuals that work closely with them, the VA 
raters, the RVSRs.
    One of the major frustrations they have is that it seems 
that the or they feel that the DBQ is longer and more 
cumbersome to use. It takes just a longer amount of time for 
one for the physician to complete and maybe they are skipping 
things on there because they do not have the time to go 
through. So the complexity of it may be in question.
    As far as those that have been approved, I apologize. I do 
not have that statistic either to know how these have impacted 
the outcomes of ratings specifically.
    And as far as the FDC, yeah, it is intended to process 
claims quicker, to get them through with wait times. I am not 
sure. I did not look specifically at that in preparation for 
today's testimony to know what, you know, the overall 
processing time for FDCs are.
    I mean, ideally it is, I think, it is supposed to be claims 
decided within 120 days. I think they may still be around that 
particular time, but it just depends on where they are 
utilizing those forms, whether it is all stations or just 
select stations.
    Mr. Runyan. Mr. Manar, anything to add?
    Mr. Manar. As far as DBQs are concerned, when they are 
received in a totally complete form, they can be very effective 
in moving that claim ahead more quickly, especially in an 
office that accepts privately completed DBQs. It can save both 
time and significant resources in VBA.
    VBA officials in Washington have pushed ahead with DBQs 
because they can save significant amount of resources both in 
VHA and VA not just in man hours but also claims processing 
time.
    The problem is that as they develop some of these, some of 
them are very simple. You want to find range of motion of an 
arm. You have got just a couple of measurements to take. On the 
other hand, if you are looking at more complex disabilities, 
those questionnaires can go to many pages. And even if 
electronically completed, they can still be difficult for the 
examiner to fill out.
    Now, this is where the DBQs, are, I think, the forerunner 
of what may eventually help VA become a lot more efficient. And 
that is they are collecting this data in discreet form and they 
can eventually, the plan is to eventually take that data and 
directly dump it into the VBA system so that if an exam were 
done on you or I, then there is no printing of paper, there is 
no interaction.
    If it is that simple range of motion, then those 
measurements can go right in and the computer can be programmed 
to propose an evaluation that is appropriate for the 
individual.
    So the potential here is to use these things, these tools 
to help speed up processing and eliminate hand-offs and 
eliminate the potential for input errors and so on. The 
potential here is really good, but they still have a lot of 
work to do on these and I believe they know that.
    Mr. Runyan. Mr. Dumancas.
    Mr. Dumancas. Yeah. The concern of DBQs, they are still 
fairly new, but I believe that if the right blocks were in 
there such as providing a nexus statement, making sure that the 
private doctor understands what a nexus--I am sure that they 
do, but, I mean, making sure that they understand that they 
need to rate it back to the military service or service-
connected condition that is already granted. I think that would 
be a great step forward.
    Another concern I have is that there are 71 out there on 
the Web site, but I hear that there is over 80 DBQs. And why 
aren't the other DBQs releasable to the veteran? Like I say for 
mental health, we did not see anything for mental health.
    If a veteran is seeing his or her own psychiatrist and the 
psychiatrist is using the DSM-IV, why not allow that 
psychiatrist to give an opinion or conclusion?
    For a fully developed claim, yes, I have seen that in the 
past. Prior to me coming on to The American Legion, I was a 
county veteran service officer out in Minnesota. And, yes, 
fully developed claims worked very well as long as the veteran 
understands what a fully developed claim is.
    And that is where we are going to have to take the 
initiative also to assist the veteran and making sure that they 
understand what it is because providing the medical 
documentation and the needed links to the service and whatever 
else is out there, as long as we are guiding the veteran, as 
long as the veteran comes and sees us and the veteran is 
cooperative with us, too, the claims do go through.
    I mean, I have witnessed claims going as fast as 45 days 
through the St. Paul regional office which is very great. 
Veterans are very helpful and they are very thankful for stuff 
like that. But in turn also, I have seen fully developed claims 
take up to six months and then, of course, one or two that took 
a little over a year because it needed to be further developed.
    So with that, yeah, the fully developed claim does work as 
long as everybody is on board and everybody is working together 
towards it.
    Thank you.
    Mr. Runyan. Thank the gentleman.
    Mr. Gillums, I am going to have to refrain from you. I want 
to make sure all the Members get a chance to weigh in on this.
    With that, I will recognize Mr. McNerney for his questions.
    Mr. McNerney. Thank you, Mr. Chairman.
    There is really no doubt in my mind that members of the VA 
that are going to sit in front of us today and sit in front of 
us on all these panels and the people that work at the VA want 
nothing more than to serve the veterans the best they can. Most 
of the members of the VA feel that way. Most members I have 
talked to are very committed to our veterans and, yet, these 
problems persist.
    So I take Mr. Hall's comment about some loss between the 
top level and the bottom level. And then we see a protest at 
the South Carolina, Columbia, South Carolina regional office.
    In private industry, there is usually a culture where 
suggestions from the bottom are encouraged and they are 
considered carefully and put into effect if they look like they 
are going to do any good.
    Have any of you noticed whether there is a culture in any 
of the regional offices that encourages suggestions from the 
line members, from the workers that are actually doing the 
claims?
    Mr. Manar. Several years ago, VBA here in Washington 
undertook suggestion campaigns with employees in the field and 
they collected hundreds of ideas and evaluated them and piloted 
quite a number of them. However, that was from the top down.
    In terms of at the regional office, the offices I have been 
in, they are so focused on production, so focused on moving 
things along even as inefficiently as they might do that, that 
is what they are focused on. So they don't have time or they 
think they do not have time to both solicit and then evaluate 
local ideas for improvement.
    Mr. McNerney. Well, it might be that in regional offices 
that some suggestions could be implemented. The directors would 
have flexibility to implement suggestions and see what works 
locally.
    Do you think there is an important need for a uniform set 
of guidelines across all the regional offices or do you think 
that some regional offices benefit from different guidelines?
    Mr. Hall.
    Mr. Hall. Thank you for the question.
    I think it really depends on what we are talking about. I 
mean, there are certain things that need to be standardized 
such as training. Training has got to be standardized across 
the board. That is something that should not be deviated from 
station to station.
    As far as something that affects how a particular regional 
office goes, no, I do not think nor am I suggesting that VBA 
leadership micro manage each regional office. I mean, that is 
what a director is supposed to do.
    But when they make decisions such as creating a work-around 
solution completely far and away from the VBMS and what it is 
intended to do, that is something again where the leadership 
must step in and say, hey, listen, this is way too important 
for you guys to be coming up with your own solution here. Why 
do we have somebody leaving the building and going to another 
building to review a paper copy of something that is supposed 
to be electronic? Let's get, you know, the resolution to the 
access resolved or let's resolve the access issue.
    So there are certain things that must be standardized such 
as training and maybe a process, but, you know, as far as 
individuals being listened to in the regional office also, I 
mean, that is where the innovation----
    Mr. McNerney. Right.
    Mr. Hall. --kind of things come from such as the SNLs, I 
think, was developed out of suggestions from one local VA 
regional office which then it was built upon. We are just not 
happy with the quality of it at this point.
    But the fact is, is that, yes, I think things are listened 
to, but it probably depends on, I do not know, are working 
conditions or morale issues being listened to? That I could not 
say. But some things are.
    Mr. McNerney. Mr. Gillums, you seen anxious.
    Mr. Gillums. Yeah. I think variability has plagued VA for 
some time and I have appreciated that both as a user and a 
representative.
    To your question on morale, I take a different tact. Maybe 
the reason why we have all these pilots, I think it is 45 up to 
this point, is because we are listening to too many other 
voices. Maybe at the tactical level, that is appropriate, but I 
think at the strategic level, there has to be some certainty 
about the direction in which VA needs to go. And that is 
probably why we have the fits and starts as it was 
characterized earlier.
    I think a more decisive strategy is probably in order. 
Maybe tactically you could have the various stations decide 
what is best because of maybe the regional issues that 
characterize their work. But I am more inclined to look for a 
more clear, cohesive strategy than to add more layers to the 
range of possible options. I articulated that in my written 
statement and I think that that is probably one of the issues 
here with a number of initiatives we are looking at.
    Mr. McNerney. Mr. Chairman, may I?
    Mr. Manar, do you think that some of the regional offices 
would benefit from these different pilots that are out there 
now or do you--some of those underperforming offices in 
particular?
    Mr. Manar. I think underperforming offices are deserving. 
First of all, underperforming in quality are deserving of 
extreme attention by both their own management and also VBA 
management here in Washington.
    It is my understanding that there is a program underway 
right now to retrain the staff in several regional offices 
because they have had problems in recent years. And we view 
that as a good thing. There has been too little attention paid 
to quality within VBA because of this overriding focus on 
production.
    In terms of pilots, sometimes you can have too much of a 
good thing. A couple of years ago, there were many more pilots 
underway than are currently working and I think that as 
exciting or energetic as it might have seemed at the time, it 
was not very productive. And many of those have been dialed 
back at this point and terminated.
    VBA needs to keep its focus on quality while pursuing this 
modernization program. With more attention to quality, no 
matter how long it takes to work the case, eventually veterans 
are going to get decisions that are appropriate and legally 
correct.
    And eventually you are going to see appeals begin to fall 
if veterans become convinced that the decisions they are 
receiving, whether they like them or not, are legally correct, 
but that is a long haul.
    But it has got to start somewhere and the more VBA focuses 
on quality, the better the organization will be down the road 
and the better veterans will be.
    Mr. McNerney. Thank you.
    Mr. Chairman, I yield back.
    Mr. Runyan. The gentleman yields back.
    Dr. Roe from Tennessee is recognized.
    Mr. Roe. Just a couple of very quick things. One, I could 
not agree more with Mr. Dumancas.
    And I am sorry I missed you all's testimony, but I have 
read it. I had another meeting to go to.
    I think one of the irritating things to me as a veteran and 
then as a physician outside the VA, you should be able to make 
a determination if you have a qualified physician.
    And what I have noticed in my hometown is that we have a 
number of doctors who have retired from their medical practice 
and gone to the VA and the day before, they are out in private 
practice, their opinion is not as good as it is the next day. 
They just go over to the VA and start working. I have seen 
that. I can name you 15 people I know right now that have done 
that in my own hometown.
    So I agree with you. I do not know how to get by that where 
a veteran goes out and sees someone, has a rating by a 
specialist and goes back, is reevaluated by someone at the VA 
and that decision is overturned. I do not know how you get by 
that, but we should. I totally agree with that.
    I think I would like to see one of those questionnaires 
just so that I could go through it and see how hard it is to 
do. I would like to look at one. At the end of the day, I would 
like to have that and just myself run through it and see how 
hard it is to do.
    And then lastly, we talked about this a lot and it is an 
enormous job that they have. I mean, when you look at the 
amount of paperwork and stuff they have to and information they 
have to evaluate, it is enormous.
    I have done that change from a paperless to try to make it 
better. And what I discovered in my own practice was the 
paperless part actually slowed me down a little bit to begin 
with until you get familiar with it.
    So I think the learning curve on their part is 
understandable. At least we had a much smaller bite, just 
70,000 charts. They have millions, maybe even billions of 
pieces of paper. I do not know, but lots.
    So what will you all do? I mean, I have some ideas about 
what to do. They have ideas. But you have to deal with it every 
day. What would you do to speed it up? I am going to put the 
ball in your lap.
    Mr. Dumancas. Well, one of the things I would do if I was 
in charge, which I am not, but if I was in charge is contract 
with one company. I mean, find that one company. I mean, right 
now they have got so many different software programs that they 
have to bounce in and out of. I am talking the lowest level 
workers, you know, and it is frustrating for them.
    I mean, it was frustrating for me as I called down to the 
VA from my office when I was in Minnesota and they were like, 
oh, it is not there, hold on, let me check this other screen, 
oh, hold on, it is not there, let me check this other screen of 
if you called the 1-800 number, you know, they are going off of 
one screen that is updated by the human factor.
    And when a veteran is calling, it is very frustrating to 
them because they do not have the information right there at 
hand. I mean, for instance, I would submit a form in support of 
veteran's claim that was filed a while ago. Veteran calls the 
1-800 number and the person at the other end goes, no, was not 
submitted.
    Well, what is the veteran going to think of me? I am not 
doing my job. So I have to sit there face to face with the 
veteran, arguing with the veteran, yes, I did send it, yes, 
sir, I did, yes, ma'am, I did send it.
    So I have to double check. I have to take the time out of 
my day to double check to make sure that it is within the VA 
system. And normally you----
    Mr. Roe. Why would that happen? Not to interrupt. Why would 
that happen? I mean, you are sitting there as a veteran service 
officer. You take the information. You are trying to help the 
veteran get their claim. It goes in. Why would that happen?
    Mr. Dumancas. Multiple factors in there. I mean, it gets to 
the mailroom and I don't know the procedures of the mailroom. 
And then once it gets up to wherever it goes from there and 
then who is entering into the computer, I am not sure. I 
apologize, but I cannot answer that for the VA staff.
    Mr. Roe. So you think part of the problem, and, of course, 
we will have Mr. Baker in a little bit to answer the software 
issue, but you think part of that is just a program, that they 
have got multiple different ones that do not work as well as 
they should?
    Mr. Dumancas. Right. It could be just, yeah, the software 
program itself. I mean, right now we are looking at VBMS, but 
we are also looking at SEP and ebenefits, how are those three 
going to connect together. SEP, stakeholders enterprise portal, 
we will be able to scan stuff, upload it into the VA system.
    But where is it going to go? Is it going to go in the VBMS 
or is it going to go--you know, I mean, I do not know. I cannot 
answer those questions. I got a lot of questions, but I cannot 
answer them.
    So, you know, I mean, the SEP, we have seen it. It looks 
like it is going to be great and we are hoping that it is going 
to be great, but is it going to solve all the everything? You 
know, we can do it electronically. We could submit everything, 
scan it in right there with the veteran, scan it in, 
automatically sees that we submitted it.
    Mr. Roe. And at least ours did not work quite that well.
    I yield back my time.
    Mr. Runyan. The gentleman yields back.
    The gentleman from Michigan, Dr. Benishek, is recognized.
    Mr. Benishek. Thank you, Mr. Chairman.
    Frankly----
    Mr. Runyan. Excuse me.
    Mr. Benishek. --I would like to associate--pardon?
    Mr. Runyan. My mistake. I want to recognize the gentleman--
--
    Mr. Benishek. Oh, sorry.
    Mr. Runyan. --Mr. Reyes.
    Mr. Reyes. Thank you, Mr. Chairman.
    And I want to start by also referencing the article on the 
protest by the VBA workers. And I do this because my first 
contact with the VA was in 1974. I got out of the Army in 
August of 1968 and in 1974 had my first contact.
    But the issue here 35, 40 years later appears to be the 
same and that is according to these workers, and I am quoting 
them, it says processing a claim has become increasingly 
segmented with finals passing through several hands before 
being denied or approved which leads to no one being held 
accountable for mistakes because so many people are involved.
    I went through this because in 1974, no one has a record of 
my initial medical issue with the VA. And I understand back 
then they were paper files. They had boxes and boxes of 
records. I was sent from El Paso to Albuquerque, so that 
increased the likelihood of something being misplaced or lost.
    But here decades later in the age of technology and the age 
of computerization, it boggles my mind that we cannot simplify 
things like a questionnaire that I have seen and is extremely 
complex.
    I cannot in my own mind resolve the issue that my colleague 
mentioned about not accepting a medical opinion within the same 
agency.
    And then when the Ranking Member talks about a 
dysfunctional system where yet one more series of pilots, which 
you have commented on, are proposed in an effort to get to 
transformation.
    In your opinion, what does VBA actually need to do to get 
to transformation in an era of advanced technology, in an era 
of a secretary that I know is very serious about doing whatever 
is necessary to get veterans taken care of and where funding 
has been provided to our largest Federal agency?
    And I ask that question as a veteran who today has a VA 
account. And I can certainly sympathize with veterans that come 
to my office and come to me personally and I can tell you they 
are very frustrated at the cyclical merry-go-round that they 
are forced to go through that subjects them to long waiting 
periods. It subjects them to conflicting medical opinions, and 
then the system questions their veracity even after having put 
their lives on the line in places like Iraq, Afghanistan and, 
yeah, as far back as Vietnam.
    So what do we need to do in your opinions? You have been at 
this for a while as the Ranking Member mentioned. What do we 
need to do to get real transformation done? How do we get 
accountability? How do we get that vital service to veterans? 
You guys represent national organizations. I am a member of 
your organizations. What do we need to do?
    Mr. Gillums. I find it interesting, that in the appellate 
realm where, of course, a lot of wrongs are righted, there is 
no way to take what we learned at that level about why a 
decision was wrong and then apply it proactively to the 
process. In law, higher court decisions have precedential 
value. But there is no precedential value to a decision at the 
appellate level in VA that will inform how we should be doing 
things, how we should adapt the system.
    There are fundamental aspects of the process such as, 
reasonable doubt. That in particular is so fundamental to the 
process. That speaks to whether you should be able to come in 
with an opinion that is valid on its face and apply it to a 
claim. But that does not happen. That goes back to the question 
of culture.
    But I think becoming an adaptive organization, an 
organization that understands its vulnerabilities and, again, I 
will harken back, to my earlier comment about the board and 
what it could teach us, maybe have those decisions carry some 
precedential value and maybe have the leaders understand that a 
lot of these appeals happen a lot of times because of poor 
development and a misapplication of law. And as long as that 
happens and we are ignoring that, then we are missing out on an 
opportunity to fix the system.
    Mr. Manar. You covered so many things and, unfortunately, 
we do not have the time to talk about all of them.
    I am reminded years ago, I had an opportunity to visit a 
country-wide mega call center out in Simi Valley, California. 
And you walked in this giant warehouse and people are in their 
little cubicles and they are all answering the questions that 
people have about mortgages. And at one point, we asked about 
problem resolution.
    So they took us over to a corner of the facility and there 
is another set of cubicles identical to all the rest and they 
said this is the Office of the President. And when a regular 
agent cannot complete the action that is necessary here, they 
refer them to these folks over here. And quite often the 
customer is satisfied with the resolution after they talked to 
somebody in the Office of the President.
    I asked the question: ``what extraordinary powers do they 
have?'' and they said, well, they do not have any extraordinary 
powers. But what they understand is the powers that they do 
have.
    Many VA employees operate within what they think they know, 
a range of what is, you know, I can make a decision in favor of 
the veteran between these parameters. [hands held a foot apart]
    But if they really understood, if they were really properly 
trained and experienced, they would understand that they have 
got this much authority, [hands held a foot apart] that the 
people on the margins can receive the benefits that they are 
entitled to under the law.
    But because of inadequate training, inadequate preparation, 
inadequate supervision, inadequate review of the quality of 
their work, people continue operating within a much narrower 
parameter than they can legally do so. And that is the 
challenge within VBA.
    One of the things that I have talked to General Hickey 
about and other leaders in VBA over the years is this concept 
of a second signature on ratings. Right now in many instances, 
a rating specialist goes ahead and makes a decision. And unless 
that decision gets picked up on quality review, and only a 
small number of those do get picked up on quality review, there 
is no check on whether that decision is correct or not.
    As a consequence, a rating specialist who gets single 
signature authority stops learning, stops growing because 
nobody ever comes back and says you could have made a different 
decision here based on the same facts and the same law.
    So that is a challenge that VA has and I think that is 
something that they really need to tackle, figure out how they 
can improve the quality of review at the local level. Now, they 
have started doing it recently by instituting what they call 
quality review teams in regional offices. How that is going to 
work out, I think it is still too early to tell because they 
are really very new. But the decision makers need that 
additional feedback so they can continue to grow and learn.
    The system as Congressman Filner points out is incredibly 
complex and all of us who work with veterans' benefits, if we 
do not learn something new every day, then it is a day wasted. 
There is something new to learn every day. And the job of VBA 
and the job of those of us who help train our own service 
officers to ensure that our people are learning every day so 
that we can help veterans.
    Mr. Runyan. The gentleman yields back.
    Now the gentleman from Michigan, Dr. Benishek, is 
recognized.
    Mr. Benishek. Thank you, Mr. Chairman.
    Frankly, I want to associate myself with the outrage of Mr. 
Filner because of the fact that, you know, this bureaucracy is 
so difficult to get a handle on.
    And, you know, I have been conducting these like veteran 
roundtables where we have VSOs around my district come and we 
have these little meetings and what are some of the ideas that 
they have.
    And, frankly, you know, one of the guys put together an 
idea that I did not have a good argument with and it kind of 
comes back a little bit to Mr. Filner.
    You know, the audiology, you know, hearing loss and 
tinnitus is like 30 percent of the claims as I understand it. 
And it is such a simple thing to document. For example, the guy 
either was exposed to a situation that could cause him hearing 
loss or not.
    And there is a simple test to determine if you have a 
hearing loss. There are things that are easily documented. Why 
does that take 18 months to get the determination that there is 
a disability?
    Now, there has been some arguments about for and against 
that. I do not know. Maybe it is the cost or the--but to me, it 
seemed like a real good question from this VSO. Why can't that 
just be determined to be a hearing loss and the guy gets his 
benefit? Now, he might have other issues that require further 
investigation and I can understand that. Maybe that gets put in 
the list with the other one.
    But why shouldn't something like this simply be granted? 
Now, I would like to hear your comments on that. You know, what 
are the downsides to that? Are there any downsides to it? I 
could not see any.
    Mr. Hall.
    Mr. Hall. It is not that we are not outraged about simple 
things, what appears to be simple things like if you have the 
evidence. Again, a fully developed claim is a prime example 
which I cited and Congressman Filner had responded to or 
comment about. It is not that we are not outraged by something 
simplistic such as hearing loss where again there is no 
subjectivity from a rater----
    Mr. Benishek. Right. I mean, why shouldn't that be granted 
immediately?
    Mr. Hall. Right. DIC claims, there is another one that 
really does not take a whole lot to decide or grant burial 
allowance. There is a lot of them that are still caught up in 
this 900,000 plus backlog, what is referred to as a backlog, 
but there are claims that could be plucked out easily. I think 
that is----
    Mr. Benishek. The question is, is there anything wrong with 
the scenario that I said which we just grant these benefits to 
that simple case? I mean, what is the downside to that? Is 
there a downside to it? Like I said I could not see one. Do you 
see one?
    Mr. Hall. I do not really see a downside to your 
suggestion.
    Mr. Benishek. Right.
    Mr. Hall. You know, as far as granting all claims, I do not 
know that that is feasible.
    Mr. Benishek. Well, I understand that. But, I mean, if we 
simplify that 30 percent of the claims are hearing loss, that 
would free up a lot of people to work on other things it seems 
to me.
    Mr. Hall. Agreed.
    Mr. Benishek. Mr. Manar, do you have any comment on that?
    Mr. Manar. Yes, I do. There are a couple things here. First 
of all, to your ideas and suggestions. Right now in order to 
service-connect a hearing loss or any disability, there are 
three things that need to be done. You have to have an event in 
service. You have to have a present disability and then you 
have to have a medical nexus, a doctor's opinion that connects 
the two.
    Many, many, many veterans were exposed to extreme noise 
while they were in service. Because of inadequacy of testing 
when they were getting out, their tests at discharge showed 
that they had normal hearing.
    Doctors know that they can detect hearing loss caused by 
acoustic trauma you are tested at a high enough level. If you 
test at the 6,000 hertz level or the 8,000 hertz level, they 
will see very early what they call an acoustic notch, a problem 
with hearing that is caused by noise exposure.
    Mr. Benishek. So it is not as simple as I said then?
    Mr. Manar. Well, there are two things that can be done. The 
VFW and, I believe the, Independent Budget which is made up of 
four major service organizations, have proposed for years that 
a presumption be created that would allow service-connection 
for hearing loss--assume this medical nexus where somebody who 
was either in combat or in a job in the service that exposed 
them to loud noises and they now have a present hearing loss.
    If they get the presumption, then VA can move very quickly 
to grant service-connection. That would either take legislation 
or it would take action by the VA to create the presumption.
    The other thing that VA can do for future veterans, and I 
have talked to a high level VA official who actually presented 
this to me, and he said they considered changing the testing 
levels for veterans or servicemembers who are coming out of 
service to test at the 6,000 or 8,000 hertz level and then 
change the law so that if they have a hearing loss at that 
point, a very high frequency hearing loss, VA would 
automatically grant service-connection.
    Now, it might be 20 or 30 years before they have a hearing 
loss that is compensable. But once they have that compensable 
hearing loss, you do not have this huge requirement of a 
medical opinion. You have already got service-connection. You 
say, okay, what do the numbers show. You assign whatever 
evaluation that is appropriate based on the numbers.
    So there are a couple of approaches to this, presumptions 
and changing the testing at discharge so future veterans can be 
treated much more fairly and justly.
    Mr. Benishek. I think I am out of time.
    Mr. Runyan. The gentleman yields back.
    The gentleman from Minnesota, Mr. Walz, is recognized.
    Mr. Walz. Thank you, Mr. Chairman and Ranking Member.
    And thank you to all of you for being here.
    And it goes without saying the frustration level for 
everyone in here is high. I understand that. I also think it is 
very evident that everyone in here's goal is to serve our 
veterans with the best possible care and best service they can 
get and try and figure that out.
    We all do know it is a zero sum proposition. If one gets 
through or 900,000 get through without being taken care of at 
the proper level, there is going to be frustration. So I think 
we are going to hear from some folks. We are going to hear from 
VA folks.
    But I think it is important to keep in mind when General 
Hickey gets up here and testifies, this is somebody who has 
spent a lifetime in the military and understands this. And the 
folks who work in the VA and the folks who are processing these 
claims in many cases are veterans too.
    So with that being said, I share that frustration. I think 
the issue we have to come to grips with is it is not mutually 
exclusive to care for veterans in a timely, efficient, and good 
manner and also be good stewards of the taxpayer dollars. This 
is the part that always troubles me.
    And I have to be honest with you. We are not business. We 
are not a business, so we should not oversimplify on that. We 
cannot go the way of some businesses. We cannot become Enron in 
the VA or whatever it is. We have to maintain excellence, but 
there is things we should learn on best practices and how we 
get there.
    And the Ranking Member's frustrations, I think he is 
exactly right. And I feel that with him, too, that it is just 
why are we not demanding this get done because I know there are 
professionals like General Hickey in there. I know they go up 
and down the line. I know our VSOs are unwavering supporters. 
And I know there are good Members of Congress that want to get 
this fixed.
    The will of the American public is there and I think we 
should try and shoot for something grand. I think we should try 
and fix this dang thing. If not us, who is going to do it? We 
have been at this for so long and so that is why I am looking 
for all of you.
    And I am pretty much to be honest with you, I am willing to 
try anything to get through this. You know, I was willing to go 
with the brute force way of getting it through or whatever. I 
also think we should take responsibility.
    And I have pride that we did the right thing with Agent 
Orange claims, but we added to that backlog. We put those in 
there and we did that. We made the presumptions on PTSD and 
some of those things. That is the right thing to do.
    But, again, we need to plan accordingly. I think we all 
here need to take some responsibilities. We did not know we 
were going to have a lot of veterans from these wars. We did 
not know we had aging veterans. Plan ahead accordingly and 
figure that part out.
    So I have a couple things I want to ask about. We are 
trying to do the benefits delivered at discharge, the paperless 
initiative, which is one of the programs you are trying to get. 
Hopefully the goal is to get there. That will bring down the 
claims and all that.
    But I have to tell you my county veteran service officers 
are at the point now they are recommending the veteran wait 
until they get back home to start the claim. They said it is 
too much of a hassle. They cannot get it or whatever. And I 
just want to ask you guys what you think on this level, the 
little, you know, 30,000 foot.
    Do you think that is good advice they are giving at this 
point or is that still stymieing the chance to move to that 
transformational level, whatever that is, as the Ranking Member 
said?
    So anyone who wants to try that.
    Mr. Manar. I have had this conversation with several of our 
service officers and although we have not taken a position 
nationally on it, I am certainly not telling our service 
officers that they should not be telling veterans or 
servicemembers they need to go through the BDD program rather 
than wait.
    Right now the BDD program and the Quick Start programs for 
active-duty servicemembers who are getting out are broken to be 
honest. And in many regional offices, new veterans will get 
faster service if they wait a few days until they are 
discharged.
    Mr. Walz. Do you believe by us not participating or 
advising, you know, my constituents and our, you know, CVSOs 
and VSOs back home or whatever, are we stymieing the chance to 
get to that because I am certainly not one who is stuck in the 
status quo?
    I have to tell you I am leaning more towards this big 
change that the Ranking Member is saying, that we have to get 
there. But I want to do it in a manner that is responsible, 
that is systematic and all that. I wanted to believe this was 
the way to go, but the folks on the front lines of the 
processing are telling me it is simply maybe not there.
    So are we going to hang on to BDD for the next 20 years and 
continue to try and reform it or is this just a natural growing 
pain? I am really struggling with this one.
    Mr. Manar. Well, I think part of it is a growing pain. They 
started the BDD program in Winston-Salem and moved it to Salt 
Lake City and they did not have the infrastructure or we were 
talking about VBMS. They did not have the tools. They did not 
have the system that would support this program.
    They did not realize that you are not just dealing with a 
few pieces of paper when you are scanning them and putting them 
in the system. It is millions and probably billions at this 
point of paper. And they did not have the system to support it. 
Things ran slowly. And so even if VA employees could work at a 
higher speed, there was a long period when they could not 
simply because they could, you know, go out and get a cup of 
coffee between actions.
    Mr. Walz. Mr. Chairman, could I have just a little time if 
anybody else wants to quickly answer, 30 seconds?
    Mr. Runyan. I remind the gentleman we have four panels here 
today.
    Mr. Walz. I yield my time.
    Mr. Runyan. The gentleman from Indiana is recognized, Mr. 
Stutzman.
    Mr. Stutzman. Well, Mr. Chairman, I am just going to go 
ahead and yield back, but I would like to say this because I 
had to step out for a short Budget Committee meeting.
    But from the conversations I have heard, I hope that and it 
feels like this Committee is determined to make sure this gets 
right and I am willing to help do that.
    So with that, Mr. Chairman, I will yield back.
    Mr. Runyan. Thank the gentleman.
    Gentleman, on behalf of the Committee, I thank you for your 
testimony and your service to our Nation's veterans. And you 
are excused.
    And our second panel will please come to the witness table.
    The U.S. National Archives and Records Administration or 
NARA has been an integral and temporary player and a standing 
component of VBMS.
    In the second panel, we welcome Mr. William Bosanko, 
Executive for Agency Services at NARA.
    Mr. Bosanko, you are now recognized for five minutes for 
your oral testimony.

                STATEMENT OF WILLIAM J. BOSANKO

    Mr. Bosanko. Good morning, Chairman Runyan, Ranking Member 
Filner, and Members of the Committee.
    Thank you for inviting me to this hearing and thank you for 
all that you do to honor and support our Nation's veterans.
    The National Archives has a long and proud history of 
supporting our veterans. Every day we assist veterans and their 
families by providing them with the records necessary to prove 
military service in order to claim a benefit or receive an 
honor.
    Our National Personnel Records Center in St. Louis, 
Missouri holds approximately 16 million official military 
personnel files and we respond to more than one million 
requests for these records every year.
    Here at the National Archives in Washington, D.C. in 
College Park, Maryland, we permanently archive and provide 
access to the historical records of our armed services that 
document the actions and heroism of many generations of 
military veterans from the Revolutionary War to present times 
so that historians, film makers, and genealogists can tell the 
stories of those who have served.
    I would also like to add that NARA, an agency of 
approximately 3,000 employees, is proud to employ over 480 
veterans including the archivist of the United States, David 
Ferriero.
    VBA has a primary role to play in serving our Nation's 
veterans. Its mission is to provide veterans, servicemembers, 
and their families with access to the benefits to which they 
are entitled.
    Essential to this mission is the VBA claims process. The 
VBA is building a new electronic system, VBMS, to transform the 
paper intensive process into a faster, more efficient and 
secure paperless system.
    One aspect of building VBMS and speeding the claims process 
involves the digitization of paper claims. In 2010, VBA 
approached NARA for advice on how to employ scanning technology 
and applied proven records management practices to scan and 
automatically extract data from paper claims forms.
    NARA had recently undertaken a successful project to 
digitize civilian official personnel folders at the National 
Personnel Records Center. As part of this project, we had 
employed cutting-edge technology that has the ability to scan a 
form and to learn where to look on the form to extract the 
necessary data.
    This technology had the potential to be useful for 
extracting data from VBA paper claims forms. NARA entered into 
a one-year agreement with the VA in June of 2010 to help design 
a scanning architecture and a process that would meet VBA's 
particular needs. Under this agreement, NARA mapped out a 
scanning workflow for claims processing, configured a scanning 
system, trained the system to recognize the data on VBA's 
forms, and developed a way to index the data so that it could 
be efficiently retrieved when needed.
    NARA also agreed to perform low-volume physical scanning of 
paper documents and hired a limited number of temporary 
employees to manually scan paper VBA forms. A pilot of the 
system was successfully tested in two VA regional offices, 
demonstrating that the architecture and process had potential 
to meet VBA's needs.
    Based on the success of the first pilot, NARA signed a 
second one-year agreement with the VA in June of 2011 to 
further refine the scanning workflow and hardware configuration 
and to continue to improve the system's ability to 
automatically recognize and compile data from paper VBA forms.
    We successfully pilot tested these refinements in two 
additional VA offices. The system can now recognize and compile 
data from 170 different VBA document types.
    NARA and VBA have demonstrated that the system can handle 
the scanning of up to 600,000 images a month from claims 
supplied by five VA facilities, four regional offices, and our 
records management facility.
    We are nearing our completion of meeting the requirements 
to the VA under the terms of these two year-long agreements. 
Our current agreement with the VA ends on June 26, 2012.
    Thank you again for inviting me to testify. I am happy to 
answer any questions that you may have.

    [The prepared statement of William J. Bosanko appears in 
the Appendix]

    Mr. Runyan. I thank the gentleman for his testimony, and 
the Chair will begin with questions.
    First let me say the Committee greatly appreciates your 
agency's service to our Nation's veterans. I think that being 
said, it is the mission of the National Archives to preserve 
and protect American history. While technology is an important 
element of such a process, NARA does not serve as the primary 
scanning operation for either itself nor other government 
agencies.
    Can you please describe how NARA became involved in VBA's 
VBMS program, then how it developed the technology used by 
VBMS, and finally its current role? I know you touched on it in 
your testimony, but how did they approach you in the whole 
process?
    Mr. Bosanko. Thank you, Chairman Runyan.
    Essentially we had previously had this effort with the 
Office of Personnel Management to scan civilian official 
personnel files and extract the necessary information off of 
those forms and make it available.
    Based on the success of that, we were approached by VBA. I 
think we also have a clear tie-in with the VA's business 
process given all of our work at the National Personnel Records 
Center in St. Louis.
    Mr. Runyan. I think the one question on everybody's mind, 
and you just brought it up, is what happens on June 27th, which 
happens to be next Wednesday, as this contract expires?
    Mr. Bosanko. So let me be very clear. The National Archives 
absolutely recognizes the significance of the support that we 
are providing. We are playing a very small but very important 
and critical role in supporting the VBA in this effort.
    In no way would we envision turning off, if you will, the 
service delivery that we are providing right now with VBA to 
veterans that are being served by those four facilities.
    So we are working with the VA to ensure that essentially 
there is no change on June 27th, that service delivery 
continues as it does today, and then figure out a mechanism to 
continue to support and ramp down our engagement as they build 
up private sector capability.
    Mr. Runyan. That being said, how many SES level meetings 
has NARA had with the VA about the process in light of this 
date looming here next week and when were they initiated? 
Because what I have heard is that discussions really did not 
come about until this hearing was actually called?
    Mr. Bosanko. So we received a request from the VA for 
production level scanning back in May. Prior to that, the prior 
year, there had not been any senior level engagement between 
the VA and NARA.
    The pilot was able to work at the staff level. We received 
a new performance work statement on June 11th and based on that 
in the last couple weeks, we have been working much more 
closely with the VA to make sure that there is a clear path 
forward.
    Mr. Runyan. Thank you for that.
    With that, I will recognize the Ranking Member from 
California, Mr. Filner.
    Mr. Filner. Thank you, Mr. Chairman.
    How much was NARA paid for those two years?
    Mr. Bosanko. So the two years combined, the total cost to 
the VA for our services was $9.7 million.
    Mr. Filner. All right, $10 million. When I hear all this 
stuff, by the way, I figure I can give a million dollars to 
some 20-year-old geek and he would solve it within a few weeks. 
So I just do not understand all this. This is not rocket 
science here. We know how to do this stuff.
    And why aren't you continuing into another year?
    Mr. Bosanko. I just want to be clear. We are continuing our 
work. We do not want to----
    Mr. Filner. You do not have a contract?
    Mr. Bosanko. We do not have a current agreement.
    Mr. Filner. So why don't you have an agreement?
    Mr. Bosanko. We are working with the VA right now to 
finalize their requirements and what our response will be to 
those.
    Mr. Filner. So you have set up a system at these regional 
offices to do this.
    How many employees do you think are going to be needed to 
do the job and why can't you do it?
    Mr. Bosanko. So we presently have 60 people that are 
working on the projects and those are sufficient for the work 
that we are doing. If your question is what would it take to do 
more----
    Mr. Filner. No. What my question is, what the VA's question 
is, how--we got a million backlogged claims. How many people do 
you need to scan this within two weeks or a month or two 
months? I do not care. How many people do you need to do it?
    You already have a system which took two years to give us 
an answer. I could have given you an answer in a week, I tell 
you, but it took you two years. How many people is it going to 
take to do all the scanning that has to be done?
    Mr. Bosanko. So National Archives does not intend to do all 
the scanning. The scan requirements----
    Mr. Filner. Well, have you estimated how many employees it 
would take to do it?
    Mr. Bosanko. For us to do the full 60 million pages a 
month, our model looked at a figure of around 4,000 employees.
    Mr. Filner. So we need another 4,000 employees to do this? 
Hello. I mean, do I have to say any more? This is the most 
ridiculous thing I have ever heard. You spent two years.
    You are telling us or you are not telling us, your agency 
said now we need 4,000 more to do the job. We do not have any 
budget. I am sure General Hickey is not going to tell us we 
need 4,000 more employees.
    I do not know how we are going to do your job that you in 
your testimony, Secretary, that we are going to have to do this 
by 2015.
    But I do not get it. I mean, I am not saying you at NARA 
are responsible. I just do not understand that we contracted 
for $10 million for you to give an answer that we can do this 
with 4,000 more employees. There is no way they are going to 
hire 4,000 more employees.
    So how long do you think this is going to take, another 10 
years, 15 years, 20 years? Which is why I go back to the so-
called Bilmes plan?
    We are not going to do this by brute force. Now we are 
going to need another 4,000. We have already hired 12,000 in 
the last few years.
    I thank you for your work, but, I mean, I could have 
predicted two years ago, you know, that it is going to be 
exactly this. And we know how to do this. This is not rocket 
science.
    Scanning, you know, I could go into my office and scan 
anything I want right now and I could pick out anything I want 
to scan. And I could take any veteran who comes into my office 
and do the scanning.
    I mean, we can do this. We do not need all these thousands 
of employees and bureaucracy after bureaucracy after 
bureaucracy. It just gets worse and worse and worse and worse.
    The VFW, is Mr. Manar still here, said I do not want to 
blow up the system. Your testimony, read your testimony, it 
needs to be blown up, I will tell you. I rest my case.
    Mr. Runyan. The gentleman yields back.
    And I remind the gentleman that NARA by no way is asking 
for more employees.
    Mr. Filner. I did not suggest that. I asked him how many 
would he estimate would be needed to do the job, not by him, 
but by the VA.
    Mr. Runyan. I think the next question, is what is the VA 
asking needs to be scanned and where do we draw the line as to 
whether we are going backwards into the files, or are we moving 
forward? I think that the biggest question that the VA has to 
answer is what is their need on how to move this process 
forward.
    With that, I will yield to the gentleman from Indiana, Mr. 
Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman.
    Mr. Bosanko, thank you for being here and for what you all 
are trying to accomplish.
    I guess my question is, is why isn't there a contract 
renewed? Is it a hangup on the VA's side, your side? Why isn't 
there a renewed contract?
    Mr. Bosanko. Thank you, Congressman Stutzman.
    We received a performance work statement on June 11th. At 
this time, it is a matter of us working through that, making 
sure that we are going to be able to deliver on the things that 
we are being asked to perform, figuring out what the cost of 
those things would be.
    It is actually an interagency agreement which is a 
relatively fast process, so we are optimistic that in the very 
near future we will be able to lock that in with the VA. But, 
again, I just want to stress June 27th, we are going to 
continue to scan the materials that are coming.
    Mr. Stutzman. But why isn't the contract done now? I mean, 
why does it have to be after the contract expires and we have 
got to go through this exercise? It is really pointless.
    Mr. Bosanko. There is no limit. We could have done one 
months ago. We could do another one in the near future. It is 
just a matter of clarifying what they need us to do and then us 
having the time to do the analysis.
    Mr. Stutzman. Do you know, are the expectations in a new 
contract to address the million images that need to be scanned 
and recorded?
    Mr. Bosanko. The materials that we have received still have 
us performing at a up to 600,000 pages a month level. The delta 
between that and the 60 million that are necessary for full 
national rollout, I believe the VA is examining private sector 
solutions.
    Mr. Stutzman. So do you have options to use private sector 
at all in addition to what you scan? Can you take anything that 
is needed and get it done outside of your capabilities?
    Mr. Bosanko. We are leveraging private sector expertise to 
make sure that we are using the scanning software in the most 
efficient, effective way, and to get advice as we work the 
workflow.
    But as far as us being a pass-through for the VA, I think 
the National Archives as an agency of a total of 3,000 people, 
it would be far more efficient and effective for the VA to 
manage that part of the process.
    Mr. Stutzman. So there are folks that you work with in the 
private sector that do the same thing that National Archives is 
doing for the VA?
    Mr. Bosanko. Yes. The particular software package that we 
use is one of the leading ones that is out there. And we are 
working closely with them and others that have leveraged that 
same software package.
    Mr. Stutzman. So is it possible then that the VA could 
continue the contract with the VA and could also bring a 
supplemental contract with somebody at the private sector to 
help catch up?
    Mr. Bosanko. I believe so.
    Mr. Stutzman. I mean, is that being discussed at all, do 
you know, or is National Archives being asked to do more to 
catch up?
    Mr. Bosanko. So what we are being asked to do is to 
continue our support to the five VA facilities and then to 
provide some expertise to support a national rollout so that we 
can take the lessons learned in the rollout to the five 
facilities we have done and actually be there to help roll it 
out into the other VA facilities.
    Mr. Stutzman. So the $10 million, that was a previous 
contract; is that correct?
    Mr. Bosanko. It was a combination of two one-year 
contracts.
    Mr. Stutzman. Two one-year contracts. What do you expect 
the price tag to be on the next one-year contract if it is a 
one-year contract or two-year contract, if you know?
    Mr. Bosanko. I actually do not know. And given the 
importance of this, I would prefer to follow up with the 
Committee in writing later.
    Mr. Stutzman. Okay. All right. That would be helpful.
    Okay. Thank you. I will yield back, Mr. Chairman.
    Mr. Runyan. The gentleman yields back.
    Mr. Michaud is now recognized.
    Mr. Michaud. Thank you, Mr. Chairman.
    Thank you for coming today.
    You mentioned that you are doing the work for what, five 
different states. From what you know about what you have been 
doing so far and you look at, you know, the expertise needed to 
do this, do you think this is something that, for instance, 
that is eligible for the private sector? Is there that much 
capacity out there in the private sector to do this and, if 
not, do you think the archives in each individual state, do 
they have the same type of software system that is needed for 
this particular program that the states might be able to help 
out with this backlog?
    Mr. Bosanko. So I think the state archives facilities have 
their own unique challenges, but I think you ask a very good 
question with respect to leveraging this capability and going 
forward.
    In the five facilities that we have deployed it, for the 
volume that we are doing, we believe that there is a firm 
foundation now for the VA to build off of and we think there is 
sufficient capability in the private sector.
    I think as the Ranking Member made the point, once you 
figure out the basic workflow and the basic scanning, after 
that it is a production environment and we think that that 
would be very appropriate for a private sector capability.
    Mr. Michaud. You mentioned the states have unique 
challenges. You are talking about money?
    Mr. Bosanko. I just meant that I did not think that state 
archable institutions do not have the kind of capability to 
handle this kind of scanning volume.
    Mr. Michaud. Okay. Thank you.
    Thank you, Mr. Chairman.
    Mr. Runyan. Mr. Walz.
    Mr. Walz. Well, thank you, Mr. Chairman. Again, thank you 
for your service on this. I am going to make this brief.
    I am getting back to this again. The archives 
responsibility is just a physical handling of the paper 
basically and the scanning in, in a useable format; is that 
correct?
    Mr. Bosanko. I think we have done more than that. We 
essentially designed the scanning workflow and we have been 
teaching the system to recognize where on the forms to find the 
data that needs to be extracted. That is a very challenging 
aspect of this. The concept of basic scanning is a pretty 
rudimentary process, but the ability to have the software find 
on----
    Mr. Walz. That is right.
    Mr. Bosanko. --all the numerous iterations of forms that 
have been used over the decades, that is incredibly complex.
    Mr. Walz. Is it hard for you to say is necessarily having 
that data in a useable format, that is still not a guarantee 
that these will move any faster? Am I correct that if there is 
the decisions to make on the ratings and the decisions to make 
on the claims, it is not a guarantee? I mean, your assumption 
is like anything. Productivity should increase with workflow 
management, but it is not a guarantee, right?
    Mr. Bosanko. So it cuts out some of the mail time. It cuts 
out some of the processing time which I think is absolutely 
critical to resolve, but I think you are absolutely correct.
    Mr. Walz. I certainly do not want to put you on the spot to 
say it, but it seems to me, and you are proving it at least on 
some of those numbers, we should be able to be more efficient. 
I mean, I keep coming back to this accepting the status quo 
that it is just going to take a certain amount of time.
    I think we can maintain those two basic things that we are 
trying to do, timely and appropriate care for the veterans and 
stewardship of the taxpayer dollars.
    And what you are saying is what the National Archives does 
is give you the tools to do that, should give you the tools to 
do that, correct?
    Mr. Bosanko. Correct. The current paper-based system is 
inefficient. It is not secure. Moving to a paperless 
environment and, frankly, because of the time period that is 
covered, you have got paper records. This is not all born 
digital, so you have got to use this sort of as a bridge to 
deal with the paper. And I think it does make it more 
efficient.
    Mr. Walz. Is this the appropriate way to go about it? I 
mean, is this one of those situations that we are going to have 
to bridge the transition where we cannot, you know, scrap the 
whole system and start fresh? We simply have to move to that, 
is that----
    Mr. Bosanko. I think as far as trying to process things in 
a more efficient and electronic manner, yes, you have got to 
bridge that gap where we have the extant paper that has to be 
dealt with. And it is part of, you know, the history of each 
claim and it needs to be considered.
    Mr. Walz. Is there any reason that this entire, and this 
may be going out again, do you work at all with DoD on 
anything, Department of Defense on any record management or 
anything?
    Mr. Bosanko. Yes, sir, we do.
    Mr. Walz. Is there any reason that we couldn't be 
formulating this as a--we always talk in this Committee about 
seamless transition--any way these couldn't be all being 
funneled together? Are we going to create two separate systems 
again with what DoD's data collection and what we are doing on 
these claims?
    Mr. Bosanko. While we work with DoD on a number of efforts, 
with respect to this particular one, our role has been limited 
to, you know, the immediate aspect of figuring out how to take 
these paper-based claims and scan them.
    Mr. Walz. Because I keep coming back to it again. I 
appreciate this effort. But if we are going to start again, I 
want to start with all of it and why we are not doing the 
seamless transition if we have got a fresh start to try and do 
that because now, once again, I am afraid we might get a very, 
at least a fairly good, efficient system in the VA. And if we 
have that separate silo on the DoD side, many of those source 
document records have to come across the bridge that in many 
cases is not there.
    So I know that is probably not in your lane, but I 
appreciate the effort to help out. And I think trying to find 
these solutions, and I am certainly one that is willing, if 
there are public/private partnerships to get this, we need to 
get there because it is too important to miss.
    So thanks for your time.
    I yield back.
    Mr. Runyan. The gentleman yields back.
    Mr. Bosanko, on behalf of the Committee, thank you for your 
testimony and your service to our veterans. And you are now 
excused.
    And I will ask the third panel to please come to the 
witness table.
    Mr. Runyan. The VA Inspector General's Office has been 
conducting audits of the VA's regional offices and its appeals 
management process. Today on our third panel we welcome Ms. 
Linda Halliday, Assistant Inspector General for Audits and 
Evaluations for the U.S. Department of Veterans Affairs, Office 
of the Inspector General. She is accompanied by Mr. Nick Dahl, 
the Director of OIG's Bedford Office of Audits and Evaluations; 
and Mr. Larry Reinkemeyer, Director of OIG's Kansas City Office 
of Audits and Evaluations; and Mr. Brent Arronte, Director of 
Bay Pines Benefits Inspections Division. Ms. Halliday, you are 
now recognized for five minutes for your testimony.

 STATEMENT OF MS. LINDA HALLIDAY, ASSISTANT INSPECTOR GENERAL 
 FOR AUDITS AND EVALUATIONS, OFFICE OF THE INSPECTOR GENERAL, 
 U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY MR. NICK 
   DAHL, DIRECTOR, BEDFORD OFFICE OF AUDITS AND EVALUATIONS, 
 OFFICE OF THE INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS 
  AFFAIRS; MR. LARRY REINKEMEYER, DIRECTOR, KANSAS CITY AUDIT 
   OPERATIONS DIVISION OFFICE OF THE INSPECTOR GENERAL, U.S. 
    DEPARTMENT OF VETERANS AFFAIRS; AND MR. BRENT ARRONTE, 
DIRECTOR, BAY PINES BENEFITS INSPECTION DIVISION OFFICE OF THE 
     INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS

                  STATEMENT OF LINDA HALLIDAY

    Ms. Halliday. Mr. Chairman, Ranking Member Filner, and 
Members of the Committee, thank you for the opportunity to 
discuss the work of the OIG in the Veterans Benefits 
Administration.
    Delivering timely and accurate benefits to millions of 
veterans who served our Nation is central to VA's mission. We 
conduct national audits of VBA's programs and inspections of 
individual regional offices to examine high risk claims 
processing activities. We have consistently reported the need 
for enhanced policies and procedures, training, oversight, and 
quality reviews to improve the timeliness and accuracy of 
disability claims processing.
    Although VBA has briefed us on their transformational 
initiatives we have not observed enough of the process to truly 
assess the results. Today, I want to discuss four areas where 
recent audits and inspections have consistently identified 
weaknesses.
    First, in a January, 2011 report we reported VBA did not 
correctly process temporary 100 percent evaluation for 
approximately 27,000 veterans. We reported that VBA paid 
veterans a net $943 million without adequate supporting 
evidence, and if VBA did not take corrective action it would 
overpay veterans a projected $1.1 billion over the next five 
years. VBA agreed to review all temporary 100 percent 
evaluations and to ensure each had a future examination date 
entered into their electronic record by September 30, 2011. VBA 
subsequently extended the national review deadline to December 
31, 2011, then again to March 31, 2012, and has currently 
extended the deadline to June 30, 2012. VBA has not completed 
this national review requirement, yet monthly benefits continue 
to be paid despite the lack of adequate medical evidence.
    Mr. Filner. Ms. Halliday, I just want to clarify that 
statement. Are you saying that the entering of the date for a 
follow up review for these was not done? Is that what you are 
saying?
    Ms. Halliday. Yes.
    Mr. Filner. That is the only thing they had to do?
    Ms. Halliday. Right.
    Mr. Runyan. Would the gentle lady please continue?
    Ms. Halliday. Our inspections continue to show the accuracy 
of temporary 100 percent evaluations remains a serious issue. 
We identified excessively high error rates at three California 
regional offices we recently reviewed. In addition, the San 
Diego regional office completed its review of VBA's temporary 
100 percent disability evaluations but did not take appropriate 
actions in 22 percent of the claims. Regional office management 
erroneously reported that they had taken corrective action when 
they had not.
    Second, we issued a report on regional offices' appeals 
management processes and reported the nationwide inventory of 
appeals increased over 30 percent from fiscal years 2008 to 
2010. We concluded that VBA contributed to the growing 
inventory and the time delays by not assigning enough staff to 
process appeals. The Under Secretary generally agreed that 
opportunities exist to improve appeals processing and stated 
that VBA is conducting a pilot program to assess the 
feasibility of implementing our recommendations.
    Third, we conducted an audit to provide an early assessment 
of VA's internal controls over the use of disability benefit 
questionnaires. We found that the expedited roll out of the 
process did not provide VBA sufficient time to design, 
evaluate, and implement adequate internal controls to prevent 
potential fraud. It is the OIG's position that it is critical 
to establish adequate front-end controls and identify and 
minimize risks before benefit payments are initiated.
    Lastly, 19 of 20 regional offices inspected in fiscal year 
2011 did not follow VBA policy for processing conditions 
related to traumatic brain injury. The errors related to 
inconsistent and insufficient training, VA medical examiners 
providing inadequate exam reports upon which to base disability 
claims decisions, and raters not returning these inadequate 
reports to the medical examiners for correction as required. We 
attributed the deficiencies related to training and inadequate 
medical examinations to a complex set of policies and 
procedures for processing these claims. Further, raters told us 
they often did not return the inadequate reports due to 
pressure to meet productivity standards.
    VBA continues to face challenges in improving the accuracy 
and timeliness of disability claims decisions, along with 
trying to manage an every growing backlog of claims, and to 
maintain efficient operations. While VBA has made incremental 
progress through its own initiatives and in response to our 
prior report recommendations, more work needs to be done.
    Mr. Chairman, this concludes my statement. We would be 
pleased to answer any questions you or the Committee has.

    [The prepared statement of Linda Halliday appears in the 
Appendix]

    Mr. Runyan. Thank you very much, and I will begin the 
questioning. Dealing specifically with the temporary 100 
percent disability cases and the TBI, I think you just said in 
your statement statistics are overriding the execution of the 
law and the benefit to make, in my view, to make the VA seem 
like they are doing their job. Is that a correct analysis? The 
statistical analysis that they can give us to say we 
adjudicated these claims up or down, it seems like it is in the 
forefront. I always argue with the VA that the ultimate goal 
should be customer satisfaction. And tell me if I am right or 
wrong that you just validated my point there?
    Ms. Halliday. My take on this is these are temporary 
ratings to address a medical condition at a specific period in 
time. They are temporary ratings because the medical condition 
is expected to improve, and the ratings would be readjusted 
downward. What VBA is not doing is actively managing these 
temporary ratings. Their staff is not including the 
reevaluation or reexamination dates within their electronic 
system to alert the new raters to call for a medical exam and 
adjust these ratings.
    Mr. Runyan. So----we are basically saying that a medical 
condition is going to improve with time? That is how they are 
viewing the process?
    Ms. Halliday. On these temporary 100 percent medical 
disabilities claims, yes. There is an expectation and a 
probability that some of these claims, the medical conditions 
will improve.
    Mr. Runyan. But I think most of us would agree within the 
human body that with aging that medical conditions do not tend 
to get better over time.
    Ms. Halliday. An example would be prostate cancer, where 
the treatment has taken place and after a period of time, 
whether they use seeds or whatever the treatment, the veteran 
is considered to be improved.
    Mr. Runyan. Now is the VA actively working to implement any 
of your recommendations? Or is it just acknowledging a mistake 
and continuing with the same old thing? Because I think that is 
the feeling we get around here a lot of times.
    Ms. Halliday. I think at first there was some push back, to 
accept recommendations that we were offering. But I do believe 
under General Hickey we have a better working relationship 
today to implement these recommendations. And I would reference 
that I had issued two reports dealing with claims processing, 
where originally we got nonconcurrences with recommendations. 
And she agreed to meetings. We resolved those issues. We found 
areas of consensus so that VBA could implement that 
recommendations.
    Mr. Runyan. Well shifting gears to DBQs and the potential 
for fraud there, has the VA adequately addressed the concerns 
there? I know there are some issues possibly with people 
falsifying the forms and entering doctors' license numbers. Is 
there a system and process besides random selection of the 
claims to make sure that that does not happen?
    Ms. Halliday. VBA has provided a long range solution to put 
controls in place. Our concern is that benefits are being paid 
right now and that the information that is maintained in the 
electronic systems for VBA does not give sufficient information 
to really look closely at how well or how poorly the VBA 
disability benefit questionnaires are improving the process. 
For example, the system was lacking the number of veterans who 
had submitted claims using DBQs; the number of claims and the 
amount of money awarded based on DBQs; and the processing times 
for claims based on DBQs. There was an inability to trend 
information when we looked at this process. While only three 
DBQs had been released by VBA, information was lacking trend to 
DBQs with regards to locations, the same physician providing an 
excessive number of DBQs which might be an indication of fraud, 
there was an inability to trend the information.
    Mr. Runyan. Thank you for that. With that I will recognize 
the Ranking Member Mr. Filner.
    Mr. Filner. I mean, I found, I find your report astounding 
in the following way. The only justification I have ever heard 
for all these backlogs, it takes time, we have got to be 
accurate, we have got to have all the information. So we are 
supposed to be accurate. And yet we find a quarter of our 
things are not accurate.
    Now you give the simplest thing I could ever imagine in 
your audit of the temporary 100 percent evaluation. The 
simplest thing, enter the date it says here for a future 
examination on the electronic record. Hello? I could do it 
tomorrow. It has taken a year and a half. I am going to ask 
you, Ms. Hickey, if you are going to reach that by June 30. 
That is a year and a half after they asked you to do it. You 
still have not done it. And now you are promising us to fix the 
whole claims backlog in a year and a half. How do you expect us 
to believe the VA? You cannot even put in an evaluation date on 
an electronic record in a year and a half after it has been 
pointed out to you. The simplest thing I could imagine. I could 
put somebody on it tomorrow and I could do it. It will take 
them a week or two.
    I cannot believe that this simple operation is not done, 
which claims, I mean we could be talking $1 billion of 
overpayments. Which I am not saying is happening, but that is 
the projection. It seems to be if someone said to me, Bob, you 
could save $1 billion if you did that, I would do it in the 
next week.
    Ms. Hickey, you are coming up next. Who is responsible for 
this kind of sloppiness? Who is responsible for this 
irresponsibility? Who is, and I do not want an impersonal 
answer, I am warning you, like the system is this, the system 
is that. We cannot get, you know, I want to know who is 
responsible and is it you? This is ridiculous. And again, if it 
was not tragic it would be ridiculous. Not only are we not 
serving the veterans, there is a potential for, in a budget 
where we cannot get, you know, a few million dollars here, we 
could be wasting $1 billion. And nobody has decided to take any 
action? Again, I rest my case.
    Mr. Runyan. The gentleman yields back. Mr. Stutzman?
    Mr. Stutzman. Thank you, Mr. Chairman. And thank you for 
the work that you have done with the audit and the information 
that you provided. You found a lot of egregious systematic 
failures in processing accuracy. For example, you mentioned 
that you found a 30 percent error rate for the over 4,000 high 
risk claims you reviewed at 50 regional offices. And you also 
mentioned that none of the offices that you reviewed followed 
protocol in assessing temporary 100 percent disability cases, 
and only one office followed protocol for traumatic brain 
injury assessments. In your opinion, I mean, what is the cause 
of such an error rate? And is there any effort at all to fix 
the problem that you know of?
    Ms. Halliday. Well to answer the first question on the 
cause, we are seeing the cause as poor and inadequate oversight 
of the work processes. We are often seeing that first line 
supervisors are not always overseeing the work of their 
employees and they are also making mistakes. The second issue 
would be that our benefits inspections have reported on fairly 
complex policies related to the traumatic brain injury claims. 
And these policies at times ask physicians to make medical 
diagnoses that are not always possible, which leads to 
insufficient medical exams and inaccurate disability 
determinations. I will ask Mr. Brent Arronte, who heads up our 
benefits inspections, if he wants to add anything?
    Mr. Arronte. Mrs. Halliday is correct in the, regarding 
traumatic brain injury. That policy is extremely complex. It 
involves the physicians at the VA medical centers, where they 
have difficulty being able to assign a specific diagnosis or 
even make a medical decision. So the decision is not made. Then 
that compounds the problem when the medical examination goes to 
the RO for the raters to look at this evidence, evaluate it, 
and try to make an accurate decision. So when the evidence is 
not sufficient, then the decision-maker uses insufficient 
evidence to make a decision, then the decision becomes wrong. 
And we see that across the board at most regional offices, as 
we indicated 19 out of 20 for the TBI specifically, that these 
policies are just way too complex. The doctors are having 
problems understanding the policies, the regional offices are 
having problems implementing the policies. We just need a 
review of these policies.
    Mr. Stutzman. Why? Why is it that complex?
    Mr. Arronte. Because traumatic brain injury has a lot of 
residual disabilities or disabilities associated with that 
event. For example, one of the major issues we see is traumatic 
brain injury that may cause memory loss. The veteran also may 
have a coexisting mental condition. Sometimes memory loss can 
also be symptomatic of a mental condition. The physicians 
cannot distinguish which disability to attribute that symptom 
to. That compounds the problem as the decision-makers get this 
evidence. It kind of leaves them to guess. Okay, is this 
symptom related to TBI or is this symptom related to a 
coexisting mental condition?
    Mr. Stutzman. You mentioned, I believe that you have made a 
recommendation to the VA, is that correct? You have made 
recommendations? Are you seeing the VA actively working to 
implement any of them?
    Ms. Halliday. Yes. We have concurrences on the 
recommendations. I think in some cases General Hickey is trying 
to look at the pilots to make sure that the recommendations are 
fully implementable and that they would be, there would not be 
any claims that you might exclude from applying the 
recommendations. But I think there has been a receptiveness to 
do that. But at the same point there is a very significant 
focus on her implementing the transformational initiatives that 
have come up, more specifically the ideas that have come from 
her staff.
    Mr. Stutzman. What about potential fraud related cases to 
DBQs? Has VBA adequately addressed any of these concerns?
    Ms. Halliday. We had separate meetings with General Hickey 
on this. They established a referral process to the OIG when 
their STAR reviewers actually look at a small subset of claims 
to see if they might have been changed, or to verify if the 
veteran is really a patient of the private physician, to look 
behind the DBQ and to ensure that it is authentic. We would 
like to see a more aggressive approach to it but they are 
looking at it as part of their STAR program. VBA started to 
implement a referral process, which we recommended, to the OIG 
so the OIG could screen those same DBQs and take it a step 
further and to see where there should be an investigation 
opened.
    Mr. Stutzman. Okay. Thank you, Mr. Chairman. I yield back.
    Mr. Runyan. The gentleman yields back. Mr. Michaud?
    Mr. Michaud. Thank you very much, Mr. Chairman. Thank you 
for coming here once again. Looking at your testimony, on page 
four you talk about that you found VARO staff did not 
adequately process 45 percent of the TBI claims. Then at the 
end of the paragraph you mention that the rating veteran 
service representatives told you that they often did not return 
the inadequate reports due to pressure to meet productivity 
standards. And that continues in the fiscal year 2012 reviews. 
Why is that, that they're so driven to meet productivity 
standards? Is it because of policy from headquarters? Or is it 
because bonuses and increase in salaries is predicated on 
getting more out the door versus accuracy? And would--have you 
looked at that issue? And have you looked at the issue, well 
would it not be better when you look at bonuses or increase in 
salary that it is dealt more with on accuracy versus just sheer 
numbers?
    Ms. Halliday. I think it needs to be a combination of both. 
In an environment as large as VBA, where they are processing so 
many claims, you have to have some focus on productivity and 
you have to balance that with accuracy if you want to achieve 
any fiscal stewardship of the funds.
    Mr. Michaud. Okay. You had mentioned the transformation 
plan that VBA has. Have you looked at that transformation plan 
to see whether or not they have benchmarks in place and whether 
VBA is meeting those benchmarks? And do you feel that that plan 
is adequate to deal with the issue we are facing today?
    Ms. Halliday. We had some original challenges getting 
information on the transformation plan. Because the plan had 
not been approved by the Secretary at the time we started 
asking questions. I have reviews in process now looking at 
various aspects of the transformation. I cannot really comment 
beyond that.
    Mr. Michaud. You cannot comment on the benchmarks or 
whatever? And for the VA, hopefully Mr. Chairman we will be 
able to get a copy of that plan if we have not already. My 
other question is a question I related to the first panel. And 
PVA mentioned that there does seem to be a kind of disconnect 
within VA's system, as far as the doctors and VHA versus the 
doctors, and VBA, where VBA doctors might be asking for similar 
information that a VHA doctor has already done. Have you looked 
at that between the different, VHA and VBA, how they might be 
able to synergize the efforts between the two? Versus being 
duplicative within the two?
    Ms. Halliday. Not recently. We had looked at the 
coordination between VHA and VBA when a medical exam was 
needed. Our information is a little dated. I am not sure it 
would really help.
    Mr. Michaud. Are there any other areas within VHA and VBA 
that we could speed up the process by VBA accepting what VHA 
might recommend?
    Ms. Halliday. Absolutely. I believe that the first panel 
actually brought up a significant vulnerability, in that there, 
now with the new DBQ system, the reliance on this information, 
VHA would be at risk of doing unnecessary compensation and 
pension exams.
    Mr. Michaud. Mm-hmm, okay. My other question is when you 
look at the claims process, and I will be asking VA for this 
information, I would like to know how many are 30 days, 60 
days, 90 days, to try to get a better feel of where the problem 
lies. In your review of what VBA is doing and to meet the 
productivity standards that the employees feel that they have 
to meet in order to be successful, have you looked at whether 
or not, that that is causing the more difficult claims to be 
pushed back further and further because they are dealing with 
the easier claims up front?
    Mr. Arronte. When we conduct inspections of the regional 
offices we do not see in particular that the ROs are working 
the easiest claims. They typically work the claims first in, 
first out. So the oldest claims typically are the ones that are 
worked first. So we do not see any specialization towards one 
or two issue easy claims versus eight or ten issue more 
difficult claims.
    What we do see, however, and your earlier question was it 
seems that they, VBA has concerns with gathering evidence 
quickly. Whether it is from Department of Defense or from VHA 
in a medical exam, they do not tend to gather that information 
quickly. And that, we think is where a lot of their timeliness 
lags in claims processing occurs.
    Mr. Runyan. The gentleman yields back. Mr. Walz is 
recognized.
    Mr. Walz. Thank you, Chairman. Again, thank you for the 
work you do. I have many times expressed how important the work 
you do is and it helps us try and refine the process. I just 
have one, I guess a question here. Are there any comparable 
enterprises to what VBA is trying to do anywhere? Either across 
the government or in the private sector in terms of volume, 
complexity, and things like that? Is it, I know this is 
somewhat subjective. But just to help me get my mind wrapped 
around what we are comparing.
    Mr. Arronte. Not in terms of volume or even process. I am 
not aware of any civilian agency, or even the Department of 
Labor, that does workmen's comp claims, they work with evidence 
and medical evidence and process claims, not to this volume. I 
think this is unique to VA.
    Mr. Walz. I ask this, because I always think that Mr. 
Filner's argument on IRS is compelling when we make that. I 
personally think we should probably be as efficient at getting 
people money that we owe them as we are of taking it. That is 
something the public would ask for. But I am trying to figure 
out are we taking in all of the variables? Are we bringing all 
of the complexities to this? And where do we go to try and find 
the model to, is this just a sense of if we could scale up we 
could get there? Or the unique nature of it? It is challenging 
for me because I refused to believe all of the good people and 
all of the good intentions for so long have allowed us to not 
fix this. So I do not know if there are any insights? You see 
this at a micro level more than I do. But.
    Ms. Halliday. The area I see would be to look at the risks 
associated with the claims and take an approach based on that. 
Not just a flat out approach to pay everything at 30 percent 
because a 30 percent rating----
    Mr. Walz. Yes.
    Ms. Halliday. --includes entitlement to other programs. I 
believe that there would be a subset of claims that you would 
find represented low risks.
    Mr. Walz. And find those and process those, and then make 
the case to the public. Because I certainly think everyone here 
could understand if we processed a whole bunch or paid out a 
whole bunch of money that went to the wrong people we are going 
to be on, you know, that side of it. That is why I am trying to 
strike that balance between those that we can get with a high 
degree of accuracy, much like the IRS is able to do, I think 
that analogy part is good. But still understanding the 
complexity of those claims. And I think Mr. Michaud's point is, 
is that I think there is at least a belief among veterans that 
many times that complex cases get pushed back because it slows 
down processing time. And unfortunately in many cases complex 
claims are the ones that are most needy in terms of trying to 
get this done. So I yield back, Chairman.
    Mr. Runyan. The gentleman yields back and with that thank 
you for your testimony on behalf of the Subcommittee. Thank you 
again for your testimony and your service to our veterans. And 
you now are excused and I welcome the fourth panel to the 
table.
    On second thought, the Committee will stand in recess as we 
are probably seven minutes into a vote right now, and we will 
be back as soon as votes are concluded. The Committee stands in 
recess.
    [Recess]
    Mr. Stutzman. [presiding] Today on our fourth panel we 
welcome the Honorable Allison Hickey, Under Secretary for 
Benefits from the U.S. Department of Veterans Affairs. She is 
accompanied by Mr. Alan Bozeman, Director of the Veterans 
Benefits Management System, Program Management Officer at the 
U.S. Department of Veterans Affairs; and by the Honorable Roger 
Baker, Assistant Secretary for the Office of Information 
Technology for the U.S. Department of Veterans Affairs as well. 
At this time we will recognize General Hickey for five minutes 
for your testimony.

   STATEMENT OF GENERAL ALLISON HICKEY, UNDER SECRETARY FOR 
 BENEFITS, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY 
   MR. ALAN BOZEMAN, DIRECTOR, VETERANS BENEFITS MANAGEMENT 
 SYSTEM, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF 
VETERANS AFFAIRS; AND MR. ROGER BAKER, ASSISTANT SECRETARY FOR 
INFORMATION AND TECHNOLOGY, U.S. DEPARTMENT OF VETERANS AFFAIRS

              STATEMENT OF GENERAL ALLISON HICKEY

    General Hickey. Good morning, Chairman Stutzman, Ranking 
Member Filner, Members of the Committee. Thank you for the 
opportunity to testify here today. I am accompanied by Mr. 
Roger Baker, the Assistant Secretary for Information 
Technology, and Mr. Alan Bozeman, the Director of the Veterans 
Benefits Management System, or VBMS, Program Office. My 
testimony today will focus on VBA's transformation plan, with 
particular focus on the new paperless IT system known as VBMS. 
Combined with 40-plus additional designed, tested, and measured 
initiatives in VBA's comprehensive transformation plan, VBMS 
will provide electronic claims processing capabilities critical 
to achieving the Secretary's 2015 goal of eliminating the 
backlog and processing all claims at 98 percent quality.
    The bottom line, VA must deliver timely, first rate 
benefits and services with greater efficiency and effectiveness 
than we do today. We cannot do this by using old tools and 
processes. The magnitude of this change requires a 
comprehensive and integrated plan which VA developed in 
collaboration with our stakeholders within 45 days of my 
swearing in. We are implementing that plan today.
    As we work to transform how we do business through new 
people, process, and technology initiatives, at the end of the 
day our transformation is about taking care of our veterans and 
our loved ones. I am proud of VBA employees, 51 percent of them 
who are veterans themselves, who have processed over 1 million 
disability claims in each of the last two years, an 
unprecedented number. We did this while at the same time 
allocating 37 percent of our rating staff to processing Agent 
Orange claims, putting over $3.6 billion into the hands of our 
Vietnam veterans and their survivors. Since October, 2010 we 
have dedicated over 1,200 skilled raters to completing these 
Agent Orange Nehmer claims. All Nehmer claims for living 
veterans have been completed and we are now focusing on fewer 
than 274 remaining that will benefit survivors and next of kin. 
This means we can now redirect over 1,200 skilled raters to the 
claims backlog.
    Despite unprecedented VBA claims production, completing 
over 1 million claims each year for the last two, VA's backlog 
has grown. We have received an unprecedented growth in claims, 
nearly 48 percent more than three years ago. Included in this 
growth, 45 percent of the 1.6 million veterans who have 
honorably served more than a decade of War in Iraq and 
Afghanistan and are rightfully, rightfully filing claims. But 
at unprecedented levels. Thankfully, these dedicated men and 
women are ten times more likely than previous generations to 
have survived the multiple deployments they have selflessly 
made. But they are returning home with triple the medical 
issues of previous generations, driving the complexity of these 
claims and their associated workload to an all time high.
    As a result, VBA is aggressively pursuing its 
transformation plan, a series of tightly integrated 
initiatives. Our people initiatives focus on how we are 
organized and trained to do this mission. Our employees are key 
to our success, and over 51 percent of them are veterans 
themselves working hard for other veterans. People initiatives 
include segmented lanes based on claims complexity, cross 
functional teams designed to work claims from start to finish, 
and a redesign of our entire national training program with 
dramatic results already.
    Our process improvement initiatives, some of them include 
our quality review teams in every office designed to assess our 
quality throughout the process, not just inspect it at the end. 
Sixteen rules based calculators built to assist decision-makers 
in assigning an accurate result the first time. During testing, 
quality improved from 83 to 92 percent.
    Our VRM initiative is one of our technology initiatives. It 
now gives veterans to information from multiple channels, on 
the phone, online, and through eBenefits. All call centers have 
designed new technology and new call back features. Recently we 
deployed two and we have successfully had 3 million veterans 
use them. Our eBenefits portal lets our veterans, 73 percent 
who say they want to meet us online, do so easily. They include 
41 self-service options and veterans are downloading more than 
120,000 benefit letters a month. The ability to file a veterans 
claim online, like you file your taxes online today, and more 
than 1.5 million users representing a 500 percent increase 
since January of 2011.
    VBMS is the cornerstone of our transformation plan, will 
dramatically reduce the amount of paper in the current process, 
employ a rules based claims development. The team developing 
VBMS is using a tailored, agile approach. Version three is 
currently in user acceptance testing with national deployment 
coming soon and to be completed by the end of the calendar year 
2013.
    We are developing many multiple channels of intake 
capabilities to include scanning, a data interface, and direct 
transfer of data into the VA system from our stakeholders and 
partners.
    In conclusion, Chairman, VBMS along with 40 other people, 
process, and technology transformation initiatives is critical 
to our success in meeting the needs of our veterans, their 
families, and survivors, and we are committed to deliver on 
this plan.
    This concludes my statement, Mr. Chairman. I am pleased to 
answer any questions.

    [The prepared statement of Allison Hickey appears in the 
Appendix]

    Mr. Stutzman. Thank you, General Hickey. And I will begin 
the questioning. Veterans are one of the most honored and most 
vulnerable groups in our great Nation. And the American public 
has entrusted the VA, specifically the VBA, with providing them 
with the benefits that they were promised, benefits that many 
of them desperately require as they reassimilate into civilian 
life. With this in mind the backlog, processing times, and the 
rate of error seems to have become the norm rather than the 
exception and this is unacceptable. As leader of VBA it is your 
responsibility to ensure that the management and culture of 
your department align with the agency's mission and goals. 
Though we wholeheartedly support VBA's efforts to transform its 
operations, and indeed we do have faith in some of your 
initiatives, it is also our job as a Committee and as a 
Congress to ensure that VBA is not merely developing a band-aid 
for a bullet wound in the form of a vast array of initiatives 
that quite honestly lack focus and direction, and which may 
only serve to distract your agency from addressing the root 
causes of these issues.
    It has been suggested that VBA lacks a sense of urgency and 
an ability to follow through in addressing these problems. 
General Hickey, one would expect that with the tough economy, 
the tight fiscal climate, and the failure for VA to turn the 
corner on quality and timely claims processing, many of these 
initiatives have had a moderate effect overall. But there are 
still highly paid VA executives. Recently the Committee 
received information showing 245 reports of performance bonuses 
to VA in the senior executive service averaging over $11,000. 
How many of those bonuses went to VBA employees?
    General Hickey. Chairman Stutzman, I will tell you we have 
a very stringent and rigorous process at VBA for bonuses for 
our senior executives. And we use those processes with very 
hard metrics. In fact, there are 98 metrics that we measure on, 
largely in the categories of production, quality, yes we 
measure our SESs against quality standards that they produce in 
their organizations and that they lead. We also assess them 
against training requirements. Yes, we check to see that they 
are validating training is being done and that people are being 
provided their training. And we also on a number of other 
avenues, including leadership and their ability to run their 
organizations.
    Mr. Stutzman. So how many of those bonuses went to VBA 
employees? And then my second question would be how many went 
to SES employees in your central office?
    General Hickey. So most of our performance awards are 
awarded to the GS-12 and below. Our total awards paid in fiscal 
year 2011 was approximately--I am sorry, that is VA's 
performance, $186 million. But I will tell you our performance 
awards in VBA, our number of outstandings significantly lowered 
those in order to tie to performance standards and expectations 
associated with leadership in the transformation model.
    Mr. Stutzman. You never answered the question, ma'am. I 
asked you how many people? Do you have that number? Do you have 
how many people?
    General Hickey. Chairman, I have a number that says that 
one-third of the total of outstandings that we had done in 2009 
is what we do today.
    Mr. Stutzman. One-third?
    General Hickey. One-third of the total we used to do in 
2009, are all we give out today.
    Mr. Stutzman. Do you know what that number was in 2009?
    General Hickey. I do not know but I can get that for you 
and bring it back to you for the record.
    Mr. Stutzman. Okay. For both VBA and SES employees. How do 
you justify when the agency's goals and performance measures 
have not been met, how do you justify bonuses? I mean, you look 
at what people across this country are doing today. And when 
times are tough, and when the goal is not being met, and we 
continue to fall behind, how do we justify giving taxpayer 
dollars in bonuses to those who are responsible for the 
program?
    General Hickey. So thank you, Chairman Stutzman, for your 
question. I will say, you know, it is appropriate to note that 
we have very high regional offices and very good senior leaders 
in those offices that are driving high performance, that are 
exceeding the production standards, that are exceeding the 
quality standards, that are producing for our veterans and 
their families and survivors in a very good way. So from our 
perspective this is, it is not an all up or all down vote. From 
our perspective I need to encourage and I need to draw in 
strong leadership to lead us through this very challenging 
time. And oftentimes in order to really attract and retain that 
superb leadership you have to do things like offer bonuses for 
high performance.
    Mr. Stutzman. But, the responsibility lies at the top. And 
if we are not meeting our veterans' needs, the responsibility 
that we have for our veterans and the benefits that they are 
waiting for and deserve, at what point does leadership step up 
and make changes, big changes, to meeting the problems that we 
have? Because I hope you understand that when the general 
public sees that bonuses are being given out and our veterans 
are waiting for benefits, this does not add up.
    General Hickey. Thank you, Chairman Stutzman, for your 
question. What I will tell you is that at the very top of the 
Benefits Administration is me. I take responsibility for what 
happens in the Veterans Benefits Administration. I also take 
very seriously and have grown up in the Department of Defense 
knowing the importance of really good leadership in driving 
performance and in driving quality. And in that respect I 
believe that you should reward those who do meet the mark in 
that respect and that is what we do in VA.
    Mr. Stutzman. I am a small business owner. And if the job 
does not get done, you find somebody that do it. Whether it is 
bonuses or whether it is pay and salary, you find somebody to 
get the job done. In 2010 only 36 percent of claims took over 
125 days to process. In 2011 that number jumped to 60 percent 
of claims. Now in 2012 the number of claims taking over 125 
days to process is at 65 percent, despite hiring 3,000 new 
full-time employees in 2011. What is going to change?
    General Hickey. So Chairman Stutzman, thank you for 
bringing up that point. Because I just want to clarify that, 
and I said it in my opening statement but I will say it again, 
we have done unprecedented numbers of claims in those same last 
two years that you described. More than 1 million. In 2008 we 
did 800,000. We are getting 1.3 million claims in the door that 
we are working on. During that same period of time those same 
senior leaders led us through the very complex, absolutely 
right thing to do by our Vietnam veterans. 260,000 new Agent 
Orange Nehmer claims that we worked at the same time as we 
worked today's veterans' claims. Thirty-seven percent of our 
workforce it took to do those claims.
    At the same time those same leaders were leading our loan 
guarantee capability, where we kept 73,000 veterans in their 
homes last year. And that was even 10 percent more than the 
previous year. These same leaders do not just lead our 
compensation areas, they lead all of our five business lines. 
They were leaders in the areas of our education claims, where 
they drove the numbers down from 59 to 30 in terms of the days 
it took to complete our education claims. Same leaders, making 
those same decisions in that same effort. Not just focused on 
compensation claims. Focused on homeless veteran claim, focused 
on our efforts to bring on VBMS, many of them piloting new 
initiatives, many of them driving the challenge training to 
improve the quality of our performance.
    We are not a single area senior leader at that level. We 
have many business lines that meet the needs of our veterans.
    Mr. Stutzman. Thank you. I will recognize Mr. Filner for 
his questions.
    Mr. Filner. Let me be honest, Madam Under Secretary, I find 
your testimony incredibly astounding. You sat here for three 
hours, listening to all kinds of problems, listening to all 
kinds of perceptions, listening to all kinds of data that the 
system is broken. According to your testimony, nothing is 
wrong. Absolutely nothing. Everybody is all, da, da, da, blah, 
blah, blah. Everything is happy. I am so proud. If someone of 
my constituents is sitting here who has waited three years for 
a claim adjustment and heard your statement, they would throw 
up. Many have committed suicide while waiting for your 
bureaucracy to give them a response and they do not see one. 
And the respect that we have that you show for us is absolutely 
astounding. We said three hours worth of stuff. Not one thing 
did you ever mention. Not one thing did you ever respond to. 
Not one thing did you ever say either, ``Congressman, you are 
wrong,'' or, ``Congressman, you are right.'' You went through 
with your standard thing as if you did not sit here for three 
hours. What the hell were you here for? You hear things. You 
respond to things. You did not. And if you, it looked to me if 
you want to know what the answer is here, if everything is 
fine, nobody is going to fix anything. And that is what your 
testimony said. Everything is fine. Oh, we have all these 
different initiatives, we had these new Vietnam era claims. 
Well tell us that you had 250,000, you need more resources to 
do it. Do not use it as an excuse, that you could not do your 
job. You have not done your job, Madam Under Secretary.
    We gave you 12,000 new employees over the last few years. 
The backlog has doubled. The error rate has gone up to 25 
percent. And you say everybody is doing their job to a high 
level. You have 98 metrics. My constituent has one metric. Have 
you given him a timely and accurate answer? And you have not. 
You have not. And you have not explained why. And if you are at 
the top, and if you are responsible, as you just said you were, 
are you responsible for the fact that we had a doubling of the 
claims that we put this incredible number of new personnel in, 
that our error rate is up to 25,000?
    You did not answer what I said I was going to ask you. A 
simple little error had occurred in your temporary rating 
disability claims. They asked for you to put on the next date 
for a review hearing. A year and a half later, that has not 
been done. Are you responsible for that? Are you responsible 
for not answering how we save $1 billion potentially? Who 
deserves a merit pay increase for that? Who deserves a bonus 
for that? How is it that, we have not put on the next 
appointment date on the electronic records for the people who 
have temporary ratings of 100 percent, how long? A year and a 
half. Why do we not have, why do we not have that? Is that your 
fault, Ms. Hickey? Thank me for the question, first.
    General Hickey. If you are asking me about the temporary 
question, I am happy to answer that question. The temporary 
disability is a computer glitch. They have not put in that date 
yet. There was a glitch in the system that would drop the date 
out of the calendar----
    Mr. Filner. Oh, you know, I said to you when you were 
sitting there do not give me an impersonal responsibility. A 
glitch occurred? Oh, there was just sort of a glitch on the 
shelf that occurred and you have not fixed it in a year and a 
half. If it was so simple, Ms. Hickey, why have you not fixed 
it? It will be fixed. This is January, 2011 it was noted.
    General Hickey. Congressman, it was fixed on the 30th of 
June.
    Mr. Filner. The what?
    General Hickey. The 30th of June.
    Mr. Filner. That is a year and a half. Why did it take so 
long?
    General Hickey. Congressman Filner, we did not know it was 
a computer glitch and we were retraining everyone to make sure 
that they filled in the date, they were filling in the date.
    Mr. Filner. A year and a half and you did not know it. So 
you deserve high ranking for your leadership for that? Who is 
responsible for it? Do not tell me about a glitch? Who did not 
do their job? Who? Is it you?
    General Hickey. Congressman Filner, I have been in this job 
for one year this month.
    Mr. Filner. Oh, now it is going to be because you were not 
there. So everything starts when you arrived. So everybody 
should actually redo their disability claim because you arrived 
a year later.
    General Hickey. In fact, Congressman, in this case if I can 
clarify for the rest of the Committee, the 100 percent 
temporary disability claims are actually advantageous to the 
veteran when we do not redo them.
    Mr. Filner. Of course they are. So now you are telling me 
it is okay you went a year and a half because it was so 
advantageous to the veteran. It is also advantageous to give 
them their check the minute that their claim arrives. Why have 
you not done that? You have an answer for everything except 
personal responsibility. Who is responsible?
    General Hickey. Congressman Filner, I have already said I 
am responsible.
    Mr. Filner. You just arrived, or the glitch occurred. Who 
is responsible?
    General Hickey. I am.
    Mr. Filner. Okay. Then why should we give you any kind of 
merit or even a continuation of your position if you are 
responsible for these failures?
    General Hickey. Because we have developed a plan and that 
plan is a very good and a very----
    Mr. Filner. Do we have the plan?
    General Hickey. We have incorporated the great ideas----
    Mr. Filner. Do we have the plan?
    General Hickey. We do have a plan.
    Mr. Filner. Do we have the plan?
    General Hickey. Sir, I have delivered that plan to the 
House Veterans' Affairs Committee staff. I am happy to deliver 
it to anyone else in here who would like.
    Mr. Filner. Has anybody received this plan? We are into it, 
what, a year? A year and a half? How many years are we into it? 
Has anybody received this plan?
    Counsel. We had a briefing with Under Secretary Hickey on 
the plan, it was some slides and a power point presentation. 
But I am not sure we specifically have anything that says this 
is the plan.
    Mr. Filner. There is no plan, Ms. Hickey. There is no 
transformation. It is a fossil formation. It is the same 
arguments, the same ideas, the same failures that we have been 
looking at. I have been here for 20 years looking at the same 
thing, and you just started so you are doing the same thing 
again. We do not have a plan. We have 40 initiatives. There is 
no focus, there is no measure, there is no continuity, there is 
no evaluation. There is no plan. You just put out 40 things, 
and we are doing the same 40 things we have done before. We are 
just doing them, I do not know, more rigorously. You pay $10 
million for scanning advice. How much is it going to cost us to 
scan everything that you paid for?
    General Hickey. Congressman Filner, I would like to answer 
your first question that you asked, or statement that you made, 
and clarify that I have a difference of opinion. And that is we 
do not have the same plan. We are not retreading old things. We 
are fundamentally changing the way we do business at VBA.
    Mr. Filner. Give me one thing that we are fundamentally 
doing different.
    General Hickey. Fundamentally changing it, all focused on 
how we deliver better----
    Mr. Filner. Give me an example. If I am a veteran and I 
come in with a claim, what has changed?
    General Hickey. What is changed is that your claim will now 
be handled in a paperless environment. Your claim will now be 
done in a----
    Mr. Filner. Who, that is not true and you know it. You just 
went through pilots that they are doing it in a few places. 
Where is it paperless?
    General Hickey. I would be happy to talk to you about a 
specific example.
    Mr. Filner. No, talk to me now.
    General Hickey. I will do that, sir. So let me talk to you 
about rules based processing----
    Mr. Filner. And how long does it take, this new paperless 
process?
    General Hickey. We have completed in the pilots these 
claims in about 120 days.
    Mr. Filner. Oh, now it is a pilot?
    Mr. Walz. Ranking Member, I think the General has a right 
to answer. I think we should keep in mind here----
    Mr. Filner. She is giving us baloney.
    Mr. Walz. This is an Air Force General who was in our first 
class of female warriors----
    Mr. Filner. And everything is fine according to her.
    Mr. Walz. I think she should be allowed to finish her 
answer.
    Mr. Filner. If she was a General and gave the Commander in 
Chief such a report she would be fired. I will yield back.
    Mr. Stutzman. The Chair will remind the Committee, let us 
let the witness answer the questions once the question is 
asked. Mr. Michaud?
    Mr. Michaud. Thank you very much. I have several questions. 
The first few are to ask for information. You mentioned the 
metrics that you deal with as far as bonuses and raises. Would 
you provide the Committee with the metrics that you utilize?
    General Hickey. I would be happy to do that, Congressman 
Michaud.
    Mr. Michaud. Okay, thank you. The second thing, there has 
been a lot of discussion about the transformational plan. We 
have seen on the Web site the initiatives but can you also 
provide the Committee with the actual transformational plan 
that you have?
    General Hickey. I will be happy to do that, and I will be 
happy at your request to come speak to you, talk to you about 
it and walk you through it.
    Mr. Michaud. Okay, thank you. The third is last time, 
looking at some of the problems in the different regions as far 
as accuracy and timeliness of approving individual veterans' 
claims, I asked for a copy of the different regions, the 
turnover rate within those regions. Could you provide that for 
the Committee as well? As far as staffing? Because I find that 
tends to be, some of the problem areas is when you have a high 
turnover rate because of it is not an employer of choice, so to 
speak. So could you provide that to the Committee as well?
    General Hickey. I will do that, Congressman Michaud. And I 
will also say that some of our turnover is not related to 
employer of choice, it is related to normal attrition relative 
to retirements and populations that move to new locations. 
Again, I tell you that 51 percent of our employees are veterans 
and sometimes they move to different environments as a choice.
    Mr. Michaud. Sure. Yeah, if you could provide that. Looking 
at the Inspector General's report, and I mentioned it earlier, 
when you look at the error rate of 45 percent for the TBI 
claims. But at the bottom of that paragraph it talked about the 
rating veterans service representatives told the Inspector 
General that they did not return the inadequate reports due to 
pressure to meet productivity standards. Is there any standards 
that you have set to the different regions to just try to get 
the numbers up there? To get it out there? And that is why we 
have a lot of problems with the error rate?
    General Hickey. Congressman Michaud, I will tell you that 
is not an acceptable policy. That is not one that I have given 
and mandated and directed. We do not want to pass errors by. We 
want to solve errors. In fact, what we have done recently in 
one of the transformation initiatives is to put quality review 
teams in every single one of our regional offices. Never done 
before. Never done before. These folks are STAR trained, our 
big team that looks at all of our quality accuracy and is well 
respected by this Committee and others, they are trained by 
them. And they are looking for those places in our system in 
the process, instead of just inspecting at the end, and they 
are taking those in process checks and they are making sure 
that they----
    Mr. Michaud. That is okay. I just wanted to know whether or 
not there was a policy as far as just getting claims out. And 
that is one of the reasons why I want the metrics, to be able 
to see if there is a lot of emphasis paid on that versus other 
areas.
    Do you have a plan in place if VBMS fails?
    General Hickey. I do not believe----
    Mr. Michaud. Is there a backup plan?
    General Hickey. So I will start this and then I will 
deflect or defer to----
    Mr. Michaud. No. Well, first is there a back up plan? Yes 
or no?
    General Hickey. So part of the reason why we have built an 
integrated plan that includes people, process, and technology 
issues is to buy down any risk of any kind and nature.
    Mr. Michaud. All right. So I have got a lot of questions 
and my time is running short. So right now you think it is 
going to work, there is no back up plan, correct?
    General Hickey. It is unnecessary to have a back up plan at 
this point. We have seen it work.
    Mr. Michaud. All right. How do you define VA's success 
under the VBMS in each step of the implementation? Do you have 
any definitions of success under that particular program?
    General Hickey. Our success factor is and has always has 
been, since the moment the Secretary said it is our agency 
priority goals, that we will do claims in 125 days, 98 percent 
quality, in 2015.
    Mr. Michaud. Okay. Now how do you, can you provide the 
Committee on how many, because the concern I heard from some of 
the VSOs and veterans is the goalpost is moving as far as what 
is a backlog, and what is an error rate. Could you provide to 
the Committee or do you have it on your Web site, I do not 
think it is on your Web site, but as far as an ongoing visual, 
like on Monday you have X claims that are 30 days behind, 60 
days, 90, and exactly what the problems are in that area?
    General Hickey. So Congressman Michaud, as part of our 
transformation plan VBA has presented all of its metrics in the 
Aspire database that is available to the public. And anyone can 
look at it at any point in time. I will tell you that we are 
focused on both production and quality, and we are now adding a 
three-month rolling quality average to see the effects of these 
initiatives that we have placed them in. And we have seen a 
full 4 percentage point increase in our quality in the last 
quarter.
    Mr. Michaud. Okay. My last question is, I heard from some 
veterans and I know PVA mentioned it a little bit earlier and I 
will follow it up with PVA, when you look at, we have a 
Department of Veterans Affairs. And sometimes whether it is VHA 
or VBA they tend to work in silos. And some of the concerns I 
heard was that doctors within VHA and doctors within VBA, 
sometimes VBA doctors since they have got to approve the claim, 
will not accept what a VHA doctor has to say. Is that an 
accurate statement? And are there ways where you can break down 
the silo between VBA and VHA?
    General Hickey. Congressman Michaud, thank you for asking 
that question and affording me the opportunity to clarify. VBA 
does not have doctors. VBA has VHA doctors who come and sit in 
our VBA resource, in our regional offices. And they help us do 
some of the medical decisions that we need. But we do not have 
doctors in VBA.
    I will tell you from the perspective and VHA and VBA 
working more collaboratively, we are doing that. We have an 
entire group of people now that work on a regular day to day 
basis between VHA and VBA on these claims.
    Mr. Michaud. So where do those doctors come from though? Is 
it in the same area?
    General Hickey. They come from the VHA. VHA has 
compensation exam physicians. And that is where they come from, 
from VHA.
    Mr. Michaud. Okay.
    General Hickey. From the Veterans Health Administration.
    Mr. Michaud. Well why would you not just accept a VHA 
doctor's recommendations versus having another maybe VHA doctor 
in VBA questioning another VHA doctor?
    General Hickey. So Congressman Michaud, I will clarify 
again, we do not have doctors in VBA. They do not exist in VBA. 
We have doctors in the Health Administration and we rely on 
them for medical opinions and we also rely on private medical 
physicians for their opinions.
    Mr. Michaud. So the doctor in VHA that you use, they can 
question another doctor in VHA? Is that what you are saying?
    General Hickey. I am just saying that our doctors come from 
VHA.
    Mr. Michaud. So they can question another VHA doctor, then?
    General Hickey. They can have an engaging conversation, I 
am sure they do all the time, to collaborate over issues of a 
veteran's health.
    Mr. Michaud. Okay. Thank you, Mr. Chair. I think we ought 
to work this out. Because I heard that there is a problem. And, 
you know, if you have a VHA doctor saying something then there 
should not be another VHA doctor that works with VBA to be able 
to question that. So I think that might be one way we can try 
to streamline the process. Thank you, Mr. Chairman.
    Mr. Stutzman. Thank you. Mr. Walz?
    Mr. Walz. Well, thank you Mr. Chairman. And I would like to 
note that the Ranking Member's passion for veterans is never in 
question. And I as a veteran have benefitted from that. So I 
understand the frustration. I also think it is important, 
though. And my point with the General and with many in VA is 
that commitment is there. General Hickey was the first class of 
female warriors to graduate from the Academy, one of our first 
pilots that came out of that. So I think that part of the 
transformation and trying to get at this, it certainly does not 
relieve that responsibility. But all of us together trying to 
figure this out, I think we can get there.
    My question to you, Under Secretary, this, I am going to go 
to this last one that you went to. This VBA/VHA. VBA and VHA 
are colocated in the Sioux Falls regional office. They had some 
of the best processing and highest quality of claims. The new 
system forced them to send those somewhere else and my veterans 
in Southwest Minnesota, Northern Iowa, and South Dakota have 
seen claims times go up. And their fear is, is that as we try 
to take massive claim times down in other areas, that we are 
pushing up and reaching the lowest common denominator instead 
of asking everyone to try and come to that high level of 
excellence. Was that taken into consideration? Because there is 
a feeling amongst some very highly qualified and passionate 
folks in your, under your command, that they were doing great 
work and the system actually did not really benefit them. They 
actually went away from that. How do you explain that? Because 
I think that colocation was a key point that Mr. Michaud was 
bringing up. They are right there. I would walk across the 
street from one to another.
    General Hickey. So Congressman Walz, I will tell you that 
we are, we have worked very hard to do and keep our claims for 
our veterans in the states in which they are in. There are 
times when a particular regional office because of a surge 
deployment, and I will say, you know, when you have an entire 
Army group that comes back from a particular region, that can 
get very heavy on that regional office very quickly, especially 
if it is a National Guard or a Reserve unit that is located in 
that state and stays in that state. And so there are times when 
we look to say, how can we rebalance the load so that we can 
effectively get more and more of those claims done?
    Mr. Walz. But I am trying to figure this out. I come at 
this in civilian sector, it is the military experience but also 
as a cultural studies person, trying to break this. The one 
thing I think we have to recognize here is too, the common 
denominator over the last 20 years is Congress, too. We have 
been here this whole time. Our job is oversight. Some of us 
have come and gone, and so forth. Secretaries have come and 
gone, Under Secretaries have come and gone. The question I ask, 
and I think it is an important one, this, very small, but this 
is the claims chart, the flow chart that comes out of this or 
whatever. I would challenge my colleagues, I do not know if 
there is anybody here who knows how this whole process works. 
And I struggle myself to try and figure this out. What I am 
trying to mesh up is, this is the current claims chart. And if 
our belief is the inputs going into it were greater, all kinds 
of external factors, we still need to come out with a claim 
adjudication at some point in time. How do the initiatives, the 
transformation initiatives, how are these going to blend 
together to make this thing flow? Because I am having a hard 
time wrapping my mind around it. I think the frustrations that 
are being expressed is trying to clearly articulate and know. I 
would like to know, and if I asked all of you, what happens to 
me as a 20-year veteran who was in artillery and I am having a 
little trouble hearing? And I go in? Where does it all start, 
and what happens, and how do I come out the other end?
    General Hickey. So thank you, Congressman Walz, for your 
question. I will tell you that in my years since I have been on 
staff here, and our Secretary, our Secretary has traveled to 25 
regional offices and asked exactly those questions. Show me how 
it works. And they have walked him through, from Alaska to 
Texas to Maine. And I have done the same in the last year. I 
have been to 26 regional offices, where I told them make me a 
claim and walk me through and show me how that works.
    I will tell you each one of those initiatives is focused at 
a particular area where we have seen problems in the process. 
So if you do a lean six sigma, for those of you who are 
familiar with those kinds of activities, where you take and 
break a complete process apart and then you find the places 
where you have delays, where you have disruptions, where you 
have problems in the process, we have targeted those 40-plus 
initiatives at those historical problems. So that is what those 
initiatives do.
    The people initiatives help us with segmented lanes, which 
is an IRS model that worked for them. So we are taking lessons 
from IRS, where we can put things that go through quickly, 
through very quickly. Things that are very difficult to do 
through a special operations lane, and the body of the rest in 
the middle. That has made a difference in the ways in which we 
can get some of those easy ones done. We have learned other 
things as well.
    Mr. Walz. Under Secretary, and I ask you this. You have a 
long, distinguished career. You have been successful where you 
have been at. You have taken on, and thank you for doing so, an 
incredible challenge. You are going to be judged by the 
outcomes of this. Outcomes do matter. Are you comfortable that 
if we came back here in 18 months that we will see a 
significant change? Because I would have to say, I think 
probably skepticism is a health point here. My fear here is, 
though, is not only this Committee but the veterans are moving 
from skepticism to cynicism on the process. Are you 
comfortable, I mean, to lay that on the line? Because what we 
are asking is, we will give you the tools necessary to get 
there. You are going to be looked at and asked that question. 
Do you have the ability to crack that cultural malaise, or 
whatever it is, to get through to the other side?
    General Hickey. Congressman Walz, I value what you all 
think of me and the end of the success. But even more than that 
is the 23 million veterans who are out there, many of which 
watching today, and I want to tell them that I am committed to 
do this. We are committed to get through it. Change is hard. It 
is hard no matter who does it and where they do it. But we are 
tackling it and we have put out the right kinds of resources to 
do this right. I have a program management office that makes 
sure I do everything before I have to do the next thing, and be 
on time, and be on track. I have engaged with Labor to make 
sure we are doing it right. They understand what we are doing. 
I have gotten every single one of the memoranda of 
understanding signed by our great Labor partners in everywhere 
we are going. We are all in on this.
    Mr. Walz. Do you feel an effort of this magnitude has ever 
been made on the claims process?
    General Hickey. I do not. That does not shy me away from 
doing it. As you have mentioned, I was an Air Force general 
officer on the Air staff and I led an effort in my last career 
assignment to stand up 140 new missions in the United States 
Air Force. And nobody wanted to do it. And today there are UAVs 
flying over Afghanistan in support of our War fighters that I 
got to put there despite the fact that nobody wanted to fly a 
UAV at that time in the Air Force. We will make it happen.
    Mr. Walz. And I appreciate that.
    General Hickey. We care about our veterans, their family 
members, and their survivors.
    Mr. Walz. We are all in this together. I think our charge 
is that this is one of those cases failure is not an option.
    General Hickey. It is not an option.
    Mr. Walz. We have to get there. So I yield back.
    Mr. Stutzman. Thank you, Mr. Walz. I would like to do a 
second round of questions if anyone has any. Because I would 
like to just talk a little bit about the scanning issue. Why 
did it take this Committee calling a hearing for the VA to meet 
with NARA to discuss next week's scanning contract expiration? 
I think the frustration that is felt around here, is that it is 
these sorts of things that we find out about. And why is there 
not some sort of proactive movement before this? Can you give 
us an explanation of when the contract is set to expire next 
week, there is not a new contract? Is there some other plan 
that the VA, VBA is planning on implementing? Is it going to be 
done in house? I know for us congressional offices we have 
folks that we could use to scan things in. I am sure, your 
system is a little bit more complicated. But, we are spending 
$10 million a year, if I remember the number correctly. It 
seems like we could do it cheaper and it seems like we could 
get it done. Is there a plan to address that?
    General Hickey. Chairman Stutzman, yes there is. I will 
defer the first part of it to my Assistant Secretary for 
Information Technology Roger Baker.
    Mr. Baker. Thank you. So I just wanted to talk to the NARA 
piece. NARA has been our partner on this for two years. So let 
me start with will we have an agreement with them by the end of 
this week to continue them for the next year? I believe the 
answer to that is yes. I know that is in process. I checked 
with my staff while we were listening to this go on, and got 
absolutely assurances that there is really nothing standing in 
the way of that completing by the end of this week.
    So it is a little bit different than a normal government 
contractor relationship, because it is a government to 
government relationship. It is much easier to do. We have used 
NARA from a development standpoint. As we developed the VBMS, 
the relationship with NARA has been in my organization and 
coming out of my appropriation. As we transition the VBMS from 
development into full production we will move to a production 
level of scanning.
    NARA will continue on and work with us, I believe at the 
600,000 scanning pages level. But I think you also heard them 
mention the kind of level we need to get to, which is about 60 
million pages a month. And that is a private sector commercial 
level of scanning on that. Let me just turn it to the Under 
Secretary for a second and talk about that acquisition that is 
ongoing.
    Mr. Stutzman. Do you know the cost of that? What is that 
going to cost?
    Mr. Baker. We have an acquisition out right now. We do not 
know the exact cost of that. Because it usually is priced on a 
per page standpoint. So depending on the per page that comes 
back----
    General Hickey. And Chairman Stutzman, I would be a little 
concerned we have an active acquisition at this point in time, 
about talking too broadly around it while we are going through 
that acquisition.
    Mr. Stutzman. Okay. Let us go back then, why the delay? I 
think that an incident like this does not give us confidence 
that the job is going to get done. Because this is about 
veterans not about contracts between agencies. And I am sure, I 
know that it can be done more quickly and that is good. But why 
is it taking a hearing? Why is it taking so long for a contract 
to be renewed? It seems like you are really imposing on the 
good will of another agency. And that, well they are going to 
just keep doing it. We have got to handle this like a business.
    General Hickey. So Chairman Stutzman, I will say we have 
been in discussions with NARA for some time about our 
relationship. And over time we realized that as we were 
developing this past winter our requirements for intake, we 
call it ingest, meaning the ability to consume the data, we 
were learning more and more about that intake strategy. And we 
now have an intake strategy that initially does depend on 
scanning. But over time, but not over a lot of time, very 
quickly, we are going to more increasingly to a strategy that 
also includes data to data interface. What I mean by that is as 
we were discussing and briefing our stakeholders in the 
veterans service organizations and in your states at the 
directors of veterans affairs offices, they were talking to us 
about rather than scanning why do you not let your system 
connect to our system at a data to data level? That was a 
recently, January timeframe, new discussion that shifted some 
of our requirements for scanning.
    So in those discussions with NARA, NARA and we both came to 
a mutual agreement that they would continue to sustain the 
level they have been doing with us, but that we probably needed 
a more short-term, big commercial capability to move the 
solution that they have developed into production as we move 
forward.
    Mr. Stutzman. Staff just handed me the presentation you had 
given regarding the plan. And I am just reading through this 
and glancing through this. But it looks more like a 
presentation about the statistics, the problem that we know 
that we have. Are you going to produce an actual plan in 
addressing the backlog? A written out plan that could be 
presented to the Committee?
    General Hickey. Chairman Stutzman, we have a concept of 
operations that is in a written document, if you would prefer a 
Word document that describes all the details listed in that 
particular slide deck. I do not know if that is the full and 
complete one. It looks too short to be the full and complete, 
all the details. I do know that we spent several hours with the 
staff and I am happy to do it again. I am happy to do whatever 
you need, whenever you need it.
    Mr. Stutzman. I think that more information right now would 
be helpful. And this was what staff was handed at the hearing?
    Counsel. Yes, this is the full copy of the presentation 
that you provided when we met with you. If it is shorter and 
there is more to it, we did not receive anything additional 
than what is right here.
    General Hickey. We will certainly provide that to the 
Committee.
    Mr. Stutzman. Thank you. Any other Members? Mr. Filner?
    Mr. Filner. When you were asked do you have a plan, you 
said yes, we provided it to the Committee. This is not a plan. 
This is not a strategic plan. I will ask you again, do you have 
a strategic plan and why do you not just have it with you and 
give it to us? That is the title of this hearing. Do you have a 
plan to give to us this minute?
    General Hickey. I do have a plan, Congressman Filner.
    Mr. Filner. You have what?
    General Hickey. I do have a plan.
    Mr. Filner. Then----
    General Hickey. I do not have it in this book and these 
materials. I am happy to provide it to the Committee.
    Mr. Filner. Why are you not providing it to us in a plan of 
execution now. You are going to provide it to us? Why do you 
not have it here? You have 18 people here who work for you. 
Give us the plan. That is all we asked for. And you said you 
did it. We do not, we have some slides. We do not have a 
strategic plan of how you are going to execute this so called 
transformation which sounds more like a fossil formation. So 
where is the plan?
    General Hickey. So Congressman Filner, I have the plan. It 
is in Word document.
    Mr. Filner. Is it a secret one, or what?
    General Hickey. No, it is not a secret document. In fact I 
have shared it with veterans service organizations, with our 
Labor partners, with----
    Mr. Filner. I guess though if none of us have seen it, why 
do you not have it with you?
    General Hickey. I will be happy to bring it to you, sir.
    Mr. Filner. All right. Thank you. Now by the way, Mr. Walz, 
she does not need your defense here for her past 
accomplishments, and I do not need a lecture from you of her 
past. We are talking about what she is going to do for the VA 
now. I will stipulate any accomplishments that she has had. I 
respect her service. But if she cannot do this job, I do not 
care what she has done in the past, okay? So do not lecture me 
about how I do not have respect for someone's past. She is 
talking about the future, I mean the present and the future.
    And she did not give one answer or one recognition that 
there was any problem, in all her testimony, in every answer. 
The Chairman asked her a number of things. She talked for three 
and a half minutes and did not give the answer and still does 
not know the answer. So let us talk about what she is doing 
right here, and right now. And I said if one of your veterans, 
and she did not answer your question, your very good question, 
Mr. Walz, about the time period of what is going on in 
Minneapolis. She just said, ``Oh, time to time we have 
surges.'' You asked are we heading toward a lowest common 
denominator, and that is, she never answered that. So do not, I 
mean, be, I think, a little bit more critical of the kind of 
answers we are getting.
    We do not have a plan. This whole hearing was about a plan. 
If I were here, I would have given out the plan. But we still 
do not have one. And again, Ms. Hickey, if I were you, 
leadership comes from the top. The top is saying there is no 
problem. You ask any veteran in my district, in Mr. Walz' 
district, in Mr. Michaud's district, in Mr. Stutzman's 
district, is there a problem? Everyone will say yes.
    Now you could say they do not understand fully, their 
perception is wrong, we have had a surge of this, we did this, 
we had the Vietnam era, I do not care what you, you have not 
either acknowledged a problem or say how we are going to get 
out of it. You gave us an assurance of a date. And Mr. Walz 
asked, I know you asked, it is not a very bright question, but 
you asked, are you committed? Is it going to happen? What is 
she going to say, no?
    We have had these questions. We have had these commitments 
for years and years and years and years. And Mr. Walz asked you 
another softball question. Has anything been tried that is this 
big before? We have tried every single thing that you have as 
one of your initiatives has been tried, every one of them at 
some point. In fact we have had far more comprehensive plans 
than your 40 initiatives lumped together. Nothing has worked. 
It has gotten worse. And you refuse to admit it. You refuse to 
acknowledge it. And you do not give us a plan to fix it? What 
am I to think? Well, she was an Air Force General and did great 
things. Are you, if it does not happen by 2015 are you going to 
say, ``I resign,'' or what? Or what are you going to make 
happen, if you are the top? And it is always two or three years 
out. It is never I am going to do this tomorrow. You have been 
working on this, your predecessor was working on it.
    I do not have any assurance. You cannot even correct a date 
on the computer for a year and a half and you call it a glitch. 
What confidence do I have that you can do anything if it took 
you a year and a half to fix a glitch? On a simple, the 
simplest thing. Put a date in. I could have done it by hand in 
a few months. It took you a year and a half and you still have 
not done it. Well I am sure we will get a memo from you, I just 
bet, you want to make a bet right now, that you will ask for 
another extension. I just bet. When is that going to be done?
    Why should we have any confidence in 2015 that a system of 
a million backlogs is going to be fixed when we cannot even get 
a glitch fixed in a year and a half? What gives me the 
confidence? That you were an Air Force General? Sorry, it does 
not work. Give me some confidence. What has worked so far? 
Everything has been a problem.
    General Hickey. Would you like me to answer what has worked 
so far, Congressman Filner?
    Mr. Filner. Yeah.
    General Hickey. I would be happy to do so.
    General Hickey. We have a rules based processing system 
that is being tested out of Congressman Walz' regional office.
    Mr. Filner. I am sorry, what program? Of what program?
    General Hickey. A rules based processing system that is 
being tested out of Congressman Walz' very good regional office 
in St. Paul, that has produced the results of the ability to 
send what is a claim that does not require a rating, which is 
another million claims in our bucket that we do everyday. And 
when we pushed it through that rules based processing system 
this week, it takes us four days. It used to take us 154 days--
--
    Mr. Filner. So when is that going to be replicated through 
our whole system?
    General Hickey. We saved 150 days.
    Mr. Filner. When is that going to be replicated to our 
whole system?
    Mr. Stutzman. Let the witness----
    Mr. Filner. When is that going to be replicated to our 
whole system?
    Mr. Stutzman. Let the witness answer the question before--
--
    Mr. Filner. I hear her. She said some pilot worked. When is 
that going to be replicated to the whole system?
    General Hickey. We are making those decisions right now as 
we speak, Congressman Filner. And we will have that system as 
soon as we go through making sure we have all the training 
right for our employees, so we do not ask them to do something 
we have not laid out in what we call a playbook that we have 
for every single one of these initiatives----
    Mr. Filner. You have no playbook for anything.
    General Hickey. That tells everyone how to do these new 
initiatives.
    Mr. Filner. You have no playbook for anything. I have not 
seen it. I have asked for it. You said we got it. It does not 
exist.
    General Hickey. Congressman Filner, would you like me to 
tell you something else that is working?
    Mr. Filner. I hear it worked in Minneapolis. I want to know 
if it is going to work in San Diego, and Seattle, and in 
Jacksonville, and in everywhere else, and what time, and you 
cannot even give me, you say we have not got a playbook yet. 
Give me a time that it is all going to come together.
    General Hickey. These are one of our new----
    Mr. Filner. I can do anything in one office.
    General Hickey. Would you like me to give you another thing 
that worked, Congressman Filner?
    Mr. Filner. Yeah, give me another thing, please.
    General Hickey. Fully developed claims. We have done fully 
developed claims with the support of our veterans service 
office who we cannot, we really depend on highly to help us in 
this regard. And I have great respect for what they do for our 
veterans every single day. Fully developed claims, we do in 117 
days. That is well below the 125-day, 98 percent quality that 
we will do in 2015. 117 days, we do a fully developed claim.
    Mr. Filner. We passed that in 2008, Madam.
    General Hickey. Would you like another thing----
    Mr. Filner. We passed a law demanding that. And it is five 
years later now.
    Mr. Michaud. Mr. Chairman?
    Mr. Stutzman. Does the Ranking Member yield back? Mr. 
Michaud?
    Mr. Michaud. Thank you. Thank you, Mr. Chairman. Quick 
question, will the VA be updating the disability benefits 
questionnaire to allow physicians to state a critical nexus 
opinion as recommended by the American Legion.
    General Hickey. Thank you, Congressman Michaud for your 
question. I will tell you next week we are actually meeting to 
update the DBQs with all the great inputs that people now who 
have been using them for about a month think and have brought 
forward some good ideas. And I highly encourage us, and I will 
take it back personally and make sure that that idea is 
inserted into that process to look at it for an option.
    I will tell you on the DBQs, when we had them all approved 
and we had them available to our veterans, I made the decision 
to go ahead and put them out there to help our veterans as much 
as possible. We are simplifying those in a much easier user way 
for our doctors, both private medical physicians and our VHA 
doctors to use. And that capability is being built as we speak. 
And literally next week, I already took the demonstration on 
it. It looks great. DoD is going to use the same thing to help 
on our seamless process we do with our servicemembers who are 
leaving service.
    Mr. Michaud. Thank you. And I just wanted to follow up from 
the first question I mentioned earlier as far as the Inspector 
General report, and I will quote, RVSRs told us they often did 
not return the inadequate reports due to the pressure to meet 
productivity standards. We continue to see this as an issue in 
our Fiscal Year 2012 reviews. So there evidently is some type 
of productivity standards out there that they have to meet. And 
it is because of that pressure that they are moving forward 
with these claims that I believe is causing part of the 
inaccuracy. So what is that productivity standards out there 
that at least that these employees feel that they have to meet?
    General Hickey. There are different standards of quality, 
Congressman Michaud, for different levels in the organization 
and different positions. But both of them are not just a 
production standard, there is also a quality standard. So you 
have to have both standards, not just one or the other. And 
that is helping us to focus on quality improvement as well. We 
have instituted those new quality review teams in the regional 
offices in order for us to do a less threatening but get to the 
point and get the claim done right, for our employees what we 
call an in process check. Meaning when the quality person comes 
and finds that you have done something in error, and you fix it 
right away and they instruct you on what you did wrong, it does 
not count against your performance standard. So that we are 
encouraging our employees to fix things right away, learn from 
that, and then not make the subsequent error down the road for 
the next claim.
    Mr. Michaud. How is that weighted? Equally, as far as 
accuracy and production?
    General Hickey. This is important to note, our veterans of 
today's conflict, Iraq and Afghanistan, are coming to us with a 
higher number of medical issues per claim. Almost in some cases 
we are starting to see 15. The reason why this is important, if 
you can give me just a second Congressman Michaud, is because 
right now today our standards are if you get one of the 15 
things wrong, even if that one does not affect the veteran pay, 
you get a big goose egg for that claim. We are looking at, and 
will be able to under the new VBMS technology, look at those 
medical issues by issue and be able to look at the quality by 
issue. I cannot do that today in our current paper bound 
process.
    Mr. Michaud. So, wait you confused me. So the quality and 
the productivity standards are not weighted equally?
    General Hickey. From my perspective they are both, they are 
both weighted, both quality and production.
    Mr. Michaud. They are both weighted, but are they both 
weighted equally?
    General Hickey. There is a balance between them, yes, 
Congressman Michaud.
    Mr. Michaud. Okay. No further questions. Thank you.
    Mr. Stutzman. Thank you. Mr. Walz?
    Mr. Walz. Thank you, Ranking Member. And fixing this thing 
is the ultimate goal, however we have to get there to do that. 
And I think it a point, and I will certainly say it, I take 
responsibility sitting on this Committee as being part of that. 
I will not be part of the problem with it. I apologize to the 
Ranking Member if there was any disrespect, because it was 
never intended to be that. Your passion for veterans is never 
questioned.
    And I will say on this, of trying to get this thing done, 
we need to know. The past is prologue on certain things. We 
went into 2005 with a $1 billion shortfall in the VA because we 
were told these wars would last weeks, not months. Now we are a 
decade later. These are costs of war that we are talking about. 
These are long term prognoses. I am just fearful that if we 
compartmentalize and we silo again we do not bring into the 
greater effect of this.
    We are going to have, we have aging Vietnam veterans. We 
are going to have aging Iraq veterans and Afghan veterans. And 
my thing is we will be right back here again trying to get at 
that.
    So a couple of quick questions. Was NARA better qualified 
at the data entry than any private sector entity?
    Mr. Baker. I do not believe necessarily. I believe it was a 
good partner during the development. We needed somebody with 
expertise that we could access quickly. And it is much easier 
to access another government organization. I believe the skills 
for doing that work could potentially have been accessed from 
the private sector, which is why we are looking at the large 
volume being a private sector piece. But we believe they were 
the right partner for the development stage of VBMS.
    Mr. Walz. Because, and I will, in dealing with, and I think 
the frustration on the bonuses is there. But I will also be the 
first to say I will not allow good public servants to be thrown 
under the bus for trying to do their job. I will also not 
defend them if they are not, when we have got this. We have to 
use the best that we have. This is about delivering case. This 
is about what we know. It is not the either/or proposition of 
the private sector versus the government. It is the hybrid 
model of public/private partnerships to get this done. I want 
to make sure we are utilizing those.
    I want to make sure we give the tools necessary because 
this situation, and we feel hamstrung by this too, I guess, at 
certain times. Of just trying to make these command decisions 
to get it done. We have an opportunity here. The public is 
absolutely with us. They are telling me in my district, do what 
is necessary, but do not waste money on this. Do what is 
necessary to care for our veterans, do what is necessary to 
speed up the process, and I know there are successes everyday, 
and I can know there are successes on the VHA side everyday. 
But again, asking a veteran to wait, asking a veteran's claim 
to be drawn down, it is simply, if it is so complex that we 
cannot explain it to our constituents in a minute or two that 
becomes a real problem for them. And when I look at that flow 
chart I do not know what it means. I am really struggling with 
trying to get through this.
    So I say again, all the frustrations here are for the right 
cause. I certainly do not see a softball question asking a 
General who has performed whether she can get this thing 
whipped or not and is ready to live with those consequence. I 
think the respect goes with that. But that is the reality, it 
is going to be there, Under Secretary.
    General Hickey. And I accept that, and I accept that 
oversight.
    Mr. Walz. I yield back.
    Mr. Stutzman. Thank you. Thank you from this Committee for 
being here. Obviously we are expecting some follow-up. One, I 
would like the number of bonuses that VBA senior executives 
were given, and also for your headquarters staff. And if you do 
not have them here if you could please provide them for the 
record to the staff. And then also the plan that was being 
discussed and that you mentioned, if you could also have that 
delivered as well before closing. And then also we just want to 
let you know that we appreciate the testimony. We recognize 
that it is a tough job but our veterans are counting on it. And 
we have a responsibility to answer to our veterans back home. 
You have a responsibility to the veterans, and I know you know 
that. But we want to see this turn around and go the other way. 
With that, if any Member has any closing statements we just ask 
that you submit that in writing. And I ask unanimous consent 
that all Members have five legislative days to revise and 
extend their remarks and include extraneous material. Hearing 
none, so ordered. I thank the Members for being here, and I 
thank the panel for being here. You are dismissed. And this 
meeting is adjourned.

    [Whereupon, at 3:32 p.m., the Committee was adjourned.]



                            A P P E N D I X

                              ----------                              

               Prepared Statement of Chairman Jeff Miller
    Good Morning,
    Welcome to our hearing, ``Reclaiming the Process: Examining the VBA 
Claims Transformation Plan as a Means to Effectively Serve Our 
Veterans.''
    Through their service and sacrifice on behalf of our Nation, 
veterans have ensured that our American way of life can continue long 
into the future. Our Committee has the privilege of serving these 
heroes, to whom we owe an immense debt of gratitude, by ensuring that 
they have reasonable access to the benefits they earned. This access to 
promised benefits has been made ever more difficult in recent years, as 
VA continues to struggle with unconscionable backlogs and unacceptable 
delays in getting our Nation's veterans the benefits they need.
    On several occasions, Secretary Shinseki stated that VA would 
``break the back of the backlog in 2009.'' And, in an effort to do just 
that, VBA implemented a ``Transformation Plan,'' consisting of various 
initiatives that have great potential to ease some of these problems. 
However, despite the development of this transformation process, the 
backlog continues to grow, and the rate of accuracy and processing time 
has, at best, remained stagnant.
    Today, we will examine VBA's transformation plan and the 
effectiveness of these initiatives in resolving the core issues of 
processing time, accuracy of decisions and eliminating the backlog.
    We will specifically focus most of our attention on the Veteran's 
Benefits Management System, or VBMS, as you will hear it called 
throughout this hearing, and which VA has consistently referred to as 
the cornerstone of its transformation process. I know that I, and my 
fellow Committee Members, have many questions as to when this system 
will be ready for national rollout, and how issues relating to the 
scanning of paper documents will be handled in the future.
    As a matter of fact, VA's contract with the U.S. National Archives 
and Records Administration (NARA), the agency currently handling VA's 
scanning needs, expires on June 26th, just one week from today. 
Unfortunately, as is often the case when dealing with VA, they have 
waited until the eleventh hour to address this contract expiration and, 
to the best of my knowledge, are still working on contract 
solicitations.
    This hearing also will focus on several of VBA's other 
transformation plan initiatives, including, Disability Benefit 
Questionnaires (DBQs), Simplified Notification Letters (SNLs), Fully 
Developed Claims (FDCs), the I-Lab, and the Appeals Design Team.
    Although I applaud VA for taking the initiative to transform the 
claims process, we must ensure that these transformation efforts 
continue to progress in the right direction, and that they are 
ultimately helping veterans obtain the benefits they have earned.
    It is time for VA to uphold its responsibility, to our veterans and 
to the American people, to break this cycle of un-productivity and 
deliver the benefits that the agency was created to provide.
    Also, since I may need to leave before the end of the hearing, I 
want to take the opportunity to bring an additional issue to the 
attention of our VA witnesses.
    Last week, the Chancellor of the Florida College System informed 
the Committee staff that VA had determined that 23 of the 28 Florida 
community colleges do not qualify to provide training under the 
Veterans Retraining Assistance Program, or VRAP, which was part of the 
VOW to Hire Heroes Act passed by Congress last November. The reason 
given for this denial is that each of those 23 community colleges 
awards only a very limited number of bachelors' degrees, most often in 
technical and health care fields, such as degrees in Bachelors' of 
Nursing.
    It is clear to me that VA is ignoring the traditional community-
focused approach these schools continue to offer. Unlike four-year 
schools that offer bachelors' and other advanced degrees, generally 
without regard to the needs of the local area, community colleges 
continue to provide education and training that responds to the needs 
of their surrounding communities.
    In fact, using VA's narrow definition of community college, if a 
school awarded one bachelors' degree, among hundreds or even thousands 
of associates' degrees, the school would not qualify for VRAP 
training--which is like saying that a bank offering coffee to its 
patrons is no longer a bank, but is actually a Starbucks.
    And this issue is not limited to the state of Florida. According to 
the American Association of Community Colleges, 64 of its members in 
Florida, Nevada, Georgia, Texas, North and South Dakota, Puerto Rico, 
Arizona, Utah, Kansas, Wisconsin, New York, Oklahoma, Pennsylvania, 
Hawaii, Vermont, Indiana, and Washington also are authorized to award 
only limited numbers of bachelors' degrees.
    I would note that several of these states have high unemployment 
rates among veterans.
    Under Secretary Hickey, the VRAP legislation is intended to retrain 
unemployed veterans. We owe it to these heroes to not let even one of 
those VRAP slots go unfilled. I urge you, in the strongest possible 
way, to consider the spirit of the VRAP provision in defining the term 
``community college.'' Ensuring that veterans in those 18 states are 
given the opportunity to retrain for in-demand jobs at the institution 
of their choice.
    Thank you.
    With that I yield to the Ranking Member for his opening statement.

                                 
               Prepared Statement of Hon. Gus Bilirakis, 
                             Vice Chairman
    Good Morning,
    Welcome to our hearing, ``Reclaiming the Process: Examining the VBA 
Claims Transformation Plan as a Means to Effectively Serve Our 
Veterans.''
    Through their service and sacrifice on behalf of our Nation, 
veterans have ensured that our American way of life can continue long 
into the future. Our Committee has the privilege of serving these 
heroes, to whom we owe an immense debt of gratitude, by ensuring that 
they have reasonable access to the benefits they earned. This access to 
promised benefits has been made ever more difficult in recent years, as 
VA continues to struggle with unconscionable backlogs and unacceptable 
delays in getting our Nation's veterans the benefits they need.
    On several occasions, Secretary Shinseki stated that VA would 
``break the back of the backlog in 2009.'' And, in an effort to do just 
that, VBA implemented a ``Transformation Plan,'' consisting of various 
initiatives that have great potential to ease some of these problems. 
However, despite the development of this transformation process, the 
backlog continues to grow, and the rate of accuracy and processing time 
has, at best, remained stagnant.
    Today, we will examine VBA's transformation plan and the 
effectiveness of these initiatives in resolving the core issues of 
processing time, accuracy of decisions and eliminating the backlog.
    We will specifically focus most of our attention on the Veteran's 
Benefits Management System, or VBMS, as you will hear it called 
throughout this hearing, and which VA has consistently referred to as 
the cornerstone of its transformation process. I know that I, and my 
fellow Committee Members, have many questions as to when this system 
will be ready for national rollout, and how issues relating to the 
scanning of paper documents will be handled in the future.
    As a matter of fact, VA's contract with the U.S. National Archives 
and Records Administration (NARA), the agency currently handling VA's 
scanning needs, expires on June 26th, just one week from today. 
Unfortunately, as is often the case when dealing with VA, they have 
waited until the eleventh hour to address this contract expiration and, 
to the best of my knowledge, are still working on contract 
solicitations.
    This hearing also will focus on several of VBA's other 
transformation plan initiatives, including, Disability Benefit 
Questionnaires (DBQs), Simplified Notification Letters (SNLs), Fully 
Developed Claims (FDCs), the I-Lab, and the Appeals Design Team.
    Although I applaud VA for taking the initiative to transform the 
claims process, we must ensure that these transformation efforts 
continue to progress in the right direction, and that they are 
ultimately helping veterans obtain the benefits they have earned.
    It is time for VA to uphold its responsibility, to our veterans and 
to the American people, to break this cycle of un-productivity and 
deliver the benefits that the agency was created to provide.
    Also, since I may need to leave before the end of the hearing, I 
want to take the opportunity to bring an additional issue to the 
attention of our VA witnesses.
    Last week, the Chancellor of the Florida College System informed 
the Committee staff that VA had determined that 23 of the 28 Florida 
community colleges do not qualify to provide training under the 
Veterans Retraining Assistance Program, or VRAP, which was part of the 
VOW to Hire Heroes Act passed by Congress last November. The reason 
given for this denial is that each of those 23 community colleges 
awards only a very limited number of bachelors' degrees, most often in 
technical and health care fields, such as degrees in Bachelors' of 
Nursing.
    It is clear to me that VA is ignoring the traditional community-
focused approach these schools continue to offer. Unlike four-year 
schools that offer bachelors' and other advanced degrees, generally 
without regard to the needs of the local area, community colleges 
continue to provide education and training that responds to the needs 
of their surrounding communities.
    In fact, using VA's narrow definition of community college, if a 
school awarded one bachelors' degree, among hundreds or even thousands 
of associates' degrees, the school would not qualify for VRAP 
training--which is like saying that a bank offering coffee to its 
patrons is no longer a bank, but is actually a Starbucks.
    And this issue is not limited to the state of Florida. According to 
the American Association of Community Colleges, 64 of its members in 
Florida, Nevada, Georgia, Texas, North and South Dakota, Puerto Rico, 
Arizona, Utah, Kansas, Wisconsin, New York, Oklahoma, Pennsylvania, 
Hawaii, Vermont, Indiana, and Washington also are authorized to award 
only limited numbers of bachelors' degrees.
    I would note that several of these states have high unemployment 
rates among veterans.
    Under Secretary Hickey, the VRAP legislation is intended to retrain 
unemployed veterans. We owe it to these heroes to not let even one of 
those VRAP slots go unfilled. I urge you, in the strongest possible 
way, to consider the spirit of the VRAP provision in defining the term 
``community college.'' Ensuring that veterans in those 18 states are 
given the opportunity to retrain for in-demand jobs at the institution 
of their choice.
    Thank you.
    With that I yield to the Ranking Member for his opening statement.

                                 
                Prepared Statement of Hon. Bob Filner, 
                       Ranking Democratic Member
    Thank you, Mr. Chairman.
    We are here today to examine the efficiency and effectiveness of 
some of the elements of the Department of Veterans Affairs' Veterans' 
Benefits Administration's Claims Transformation Plan.
    Since the beginning of 2007, the VBA has added well over 10,000 
claims processing personnel and Congress has funded these requests. Yet 
the backlog still climbs.
    However, merely adding more people to the same flawed system will 
not ensure proper benefits delivery to Veterans, their families and 
survivors. We need to continue to look at the system with fresh eyes to 
help VA manage its claims processing mission.
    At the time of its enactment, the Veterans' Benefits Improvement 
Act of 2008, P.L. 110-389, was embraced by many stakeholders as a way 
forward for VA to revamp and modernize its claims processing system--to 
bring relief to those Veterans who were languishing in an antiquated 
system in dire need of reform.
    I am pleased that P.L. 110-389 also planted the seeds for a number 
of initiatives that VA is currently undertaking, particularly its 
Veterans Benefits Management System and the Business Transformation Lab 
in Providence, Rhode Island.
    However, the need is still there to focus on comprehensive reform 
that will result in a system that reflects improved accountability, 
accuracy, quality assurance and timeliness of claims and appeals 
processing for our Veterans, their families and survivors.
    As the VA OIG recently concluded in its report after the inspection 
review of 16 VA ROs, VBA is processing 23% of its claims erroneously.
    That's nearly 1 in 4 claims!
    To change this, the VAOIG recommended that VA needs to enhance 
policy guidance, compliance oversight, workload management, training 
and supervisory review in order to improve claims processing 
operations.
    Long story short, we need to focus on getting the claim right the 
first time!
    I know that VA has developed a number of forward-thinking pilots 
and laboratory initiatives, but how will they actually help to put VA 
on track to processing its compensation and pension claims and appeals 
in a virtual environment using twenty-first century technology?
    How will it help deliver the promise to improve the accuracy, 
consistency, quality and accountability of VA's claims processing 
system?
    To deal with the massive scope of these issues, VA has a lot of 
irons in its transformation plan's fire, the biggest of which is VBMS 
(Veterans Benefits Management System).
    However, let us not confuse activity for action.
    Let us not confuse new processes with progress.
    We all know the problem; it's been around for several decades.
    I support the fact that the VBA is trying to operate more 
strategically under Secretary Shinseki's leadership and taking 
ownership of problems, the breadth of which, continue to perplex 
stakeholders of the Veterans community in terms of finding a workable 
solution.
    But I must ask the tough question, where is your plan of execution, 
your strategic outline to actually get there!
    Technology seems to be passing by VA and your execution is slow and 
sloppy!
    Finally, I have said it many time before, it really is time to come 
up with outside-of-the box solutions and consider implementing 
practices like an IRS-type model system where claims are granted and 
then later audited.
    However, these types of solutions would require a lot of buy-in-- 
everyone is currently vested in a failed system that is hemorrhaging 
and all we have are band-aids.
    How else will we dig out of a million-plus claims? I don't think 
VBMS will get us there. Nor will any of these other warmed-over pilots. 
The best thing I can compare the likely outcome to is a Shakespearean 
tragedy.
    But we need to ensure that we adopt policies that show the highest 
trust of our Veterans --and which prevent them from waiting too long 
for a final decision on the benefits that have rightfully earned.
    I look forward to hearing from our witnesses today. Thank you, Mr. 
Chairman, and I yield back my time.

                                 
                 Prepared Statement of Jeffrey C. Hall
    Chairman Miller and Members of the Committee:
    Thank you for inviting the Disabled American Veterans (DAV) to 
testify on the status of the Veterans Benefits Administration's (VBA) 
claims processing transformation initiatives, especially the Veterans 
Benefits Management System (VBMS). With 1.2 million members, all of 
whom are wartime disabled veterans, DAV is dedicated to building better 
lives for America's disabled veterans and their families. With the 
largest corps of National Service Officers (NSOs), DAV provides free 
representation to veterans and their survivors in seeking disability 
compensation and other benefits, working from within all 57 VA Regional 
Offices, as well as through our Mobile Service Office and Transition 
Service Officer programs.
    This morning the Committee will examine the progress made by VBA 
towards reforming its system for processing veterans' claims for 
benefits, especially the lengthy and flawed system for determining 
disability compensation claims. While preparing for today's hearing, I 
reviewed testimony DAV has provided over the past two years in order to 
better present our views today, and I was struck by the change in our 
assessment of VBA's progress. At a Subcommittee hearing 24 months ago, 
we testified that, `` . . . there were reasons to be optimistic about 
[VBA's] chances for improvement.'' Sixteen months ago we testified to 
the full Committee that there were, `` . . . some positive and hopeful 
signs of change.'' And earlier this year, we testified that there were, 
`` . . . many positive and hopeful signs that the VBA is on the right 
path.'' Although it must be stressed that there is indeed positive 
change and significant progress being made, there are also some 
troubling problems related to VBMS and other automation initiatives 
that now raise serious questions about whether VBA's transformation 
efforts will ultimately be successful.
    Mr. Chairman, this Committee is well aware of the scale of the 
problems facing VBA. Over the past decade, the number of veterans 
filing claims for disability compensation has more than doubled, rising 
from nearly 600,000 in 2000 to over 1.4 million in 2011. This workload 
increase is the result of a number of factors over the past decade, 
including the wars in Iraq and Afghanistan, an increase in the 
complexity of claims and improved outreach and communication utilizing 
new Internet tools, including social networking. Furthermore, new 
presumptive conditions related to Agent Orange exposure (ischemic heart 
disease, B-cell leukemia and Parkinson's disease) and previously denied 
claims related to the Nehmer decision added almost 200,000 new claims 
leading to a workload surge that is expected to level off this year. To 
meet this increased workload, VBA's workforce grew by about 80 percent, 
rising from 13,500 FTEE in 2007 to over 20,000 today, with the vast 
majority of that increase occurring during the past four years.
    Yet despite the hiring of thousands of new employees, the number of 
pending claims for benefits, often referred to as the backlog, 
continues to grow. As of June 12, 2012, there were 911,450 pending 
claims for disability compensation and pensions awaiting rating 
decisions, an increase of more than 360,000 from two years ago when VBA 
was just beginning their transformation planning process. Almost 
600,000 of those claims have been pending over 125 days (VBA's official 
target for completing claims), more than three times the number that 
existed two years earlier. But more important than the number of claims 
processed is the number of claims processed correctly. VBA's quality 
assurance program, the Systematic Technical Accuracy Review (STAR), 
indicates the current accuracy rate is just over 86 percent for the 
one-year period ending in April 2012. Although this is a slight 
improvement from one year prior, it is still well short of VA's target 
of 98 percent accuracy. Further, VA's Office of Inspector General 
(VAOIG) reported in May 2011 that based on inspections of 45,000 claims 
at 16 of the VA's 57 regional offices (VAROs), claims for disability 
compensation were processed correctly only 77 percent of the time.
    VBA has struggled for decades to provide timely and accurate 
decisions on claims for veterans benefits, especially veterans 
disability compensation, and numerous prior reform attempts that began 
with great promise, sadly fell far short of success. Early in 2010, 
recognizing the severity of the problems they were facing, VBA's 
leadership committed to undertaking a comprehensive transformation of 
claims processing from an outdated, inefficient, and inadequate system 
into a modern, automated, rules-based, and paperless system. It has 
been two-and-a -half years since this latest reform effort began and we 
are nearing the point where VBA's strategies to transform its people, 
processes and technologies must begin to turn around this failing 
system.
    At the outset, I want to make clear that we remain extremely 
pleased with the continuing partnership VBA has formed with DAV and 
other veterans service organizations (VSOs) to help reform the claims 
process. The outreach to VSOs that began about three years ago has been 
strengthened by Under Secretary Alison Hickey, whose commitment to 
working with VSOs on behalf or our nation's veterans is greatly 
appreciated. General Hickey has set a tone within VBA, reflected 
throughout her leadership team, emphasizing the importance of 
partnering with VSOs while designing the new systems necessary to 
ensure that veterans, especially disabled veterans, receive all their 
earned benefits in a timely manner.
    In recent months VBA has begun to roll out a new operating model 
for processing claims for disability compensation, one that will change 
the roles and functions of thousands of VSRs and RVSRs at Regional 
Offices across the country. VBA is also launching new IT systems, 
including the Veterans Benefits Management System (VBMS), a new 
Stakeholder Enterprise Portal (SEP), an expanded e-Benefits system with 
VONAPPS Direct Connect (VDC), and other elements of their Veterans 
Relationship Management (VRM) and Virtual Lifetime Electronic Record 
(VLER) initiatives. VA's transformation strategy is centered around 
three main components: people, processes and technologies; today's 
hearing will focus primarily on the technology aspect, particularly 
VBMS.
    Mr. Chairman, as you know, the VBMS has been in development for 
more than two years, with the first pilot location at the Providence, 
Rhode Island VA Regional Office (VARO) beginning in November 2010; a 
second testing site at the Salt Lake City, Utah VARO was initiated just 
over a year ago and two more pilot sites were recently stood up at the 
Wichita, Kansas VARO and the Fort Harrison, Montana VARO. The 
Providence and Salt Lake City VAROs are currently processing only 
original claims for disability compensation within VBMS, whereas both 
Wichita and Fort Harrison process all claims within VBMS and also use 
the new operating model developed from VBA's experience at its I-Lab in 
Indianapolis. Build upon the best practices developed from VBA's myriad 
of processing pilots conducted over the last several years, the I-Lab 
developed a new operating model for processing claims that relies on 
the segmentation of claims as its cornerstone. The traditional triage 
function was replaced in the new operating model with an Intake 
Processing Center, putting experienced claims personnel at the front 
end of the process, with responsibility to divide claims along three 
separate tracks; Express, Core, and Special Ops. The Express lane is 
for simpler claims, such as fully developed claims, claims with one or 
two contentions, or other simple claims. The Special Ops lane is for 
more difficult claims, such as those with eight or more contentions, 
longstanding pending claims, complex conditions, such as traumatic 
brain injury and special monthly compensation, and other claims 
requiring extensive time and expertise. The Core lane is for the 
balance of claims with between three and seven contentions, claims for 
individual unemployability (IU), original mental health conditions, and 
others.
    However, despite the General Hickey's leadership, and even 
acknowledging the progress that has been made, there are troubling 
issues related to VBMS and related IT and automation initiatives that 
could be harbingers of fundamental flaws with VBA's transformation 
plans. Although VSOs have neither the logistical capability nor IT 
expertise to comprehensively evaluate the complicated programming, 
software and hardware that make up VBMS, we are able to make firsthand 
observations from our interactions with VBA and VBMS that have caused 
us to reevaluate earlier more positive assessments. In particular, we 
have serious concerns about VBA's failure to effectively address some 
basic VBMS issues that have been raised repeatedly over the past two 
years: providing service officers who hold Power-of-Attorney (POA) for 
claimants with access to files in VBMS, implementing a scanning 
solution for paper claims files, particularly those involving legacy 
claims, and fully incorporating rules-based decision support.
    Back in early 2010, when we were first invited to provide input 
into what became VBA's claims transformation strategy, DAV and other 
VSOs stressed the central importance of resolving issues related to the 
assignment and acceptance of POAs in VBMS. Without proper recognition 
of the POA by VBA, our service officers are unable to fully assist 
veterans with their claims, especially monitoring progress and working 
with VBA to get those claims done right the first time. This breakdown 
not only hurts the veterans we represent, it also hurts VBA since our 
efforts produce better claims, which in turn reduces VBA's workload.
    However, despite our repeated entreaties to resolve POA issues 
before deploying VBMS, as of today, DAV's NSOs remain unable to access 
the VBMS system at the four pilot sites on behalf of any of the 
veterans we represent. Perhaps equally troubling is the fact that 
different work-around solutions have been developed at different VAROs 
in order to allow us to review decisions made with VBMS. For example, 
in Providence and Wichita, when a decision on a claim is made for one 
of our client veterans, rather than being notified that the 
``paperless'' rating decision is ready to be reviewed in the VBMS 
system as intended, our NSOs receive an email which includes a PDF 
attachment of the decision that must be downloaded in order to review. 
Since it does not contain evidence from the claims file upon which the 
decision was based, our NSOs are directed to go into the Virtual VA 
system where a copy of the VBMS claims file is also being stored.
    Contrastingly, in Salt Lake City, DAV NSOs receive email 
notification that a rating decision for one of our clients has been 
completed, but in order to see the decision our NSOs must leave their 
office and go to a different VBA building in order to review a paper 
copy of the decision. If DAV NSOs want to review the claimant's file, 
which is almost always done, the NSO must then make a separate request 
and the paper file is subsequently made available to them. Finally, in 
Fort Harrison, our NSO also receives an email notification that a 
rating decision has been made in VBMS; however, in order to review that 
decision and the corresponding evidence used, the NSO must go to the 
RVSR who performed the rating, whereupon the NSO is allowed to review 
the decision on the computer of the RVSR. It is not clear what the RVSR 
is doing while service officers are occupying their work stations and 
utilizing their computers, but we do know that our NSOs must spend a 
great deal of their workday away from their office to accomplish this 
necessary work.
    VBA officials have told us that the reason VSOs cannot yet access 
the VBMS as intended is due to the Limitation of Consent section of the 
POA because VBMS is unable to provide different levels of access to 
different electronic claims files. When a veteran assigns DAV or 
another VSO their POA, they have the right to check a Limitation of 
Consent box that limits access to information relating to certain 
health matters, including issues with AIDS, drugs and alcohol. Although 
this limitation is rarely invoked, the VBMS currently provides either 
full access or no access to electronic claims files; it cannot provide 
partial or limited access. As a result, the system has blocked all VSO 
access to veterans' files. It is our understanding that VBA has a 
solution which will allow the vast majority of unrestricted POAs to be 
accepted by the system, thereby allowing us access to VBMS. This fix is 
to be included in the next iterative release of VBMS scheduled for July 
16th. Even with this solution, when a veteran does choose to limit 
access to this medical information, the system will continue to block 
the POA holder from having any access to that particular veterans 
rating decision or claims file in VBMS.
    Mr. Chairman, VBA's failure to address this problem concerns us on 
two levels. First, the fact that such a basic POA issue was not 
addressed and resolved prior to live claims being done through VBMS 
raises doubts about whether VBA has given sufficient thought to the 
full range of POA issues we have been raising with them for years. 
Failure to deal with POA issues in a timely manner is not just a 
problem for VBMS, but also for the Stakeholder Enterprise Portal (SEP) 
currently under development by VBA and scheduled for release later this 
year.
    Second, we question why VBMS does not appear capable of providing 
different levels of access to different files or parts of files for 
different users, since such basic security functions are routinely part 
of major software and IT systems used everyday across the nation. While 
we trust VBA will fix the first part of this access problem, we have 
concerns about whether they will be able to resolve the remaining 
access issues related to POAs in both VBMS and the SEP. If POA access 
issues are not fully addressed, it will be virtually impossible for 
VSOs to properly assist the veterans we represent. Moreover, the fact 
that such a basic prerequisite for VBMS success - POA access - was 
either unanticipated or ignored, and that it remained unresolved even 
as VBMS was being deployed, makes us question whether there may be 
similar fundamental gaps or work-arounds embedded in other parts of 
VBMS.
    A second major VBMS issue that has yet to be satisfactorily 
resolved is VBA's proposed scanning and digitizing solution for paper 
documents and claims folders. Mr. Chairman, as you are aware, and will 
hear from later witnesses, VBA is currently relying on an agreement 
with the National Archives and Records Administration (NARA) to perform 
all of the scanning required to process paperless claims in VBMS at the 
four pilot VAROs. However, due to the volume of scanning required, NARA 
has informed VBA that they will no longer be able to perform this work, 
although we understand that they intend to continue supporting the 
scanning needs of the four pilot VAROs until a new scanning vendor is 
secured to perform this work. Apparently NARA's decision to stop 
performing this work caught VBA somewhat by surprise. We have been told 
that VBA will soon be soliciting contract proposals from outside 
vendors to perform scanning for the pilot VAROs, as well as the twelve 
additional VAROs scheduled to begin processing claims with VBMS by the 
end of this fiscal year. It is not yet clear whether the lack of a 
scanning vendor will delay the rollout of VBMS to the twelve additional 
VAROs, however the failure to properly plan for such an essential 
feature of the VBMS system troubles us and once again raises questions 
in our minds about whether there are other gaps or problems in their 
claims processing transformation strategy.
    Mr. Chairman, even before VBMS was first conceived, it was clear 
that in order to have a paperless claims process there must be a 
comprehensive system in place to digitize paper documents. Yet VBA has 
failed to finalize a long-term scanning solution, in part because it 
has not yet definitively answered fundamental questions about when and 
which legacy documents will be scanned into VBMS. Although VBA has 
committed to moving forward with a paperless system for new claims, it 
has dragged its feet for more than two years in determining under what 
conditions existing paper claims files would be converted to digital 
files. Because a majority of claims processed each year are for 
reopened or appealed claims and because files can remain active for 
decades, until all legacy claims are converted to digital data files, 
VBA could be forced to continue paper processing for decades. We have 
been told that VBA's current plans are to convert claims files that 
have new rating-related actions, but not those with minor actions such 
as dependency or address changes. However, the uncertainty over the 
past couple of years about how much scanning would be required, and at 
what cost, is at least partly responsible for VBA's reliance on NARA, 
and its current rush to find a new scanning vendor.
    While there are very difficult technical questions to be answered, 
and significant financial considerations involved in transitioning to 
all-digital processing, particular involving legacy paper files, we 
believe VBA would be best served by taking the most aggressive approach 
feasible in order to shorten the length of time this transition takes. 
While the conversion from paper processing to VBMS will require 
substantial upfront investment, it will pay dividends for VBA and 
veterans in the future. We would urge VBA to provide, and Congress to 
review, a clear plan for eliminating legacy paper files, one that 
includes realistic timelines and resource requirements.
    Another area of concern with the VBMS system is the implementation 
of rules-based decision support for automating ratings. In our 
testimony two years ago, we called on VBA to ensure that VBMS was, 
``... designed to take maximum advantage of the artificial intelligence 
offered by modern IT in order to provide decision support to VBA's 
claims adjudicators.'' After some initial indecision, VBA did commit to 
making such an element a core component of VBMS, which began initially 
at the Atlanta VARO as a local pilot program called the Disability 
Evaluation Narrative Text Tool, or DENNT. Early versions of DENNT, 
however, had serious flaws that included almost a total lack of 
sufficient information regarding the reasons and bases for rating 
decisions. After raising our concerns with Under Secretary Hickey, 
significant changes were made, and the DENTT program was rolled out 
nationally as the new initiative called Simplified Notification 
Letters, or SNLs, which provide automated rating decisions and 
notification letters. SNLs use automated calculators and evaluation 
builders to guide rating decisions and then rely on coded, standardized 
text to generate notification letters and rating decisions. However, 
many of the problems we objected to in DENTT are still present in the 
SNLs.
    Traditionally, VBA rating specialists produced rating decisions 
that contained detailed information about the issues claimed, evidence 
considered, and the reasons and bases for decisions, as well as the 
pertinent laws, regulations and rating criteria. The rating decisions 
would accompany detailed notification letters that were sent to the 
claimant. By contrast, today's SNL decisions provide only brief 
information about the issues claimed, a list of evidence and the 
criteria for a higher evaluation, if pertinent. This accompanies a 
letter with formatted auto-text entries chosen by the rater through a 
series of codes. The rater simply indicates a specific code on each 
section of the rating decision (not provided to the veteran), which is 
then finalized by the post determination team under the Denial Reason 
or Explanation section boxes contained in the letter. In addition, 
there is a free text box to provide more detailed information about the 
decision; however in most SNLs that we have reviewed, such information 
is not sufficient and often leads to greater confusion rather than 
clarity.
    Essentially VBA has created a rating decision that is combined with 
a notification letter, instead of having a separate and distinct rating 
decision and notification letter, in order to save time and reduce 
workload. However, many of the SNLs we reviewed contain so little 
information and explanation that even an experienced DAV NSO has 
difficulty determining if the rating decision was correct without 
reviewing the full file. Even if SNLs do lead to a reduction in 
processing times--and we have yet to see convincing evidence that they 
will--the lack of information and confusion created by such abbreviated 
decision letters will likely lead to more appeals, thereby shifting 
workload within VBA rather than eliminating it.
    Let me cite as an example an SNL we reviewed for a veteran we 
represent who made a number of claims, including one for service 
connection for PTSD that was denied by VBA. In the SNL he received, 
under the paragraph entitled ``What We Decided'' VBA wrote that they 
had, ``... granted entitlement to hospital and medical treatment 
because a psychosis or other mental illness was diagnosed within the 
required timeframe.'' But the letter then stated that VBA had, ``... 
determined that the claimed PTSD was, ``... not related to your 
military service, so service-connection couldn't be granted...'' 
However, the box below that stated that the Denial Reason on the PTSD 
claim was because, ``the evidence does not show a current diagnosed 
disability.'' Then to make it even more confusing, the box for the 
explanation of the denial states that VBA concedes that the veteran 
``... experienced a stressful event in service or fear of hostile 
military or terrorist activity.''
    The limited and confusing information contained in the letter above 
is typical of the problems that we have seen in SNLs at VAROs across 
the country. The common denominator in the majority of SNLs we have 
reviewed is an extremely limited amount of information and insufficient 
reasons and bases. In preparation for today's hearing, I randomly 
selected ten SNLs obtained from different VAROs to review for quality. 
Of the ten, eight were deficient due to insufficient information; 
inadequate reasons or bases; incorrect evidence listed or not 
considered; discrepancies in the raters' identified code(s) and the 
information in the letter; confusing or unclear language; and other 
similar problems. By contrast, the two SNLs that were accurate and 
acceptable provided sound explanations of the reasons and bases for the 
decision, primarily by utilizing the free text section to go beyond the 
coded, automated text. It was precisely for this purpose that the free 
text section was first added following the early problems with the 
DENTT program. However based upon our review, proper utilization of the 
free text section in order to make the SNL a clear and complete rating 
notification is still not being done with any consistency.
    Ironically, many years ago, VBA rating decisions looked very 
similar to the shortened decisions contained in most SNLs: lacking 
detailed information and explanation. This practice was changed with 
the institution of RBA 2000, which required far greater detail, 
explanation, pertinent law and regulation, as well as holdings from the 
United States Court of Appeals for Veterans Claims. While we certainly 
want rules-based decision support to be a central part of the new 
claims process and VBMS, VBA must not use technological automation to 
eliminate essential manual steps, such as the inclusion of sufficiently 
detailed free text explanations that are crucially important to the 
veteran. We believe that requiring raters to provide detailed, plain 
English explanations of their decisions will not only better inform 
veterans (and their representatives), but will also lead to better 
reasoned and more accurate decisions by the raters themselves.
    It is unfortunate that SNLs were not more rigorously and 
systematically tested as part of a pilot program before being rolled 
out nationally. It would have been better to address these problems 
before a large number of decisions were made; however, it appears that 
the pressure to reduce the backlog took precedence over the goal of 
reforming the system so that each claim is decided right the first 
time. The above problems with SNLs again cause us to question whether 
VBA has cut other corners within VBMS in order to meet self-imposed 
deadlines to reduce the backlog. We would urge VBA to take steps to 
address the deficiencies we have identified with SNLs, and put a system 
in place to ensure that there is consistency in how SNLs are produced 
both within and amongst VAROs.
    At present, VBA has finished developing evaluation builders for all 
of the diagnostic codes in the VA Schedule for Rating Disabilities 
(VASRD); however, only about half of them have been embedded directly 
into the VBMS system; the remaining ones are still functional but sit 
outside VBMS. The major difference is that evaluation builders residing 
outside VBMS are not able to be as easily or quickly modified when 
corrections or changes are necessary, a concern since the entire VASRD 
is currently in the process of being updated and revised. We would urge 
VBA to move as expeditiously as possible to fully embed all calculators 
and evaluation builders directly into the VBMS system.
    Two other vital components to the success of both VBMS and VBA's 
transformation strategy are training and quality control. As VBA 
transitions to digital claims files, VBA's existing STAR quality 
assurance system must be able to access VBMS files electronically in 
order to conduct their reviews. We understand that such basic access is 
currently available and that the VBMS team is working with the STAR 
office to determine other business requirements. In addition, VBA must 
ensure that the new Quality Review Teams (QRTs) at each VARO have the 
ability to review claims at every stage of the process. VBMS must be 
focused at least as much on increasing quality control as it is on 
producing more claims decisions.
    In order to transition employees to the VBMS work environment, web-
based training modules have been developed for new users; however, 
trainers will be onsite when VBMS rolls out to new VAROs. Instead, each 
VARO will have a number of ``super users'' who will receive about six 
hours of web-based training, compared to three to four hours for normal 
users. Additionally, ongoing training and support, as well as a help 
desk at VBA central office, will be available to VAROs or individuals 
with problems. Since we have not had a chance to review the new VBMS 
training materials, we are not able to comment on whether its content 
or length is sufficient. However based on our experience with VBA's 
existing employee training programs, about which we have testified 
several times to this Committee, we would urge VBA to ensure that 
sufficient time is provided to employees to properly complete all 
required training. We would also recommend that testing of the training 
be conducted to ensure it is being properly received by employees and 
that it is appropriate to the task at hand. Finally, we hope that the 
decision to rely on web-based training was not made for budgetary 
reasons. The upfront cost of providing thorough training will be far 
less than the future cost of correcting inaccurate claims decisions.
    Two years ago, when VBA was just setting out on the path towards 
transforming their claims processing system, DAV's testimony to this 
Committee offered a few major recommendations. We called on VBA to 
partner with VSOs and fully integrate us into the new VBMS system. We 
recommended that VBA make an early and clear decision on how to handle 
the conversion of legacy paper files. We also urged that rules-based 
decision support be fully incorporated into VBMS as a core component, 
and stressed the importance of training and quality control. Finally, 
we called for an outside, independent review of VBMS, since neither 
VSOs nor Congress have the IT expertise to make informed judgments 
about whether VBMS is being developed properly. Based upon the concerns 
raised in our testimony, we believe it is now more crucial than ever 
that such a review be conducted by a private sector panel of experts. 
Rather than a GAO audit, or a consulting company review, we envision 
bringing in leading systems experts from major IT companies such as 
Google, Facebook, Amazon or Apple, who might be interested in providing 
some of their leading experts pro bono to sit down and talk with the 
VBMS team to determine if they are on track. We believe that there are 
many companies looking for ways to support our nation's veterans with 
no other conflicts of interest. This kind of expert private sector 
perspective could either result in greater confidence that VBA is on 
the right track, or provide an informed judgment about where and why 
they have gone wrong. Either way VBA has something to gain and nothing 
to lose.
    Mr. Chairman, we have long advocated that in order to achieve long-
term success, VBA must make a cultural shift away from focusing on 
speed and production to a new culture built upon quality and accuracy. 
It is not enough to simply lower the backlog, after all backlogs can 
return. Moreover, it doesn't matter how quick a claim is completed if 
it is not done correctly. However, despite the problems with VBMS 
discussed in our testimony, we have not concluded that VBA's 
transformation efforts cannot be successful. Therefore, we would urge 
this Committee to continue to oversee and support VBA them as they seek 
to complete the VBMS, mindful of the concerns we have raised. For the 
3.8 million disabled veterans who rely on disability compensation to 
meet some or all of their essential needs, it is imperative that we 
finally and truly reform VBA's claims processing system, and a 
successful VBMS must be a central component of that change.
    That concludes my statement and I would be pleased to answer any 
questions you may have.
Executive Summary
      Over the past decade, claims for disability compensation 
have more than doubled, rising from nearly 600,000 in 2000 to over 1.4 
million in 2011; during this same decade, VBA's workforce grew by about 
80 percent, rising from 13,500 FTEE in 2007 to over 20,000 today.
      As of June 12, 2012, there were 911,450 pending claims 
for disability compensation and pensions awaiting rating decisions by 
the VBA, an increase of more than 360,000 from two years ago; over 
600,000 of those claims have been pending for more than 125 days. VBA's 
accuracy rate according to STAR is currently 86 percent, far below the 
target of 98 percent.
      For the past 2 1/2 years, VBA has been developing a new 
claims processing model while also undertaking several IT initiatives, 
especially the Veterans Benefits Management System (VBMS). We are now 
nearing the point where VBA's strategies to transform its people, 
processes and technologies must begin to turn around this failing 
system.
      Although it must be stressed that there is indeed 
positive change and significant progress being made, there are also 
some troubling problems related to VBMS and other automation 
initiatives that now raise serious questions about whether VBA's 
transformation efforts will ultimately be successful.
      The issue of VSO access to VBMS and the scanning of 
information and evidence into VBMS, especially the handling of legacy 
paper files, remain unresolved by VBA and deeply concerning to DAV. 
Without access to VBMS, VSOs are not able to review decisions and 
corresponding claims files, leaving us unable to properly assist our 
client veterans, as well as VBA.
      Instead of resolving the VSO access issue, a number of 
questionable work-around measures have been implemented at each of the 
four pilot VAROs, differing from station to station. Instead of 
resolving the scanning of files, especially legacy files, VBA is 
nearing the end of a temporary agreement with NARA without a long-term 
solution.
      VBA has implemented nationwide a streamlined rating 
decision notification process called the Simplified Notification Letter 
(SNL). Since inception, the new SNLs have raised serious concerns 
amongst veterans and VSOs, primarily due to the lack of information, 
explanation and insufficient or inadequate reasons and bases being 
provided.
      VBA's plan is for the fully automated evaluation builder, 
rating calculator based SNLs to be integrated into the automated VBMS 
system; however, after 2 1/2 years since the transformation process 
began, problems with both the VBMS and SNLs raise serious concerns 
about VBA's focus and ability to be successful in the overall 
transformation.
      Since neither VSOs nor Congress have sufficient IT 
expertise to evaluate technical questions about VBMS, a panel of 
independent, outside IT experts from the private sector should review 
VBMS and provide an informed judgment about its progress and chance for 
success.

                                 
                 Prepared Statement of Gerald T. Manar
    MR. CHAIRMAN AND MEMBERS OF THIS COMMITTEE:
    On behalf of the more than 2 million members of the Veterans of 
Foreign Wars of the United States (VFW) and our Auxiliaries, I would 
like to thank you for the opportunity to testify today on the VBA 
claims transformation plan within the Veterans Benefits Administration 
(VBA).
    Over the last 20 years we have watched VBA struggle to determine 
how it would modernize its claims processing systems. ``Struggle to 
determine'' because VBA has lacked a coherent vision of what a 21st 
Century claims processing system should be. Lewis Carol, author of 
Alice in Wonderland, is often quoted as saying: ``If you don't know 
where you're going, any road will get you there.'' To the despair of 
many of us, VBA started down many roads, only to find that nearly all 
got them precisely nowhere.
    In our view, VBA is still struggling to find its vision. Without a 
clear vision, an ultimate goal, it advances in fits and starts, making 
some progress, but often at the cost of wasted time, money and the 
energy of its people.
    In the last year Allison Hickey, Under Secretary for Benefits, has 
worked hard to bring that vision into focus. Just a year ago this month 
she called 50 people to a Strategic Planning and Implementation 
Workshop. Through two grueling, 12- hour days she worked with them to 
define where VBA should be by 2015. By the end of the workshop they had 
taken the vision from its murky, ethereal shape and had developed the 
outline of goals and the start of a plan.
    They started the process of paring away the programs and pilots 
that weren't working. They sought to identify those things that were 
working but not delivering sufficient value to continue. Then they 
began to examine which of the remaining initiatives would help them get 
to their goals, and figure out what was required to further the 
process.
    In all of this there was a recognition that VBA could not overhaul 
its claims processing systems without first overhauling its computer 
and software infrastructure.
    How best to describe the computer systems used by VBA to process 
claims? Imagine a house first built in the late 1970's. The house was 
an old design but because the plans and materials were already out of 
date, the price to build it was considered reasonable. The house was 
modest at first, and because it was new, its owners thought that it 
would serve them for many years to come.
    Over the next 40 years many rooms were added to the house. The 
rooms had funny names, such as BIRLS \1\, COVERS \2\, RBA 2000 \3\, BDN 
\4\ and MAPD \5\, to name a few. Each room was added at different 
times. Some doors failed to open onto hallways. Some had central air 
conditioning while others had none. In some rooms the plumbing worked 
fine while there were chronic problems in others. Visitors to this 
house often had to go back outside and enter through a different door 
just to get to another room. As a consequence of poor planning and 
design, the house was not very efficient and it was difficult to live 
in.
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    \1\ Benefits Identification and Records Locator System
    \2\ Control of Veterans Records System
    \3\ Rating Board Automation 2000 was an updated version of the 
original Rating Board Automation program
    \4\ Benefits Delivery Network
    \5\ Modern Awards Processing - Development
---------------------------------------------------------------------------
    This analogy describes the computer systems VA uses today. While it 
is true that many changes and improvements have been made, the basic 
foundation on which all these systems are built is inadequate to 
support a functional claims system. It is slow, inefficient, requires 
repetitive input and it is difficult to update and repair.
    VBMS is VBA's attempt to build a foundation for a new house. It's 
not just designed to sustain the software programs VBA envisions for 
the immediate future, it is intended to be sufficiently flexible to 
allow the addition of programs not yet contemplated.
    It is important to understand that VBMS is the foundation. VBMS is 
designed to facilitate the creation of efficiencies. As such, we do not 
anticipate that the rollout of VBMS over the next year will initially 
result in significant improvements in claims processing timeliness or 
quality. In fact, if history is any guide, the deployment of VBMS will 
actually slow claims processing during the first 6 months as software 
problems are identified and fixes installed.
    We do anticipate some efficiencies from the start. For instance, 
information concerning individual veterans, now scattered in multiple 
locations requiring separate input, will be stored in one location. 
Whenever that information is required, VBMS is designed to retrieve 
that centrally stored data.
    For instance, right now a Veterans Service Representative (VSR) 
must enter a veteran's address in several different programs to ensure 
that the address is current. Systems do not automatically update. 
Similarly, a veteran's Power of Attorney (POA) must be entered in 
different programs to allow access by veterans representatives. With 
VBMS, a VSR need update the system in one place only and other programs 
will draw from that central data point to find the most current address 
or POA.
    There has been some discussion of late that the deployment of VBMS 
may be delayed. There is a fine line between rolling out a new program 
too soon and delaying rollout too long while seeking to fix all the 
problems. VBA's initial plans for rapid development and deployment of 
VBMS were, in our view, unrealistic from the start. It is our 
understanding that development and testing of VBMS was to be conducted 
in rapid succession: collect the business requirements in Baltimore for 
a few months, deploy the first version to Providence for 6 months, 
update and deploy the second version to Salt Lake City for 6 months 
then roll it out to the other regional offices. To date VBMS is in four 
regional offices and, we are told, fewer than 800 cases have been 
processed to completion.
    We believe that rolling out VBMS prematurely, before it is fully 
stressed to identify the majority of issues and problems it contains, 
is a bad business practice, bad for veterans and bad for morale of an 
already demoralized VA workforce. Examples are replete in the history 
of VBA claims processing of what happens when a new software program is 
deployed before it is ready for prime time.
    BIRLS has been a useful tool to aid claims processors for many 
decades. It contains, among other things, data on veterans' military 
service. In an effort to clean up and verify the data contained in this 
program, VBA undertook a project in the1980's called BIRLS Redesign. 
This program was rolled out to the field without adequate testing. As a 
result, tens of thousands of records had to be corrected or updated by 
hand, costing VBA thousands of man-hours of lost productivity.
    In the 1990's VBA developed a program called RBA to assist rating 
specialists in the completion of rating decisions. In 2000, VBA updated 
the program and deployed it to the field without sufficient beta 
testing. As a consequence, creation of rating decisions slowed to a 
crawl while thousands of VA's most critical decision makers spent 
months identifying software bugs and struggled with ``workarounds'' 
while computer programmers fixed problems.
    While it is counterproductive to delay release of a computer 
program until all the bugs are identified, these two examples are ample 
evidence of what happens when a new program is inadequately tested and 
released too soon.
    We encourage this Committee to continue its oversight of VBA and 
VBMS while recognizing that it may be necessary to accept modest delays 
in deployment of this major initiative in order to avert the negative 
effects of rolling out a program with defects simply to meet a 
deadline.
    VBMS is just one of many initiatives underway in VBA. A list of 
Transformation Initiatives \6\ on VA's website offers a fascinating, 
though dated, summary of the dozens of ideas tried, adopted or 
discarded in a quest to find the most efficient way to develop and 
decide claims in a timely manner.
---------------------------------------------------------------------------
    \6\ Transformation Initiatives; http://benefits.va.gov/
TRANSFORMATION/docs/initiatives.asp#i-lab, November 18, 2011.
---------------------------------------------------------------------------
    Simplified Notification Letters (SNL) is an initiative thoroughly 
embraced by VBA leadership. An examination of what this initiative does 
to veterans is illustrative of the mindset of VBA in the last year.
    The veteran service organizations first became aware of this 
project in June 2011 when our service officers in Atlanta notified us 
of its existence. Initially called Disability Evaluation Narrative Text 
Tool (DENTT) and later Rating Redesign, a team working in the Atlanta 
and St. Paul regional offices designed a process which could best be 
described as ``Back to the Future''. Instead of creating a time machine 
in a DeLorean, this team reached back to a simpler pre-VCAA, pre-
veterans court era when ratings were simply conclusions with no 
discussion of the evidence considered nor the reasons and bases as to 
why the decisions were made.
    Instead, this initiative, now called SNL, required the rating 
specialist to include a set of codes at the end of the rating. The 
codes, in turn, were used by VSR's to select standard paragraphs for 
inclusion in the decision notice letters to veterans. While these 
standard paragraphs were better written and more understandable than 
those previously used by VA, they were generic and did not include the 
minimum information needed by a veteran to decide whether the decision 
was likely to be correct. With only general information provided by VA, 
veterans are faced with the choice of blindly accepting the decision or 
filing a Notice of Disagreement \7\ in order to obtain the reasons for 
the decision.
---------------------------------------------------------------------------
    \7\ A Notice of Disagreement is the first step in the appeal 
process. Upon receipt, VA is required to review the decision, determine 
if additional development is required, and a new decision is warranted, 
If no change is warranted, a Statement of the Case, which provides the 
reasons and bases, as well as applicable citations of law and 
regulations supporting the decision, is issued to the appellant. 38 CFR 
19.26; 20.201.
---------------------------------------------------------------------------
    In September 2011, the VFW conducted an on-site review in Atlanta 
of rating decisions made under this initiative. After reviewing 60 
ratings and accompanying notice letters we concluded that the quality 
of the rating decisions was worse than that reported by VA through its 
STAR quality review program, and that veterans were not receiving 
adequate notice to satisfy legal and judicial requirements. Local 
management bragged that production was increased by 40 percent when 
cases were rated under this initiative.
    Over the ensuing months we continued to complain about the 
inadequate notice being provided to veterans. To be fair, Under 
Secretary of Benefits Hickey listened to our concerns and changes have 
been made in the SNL program in an attempt to address the problems we 
noted.
    Under the most recent changes, rating specialists were given 
additional instructions on providing sufficient details and discussion 
to explain their decisions. Restrictions on how much ``free text'' 
narrative they could insert in a rating were removed. At the time these 
changes were implemented in late February, 2012, we concluded that if 
field personnel followed the instructions it would be possible to 
create barely adequate decisions and notice letters. \8\
---------------------------------------------------------------------------
    \8\ VA regulations and Federal court decisions make it clear that 
VA must provide claimants the reasons and bases for the decisions it 
makes. ``Every claimant has the right to written notice of the decision 
made on his or her claim . . . '' 38 CFR 3.103(a). ``Claimants and 
their representatives are entitled to notice of any decision made by VA 
affecting the payment of benefits . . . Such notice shall clearly set 
forth the decision made, any applicable effective date, the reasons for 
the decision . . . '' 38 CFR 3.103(b). See also Gilbert v. Derwinski, 1 
Vet.App. 49, 56-57 (1990) and Bolton v. Brown, 8 Vet.App. 185, 191 
(1995).
---------------------------------------------------------------------------
    Since May 2012, the VFW has conducted a review of SNL ratings and 
letters from several regional offices. Fifty three (53) percent of the 
cases reviewed contained errors in either the rating, decision letter 
or both. There were only a few examples of where claimants were 
provided what we view as legally adequate notice.
    VBA's apparent inability to compel compliance by rating and 
authorization personnel with the most recent written directives 
concerning the SNL program force us to renew our opposition to this 
initiative. While we understand VBA's desire to increase production, we 
believe that this increased output is being done at the expense of 
veteran's legal right to know why decisions have been made in their 
cases. No two veterans, nor their disabilities, are alike. Canned 
generic paragraphs are not sufficient to tell them why their claims 
were decided in a particular way. VBA should suspend the SNL program 
until they can ensure that veterans receive adequate notice as required 
by law.
    Mr. Chairman, this concludes my testimony, and I look forward to 
any questions you and the Committee may have concerning these issues or 
other programs or pilots the VA is conducting to improve the claims 
process.
 Information Required by Rule XI2(g)(4) of the House of Representatives
    Pursuant to Rule XI2(g)(4) of the House of Representatives, VFW has 
not received any federal grants in Fiscal Year 2012, nor has it 
received any federal grants in the two previous Fiscal Years.

                                 
                 Prepared Statement of Richard Dumancas
    Chairman Runyan, Ranking Member McNerney and distinguished Members 
of the Committee:
    Thank you for this opportunity to come before you today to discuss 
the Department of Veterans Affairs (VA) efforts to transform the claims 
processing system for the 21st century and beyond. The much beleaguered 
claims system has been under harsh criticism for quite some time as VA 
has struggled under a massive backlog of claims and tried to work 
towards a system that could deliver earned benefits to veterans in the 
timely manner they deserve.
    Not so long ago, in the summer of 2010, VA Secretary Shinseki 
boldly promised ``This is the year we break the back of the backlog'' 
and set forth the admirable goal of 98 percent accuracy and no claim 
pending more than 125 days; all in a timeline achievable by 2015.
    Yet here we are, two years later, and seemingly little closer if at 
all to solving the problems which plague VA and foster the backlog. Is 
VA meeting their benchmarks? In the summer of 2010, VA had 551,131 
claims pending, 197,831 of those longer than 125 days. Therefore 35.9 
percent of claims fell within VA's internal definition of ``backlog''. 
Fast forward to this summer, as of the June 11, 2012 Monday morning 
workload report, VA is now struggling under 911,450 claims, a whopping 
597,237 of those are pending over 125 days. Over 65 percent of their 
workload now is in backlog.
    Though it is more difficult to measure, VA's accuracy figures do 
not appear to be going in a positive direction either. Whether VA's 
internal Statistical Technical Accuracy Review (STAR) figures are used 
or outside audits such as The American Legion's Regional Office Action 
Review (ROAR) figures, VA is still clearly far from achieving the 
stated goal of 98 percent accuracy on their claims processing.
    For many years now we have heard promises of changes to the system 
which will revolutionize claims processing. Time and time again VA has 
stated a strong commitment to ending this backlog, yet are we close to 
turning a corner or still stuck in the mire?
    In order to break the backlog VA has unleashed what must be an 
unprecedented number of pilot programs and initiatives to tackle the 
Herculean task of taming the claims quagmire. The American Legion 
remains concerned at the lack of clear direction from VA as to how the 
best performing measures of the pilot programs will be implemented and 
standardized across the entire benefits system.
    VA's Veterans Benefits Management System (VBMS) promises to be a 
great boon to VA in terms of the benefits of leveraged technology it 
offers, yet roll out has been slow; it is still unclear if it will be 
the panacea to the myriad ills of the claims system VA's IT 
professionals have been promising. Certainly there are still many 
questions in that area.
    There have been areas of improvement in some of these programs, yet 
The American Legion is concerned many positive gains will be lost in 
the sheer volume of data VA is compiling on the success or failure of 
the multitude of projects and programs. It is important to recognize 
the achievements and problems posed by many of these programs 
individually, then hopefully move towards an overall model that 
incorporates the positive features and overcomes the negatives to 
ensure VA is not working from a handicap in their fight to end the 
backlog.
VBMS
    Perhaps the most heralded and lauded method of attacking the 
backlog VA has put forth is the Veterans Benefits Management System or 
VBMS. VBMS has been the answer to most questions regarding the backlog 
for the last couple of years. VBMS will help VA manage their case load 
with greater speed, and will move the operations into a truly paperless 
environment. If VBMS ever ultimately delivers what is promised, it 
could solve a number of problems and be a great boon. However, promises 
that VBMS would be fully implemented by the end of 2012 have been 
pushed back to the end of 2013 and with only four locations currently 
utilizing the system; red flags have been raised about how soon we can 
expect an impact on reducing the backlog.
    There are many benefits VBMS offers. As a web based application, 
the data is supposed to be accessible anywhere within the system by 
multiple parties if need be. This facet alone can help with 
communication speeds and also allow simultaneous work by VSOs and VA 
personnel alike, and will potentially eliminate lost files and issues 
with VA's COVERS system. Initial experience is showing some lag issues 
and delays in opening files that, while perhaps minor in terms of a 
single file, could represent work delays over the course of multiple 
files in the course of a day's work. Furthermore, these lag issues are 
showing up with a relatively small number of users in pilot sites, and 
when the whole system goes nationwide, system demands will presumably 
be far greater. These speed of communication issues may be hardware 
related. Technical problems are not uncommon in tech beta testing, and 
ultimately they should be able to be resolved.
    Within the operating system there are errors that may or may not be 
fixed as more familiarity is gained with the system. When asked to 
comment on using the system, one of our American Legion contacts in an 
office where VBMS was in use made the following comment:

      ``Despite recent hardware upgrades VBMS continues to take 
between 15 and 20 seconds to load each page of an electronic record. 
When a VSR is potentially reviewing hundreds of records this delay can 
amount to hours of daily lost productivity in claims processing. Within 
VBMS, testing is taking approximately three times longer and 
development is taking approximately four times longer . . . 
Additionally since we are back scanning entire multiple volume claim 
folders every old document from the claims folder shows as a new mail 
indicator; thus, supplemental development cannot be effectively 
managed. The only way to remove the new mail indicator is to singularly 
open each and every document in the e-folder, with a 15 to 20 second 
delay for each page, again resulting in hours of lost productivity.''

    The ease with which claims data can be shared nationwide is touted 
as a positive in that it better facilitates the brokering of claims 
without substantial shipping costs, delays, or the potential to lose a 
veteran's claims file in the mail. However, The American Legion is not 
relieved by a potential ``feature'' of improved ease of brokering 
claims. Brokering claims and the consolidation that often accompanies 
shifts in work have proven problematic in most cases in the past. 
Pension claims were consolidated in 2009 and since that time the number 
of claims has risen by 70 percent and the backlog of those claims has 
more than doubled. Consolidated Call Centers have unleashed new 
problems. The Appeals Management Center (AMC) is only now beginning to 
turn around a long history of possibly making the problem worse that 
had led many to speculate it would be shut down only a few short years 
ago.
    The American Legion is wary the ease of data transfer will only 
encourage the process of consolidation and specialization that has 
proved disastrous for VA in the past. Furthermore, brokering and 
consolidating has usually had the end effect of utilizing a good office 
to cover for the mistakes and mismanagement of a poor performing 
office, without ever fixing the root causes at the poorly performing 
office. In the end, the top performing offices do not see their best 
practices shared as an example for others, but simply get another 
heaping pile of work for their troubles.
    Further troubling in the implementation of VBMS is the lack of 
change of work culture accompanying the new operating system. In 
several offices where VBMS is in use, American Legion service officers 
have noted VA end users already spending excessive amounts of time 
using ``work around'' methods to facilitate getting through the day's 
business. If the program is only in pilot stages, in limited use, and 
already the ``work around'' mentality has taken root, this must be 
recognized as a key concern.
    Finally, perhaps the largest concern looming for the full 
implementation of VBMS is the issue of scanning existing claims files 
to an electronic format. As of right now, there are far more questions 
about this aspect of VBMS than there are answers. Is VA prepared for 
the massive volume of scanning, with attendant Optical Character 
Recognition to ensure the new electronic files are truly searchable and 
useful in an electronic operating environment? Which files are to be 
scanned? Will only new files be electronic? Will files be converted to 
electronic when new actions are initiated on that file? Who will 
provide that scanning? Will there be a scanning division set up in 
every regional office, or will it be centralized? Will there be hybrid 
files, combining electronic and paper documents, and how will those 
files be handled?
    The problem, with so many questions looming, is there has been 
little in terms of a definitive response from VA as to the long term 
plan that would answer these questions. In April VA announced a 
partnership with NARA to accommodate scanning needs, but as The 
American Legion understands it, NARA is unclear as to their role beyond 
the 2012 fiscal year. Furthermore there appears to be some confusion 
regarding the scope of NARA's involvement. The American Legion is 
hopeful testimony from both NARA and VA will help clarify these areas 
of confusion so concerned stakeholders can be reassured there is a 
comprehensive plan going forward for this lynchpin issue. A lot of 
weight is riding on getting the electronic scanning portion of this 
system done right, so ambiguity in this area is deeply distressing.
Disability Benefits Questionnaires
    After many years of complaints from veterans service organizations 
about the lack of acknowledgment by VA of private medical opinions, VA 
has been working to implement an attempted fix to this issue. The 
Disability Benefits Questionnaires (DBQs) are standardized forms a 
veteran can bring to a private physician that clearly outline the 
necessary information needed by VA so the physician can provide all the 
information needed to be adequate for VA purposes. Given the problems 
and delays often involved in scheduling VA compensation and pension 
exams, these have the potential to help unclog the system for VA by 
allowing the private sector to share some of the burden.
    However, early implementation indicated additional VA exams were 
almost universally being ordered even when the private physicians had 
filled out the DBQ forms. While at first there were concerns about long 
standing cultural views within VA towards private medical opinions, the 
redundant exams may be based on a simple error in the layout of the 
forms. There is no clear place on any of the 71 forms for a doctor to 
state a critical nexus opinion, an expert assessment of the likelihood 
any present disability is related to a veteran's service experience 
that is a critical and necessary component for service connection. 
Without a stated nexus opinion, the DBQ forms are useful only for 
increased rating claims, and not helpful at all in initial disability 
claims.
    Thankfully, the simple addition of a clearly marked area for such 
opinions on each form could help make these forms a beneficial tool and 
The American Legion hopes VA will examine the possibility of refining 
the forms to include such information in the future.
I-Lab
    In Indianapolis, VA has been working on an ``I-Lab,'' an 
experimental process designed to maximize work from staff by directing 
case flow into multiple streams best suited for the type of claim being 
worked. Essentially, by shunting work to special productivity teams, VA 
can achieve a better work rate by allowing specialization on easy 
claims such as those with few issues or claims not requiring ratings, 
while more complicated claims would be developed and worked by teams 
with slightly lower goals but able to take the time necessary to do the 
complicated claims at the more deliberate pace necessary. There were 
separate ``lanes'' for the claims, such as Express, Core, Special Ops 
and ``non-rating'' for example.
    While it is still too early to tell the overall success of the 
program, the initial feedback from our employees working in the 
Indianapolis regional office was that initially there was a lot of 
confusion and many of the claims started backing up when the system was 
implemented. However, once things got sorted out, some of the easier 
lanes started improving a good deal, with times on non-rating issues 
and the simple claims moving a bit faster. The ``Core'' claims lane is 
apparently still running way behind the other lanes however. The 
personnel in the office did feel encouraged VA was taking steps to work 
``smarter'' in this case, rather than simply juggling numbers.
Fully Developed Claims
    The potential problems being experienced in the Core claims 
``lane'' of the I-Lab project are mirrored in some ways by problems 
beginning to emerge from one of the programs everyone has been 
supportive of, the Fully Developed Claims program. The idea behind the 
program was simple. If a veteran was willing to do all the hard work 
for the VA up front, and sacrifice a little of their due process, they 
would get a faster turnaround on their claim and a faster decision in 
return for VA having a greatly reduced burden of work to get the 
information necessary to decide the claim. Essentially, by doing VA's 
job for them, tracking down all the key information and submitting it 
at the outset of a claim, a veteran could expect a rapid decision 
because VA would not have to spend all that time developing the claim 
and doing the necessary research.
    Unfortunately, anecdotal reports are currently indicating Fully 
Developed Claims veterans may be waiting longer than the standard 
claims process for their decisions. This could not be further from the 
intent of the program. Why would a veteran sacrifice their own time and 
energy to provide all the necessary research and voluntarily give up 
some of their due process rights for a claim that takes more time to 
process?
    While it is unclear what is causing the delays, it could be as 
simple as the management of the ``lanes'' for processing. If VA only 
budgeted a certain number of employees to process these claims, and the 
volume of claims is exceeding their capacity, then it is no longer 
helpful to the process. Much like in traffic, when all the cars shift 
into the ``Express Lane'' it ceases to be the express lane.
Appeals
    The Houston regional office currently houses an Appeals Pilot 
tasked with experimenting to provide a better appeals process. The most 
important wrinkle of the new process is the early and up front 
involvement of a Decision Review Officer (DRO) in the process. The 
DROs, some of the most experienced VA employees who review the claims 
and provide decisions at this first stage of the appellate process, 
contact the veterans right off the bat to provide a better picture of 
the appeal.
    This informal contact with the veteran has the potential to help 
clarify the issues under appeal and also can help determine whether or 
not additional evidence is needed before the de novo review process.
    The project is still in early stages, however there have been some 
troubling concerns raised by Legion staff working in the Houston 
office. The largest concerns circulate around possible encroachments on 
appellate rights of the veterans. We are hearing reports that some of 
these contacts with the veterans may be encouraging the veterans to 
waive the right to submit new evidence in their appeal. As new evidence 
is sometimes a key component to winning a claim on appeal, this would 
be a concern if veterans are being advised against its submission 
without proper counsel and guidance. Also, there are indications 
veterans are being told their DRO review would not be a de novo review. 
At every level of the appellate process a veteran is entitled to a de 
novo, or complete from scratch review of the evidence without concern 
for previous decisions. This is essential and important to ensure 
previous decisions which may have been flawed or faulty are not simply 
rubber stamped at every level. It should not even be in questions. It's 
simply what's right for the veteran.
    If these concerns about appellate rights can be clarified, it's 
likely some positive moves can come out of looking at the appeals 
process. Even in a location as notoriously challenged as the Appeals 
Management Center (AMC) there are steps forward being made that are 
benefiting the veteran. The AMC was much maligned, and rightly so for a 
good portion of its history. In 2008 the AMC was taking nearly 400 days 
on average to complete a claim, and those claims had a remand rate of 
approximately 30 percent, meaning the accuracy was so poor nearly a 
third of the claims were continually sent back to be redone properly. 
The average days required to work a claim has been cut in half and the 
remand rate has dropped to just under 7 percent. The AMC is working 
with veterans' organizations to identify claims with multiple issues in 
which one or more issues can be rated even though others may still 
require further development. When these claims are identified, the AMC 
issues a partial rating for the completed issues and continues to work 
the remaining issue. The important step is the veteran gets some 
measure of relief with a decision letter and benefits money beginning 
to flow.
    This is what happens with a mindset and dedication to turning a 
badly performing process around. The American Legion strongly 
encourages allowing that mindset to spread.
Summary
    The VA is struggling with a massive backlog of earned benefits 
claims. In order to fix the backlog VA is introducing a wide assortment 
of pilots, projects and programs. With the raw volume of such measures, 
it is becoming increasingly difficult to separate the wheat from the 
chaff and determine which measures are truly improvements. But is it 
the techniques and technology, or is it a mindset problem?
    Ultimately we will hear many promises from VA about the benefits of 
this technology or that pilot. We will hear the virtues extolled of 
what will finally happen when some specific tool or program is put into 
place. It may be a culture issue, and VA may have to look itself hard 
in the mirror and ask ``Is failure an option?''
    What The American Legion remembers however, is that America managed 
to put men on the Moon in under a decade's time, using rooms full of 
men working feverishly with basic slide rules and determination to make 
that happen. It's not always the modern technology that solves the 
problem; it's the will to take on a task and the refusal to accept 
alternatives to your goal. As the great NASA Flight Director Gene Kranz 
was fond of saying ``Failure is not an option.''
Executive Summary
    The American Legion is concerned that despite an overpowering array 
of pilots, initiatives and technological improvements to the claims 
processing system, VA may be no closer to actually solving the issue of 
the claims backlog. While improvements must be made to a system that is 
allowing veterans' disability claims to languish far longer than is 
necessary for proper processing, it is becoming increasingly difficult 
to determine which programs offer the most hope for improvement. VA has 
placed a great amount of weight on the ability of the Veterans Benefits 
Management System (VBMS) to transform the working environment and fix 
the problems of the claims system. However VBMS and other programs may 
carry with them their own inherent faults and flaws which will only 
perpetuate ingrown cultural problems which continue to stymie efforts 
to improve the system.

    Key concerns include:

      VBMS - Even though the program is in limited pilot 
implementation, employees are already resorting to work around 
solutions for flaws in the system. How much worse will this be when the 
system goes wide?
      VBMS - Lag and latency issues are delaying work time. 
Even a few minutes per document can turn into hours magnified over the 
hundreds of documents that must be viewed in a day.
      VBMS - The ease of data sharing may lead to increased 
reliance by VA on consolidation and brokering, which have had 
detrimental effects on performance in the past.
      DBQ - Disability Benefits Questionnaires while positive 
in intent, often lead to redundant VA ordered exams by doctors. This 
may be related to poor form design and a lack of direction for nexus 
opinions.
      I-Lab - Core claims ``lanes'' are backing up and showing 
slow performance, even if some of the specialty ``lanes'' have sped up 
performance.
      Fully Developed Claims - In some offices, fully developed 
claims are taking as long or longer than traditional claims, thus 
voiding any benefit to the veteran of signing away due process rights.
      Appeals - The Appeals Pilot in Houston may be denying 
some veterans appellate rights without benefit of proper counsel and 
explanation.

    Ultimately, these problems may require culture shift within VA to 
fix. Technological fixes may not be as helpful as changing the VA 
mindset

                                 
               Prepared Statement of Sherman Gillums, Jr.
    Chairman Miller, Ranking Member Filner, and members of the 
Committee. Paralyzed Veterans of America (PVA) is pleased to present 
our views on Reclaiming the Veterans Benefits Process and the best 
methods of effectively serving our veterans, with particular emphasis 
on the Veterans Benefits Management System (VBMS). PVA thanks the 
Committee and the Department of Veterans Affairs (VA) for the 
opportunity to contribute to the discussion on the best way to promote 
timeliness and quality improvement in the VA claims adjudication 
process. We remain cautiously optimistic about the 21st century VA 
transformation plan moving forward and hope the transparency and 
collegiality enjoyed between VA and the VSO community as of late will 
continue.
    To achieve real success, the Veterans Benefits Administration (VBA) 
must focus on creating a veterans' benefits claims processing system 
designed to ``get each claim done right the first time.'' This goal 
cannot be over emphasized. This system needs to be based upon modern, 
paperless information technology (IT) and workflow systems focused on 
quality, accuracy, efficiency and accountability and must be capable of 
continuous improvement. VBA must evolve its corporate culture to focus 
on information gathering, systems analysis, identification of problems, 
creative solutions and rapid adjustments. If VBA stresses quality 
control and training, and continues to receive sufficient resources, 
timeliness will improve and production will increase and then and only 
then can the backlog be reduced and eventually eliminated.
    The VBA has undertaken a number of initiatives and pilot programs 
to address the claims backlog and reform the claims process 
simultaneously, which seems to be the typical Washington response to a 
problem: ``do a study'' or ``create a pilot.'' While PVA understands 
the need to explore new ideas, there are so many initiatives and pilots 
currently in process, that the defined outcome, if any, is obscured. 
PVA believes VA's effort would be well served by deciding on what is 
going to work and simply get it working. If the system is adaptable to 
changes and new information, it would allow for necessary adjustments 
to be implemented more rapidly. We expect progress, not perfection. If 
perfection is VA's ultimate goal with all these initiatives, we may get 
neither.
    Specifically, we note that VA has presented over 40 initiatives as 
components of its transformation plan, spanning all aspects of the 
claims adjudication process. This signals a commendable effort on VA's 
part to comprehensively confront issues that have long plagued its 
systems and processes. However, the success of this litany of 
initiatives depends heavily on whether the VA Regional Offices are 
properly staffed and resourced, training is adequate, and the cost-
benefit analyses are thorough and honest. PVA remains concerned about 
whether VBA will successfully extract and then integrate the best 
practices from so many ongoing initiatives, while simultaneously 
meeting the Secretary's ambitious goal of ``breaking the back of the 
backlog'' in the foreseeable future. One could argue that so many 
initiatives launched at once illustrates a lack of focus and a ``whack-
a-mole'' approach to problem solving that presents the illusion of 
progress with little return on investment. Given the enormous pressure 
to reduce the backlog, we are also concerned that there could be a bias 
towards process improvements that result in greater production over 
those that lead to greater quality and accuracy. We urge the Committee 
to continue oversight, as with this hearing today, of the VBA's myriad 
ongoing pilots and initiatives to ensure that best practices are 
adopted and integrated into a cohesive new claims process and that each 
pilot or initiative is judged first and foremost on its ability to help 
VA get claims ``done right the first time.'' Once pilots are found to 
be inefficient or fail to support improvements, those pilots need to 
end immediately.
    Without question, PVA supports any effort to make the claims 
adjudication process more efficient, and we are optimistic that many of 
these initiatives will ultimately prove their worth. However, our first 
duty is to ensure the real needs of every veteran we serve remain the 
central focus, not abstract statistics and novel business processes 
that satisfy VA leadership's idealistic aims yet miss the mark when 
viewed in the difficult, hard-hitting reality many of our members live 
within. The bottom line is we must remain sober in our assessment of 
whether we have done enough to fix the problems we face, no matter how 
deep our desire is to be encouraged by slight successes.
    With this in mind, I will discuss the most notable VA initiatives, 
including VBMS, Nehmer claims, Disability Benefits Questionnaires 
(DBQ), rules-based calculators, Integration Labs, and the Fully 
Developed Claims pilot and their impacts as reported by our field staff 
and the veterans we serve. We offer these assessments with the hope 
that our criticisms and compliments alike are received with equal 
appreciation.
    VA's most anticipated initiative, the Veterans Benefits Management 
System (VBMS), pioneered the development of a paperless claims IT 
solution to improve future business process and integrate with Veteran 
Relationship Management and Virtual Lifetime Electronic Record. It was 
intended to enable more efficient claims process flow to reduce cycle 
time through the elimination of paper claims and to support process 
changes like segmentation of complex claims and auto-adjudication. VA 
launched the pilot in two locations: Providence, Rhode Island and Salt 
Lake City, Utah. Conceptually, the VBMS could be the answer to 
adjudicating claims quicker and more accurately; however, this is yet 
to be determined. Its success to date is qualified by the reality that 
the system is designed to handle simpler cases than those PVA typically 
sees. Many of our cases entail seeking benefits for veterans with 
catastrophic injury or disease, which often triggers entitlement to a 
range of monetary and ancillary benefits. None of the 484 cases 
processed through VBMS in Providence have been this type, and 
approximately 10 of 239 processed through Salt Lake City have been. 
Thus the new system remains untested in our view. Incidentally, we have 
found that not using VBMS is preferred by our service officers as they 
believe the current process of handcarrying these claims through works 
best as they most often result in a 2-3 day turnaround. This may 
explain why we have seen very few of our cases processed through VBMS, 
making it difficult to ascertain its efficacy. PVA believes it will 
prove valuable as a utilitarian measure to reduce the sheer number of 
simpler claims, but ineffective in its current form for more complex 
claims. This is critical to note when touting the success of VBMS and 
considering its expansion.
    While PVA may have criticisms of the VBMS, we believe it does offer 
hope and is ready for wider implementation. That said, VA has not 
completely stated what the expectations are for the VBMS. It was 
originally going to be an on-line digital storage system for records. 
It has now morphed into something different. What is the end goal? PVA 
does not know, and we wonder if VA knows. A good plan is like a 
roadmap, with a final destination and the best ways to get there 
identified. VA needs to present a good plan for VBMS.
    The success of VBMS will greatly depend on the process design 
changes, like rules-based processes, and supportive technologies like 
Special Monthly Compensation (SMC) calculators, that undergird this new 
system. The problem with rules-based systems is they treat all veterans 
the same and can be flawed by imperfect rulemaking and application. 
This is the challenge for a rules-based computer system; it does not 
have the human interaction to fully understand the circumstances of a 
specific injury. The numerous issues often faced by veterans with 
catastrophic injuries create a complex set of outcomes that cannot be 
easily reconciled by logic-based systems that cannot appreciate nuance 
in disability assessments. Rules-based systems are composed of a series 
of algorithms that determine the outcomes of the inputs. Depending on 
who designs the rules for the algorithms, very different outcomes are 
possible with calculators historically failing to compute the right 
ratings for persons with multiple issues. PVA believes VA cannot simply 
create a ``Turbo Tax'' for claims processing. Whereas something as 
simple as hearing loss can easily be identified on a graph or chart, 
the impact of bladder conditions, susceptibility to skin ulcers, and 
need for regular aid and attendance must be more closely examined to 
determine the extent of the problem. If it has not been already done, 
PVA recommends taking older previously adjudicated ratings and testing 
them against the outcomes achieved using rules-based calculators in 
order to determine their true accuracy.
    In the area of the Agent Orange Nehmer claims processing 
initiatives, it sought to quickly reduce the backlog in claims for 
disability or death caused by herbicide exposure during the Vietnam War 
era. The plan provided for the consolidation of these cases from around 
the country to thirteen Resource and Day-One Brokering Centers. This 
was an important step toward making Vietnam veterans whole after 
decades of neglect, apathy, and even disrespect where their needs were 
concerned. To its credit, VA did a remarkable job in tackling this 
issue head on and clearing these cases from the claims backlog. Our 
field staff reported that many of these claims were timely and 
accurately adjudicated. The question that remains, however, is whether 
diverting an arguably inordinate amount of resources on these cases was 
worth the cost of under-resourcing other areas. Many VA employees who 
worked these Nehmer claims, and these claims only, during the two-year 
period required retraining in other processes, which tapped the human 
resources needed to function at regular capacity. Also, the backlog 
swelled in non-Nehmer cases, forcing VA to yet again tackle another 
issue. This ``rob-Peter-to-pay-Paul'' approach to reducing the backlog 
has proven to be an adequate short-term solution, particularly for 
Vietnam era veterans whose claims certainly deserved much-needed focus. 
But the problem persists in other areas in the form of a two-year 
backlog of non-Nehmer claims, which merely shifted the problem rather 
than eliminate it.
    VA proffers Disability Benefits Questionnaires (DBQ) as a possible 
remedy for reducing this backlog. DBQs are intended to provide medical 
exam evidence needed to render an accurate and timely disability 
decision. Ideally, this would reduce the wait time for VHA exams and 
update exam templates. For the most part, DBQs have proven to be a good 
remedy for the procedural problems noted in the claims development 
process. VA exams are scheduled timely and veterans can proactively 
pursue medical evidence that may help prove their claims. The problem, 
however, lies in the substance of many of the DBQs. Some service 
officers believe they raise more questions than answers, particularly 
where questions regarding ``loss of use'' and ``effective remaining 
function'' are contemplated. We recommend the continuous assessment of 
their accuracy and timely revision when necessary.
    An additional area for discussion is the so-called Integration Lab, 
or I-Lab. The I-Lab concept was launched in Indianapolis as a single 
place to test multiple initiatives within a new end-to-end processing 
model. The I-Lab bundles claims based on complexity and tests the 
following initiatives concurrently: lean claims, intake processing 
center, comprehensive screening, express lane, case management, and 
private medical records. Regarding the ``lean claims processing'' 
initiative, this measure sought to eliminate time lost from handoffs, 
improve communication between Veterans Service Representatives and 
Ratings Veterans Service Representatives, and draw upon their expertise 
during development. According to field reports, the claims process was 
improved when the teams were first formed, but has been hampered by the 
need to hire and train additional staff as well as confront a growing 
claims inventory. The ``express lane for limited issue claims'' 
initiative removed single-issue claims from the queue and processed 
them with higher productivity as part of the I-Lab initiative. PVA's 
St. Paul, Nashville, and Muskogee service officers reported this to be 
an effective solution to reducing the adjudication period for single-
issue cases from over 120 days to 30, in some cases as quickly as 4 
days following examination. This has benefited many veterans where time 
was of the essence, as seen in ALS cases. The Interim Ratings / Quick 
Pay initiative launched in St. Petersburg allowed for timely payment of 
benefits (2-3 days in many cases) once the VA Regional Office received 
all the necessary information. This was of particular benefit to 
veterans with ALS and prostate cancer (Agent Orange) claims where, 
again, time was of the essence.
    The I-Lab initiative's success is buttressed by the successful 
implementation of another VA initiative: the ``Fully Developed Claims'' 
pilot. This pilot, enacted under Public Law 110-389, tested the 
expedited processing of fully developed claims at 10 stations using a 
checklist mailed to assist the veterans in submitting evidence, thus 
streamlining the claims process. PVA's St. Paul, Albuquerque, Newark, 
and Muskogee service officers have reportedly had much success with the 
fully developed claims process, particularly in time-sensitive cases 
such as terminal illness. Notwithstanding these successes, we remained 
concerned that due process will be the unintended casualty in this 
otherwise successful campaign as veterans unwittingly exchange their 
rights to appeal for quickly adjudicated, inaccurate decisions that 
would otherwise warrant review.
    Chairman Miller, all of these initiatives seem to have two critical 
aspects in common: they are driven by statistics and very resource 
intensive. As long as they render real results, as determined through 
objective assessment, progress is likely despite imperfections. And as 
stated earlier, PVA appreciates VA's effort to aggressively tackle the 
backlog through ambitious, visionary initiatives. But one cannot lose 
sight of the simple virtue of having well trained people do quality 
work. An organizational culture that places more emphasis on rules than 
results, statistical validity than solid outcomes, deludes itself and 
is doomed to mediocrity at best, at the expense of those it purportedly 
serves.
    Historically, due to the nature of our catastrophically disabled 
membership, PVA has been the subject matter expert for claims involving 
multiple injuries or conditions. PVA has enjoyed the privilege of 
providing VA with help in field studies and advice on processes that 
best meet the unique needs of veterans with catastrophic injuries. PVA 
National Service Officers have even participated in the training of VA 
claims processors. This valuable service has tremendously benefited 
both organizations and illustrates an important, enduring partnership. 
In recent years, PVA acknowledges more willingness by VA senior 
leadership to involve VSOs in strategic planning sessions and 
brainstorming activities. That said, we caution this committee and VA 
not to construe the VSO community's participation as unmitigated 
support for all VA programs and initiatives. A few meetings or 
presentations where VA is ostensibly seeking VSO input does not imply, 
on its face, that the exchange was mutually beneficial or that the 
discussion went beyond a Powerpoint presentation that simply outlined 
VA plans, especially in instances where such plans remained unaltered 
by VSO input. PVA looks forward to continuing to make valuable 
contributions to VA programs and processes whenever possible, 
particularly as they impact catastrophically injured veterans.
    Ultimately, it is imperative for all key stakeholders--the VA, 
Congress, and Veterans Service Organizations--to be fully involved in 
the reformation of the claims processing system as a whole. Moreover, 
there remains a broader range of issues within the scope of the claims 
processing system that can be addressed. In the end, it must not be 
forgotten that the people who are ultimately affected by changes within 
the benefits system are the men and women who have served and 
sacrificed so much for this nation. We hope that they will always be 
forefront in your minds as you consider how benefits are provided and 
how best to speed the access to these benefits earned by virtue of 
their sacrifice in service to our great country.
    This concludes my testimony. I will be happy to answer any 
questions you may have.
Executive Summary
    To achieve real success, the Veterans Benefits Administration must 
focus on creating a veterans' benefits claims processing system 
designed to ``get each claim done right the first time.''

      A system based upon modern, paperless information 
technology.
      Workflow systems focused on quality, accuracy, efficiency 
and accountability.
      Must be capable of continuous improvement.

    The VBA has undertaken over 40 initiatives and pilot programs to 
address the claims backlog and reform the claims process 
simultaneously.

      PVA understands the need to explore new ideas.
      There are so many initiatives and pilots currently in 
process, that the defined outcome, if any, is obscured.

    VA's Veterans Benefits Management System (VBMS) initiative 
pioneered the development of a paperless claims IT solution to improve 
future business process and integrate with Veteran Relationship 
Management and Virtual Lifetime Electronic Record.

      Its success to date is qualified by the reality that the 
system is designed to handle simpler cases than those PVA typically 
sees.
      None of the 484 cases processed through VBMS in 
Providence have been this type.
      Approximately 10 of 239 processed through Salt Lake City 
have been.
      The new system remains untested in our view.
      While PVA may have criticisms of the VBMS, we believe it 
does offer hope and is ready for wider implementation, but VA needs to 
present a good plan for VBMS.

    The success of VBMS will greatly depend on rules-based systems.

      These systems treat all veterans the same.
      They can be flawed by imperfect rulemaking and 
application.
      Does not have the human interaction to fully understand 
the circumstances of a specific injury.

    All of these initiatives are driven by statistics and very resource 
intensive.

      PVA appreciates VA's effort to aggressively tackle the 
backlog
      Cannot lose sight of the simple virtue of having well 
trained people do quality work.

    Historically, due to the nature of our catastrophically disabled 
membership, PVA has been the subject matter expert for claims involving 
multiple injuries or conditions.

      PVA has enjoyed the privilege of providing VA with help 
in field studies and advice on processes.
      PVA looks forward to continuing to make valuable 
contributions.
Information Required by Rule XI 2(g)(4) of the House of Representatives
    Pursuant to Rule XI 2(g)(4) of the House of Representatives, the 
following information is provided regarding federal grants and 
contracts.
                            Fiscal Year 2012
    No federal grants or contracts received.
                            Fiscal Year 2011
    Court of Appeals for Veterans Claims, administered by the Legal 
Services Corporation--National Veterans Legal Services Program-- 
$262,787.
                            Fiscal Year 2010
    Court of Appeals for Veterans Claims, administered by the Legal 
Services Corporation--National Veterans Legal Services Program-- 
$287,992.

                                 
                Prepared Statement of William J. Bosanko
    Good morning Chairman Miller, Ranking Member Filner, and members of 
the Committee. Thank you for inviting me to this hearing, and thank you 
for all that you do to honor and support our Nation's veterans.
    The National Archives has a long and proud history of supporting 
our veterans. Every day, we assist veterans and their families by 
providing them with the records necessary to prove military service in 
order to claim a benefit or receive an honor. Our National Personnel 
Records Center in St. Louis holds approximately 60 million Official 
Military Personnel Files, and we respond to more than one million 
requests for these records every year. Here at the National Archives in 
Washington, DC, and College Park, MD, we permanently archive and 
provide access to the historical records of our Armed Services that 
document the actions and heroism of many generations of military 
veterans, from the Revolutionary War to present times, so that 
historians, filmmakers, and genealogists can tell the stories of those 
who served. I would also like to add that NARA is proud to employ over 
480 veterans, including the Archivist of the United States, David 
Ferriero.
    The Veteran's Benefits Administration (VBA) has a primary role to 
play in serving our Nation's veterans. Its mission is to provide 
veterans, service members, and their families with access to the 
benefits to which they are entitled. Central to this mission is the VBA 
claims process. The VBA is building a new electronic system, the 
Veterans Benefits Management System (VBMS), to transform the paper-
intensive process into a faster, more efficient, and secure paperless 
system.
    One aspect of building VBMS and speeding the claims process 
involves the digitization of paper claims. In 2010, the VBA approached 
NARA for advice on how to employ scanning technology and apply proven 
records management practices to scan and automatically extract data 
from paper claims forms. NARA had recently undertaken a successful 
project to digitize Civilian Official Personnel Folders at the National 
Personnel Records Center. As part of this project, we had employed 
cutting-edge technology that has the ability to scan a form and to 
``learn'' where to look on the form to extract the necessary data. This 
technology had the potential to be useful for extracting data from VBA 
claims forms.
    NARA entered into a one-year agreement with the Department of 
Veterans Affairs (VA) in June 2010 to help design a scanning 
architecture and a process that would meet VBA's particular needs. 
Under this agreement, NARA mapped out a scanning workflow for claims 
processing, configured a scanning system, trained the scanning system 
to recognize the data on VBA's forms, and developed a way to index the 
data so that it could be efficiently retrieved when needed. NARA also 
agreed to perform physical scanning of paper documents, and hired a 
limited number of temporary employees to manually scan paper VBA forms. 
A pilot of the system was successfully tested in two VA regional 
offices, demonstrating that the architecture and process had potential 
to meet VBA's needs.
    Based on the success of the first pilot, NARA signed a second one-
year agreement with the VA in June 2011 to further refine the scanning 
workflow and hardware configuration and to continue to improve the 
system's ability to automatically recognize and compile data from VBA 
forms. We successfully pilot-tested these refinements in additional VA 
offices. The system can now recognize and compile data from 170 
different VBA document types. NARA and VBA have demonstrated that the 
system can handle the scanning of up to 600,000 images a month from 
claims supplied by 5 VA facilities.
    We are nearing our completion of meeting the requirements to the VA 
under the terms of the two year-long agreements. Our current agreement 
with the VA ends on June 26, 2012.
    Thank you again for inviting me to testify. I am happy to answer 
any questions you may have.

                                 
                Prepared Statement of Linda A. Halliday
INTRODUCTION
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to discuss the work of the Office of Inspector General 
(OIG) in the Veterans Benefits Administration (VBA). I will highlight 
audits and inspections results that identified areas that VBA should 
address as part of its strategy to improve claims processing. I am 
accompanied today by Mr. Larry Reinkemeyer, Director of the OIG's 
Kansas City Office of Audits and Evaluations; Mr. Nick Dahl, Director 
of the OIG's Bedford Office of Audits and Evaluations; and Mr. Brent 
Arronte, Director of the OIG's Bay Pines Benefits Inspections Division.
BACKGROUND
    Delivering timely and accurate benefits to the millions of veterans 
who served our Nation is a central VA mission. VBA's Office of Field 
Operations is responsible for oversight of the nationwide network of 57 
regional offices that administer a range of veterans benefits programs, 
including compensation, pension, education, home loan guaranty, 
vocational rehabilitation and employment, and life insurance. These 
programs will pay out over $72 billion in benefits to veterans and 
their beneficiaries in fiscal year (FY) 2012.
    VBA claims processing has been the subject of concern and attention 
by VA leadership, Congress, and veteran service organizations, due to 
the large backlog of claims and inaccurate compensation decisions. As 
of May 2012, VA reported over 850,000 pending rating-related claims; 
almost 66 percent of them had been pending for more than 125 days--
VBA's target time frame for claims completion.
    As part of our oversight responsibility, we conduct national audits 
of VBA programs and processes, such as appeals processing, fiduciary 
management, and implementation of disability benefits questionnaires. 
In 2009, we began inspections of individual VA regional offices (VAROs) 
to examine high-risk claims processing activities and Veterans Service 
Center (VSC) management operations. By the end of FY 2012, we will have 
reviewed 56 VAROs in the past 3 years \1\. We have consistently 
reported the need for enhanced policies and procedures, training, 
oversight, quality review, and other management controls to improve the 
timeliness and accuracy of disability claims processing and enhance the 
effectiveness of VSC operations.
---------------------------------------------------------------------------
    \1\ We will not inspect the Washington, DC, VARO because of the low 
volume and the type of claims it processes.
---------------------------------------------------------------------------
DISABILITY CLAIMS PROCESSING
    Our inspections of 50 VAROs from April 2009 through May 2012 
disclosed multiple challenges that VBA faces in providing timely and 
accurate disability benefits and services to veterans. We focused our 
efforts on specific types of disability claims processing, including 
temporary 100 percent disability evaluations, post-traumatic stress 
disorder (PTSD), traumatic brain injury (TBI), and herbicide exposure, 
which we considered at high-risk for processing errors.
    Based on the 50 inspections completed, we determined that VARO 
staff did not correctly process 1,442 (30 percent) of the 4,812 high-
risk claims we reviewed. Of these, about 32 percent affected veterans' 
benefits and approximately 68 percent had the potential to affect 
veterans' benefits. The errors we identified resulted in a total of 
approximately $15 million in overpayments and $800,000 in underpayments 
to veterans.
    We adjust our inspection protocols as needed, with some review 
areas continuing year-to-year while others are replaced because VAROs 
have demonstrated improvements in performance of that review area. For 
example, we are discontinuing our review of PTSD claims because only 
two of 20 VAROs inspected in FY 2011 did not follow VBA policy when 
processing PTSD claims. This constituted an improvement from the 8 of 
16 VAROs that did not follow VBA policy in processing PTSD claims, as 
previously reported in our FY 2010 inspection summary report.
    Herbicide exposure-related claims represent an area where initially 
we saw a consistent error rate of about 45 percent. VBA policy states 
for veterans claiming exposure to herbicide agents during active 
military service, certain disabilities should be service-connected, 
provided VBA has verification of the herbicide exposure and the disease 
manifested to a degree of 10 percent disabling or more at any time 
after discharge from service. In our first inspection summary report, 
covering inspections completed from April 2009 to September 2010, we 
reported that 7 of 16 VAROs did not follow VBA policy. For those VAROs 
inspected in FY 2011, 9 of 20 did not follow VBA policy when processing 
herbicide exposure-related claims. However, for inspections completed 
to date in FY 2012, the error rate was 8 percent. We will discontinue 
reviewing these claims in FY 2013.
Temporary 100 Percent Evaluations
    VBA grants veterans temporary 100 percent disability evaluations 
for service-connected disabilities requiring surgery, convalescence, or 
specific treatment. At the end of a mandated convalescence or cessation 
of treatment, VARO staff should review the veteran's medical condition 
to determine whether to continue the temporary evaluation. In January 
2011, we issued a report, Audit of 100 Percent Disability Evaluations, 
in which we projected VBA did not correctly process temporary 100 
percent evaluations for about 27,500 (15 percent) of 181,000 veterans. 
We also reported that since January 1993, VBA paid veterans a net $943 
million without adequate supporting medical evidence. We concluded that 
if VBA does not take corrective action, it could overpay veterans a 
projected $1.1 billion over the next 5 years.
    In response to the report, the Acting Under Secretary for Benefits 
agreed to review all temporary 100 percent disability evaluations and 
ensure each had a future examination date entered in the electronic 
record. The Acting Under Secretary stated the target completion date 
for the national review would be September 30, 2011. However, VBA did 
not provide each VARO with a list of temporary 100 percent disability 
evaluations for review until September 2011. VBA subsequently extended 
the national review deadline to December 31, 2011, then to March 31, 
2012, and then again to June 30, 2012. To date, VBA has not completed 
this national review requirement and monthly benefits continue to be 
paid despite a lack of adequate medical evidence.
    Our inspections continue to show that accuracy of temporary 100 
percent disability evaluations is a systemic issue. None of the 20 
VAROs we reported on in
    FY 2011 followed VBA policy in processing temporary 100 percent 
disability evaluations and the early results of our FY 2012 inspections 
indicate that this remains an area of concern. Our recent inspections 
of the three California VAROs emphasize the need for continued 
management attention to these types of claims we randomly sampled. Our 
results showed the Los Angeles VARO to be one of the poorest 
performers, with an error rate of 97 percent in processing temporary 
100 percent disability evaluations. The San Diego VARO ranked near the 
middle of all VAROs inspected, with an error rate of 77 percent. 
Oakland's error rate was also high at 53 percent. At the time of our 
inspections, collectively, overpayments for these errors in the 
California VAROs totaled over $1.5 million, while underpayments were 
about $21,000.
    Further, the San Diego VARO completed its review of VBA's temporary 
100 percent disability evaluations, but did not take appropriate 
actions in 17 (22 percent) of 78 claims involving prostate cancer. VARO 
management erroneously reported to VBA's Western Area Office that staff 
had requested VA medical reexaminations to determine whether the 
veterans' disabilities warranted the continued evaluations. However, 
evidence in the veterans' claims folders revealed VARO staff had 
neither requested the medical reexaminations, nor put controls in place 
to manage these cases. Without appropriate action to justify the need 
for continued payments, these 17 claims have the potential to cost just 
over $400,000 annually.
Traumatic Brain Injury
    From April 2007 through September 30, 2009, based on outpatient 
screening of veterans requesting VA health care treatment following 
military service in Operation Enduring Freedom and Operation Iraqi 
Freedom, VA determined that over 66,000 veterans could possibly have 
TBI. VA ultimately confirmed that just under 25,000 veterans had 
sustained TBI. Claims processing workloads corroborated that amount.
    Nineteen of the 20 VAROs inspected in FY 2011 did not follow VBA 
policy in processing claims for residuals \2\ of TBI. We found that 
VARO staff did not adequately process about 740 (45 percent) of 1,650 
TBI claims that we reviewed. Generally, the errors related to 
inconsistent or insufficient training, VA medical examiners providing 
inadequate TBI medical examination reports on which to base disability 
claims decisions, and Rating Veterans Service Representatives (RVSRs) 
not returning these inadequate reports to the medical examiners for 
correction as required. A common scenario in TBI claims processing 
involved veterans who had TBI-residual disabilities as well as co-
existing mental conditions. When medical professionals did not ascribe 
the veterans' overlapping symptoms to one condition or the other as 
required, VARO staff could not make accurate disability determinations. 
RVSRs told us they often did not return the inadequate reports due to 
pressure to meet productivity standards. We continue to see this as an 
issue in our FY 2012 reviews.
---------------------------------------------------------------------------
    \2\ The major residual disabilities of TBI fall into three main 
categories--physical, cognitive, and behavioral. VBA policy requires 
that staff evaluate these residual disabilities.
---------------------------------------------------------------------------
Disability Claims Processing Timeliness
    Ensuring timely claims processing is a widespread concern. VBA 
policy requires that division managers conduct monthly reviews of all 
claims pending more than 1 year. Due to concerns raised about 
processing claims at the California VAROs, we reviewed their compliance 
and found this was not done. Our examination of the ten oldest claims 
at these VAROs showed all three unnecessarily delayed processing of 
some of the claims. We found that processing of 80 percent of the 
claims we reviewed at the Los Angeles VARO had been unnecessarily 
delayed, while 50 percent had been unnecessarily delayed at the San 
Diego VARO. The Oakland VARO had a delay rate of about 29 percent in 
processing its oldest claims. Reasons for the processing delays 
included pending appeals on other conditions, lost or misplaced files, 
and unresolved claims issues. One claim at the Oakland VARO remained 
incomplete for nearly 8 years because VARO rating staff overlooked the 
contentions the veteran made when the claim was initially submitted. If 
division managers conduct monthly reviews of the VAROs' aged workload 
as required, they can take appropriate actions to avoid additional 
delays in processing veterans' claims. Due to issues identified, we 
will include a review of the implementation of this policy and a review 
of a sample of the oldest completed claims during our inspections 
conducted in FY 2013.
APPEALS PROCESSING
    In May 2012, we issued a national report, Audit of VA Regional 
Offices' Appeals Management Processes (May 30, 2012), that reported the 
nationwide inventory of appeals increased over 30 percent from about 
160,000 appeals in FY 2008 to about 209,000 in FY 2010. The inventory 
of compensation rating claims also increased by 40 percent--from 
380,000 to 532,000 claims. We concluded that VBA contributed to the 
growing inventory and time delays by not assigning enough staff to 
process appeals, diverting staff from appeals processing, and not 
ensuring appeals staff acted on appeals promptly because compensation 
claims processing was their highest priority. Also we identified 
through a comparison of Veterans Appeal Control and Locator System 
(VACOLS) and Veterans Service Network Operations Reports that regional 
office staff did not properly record 145 appeals in VACOLS, which 
delayed processing for an average of 444 days.
    We recommended the Under Secretary for Benefits identify and 
request staffing resources needed to meet VBA's appeals processing 
goals and conduct de novo reviews on all appeals. De novo reviews will 
result in quicker decisions on the veterans' appeals because they allow 
decision review officers to render new decisions without waiting for 
new evidence as required with traditional reviews. VBA should revise 
productivity standards and procedures to emphasize timely processing of 
appeals and implement an oversight plan that ensures staff record 
appeals in VACOLS promptly.
    The Under Secretary generally agreed that opportunities exist to 
improve appeals processing at regional offices. VBA is conducting a 
pilot program to assess the feasibility of implementing our 
recommendations on staffing resources to meet processing goals and 
conducting de novo reviews on all appeals; revising productivity 
standards for decision review officers; implementing criteria to 
initiate a review or develop Notices of Disagreements (NODs) and 
certified appeals within 60 days of receipt; revising policy to conduct 
de novo reviews on all appeals; and implementing a plan for adequate 
oversight to ensure staff record NODs into VACOLS. The Under Secretary 
for Benefits concurred with another recommendation to take appropriate 
action to complete appeals and provide decisions on the 145 appeals 
that were not properly recorded in VACOLS.
Notices of Disagreement
    At 20 VAROs in FY 2011, we inspected controls over the processing 
of NODs--the first step in the appeals process. Sixteen of 20 VAROs did 
not timely control NODs in VACOLS. VARO staff exceeded VBA's 7-day 
standard for 204 (34 percent) of 600 NODs reviewed. Staff took an 
average of 20 days to record the 204 disagreements in VACOLS.
    The untimely recording of NODs in VACOLS occurred because of 
inadequate oversight. The VAROs' workload management plans and local 
procedures did not incorporate provisions to ensure prompt control of 
NODs in VACOLS. Further, there was a lack of staff training on this 
portion of the appeals workload. Two VAROs were unable to record NODs 
timely due to personnel shortages.
    The data integrity issues identified resulting from untimely 
control of NODs make it difficult for VAROs and senior VBA leadership 
to accurately measure and monitor the performance of regional offices. 
Delays in recording NODs in VACOLS provide inaccurate information on 
VBA's NOD inventory and timeliness--both critical elements for 
consideration in workload decisions.
    To address timely establishment of NODs, in FY 2011, we recommended 
Regional Office Directors develop and implement plans for providing 
adequate oversight to ensure staff timely record NODs in the VACOLS 
within 7 days as required by VBA policy. Regional Office Directors 
reported they implemented improvements in response to our 
recommendations. These actions are key to reversing the steady rate of 
NOD processing errors we have noted since our Benefits Inspection 
program began.
DISABILITY BENEFITS QUESTIONNAIRES
    As part of a major initiative to reduce the claims backlog, VBA and 
the Veterans Health Administration (VHA) collaborated in the 
development of Disability Benefits Questionnaires (DBQs) to replace the 
compensation and pension examination reports previously used. DBQs are 
streamlined medical examination forms designed to capture essential 
medical information for purposes of evaluating VA disability claims. 
DBQs can be completed not only by VHA and VA-contracted clinicians, but 
also by veterans' private physicians. Currently, 81 DBQs are available, 
of which 71 are approved for use by non-VA clinicians.
    We conducted an audit to provide an early assessment of VA's 
internal controls over the use of DBQs (Audit of VA's Internal Controls 
Over the Use of Disability Benefits Questionnaires, February 23, 2012). 
Once VBA personnel make a decision on a veteran's disability benefits 
application, awarded claims result in recurring monthly compensation 
payments. Therefore, it is critical to establish adequate front-end 
controls to identify and minimize risks before benefit payments are 
initiated.
    We found the expedited rollout of the DBQ process did not provide 
VBA sufficient time to design, evaluate, and implement adequate 
internal controls to prevent potential fraud. VBA does not verify the 
authenticity of medical information submitted by veterans and private 
physicians prior to awarding disability benefits, track disability-
rating decisions where DBQs were used as medical evidence, or 
electronically capture information contained on completed DBQs.
    Further, while VBA has a quality assurance review process to verify 
a limited number of DBQs completed by private physicians, in our 
opinion, the quality assurance reviews do not provide reasonable 
assurance that fraudulent DBQs will be detected. Currently, VBA 
conducts quality assurance reviews on 100 claims completed by private 
clinicians each month. The reviewers use online resources, which are 
available to the public, to attempt to validate the medical license 
information listed on each DBQ. They then fax and/or mail the DBQ to 
the clinician's office for them to validate its authenticity. If they 
cannot validate the DBQ, they forward the case to both the appropriate 
regional office and the OIG for further review. As of May 2012, VBA had 
referred over 50 DBQs to the OIG for review. The OIG assesses the 
merits of these referrals and accepts those cases deemed to be high 
fraud risks for further review. For example, a claim submitted by a 
veteran confirmed not to be a patient of a private physician would 
represent a high risk. We have continued to work with VBA on 
strengthening its quality assurance process. VBA reports it is 
developing a new standard operating procedure to refine its validation 
review process.
    Developing and implementing additional controls for DBQs--as 
recommended in our report--should reduce the risk of fraud, allow for 
greater fraud detection, and help VA identify disability compensation 
claims that carry an increased risk of fraud. The Under Secretary for 
Benefits agreed to provide a long-term solution for verifying the 
identity and credentials of private physicians. We will follow up on 
the implementation of corrective actions to determine their 
effectiveness in preventing and detecting fraud.
ONGOING REVIEWS OF VBA TRANSFORMATION ACTIVITIES
    We have recently begun to assess VBA transformation initiatives. 
Specifically, we have started an audit of the Veterans Benefits 
Management System (VBMS)--VBA's web-based, paperless claims processing 
solution to support improved business processes. VBMS is intended to 
help eliminate the claims backlog and serve as the enabling technology 
for quicker, more accurate, and integrated claims processing in the 
future. Since November 2010, VBA has worked to develop and test this 
software to provide the required claims processing functionality. VBA 
plans to begin phased deployment of VBMS to its regional offices 
beginning in July 2012. As such, it is too early for us to fully assess 
the effectiveness of this initiative.
    We are currently reviewing the claims intake portion of VBA's 
claims processing transformation. We are examining VBA's plans, pilots, 
and work with the National Archives and Records Administration to 
digitize existing hard copy claims for processing in the VBMS 
environment. We expect to report on our results by the end of the year.
    In May 2012, we began an evaluation of the effectiveness of VBA's 
Quick Start Program to process claims accurately and timely. Quick 
Start is an element of the Pre-Discharge Program, which VBA established 
to allow service members to submit disability claims before separation 
from active duty. This program is expected to ensure veterans receive 
their benefits quickly after separation from active military service. 
Although our work is in progress, we have concerns that in FY 2011 the 
Quick Start Program completed only 22,234 (2 percent) of the more than 
1 million disability compensation claims processed. The average days to 
complete Quick Start claims was 234 days--more than double the target 
of 105 days and significantly higher than the 188-day average for all 
disability claims. We expect to publish our results in the fall of this 
year.
CONCLUSION
    VBA continues to face challenges in improving the accuracy and 
timeliness of disability claims decisions and maintaining efficient 
VARO operations. Our inspections and audit work consistently have shown 
that VAROs do not always comply with VBA's national policy and struggle 
with implementing effective workload management plans and clear and 
consistent guidance to accomplish their benefits delivery mission. Such 
claims processing and operational problems result in not only added 
burdens and delayed or incorrect payments to veterans, they also mean 
wasted Government funds through improper payments that VBA will not 
likely recover. While VBA has made some incremental progress through 
its own initiatives and in response to our prior report 
recommendations, more work remains to be done. We will continue to look 
for ways to promote improvements in benefits delivery operations during 
our future nationwide audits and VARO inspections.
    Mr. Chairman, this concludes my statement. We would be pleased to 
answer any questions that you or other Members of the Committee may 
have.

                                 
                Prepared Statement of Allison A. Hickey
    Good morning, Chairman Miller, Ranking Member Filner, and Members 
of the Committee. I am accompanied today by Mr. Alan Bozeman, Director, 
Veterans Benefits Management System (VBMS) Program Office.
    My testimony will focus on VBA's Transformation Plan, with a 
particular focus on VBMS's role in improving electronic claims 
processing capabilities to help meet VA's goal of eliminating the 
claims backlog in 2015 to ensure timely and quality delivery of 
benefits and services to our Veterans, their families, and survivors.
Transformation Plan
    VBA's transformation is demanded by a new era, emerging 
technologies, the latest demographic realities, and our renewed 
commitment to today's Veterans, family members, and survivors. In the 
face of dramatically increasing workloads, VBA must deliver first-rate 
and timely benefits and services - and they must be delivered with 
greater efficiency. VBA is aggressively pursuing its Transformation 
Plan, a series of tightly integrated people, process, and technology 
initiatives designed to eliminate the claims backlog and achieve our 
goal of processing all claims within 125 days with 98 percent quality 
in 2015.
    VBA's Transformation Plan is based on more than 600 ideas solicited 
from our employees, Veterans Service Organization partners, and other 
stakeholders, including this Committee and your staffs. After 
evaluating a multitude of innovative ideas, we focused on the 40+ most 
promising, tested, and measured initiatives for inclusion in our 
Transformation Plan. As we implement these initiatives, VBA is closely 
tracking current metrics (the number of claims considered part of the 
backlog, which VA defines as claims pending over 125 days; claims 
production; quality of rating decisions; decision timeliness; etc.) to 
assess results and, if necessary, adjust our efforts. We are also 
working to expand what we measure to more clearly show the impact of 
the Transformation Plan, both at local and national levels. VBA 
continues to review the initial 600 ideas for process improvements to 
ensure all potentially valuable transformation actions are evaluated. 
We will also continue our quest for additional new and innovative ideas 
to further transform our claims processes.
    VBA's Implementation Center, established at VBA headquarters as a 
program management office, is streamlining the process of 
transformation by ensuring new ideas are approved through a governance 
process, and that implementation and training are carefully planned and 
executed utilizing a comprehensive change management approach. This 
allows us to focus on implementing initiatives that will achieve the 
greatest gains, without degrading current performance.
People-Focused Initiatives
    Our employees are the key to our success. We are strengthening the 
expertise of our workforce by changing the way we are organized and 
trained to do the work. A new standardized operating model is being 
implemented in all regional offices beginning this year that 
incorporates a case-management approach to claims processing. VBA is 
deploying the new model in a phased implementation schedule that will 
be in use at 16 regional offices by the end of fiscal year 2012 and at 
all regional offices by the end of calendar year 2013. Distinct 
processing lanes are being established based on the complexity and 
priority of the claims and employees are assigned to the lanes based on 
their experience and skill levels. Integrated, cross-functional teams 
work claims from start to finish, facilitating the quick flow of 
completed claims and allowing for informal clarification of claims 
processing issues to minimize rework and reduce processing time. Less 
complex claims move quickly through the system in a designated 
``express'' lane, and the quality of our decisions improves by 
assigning more experienced and skilled employees to the more complex 
claims in our ``special operations'' lane. The new operating model also 
establishes an Intake Processing Center at every regional office, 
adding a formalized process for triaging claims and enabling more 
timely and accurate distribution of claims to the production staff in 
their appropriate lanes. We predict that our people-focused initiatives 
will contribute to a 15-20 percent improvement in productivity and 4 
percent improvement in quality.
    At VBA we are increasing the productivity of our workforce and the 
quality of our decisions through national training programs and 
standards. Our redesigned and expanded 8-week centralized Challenge 
Training Program for new claims processors has achieved dramatic 
results. On completion of the training, employees work significantly 
faster and at a higher quality level. Trainees from the most recent 
class averaged 1.62 cases per day with 94 percent accuracy at the eight 
week point, compared to the legacy Challenge curriculum, following 
which trainees averaged one-half case per day and 60 percent accuracy 
at the six month point. Our training and technology skills programs 
continue to deliver the knowledge and expertise our employees need to 
succeed in a 21st Century workplace. We have already seen a four-
percent improvement in quality as a result of this new training 
initiative.
Process-Improvement Initiatives
    VBA has established a ``Design Team'' concept to support the 
transformation of its business processes. Using Design Teams, VBA is 
conducting rapid development and testing of process changes, and 
automated processing tools in the workplace to assure that changes will 
be actionable and effective before they are implemented. The goal of 
our Design Teams is to implement, execute, and measure an improved 
facet of our operating model with a mindset toward increasing 
productivity and improving quality towards our goal of 98 percent 
accuracy. We are focusing on streamlining processes and eliminating 
repetition and rework in the claims process while delivering optimal 
service. We expect our process initiatives to contribute to a 15-20 
percent increase in productivity and a minimum four percent improvement 
in claims quality as it relates to current processing initiatives. As 
we continue to find new, promising initiatives and scale these 
initiatives nationally, these estimates could change.
    Initial process improvements include:

    Quality Review Teams: We transformed our local quality assurance 
process by establishing dedicated teams of quality review specialists 
at each regional office. These teams evaluate decision accuracy at both 
the regional office and individual employee levels, and perform in-
process reviews to identify and eliminate errors at the earliest 
possible stage in the claims process. The quality review teams are 
comprised of personnel trained by our national quality assurance 
(Statistical Technical Accuracy Review or ``STAR'') staff to assure 
local reviews are consistently conducted according to national 
standards. An initial focus of these teams is to reduce medical 
examination errors, which currently represent 30 percent of our benefit 
entitlement quality errors. In addition to quality improvements, the 
need for reexaminations will be minimized, thereby reducing claims 
processing time in 39-day increments for every reexamination avoided.
    Simplified Notification Letter: In January 2012, we implemented a 
new claims processing initiative developed by our first Design Team 
that will result in meaningful improvements in the service we provide 
to our clients. The new decision notification process will streamline 
and standardize the communication of claims decisions. Veterans will 
receive their simplified notification letter, which contains the 
substance of the decision, including a summary of the evidence 
considered and the reason for the decision. Design-Team testing of this 
initiative at the Atlanta and St. Paul Regional Office resulted in 
productivity increases of 15 percent, while sustaining accuracy rates, 
and reductions of 14 days in average processing time.
    Rules-Based Calculators: This initiative provides a new automated 
employee job-aid that uses rules-based programming to assist decision 
makers in assigning an accurate service-connected evaluation. These new 
calculators will significantly contribute to improvements in rating 
quality and consistency. During testing, the initiative resulted in 
improved quality, from 83% to 94%. Sixteen stand-alone calculators are 
currently being used by claims processors. Additionally, the following 
three calculators have already been embedded in VBMS:

    1. Hearing loss calculator: Generates stand-alone paragraphs for 
use in rating decisions.
    2. Special monthly compensation (SMC) calculator: Determines the 
total SMC award based on disabilities input by the decision-maker.
    3. Evaluation builder: Helps assign correct evaluations and 
generates text to explain a disability grant as well as criteria for 
the next higher rating.

    The release of VBMS version 3.0 in July 2012 will embed the rules 
for the majority of the musculoskeletal system. Future releases of VBMS 
will continue to embed the calculator rules allowing for rapid changes 
to automated rules sets as needed.
    Disability Benefits Questionnaires: In March, we released 68 more 
Disability Benefits Questionnaires (DBQs) to the public, bringing the 
total number of DBQs publicly available to 71. DBQs are templates that 
solicit the medical information necessary to evaluate the level of 
disability for a particular medical condition. Currently used by 
Veterans Health Administration examiners, the release of these DBQs to 
the public will allow Veterans to take them to their private 
physicians, facilitating submission of fully developed claims packages 
for expedited processing. The closer we get to fully developed claims 
the faster we can make decisions. Currently, claims submitted under the 
Fully Developed Claims initiative are processed in an average of 120 
days.
Technology Initiatives
    Key to VBA's transformation is ending the reliance on the outmoded 
paper-intensive processes that thwart timely and accurate claims 
processing. VBA will deploy technology solutions that improve access, 
drive automation, reduce variance, and enable faster and more efficient 
operations. VBA's planned digital, paperless environment will also 
enable greater exchange of information and increased transparency to 
Veterans, the workforce, and our stakeholders. We know that 73 percent 
of our Veterans prefer to interact with VA online. We are therefore 
taking a new approach, which includes online claims submission. Our 
strategy includes participation of stakeholders such as Veterans 
Service Officers, State Departments of Veterans Affairs, County 
Veterans Service Officers, and Department of Defense (DoD)) to provide 
digitally ready electronic files and claims pre-scanned through online 
claims submission. This will be accomplished through electronic data 
sharing and utilizing a stakeholder portal.
    Our Transformation Plan also includes the following major 
technology initiatives that are expected to improve access and 
contribute to an additional 15-20 percent increase in productivity and 
a four to six percent improvement in claims quality:
    Veterans Relationship Management Initiative (VRM): VRM engages, 
empowers, and serves Veterans and other claimants with seamless, 
secure, and on-demand access to benefit and service information. VRM is 
transforming VBA's National Call Centers through the introduction of 
new Veteran-friendly technologies and features. In October 2011, VA 
deployed Virtual Hold technology. During periods of high call volumes, 
this system enhancement allows callers to leave their name and phone 
number instead of waiting on hold for the next available operator, and 
the system automatically calls them back in turn. Over 2 million return 
calls have been made through the Virtual Hold system since November 
2011. This represents an acceptance rate for callers of 51 percent, 
exceeding the industry standard of 30 percent, and our successful re-
connect rate is 93 percent.
    In December 2011, VA deployed Scheduled Callback technology, 
allowing callers to make an appointment with us to call them at a 
specific time. Since deployment, over 785,000 scheduled callbacks have 
already been processed. The J.D. Power and Associates client-
satisfaction scores for our National Call Centers indicated a four-
point uptick in overall satisfaction, from 738 to 742, for those 
callers that utilized the Virtual Hold option from November 2011 to 
March 2012.
    VRM also deployed a pilot of our new ``Unified Desktop'' 
technology. This initiative will provide National Call Center agents 
with a single, unified view of VA clients' military, demographic, and 
contact information and their benefits eligibility and claims status 
through one integrated application, versus the current process that 
requires VA agents to access up to 13 different applications. Agents 
will benefit from not switching between multiple applications or being 
timed out. These new developments provide functionality not previously 
available, such as real-time analytics and reporting, ``smart'' 
scripts, and caller contact history and appeals information, all from 
one screen. This will not only help ensure our Veterans receive 
consistent, comprehensive, and accurate responses, but will increase 
the speed to answer calls, and provide better ``first-call resolution'' 
for our clients.
    eBenefits Portal: eBenefits, the joint VA/DoD client-services 
portal for life-long engagement with Servicemembers, Veterans, and 
their families, is a fundamental component of the VRM initiative. Our 
life-long engagement now begins with the Servicemember's entry into 
military service and extends throughout his or her lifetime - and will 
include access for Veterans' survivors. The eBenefits portal provides 
users with self-service options and greater access to benefits and 
health information at the time and method of their choosing and a new 
single-sign-on exchange with My HealtheVet. We have reduced the burden 
on obtaining an eBenefits Premium (Level 2) account by allowing 
beneficiaries to register online or over the phone. In September 2011, 
VA and DoD, in a collaborative partnership, registered its one-
millionth user on eBenefits. Current eBenefits enrollment exceeds 1.5 
million users, representing a 500-percent increase since January 2011. 
This year, DoD is making enrollment in the eBenefits portal mandatory 
for all Servicemembers upon entry into military service.
    The eBenefits portal provides an online capability to check the 
status of a claim or appeal; review the history of VA payments; request 
and download military personnel records; secure a certificate of 
eligibility for a VA home loan; generate letters to verify Civil 
Service employment preference eligibility; and numerous other benefit 
actions. We continue to aggressively expand and update on-line self-
service and access capabilities. We are engaging our Veterans Service 
Organization partners in registering Veterans for eBenefits accounts. 
In 2012, Servicemembers will complete their Servicemembers' Group Life 
Insurance applications and transactions through eBenefits. Enhancements 
scheduled in 2012 will also allow Veterans to view their scheduled VA 
medical appointments, file benefits claims online in a ``Turbo Claim-
like'' approach and upload supporting claims information that feeds our 
paperless claims process. In 2013, funding supports enhanced self-
service tools for the Civilian Health and Medical Program of VA 
(CHAMPVA) and VetSuccess programs, as well as the Veterans Online 
Application for enrolling in VA healthcare. eBenefits can be accessed 
via https://www.ebenefits.va.gov.
VBMS Overview
    To improve the efficiency of the claims process, VA is 
transitioning to a business model that relies less on the acquisition 
and movement of paper documents. VBMS is a business transformation 
initiative supported by technology to improve service delivery. VA 
recognizes technology is not the sole solution to improving regional 
office performance and eliminating the claims backlog; however, it is 
the critical hallmark of a forward-looking organization. Without VBMS, 
we cannot succeed in meeting our goal of processing all claims within 
125 days with 98 percent accuracy. It is the critical component of our 
Transformation Plan. VBMS is designed to assist VA in eliminating the 
claims backlog. The centerpiece of VBMS is a paperless system, which 
will be complemented by a new operating model, enhanced tools and 
training, and improved business processes and workflows. VBMS will 
dramatically reduce the amount of paper in the current disability 
claims process, and will employ rules-based claims development and 
decision recommendations utilizing rating calculators where possible. 
Additionally, by using a service-oriented architecture and commercial 
off-the-shelf products, VA will be positioned to take advantage of 
future advances in technology developed in the marketplace to respond 
to the changing needs of Veterans over time. The VBMS initiative uses 
incremental technology releases to modernize the benefits adjudication 
process. VBMS is currently in user-acceptance testing with national 
deployment scheduled to begin in mid-July 2012 and completed by the end 
of calendar year 2013.
    During fiscal year 2011, VA developed, tested, and began processing 
a limited number of original claims for disability compensation using 
VBMS at the Providence and Salt Lake City Regional Offices. These 
efforts validated the ability of users to enter and process claims to 
completion within the new, web-based, electronic claims processing 
system, while ensuring successful integration with existing databases 
and legacy applications.
    During fiscal year 2012, VA added new system functionality, which 
was deployed to the Providence and Salt Lake City Regional Offices, and 
recently expanded VBMS to the entire Wichita and Fort Harrison Regional 
Offices to align with VBA's transformation efforts. VBMS will release 
additional system functionality in July 2012 prior to national 
deployment. VBMS will be deployed to an additional 12 regional offices 
bringing the total to 16 regional offices by the end of fiscal year 
2012.
Development
    VBMS is being developed through a ``Service-Oriented Architecture 
methodology'' meaning the system is developed in layers including a 
data layer that stores image data for VBMS; a service layer that allow 
VBMS and other systems to put data into and get data out of the system 
through an interface; a business-logic layer which defines and executes 
business logic necessary to support claims processing; and a user-
interface layer. This architecture allows one layer to change without 
forcing the other layers to change. This allows the VA to take 
advantage of commercial off-the-shelf products as much as possible, and 
allows for rapid response to new requirements.
    Under an inter-agency agreement, VA is working with the Department 
of the Navy's Space and Naval Warfare Systems Center (SPAWAR) to 
develop the architecture for VBMS. SPAWAR is assisting VA by leading 
VBMS's system engineering and development efforts, providing user 
interface and infrastructure support, and managing development and 
testing efforts. VA and SPAWAR work together on defining the scope for 
each VBMS release, which occurs approximately every six months.
    The team is using a tailored, agile development approach to create 
the VBMS application and infrastructure. An agile framework allows for 
functionality to be released in a phased approach as software is 
developed, tested, and released to the field. Additionally, subject 
matter experts from regional offices provide requirements for system 
development every three weeks.
Functionality
    Once VBMS is fully developed, it will enable end-to-end electronic 
claims processing for each stage of the claims life cycle. The current 
functionality of VBMS 2.0 software includes the ability to establish 
claims, view and store electronic documents in an electronic folder, 
and rate electronic or paper claims. The system also provides the 
ability to track evidence requested from beneficiaries. The rating 
application provides users with web-accessible, rules-based tools, and 
rating calculators to ensure consistency in rating decisions and 
improve the overall quality and timeliness of decisions.
    In the upcoming software release for VBMS 3.0, scheduled for July 
16, 2012, new functionality will include the ability to generate a 
guided evidence development plan, which will assist users in 
identifying required evidence supporting Veterans' claims. This plan 
will then automatically generate a Veterans Claims Assistance Act 
letter and a medical record request to private physicians. In addition, 
new functionality will include the ability to broker claims 
electronically to any VA regional office where VBMS is deployed, 
allowing fluid movement of pending work and work load balancing.
System Performance
    From June through early July 2012, the Office of Information and 
Technology (OIT) will be conducting a series of end-to-end performance 
tests to ensure the system and network can perform effectively under 
the projected user load at national deployment. The VBMS performance 
testing strategy will apply a simulation of production workloads in a 
pre-deployment environment to measure system performance and gauge user 
experience. The strategy includes ``break testing'' - applying a full 
load of up to 20,000 users to get a quick gauge of system breakpoints 
and bottlenecks. The goal is to identify performance problems under 
expected production loads, allowing the development and infrastructure 
teams time to analyze and resolve critical issues before production 
release.
Ingest
    VA currently has an inter-agency agreement with the National 
Archives and Records Administration (NARA) to develop and provide a 
smart scanning solution for VA claims documentation going into the VBMS 
pilots. The piloted solution includes recommendations VA can use to 
revise and/or improve business processes to promote efficiencies of 
smart scanning and optical character recognition.
    NARA has been performing scanning services for production claim 
documents as part of the pilot since January 2011. The pilot will end 
in June 2012, and OIT will continue an inter-agency agreement with NARA 
for continued development, maintenance, and enhancement of the scanning 
solution. VA issued a performance work statement last week to acquire 
the services of a commercial vendor to support long-term scanning 
needs.
    In addition to the scanning strategy, VA is developing additional 
ingest capabilities to enhance the data exchange infrastructure. The 
Veterans Relationship Management Initiative (VRM) Program Office is 
collaborating with state Veterans Service Organizations (VSOs) to 
provide a direct interface, which will enable direct transfer of data 
into VA systems. Additionally, Veterans will be able to file a claim 
for benefits utilizing Veterans Online Application Direct Connect 
through eBenefits. This will facilitate the Veteran's ability to 
leverage self-service capabilities when filing a claim for benefits. 
Furthermore, the Stakeholder Enterprise Portal will allow third-party 
personnel, such as VSOs to file and track claims on a Veteran's behalf.
Implementation Approach
    VBMS is one of several major transformation initiatives currently 
being implemented across VBA. In 2011, VBA established a transformation 
Implementation Center to streamline and coordinate the transformation 
process. In preparation for national deployment of VBMS, the VBMS 
Program Management Office has worked closely with the Implementation 
Center to align the deployment strategy and schedule for VBMS with 
larger organizational transformation efforts. A coordinated approach to 
implementation was used to successfully expand the use of VBMS from two 
initial pilot sites in Providence and Salt Lake City to the Fort 
Harrison and Wichita Regional Offices in March of this year. All four 
sites are currently processing claims in VBMS and providing input to 
improve and refine the system prior to national deployment.
Workforce and Performance Support During Transition
    The VBMS Program Management Office's deployment approach includes a 
robust organizational change management component to prepare the VBA 
workforce for the transition to a new system and associated business 
process changes. VBMS conducts numerous pre-deployment activities with 
local transformation Change Management Agents. In addition, the VBMS 
Program Management Office has developed a robust web-based training 
approach and curriculum to train end-users on the system prior to 
deployment.
    VA is also leveraging input and feedback from the pilot sites to 
refine the deployment strategy, inform training development, and 
identify impacts to the workforce. Recent focus groups held at the 
Wichita Regional Office are just one example of activities underway to 
help prepare the workforce and organization as a whole as it 
transitions from a paper-based to an electronic claims processing 
environment.
Metrics
    From October 1, 2011 through June 12, 2012, approximately 3,100 
disability compensation claims have been successfully established 
through VBMS, and 950 claims have been completed electronically. In 
March 2012, original and subsequent rating compensation claims such as 
re-opened claims, claims for increase, or secondary claims, were being 
processed in VBMS. However, there are exclusions such as claims from 
Veterans living in foreign countries and claims related to radiation or 
spina bifida. On average, claims are taking approximately 135 days to 
complete in VBMS. Although the number of days to complete is higher 
than VA's goal of 125 days, VBMS is still developing business rules and 
automated decision recommendation support tools to assist claims 
processors in adjudicating claims faster and more accurately.
Veterans Health Administration (VHA) and VSOs
    The VBMS Program Management Office is working with our VHA partners 
on multiple levels to develop and deploy the claims processing 
solution. Our collaboration with VHA includes the participation of VHA 
subject matter experts in VBMS requirements gathering sessions, 
development and delivery of VHA-specific web-based training courses, 
and ongoing communication with VHA's Disability Examination Management 
Office. To enhance inter-administration communication and 
collaboration, the VBMS Program Management Office provides periodic 
updates during VHA's Network Directors' conference calls and 
participates in biweekly meetings with VHA's Disability Examination 
Management Office. This collaborative approach and system access for 
VHA clinicians will help improve the integration of disability 
examination processes into the larger claims process.
    VBA is engaged at the design stage with our VSO partners in VBMS 
development and all transformation initiatives. In April 2011, a 
subject matter expert from a VSO participated in early requirements 
gathering sessions during a 30-day detail with VA. VBA continues to 
involve the VSOs in requirements gathering activities as the system 
evolves. Additionally, the VBMS Program Management Office is building 
VSO-specific system training into its web-based training curriculum to 
meet the needs of VSO end-users. Representatives from VSOs also 
participated in recent VBMS training sessions at the Wichita and Fort 
Harrison Regional Offices as part of the VBMS deployment to those 
sites. As committed partners in ensuring the timely and accurate 
processing of Veterans' benefits claims, VSO end-users continue to 
provide valuable insight into system requirements and are helping to 
identity system issues at the current sites.
Labor Partners
    VA has fully engaged our labor partners on all transformation 
initiatives including VBMS. We have conducted numerous briefings and 
demonstrations to our labor forums and mid-term bargaining teams. 
Additionally, we have established Memorandums of Understanding on all 
of our major transformation initiatives. Based on frequent 
communication with our labor partners, VA is adopting their feedback 
into VBMS development and deployment activities. We remain committed to 
closely collaborating with our labor partners as we move forward with 
VBMS.
Conclusion
    VBMS, along with over 40 other people, process, and technology 
claims transformation initiatives, is critical to our success in 
improving the timeliness and accuracy of the claims process. We will 
continue to vigorously pursue business process and technology-centered 
improvements designed to eliminate the claims backlog and achieve our 
goal in 2015 of processing all claims within 125 days with 98 percent 
accuracy.
    Mr. Chairman, this concludes my statement. I would be pleased to 
answer any questions you or other Members of the Committee may have.

                                 
                        Statement For The Record
   American Federation Of Government Employees, AFL-CIO And The AfGE 
                   National Veterans' Affairs Council
    American Federation of Government Employees and the AFGE National 
Veterans' Affairs Council (hereinafter ``AFGE'') appreciate this 
opportunity to provide a statement for the record on VBA 
Transformation.
    As the exclusive representative of Department of Veterans Affairs 
(Department) Veterans Benefits Administration (VBA) employees who 
process disability claims, AFGE lends a unique perspective to 
discussions about the claims backlog, including agency efforts to 
improve training and claims accuracy and implement new information 
technology (IT) systems.
    We appreciate VBA's increased willingness to listen to AFGE and our 
members. The VBA workforce has always been a key stakeholder in efforts 
to improve the claims process, along with veterans' groups, VA and 
Congress. Our members have had some, but not enough, participation in 
VBA Transformation pilots. We urge the Committee to establish a 
mechanism for regular collaboration of all stakeholders, consistent 
with Executive Order 13522, Establishing Labor Management Forums, 
including the mandate to ``allow employees and their union 
representatives to have pre-decisional involvement in all workplace 
matters to the fullest extent practicable.''
    Transformation will also benefit from greater transparency; too 
often, new VBA initiatives and policies are developed behind closed 
doors, and during implementation, limited information is provided to 
front line staff most directly affected by changes.
    Employees also need more opportunity to share insights with each 
other during the Transformation process. As one VBA employee observed, 
``Communication on and in between teams was discouraged rather than 
encouraged. This is the opposite of what was intended.''
    AFGE's greatest concern with the Transformation Plan is VBA's 
deviation from that plan, in search of ``quick fixes''. Even in the 
middle of an extremely complex Transformation Plan involving over 40 
initiatives, VBA continues to act almost impulsively by starting 
entirely different initiatives that decrease production and waste 
significant taxpayer dollars. Two recent examples:

    1. Failed, Illegal Contract for Claims Development: Last year, VBA 
entered into a $54 million three-year contract for claims development 
with ACS Government Systems, a Xerox-subsidiary. ACS has a very poor 
record as a government contractor, and no familiarity with the VBA 
disability claims process. VBA employees were taken out of production 
to train ACS employees. Significant taxpayer dollars were also spent to 
prepare and move files between offices. The result? ACS performed so 
poorly that on June 14th, VBA ordered regional offices (RO) to stop 
sending new cases to ACS to ensure that the contractor ``resolves their 
timeliness and development issues.'' Now, VBA employees must handle the 
additional cases that ACS did not complete. (AFGE received a report 
that of the 80,000 claims sent to ACS, only 200 were returned.) This 
contract was wasteful and diverted resources and staff away from 
Transformation initiatives. It also violated federal law, specifically 
the statutory prohibition against direct conversion in 41 U.S.C. 
Sec. 439(a). AFGE urges Congress to hold VBA accountable for the costs 
of its failed contracts, and require the agency to respond to the March 
21st Congressional letter of inquiry (Appendix A).

    2. 30-Day RO Shutdowns: Last month, VBA shut down all production at 
the Oakland RO and Sacramento Satellite Office and mandated full-time 
employee training to respond to recent Inspector General reports of low 
performance. (We note that ACS received more claims from this RO than 
almost every other RO.) Our members at this location report that VBA 
did not seek any input from front line employees or AFGE regarding the 
training curriculum, and management did not ask front line employees 
who are experienced Challenge instructors to provide training. We 
recently learned that plans for similar shutdowns in LA and other 
locations have been put on hold. Initial reports from Oakland indicate 
that its 30-day training program left a lot of room for improvement.

    Generally, AFGE echoes many of the concerns raised by veterans' 
groups in their testimony regarding training, quality review, and the 
need for a better balance between quality and quantity. Our specific 
concerns, including examples from the field, are set forth below.
    RO Staffing Allocation: More generally, on the issue of low 
performing ROs, we urge Congress to look at VBA's current system of 
staff allocation. We question whether VBA is in fact ``starving'' low 
performing offices of staff while ``rewarding'' high performing offices 
with more staff, rather than looking at relevant factors such as number 
of new hires, number of veterans filing claims at each RO and 
experience level of managers. To address the specific barriers to high 
performance at each RO, it is critical that RO managers seek greater 
input from front line employees and their representatives.
    Training: The quality of VBA's training program continues to lag, 
especially training provided at the ROs after completion of new 
employee training. VBA's growing reliance on web-based training, rather 
than classroom training, is most likely driven by the goal of 
minimizing the amount of lost production time. (To quote one employee, 
``I can't remember the last classroom training I had.'') However, 
production decreases when employees fail to comprehend complex new 
material. Similarly, web-based training allows pressured managers to 
rush employees through training modules; it is more difficult to hold 
managers accountable for failing to comply with VA Central Office 
(VACO) mandates for ``excluded'' time for training that is provided 
outside the classroom.
    The lack of expertise among instructors continues to weaken VBA 
classroom training. For example, at the St. Petersburg RO, management 
recently prepared for upcoming Challenge training by soliciting 
volunteers who were asked to perform self-assessments of abilities to 
instruct as subject matter experts. In addition, VBA regularly promotes 
managers to positions involving supervision and quality assurance after 
only a few years of ``floor'' experience
    VBA has still not fully implemented another valuable tool for 
ensuring quality supervision: the supervisor skills certification test 
mandated by Section 225 of Public Law 110-389.
    Outdated Work Credit System: Public Law 110-389 also mandated a 
study to overhaul VBA's system for assigning work (also known as ``time 
motion studies'' or ``elapsed time studies''). The ability to measure 
the amount of time needed to perform specific tasks is a basic building 
block of production in the private sector and is equally essential to 
properly transforming the VBA claims process, especially given 
Transformation workflow initiatives such as express lanes. We urge the 
Committee to take a closer look at VBA's progress on this mandate as 
well. It is especially urgent that VBA provide adequate credit for case 
development (rather than undervalue this function by contracting it out 
to a contractor lacking expertise.)
    VBMS: At the Ft. Harrison, MT RO, where the Veterans Benefits 
Management System (VBMS) has been fully implemented, employees are 
experiencing many system ``glitches''. Some of them are being 
addressed, but others are more fundamental and are slowing down 
production. Generally, employees find that VBMS does not interface well 
with other systems used to process claims.
    Document Scanning and VBA Job Opportunities for Veterans: A Win-
Win: National Archives and Records Administration (NARA) has estimated 
that VBA needs 4,000 additional employees to convert VBA to a paperless 
system. AFGE strongly urges the Committee to mandate that this function 
be performed by veterans working for VBA, rather than a contractor. 
This will: (1) create thousands of entry level jobs for unemployed 
veterans consistent with Secretary Shinseki's pledge to increase the 
percentage of veterans in the VA workforce by ten points; (2) save 
taxpayer dollars that would have been spent on the contracting process 
and on moving files between the VA and contractor; and, (3) lower the 
risk of security breaches because personal information is kept in-
house. And yes, new employees can be brought in more quickly than a 
contractor: VBA can use the same flexible hiring authorities (term and 
temporary appointments) it has used in the recent past to quickly hire 
new claims processors.
    Thank you again for the opportunity to present AFGE's views on the 
VBA Claims Transformation Plan.

                                 
                        Question For The Record
    To Hon. Eric K. Shinseki, Secretary, U.S. Department of Veterans 
Affairs, from Bob Filner, Ranking Democratic Member

                             July 10, 2012
    The Honorable Eric K. Shinseki
    Secretary
    U.S. Department of Veterans Affairs
    810 Vermont Avenue, NW
    Washington, DC 20420

    Dear Mr. Secretary:

    In reference to our Full Committee hearing entitled, ``Reclaiming 
the Process: Examining the VBA Claims Transformation Plan as a Means to 
Effectively Serve Our Veterans'' that took place on June 19, 2012, I 
would appreciate it if you could answer the enclosed hearing questions 
by the close of business on August 21, 2012.

    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all Full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.

    Due to the delay in receiving mail, please provide your response in 
a word document to Carol Murray at [email protected] If you 
have any questions, please call 202-225-9756.

                                  Sincerely,

                                  BOB FILNER
                                  Ranking Democratic Member

    KR:cm
Post-Hearing Questions for VA's OIG
    1. In order to better understand the efforts to improve 
underperforming Regional Offices, please provide a copy of the training 
and review guidelines for VA OIG staff who completed the Benefits 
Inspection Reports for the Oakland, San Diego, Los Angeles, Houston, 
Waco, and St. Petersburg VBA regional offices. Please include the 
definitions for the following terms used in VA OIG reports, including 
``errors,'' ``inaccurately processing,'' ``claims incorrectly 
processed,'' ``Affecting Veterans' Benefits,'' and ``Potential to 
Affect Veterans' Benefits.''

    2. The VBA and VA OIG have reported different rates of error for 
claims processing. Please provide an evaluation of the difference 
between VBA's STAR report indicating a nationwide disability claim 
processing error rate of approximately 13 percent for VBA and VA's OIG 
testimony on June 19, 2012, indicating a nationwide VBA error rate of 
approximately 30 percent. Please include comments on the scope, depth, 
integrity, transparency, reliability and accuracy of the two review 
methods.

    3. A full understanding of the different types of errors that occur 
is critical for a comprehensive picture of the underlying issues of the 
claims processing error rates. Please provide a list of the types of 
errors VBA makes processing claims, and the frequency (in percentage) 
that VA's OIG observed for each of those types of errors when auditing 
veterans' disability compensation claims aggregated for the 50 regional 
offices audited since 2009.

    4. At the June 19, 2012 hearing, the VA testified that they were 
taking steps to fix the computer glitch removing the future exam dates 
for veterans with temporary 100% disability ratings. Please provide an 
evaluation of the likely success of VBA's planned training and computer 
system upgrades regarding the entry into VBA computer systems a future 
exam date for veterans in receipt of disability compensation for 
temporary 100 percent disability ratings.

    Responses to Bob Filner, Ranking Democratic Member from Hon. Eric 
K. Shinseki, Secretary, U.S. Department of Veterans Affairs

    OCT1 7 2012

    DEPARTMENT OF VETERANS AFFAIRS
    INSPECTOR GENERAL WASHINGTON DC 20420
    The Honorable Bob Filner
    Ranking Democratic Member
    Committee on Veterans' Affairs
    United States House of Representatives
    Washington, DC 20515

    Dear Congressman Filner:

    This is in response to your July 10, 2012, letter that contained 
additional questions for the Office of Inspector General following a 
Full Committee hearing on June 19, 2012, entitled ``Reclaiming the 
Process: Examining the VBA Claims Transformation Plan as a Means to 
Effectively Serve Our Veterans .'' We received your letter on September 
28, 2012.

    Enclosed are our responses to those additional questions. If you 
have any further questions, please have your staff contact Catherine 
Gromek, Congressional Relations Officer, at (202) 461-4527 or Catherine 
[email protected] .

    Thank you for your interest in the Department of Veterans Affairs.

    Sincerely,

    GEORGE J. OPFER

    Enclosure
 VA Office of Inspector General Responses to Questions for the Record 
 for a Hearing Before the House Committee on Veterans' Affairs on June 
    19, 2012, on ``Reclaiming the Process: Examining the VBA Claims 
    Transformation Plan as a Means to Effectively Serve Our Veterans
    Question: In order to better understand the efforts to improve 
underperforming VA Regional Offices, please provide a copy of the 
training and review guidelines for VA OIG staff who completed the 
Benefits Inspection Reports for the Oakland, San Diego, Los Angeles, 
Houston, Waco, and St. Petersburg VBA Regional Offices. Please include 
the definitions for the following terms used in VA OIG reports, 
including ``errors,'' ``inaccurately processing,'' ``claims incorrectly 
processed,'' affecting veterans' benefits,'' and ``potential to affect 
veterans' benefits.''
    Response: The VA Office of Inspector General (OIG) Benefits 
Inspection Division is comprised of former Veteran Benefits 
Administration (VBA) staff and managers who previously held various 
positions within VA Regional offices (VAROs), including such 
supervisory roles as Veterans Service Center (VSC) Manager and 
Assistant VSC Managers, a member from VBA's Systematic Technical 
Accuracy Review (STAR) program, Veterans Service Representatives, 
Rating Veterans Service Representatives, and Decision Review Officers. 
Our benefits inspectors have an average of 11 years experience in VBA 
operations.
    Annually, our Benefits Inspectors complete VBA training related to 
the protocols selected for review during the subsequent fiscal year. 
Attached is specific VBA related training completed by our staff. 
Additionally, each Inspector reviews a range of Federal and VBA policy 
related to the VARO inspections, including 41 unique sections of Title 
38 of the Code of Federal Regulations (parts 3 and 4) related to VBA 
compensation and pension benefits, and VBA's policies, guidance 
letters, and training letters. Benefits Inspectors use the guidance to 
develop inspection processes and checklists for examining each 
protocol. Our Inspectors also keep abreast of new VBA policy as it 
becomes available from VBA or VA during the course of the year.
    Following are explanations of various terms used in our inspection 
reports:

      Errors, inaccurately processing, and claims incorrectly 
processed--Used synonymously and interchangeably to refer to errors 
identified in claims processing.
      Affecting veterans benefits--Indicates that errors 
identified in claims processing were either overpayments or 
underpayments of monetary benefits to veterans.
      Potential to affect veterans benefits--Indicates that the 
monetary impact of errors identified in claims processing could not be 
determined due to lack of evidence, insufficient evidence, or no 
monetary change in disability benefits.

    Question: The VBA and VA OIG have reported different rates of 
errors for claims processing. Please provide an evaluation of the 
difference between VBA's Systematic Technical Accuracy Review (STAR) 
report indicating a nationwide disability claim processing error rate 
of approximately 13 percent for VBA and VA's OIG testimony on June 19, 
2012, indicating a nationwide VBA error rate of approximately 30 
percent. Please include comments on the scope, depth, integrity, 
transparency, reliability and accuracy of the two review methods.
    Response: The OIG's process differs from VBA's STAR process in that 
we review specific types of disability claims, such as traumatic brain 
injury (TBI), herbicide exposure, and temporary 100 percent disability 
evaluations, considered to be at high-risk of processing error. OIG 
Benefits Inspectors select for review statistical samples of completed 
claims, typically from among claims processed three months prior to 
each scheduled inspection. Any noncompliance or inaccuracy we identify 
in claims processing is reported as an error; we report no degrees of 
errors. We share this approach and methodology with each VARO prior to 
inspection. We also include a discussion of our inspection scope and 
methodology in our published reports. We conduct our reviews 
independent from VBA.
    In contrast, VBA's STAR process entails review and analysis of all 
types of compensation and pension claims processed at the VAROs. STAR 
utilizes regular, random sampling of completed claims from specific 
time periods to assess local VARO and national claims processing 
accuracy rates. STAR includes reviews in three key claims processing 
areas: rating, authorization, and fiduciary workloads. In March 2009, 
we reported that VBA understated its claims processing error rate by 10 
percent (Audit of Compensation Rating Accuracy and Reviews)
    Published STAR data provides a monthly snapshot of VARO claims 
processing accuracy. Each VARO has a 12-month cumulative accuracy rate, 
which is rolled up into a national accuracy rate for all VAROs. In 
recent months, STAR implemented a ``3-Month Accuracy Review Report,'' 
which provides a snapshot of the national accuracy rate. Each month, 
the sample size for review is expected to be approximately 1,200 cases. 
From April through June 2012, STAR staff reviewed 85 percent of the 
total 3,600 sample cases expected for the 3-month period. Because the 
report included an incomplete sample, the 3-month national accuracy 
rate may not reflect overall accuracy.
    Both review methodologies are appropriate. The OIG focuses on 
examining higher risk medical disability claims. Our inspections assess 
management controls to determine whether VARO management adhered to VBA 
policy regarding correction of errors identified by VBA's STAR staff. 
We report those instances where staff did not properly take corrective 
action on those errors identified by STAR staff.
    Question: A full understanding of the different types of errors 
that occur is critical for a comprehensive picture of the underlying 
issues of the claims processing error rates. Please provide a list of 
the types of errors VBA makes processing claims, and the frequency (in 
percentage) that VA OIG observed for each of those types of errors when 
auditing veterans' disability compensation claims aggregated for the 50 
regional offices audited since 2009.
    Following is a list of the categories of errors we identified for 
four types of medical disability claims we reviewed from April 2009 to 
June 2012. It should be noted that during our inspections, we provide 
VARO officials the opportunity to review each error and comment if they 
believe the error we identified is incorrect. We work together to 
resolve any disagreements on the errors identified before completing 
each inspection. VARO officials also provide formal written comments in 
response to our inspection reports. We include copies of the comments 
in their entirety as appendices to the reports. VARO officials have 
concurred with all recommendations we have made on improving disability 
claims processing and overall VARO operations since we began conducting 
our inspections and reporting the results.


----------------------------------------------------------------------------------------------------------------
                                                                           Percentage in Error
 Temporary 100 percent Disability Evaluations
----------------------------------------------------------------------------------------------------------------
 Confirmed and Continued evaluations                                                36.2%
 Medical reexamination reminder                                                     30.9%
 notifications not processed
 Final disability decisions delayed                                                 13.5%
 or not completed
 Rating decision inaccuracies                                                       12.2%
 Improper processing of immediate                                                    7.2%
 medical reexaminations
----------------------------------------------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
            Traumatic Brain Injury Claims                                 Percentage in Error
----------------------------------------------------------------------------------------------------------------
 Inadequate medical examinations                                                        55.5%
 Incorrect disability evaluations                                                       28.1%
 Lack of evidence showing the veteran                                                    8.5%
 sustained a TBI
 Improperly identifying residual disabilities                                            7.3%
 associated with TBI
 Incorrect effective dates of payment                                                     .6%
----------------------------------------------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
        Post Traumatic Stress Disorder Claims                             Percentage in Error
----------------------------------------------------------------------------------------------------------------
 Incorrect disability evaluations                                                       24.0%
 Improper stressor verification                                                         18.0%
 No nexus between diagnosis and event in                                                18.0%
 service
 Inadequate medical examinations                                                        18.0%
 Incorrect effective dates for payment                                                  11.0%
 Additional benefits not considered                                                     11.0%
----------------------------------------------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
     Herbicide Exposure-related Disability Claims                         Percentage in Error
----------------------------------------------------------------------------------------------------------------
 Incorrect disability evaluations                                                       35.9%
 Improperly granting or denying benefits                                                24.8%
 Incorrect effective dates for payment                                                  17.6%
 Improperly identifying secondary conditions                                            11.8%
 related to primary conditions related to the primary
 herbicide exposure-related disability
 Additional benefits not considered                                                      9.8%
----------------------------------------------------------------------------------------------------------------

    Additionally, the following table reflects the error rates, by 
fiscal year, for each category of disability claim we reviewed.


----------------------------------------------------------------------------------------------------------------
            Claim Type                Error Rate 2009/2010         Error Rate 2011         Error Rate 2012 \1\
----------------------------------------------------------------------------------------------------------------
Temporary 100%                                          78%                       64%                       69%
Disability Evaluations
----------------------------------------------------------------------------------------------------------------
Traumatic Brain Injury                                  24%                       42%                       35%
Claims
----------------------------------------------------------------------------------------------------------------
Post Traumatic                                          10%                        5%          Not reviewed \2\
Stress Disorder
Claims
----------------------------------------------------------------------------------------------------------------
Herbicide Exposure-                                     10%                       11%                       12%
Related Disability
Claims
----------------------------------------------------------------------------------------------------------------
\1\ These statistics are based on 14 VARO inspections conducted through June 2012.
\2\ We discontinued our review of PTSD claims because only 2 of 20 VAROs inspected in FY 2011 did not follow VBA
  policy when processing PTSD claims. This constituted an improvement from the 8 of 16 VAROs that did not follow
  VBA policy in processing PTSD claims, as previously reported in our FY 2010 inspection summary report.

    Question: At the June 19, 2012 hearing, VA testified that they were 
taking steps to fix the computer glitch removing the future exams dates 
for veterans with temporary 100 percent disability ratings. Please 
provide an evaluation of the likely success of VBA's planned training 
and computer system upgrades regarding the entry into VBA computer 
systems a future date for veterans in receipt of disability 
compensation for temporary 100 percent disability ratings.
    Response: VBA policy requires a temporary 100 percent disability 
evaluation for a veteran's service-connected disability following 
surgery or when specific treatment is needed. At the end of a mandated 
period of convalescence or treatment, VARO staff must request a follow-
up medical examination to help determine whether to continue the 
veteran's temporary 100 percent disability evaluation. For temporary 
100 percent disability evaluations, VARO staff must input dates in 
VBA's electronic system to alert staff to schedule the future 
reexaminations.
    Based on our inspection results, however, the most frequent errors 
occurred when VARO staff did not manually enter dates in the electronic 
record as required to generate reminders to schedule future 
reexaminations for confirmed and continued (C&C) evaluations where 
rating decisions do not change veterans' payment amounts. We reported 
similar issues in our national report, Audit of 100 Percent Disability 
Evaluations (January 24, 2011). In response to a recommendation in this 
report, VBA modified its electronic system to establish a mechanism 
that automatically populates future examination dates from the rating 
decision documents to the electronic record. This system modification 
is reported to retain dates from the rating decision document even when 
an award document is not generated.
    We did not identify any malfunctions causing these future dates to 
disappear from VBA's electronic record. We cannot determine the impact 
of VBA's recent computer system modifications on addressing the issue 
of missing future examination dates related to temporary 100 percent 
disability ratings. As part of our inspections, we observed a small 
number of recently processed temporary 100 percent disability 
evaluations related to C&C decisions and noted that the routine future 
examination dates populated the correct fields in the electronic 
record. However, since the dates for the claims reviewed will occur in 
the future, we cannot ensure that the electronic system will generate 
notifications to alert VARO staff to schedule medical reexaminations as 
required. We are also unaware of any VBA-wide training plans 
specifically related to processing temporary 100 percent disability 
evaluations and, as such, cannot comment.
    In response to our January 2011 audit report, the Under Secretary 
for Benefits also agreed to review all temporary 100 percent disability 
evaluations and ensure each evaluation had a future examination date 
entered in the electronic record. The review was to be completed by 
September 2011. However, VBA did not provide VAROs with a list of 
temporary 100 percent disability evaluations for review until September 
2011. VBA subsequently extended the national review deadline to 
December 31, 2011, and then to June 30, 2012. To assist VAROs in their 
reviews of temporary 100 percent disability evaluations, we provided 
the VAROs with lists of veterans who may be receiving improper 
temporary 100 percent disability benefit payments. VBA was expected to 
complete this national review by September 30, 2012. As of this date, 
they have not completed this review.
ATTACHMENT A
                      Benefits Inspector Training


----------------------------------------------------------------------------------------------------------------
                                                                                               Training  Updated
          Protocol/Topic                                    Training                                by  VBA
----------------------------------------------------------------------------------------------------------------
TBI..............................
----------------------------------------------------------------------------------------------------------------
TBI Exam Request: Rating Training   Provides requirements for sufficient VA TBI examination               05/12
----------------------------------------------------------------------------------------------------------------
TBI Development                         Provides requirements for proper development of TBI               02/12
                                                                                     claims
----------------------------------------------------------------------------------------------------------------
Temporary 100s...................
----------------------------------------------------------------------------------------------------------------
Effective Dates: Journey Level          Provides requirements for assigning effective dates               06/12
 RVSR Training
----------------------------------------------------------------------------------------------------------------
Effective Dates: CUEs and New and    Review of Clear and Unmistakable Errors in conjunction               04/12
 Material**                              with Effective Dates and New and Material Evidence
----------------------------------------------------------------------------------------------------------------
Effective Dates: Challenge         Review of Challenge and Post-Challenge RVSR Training for               05/09
 Training Material with detailed    Effective Dates. Also includes RVSR Assistant-Effective
 scenarios                                                                       Dates EPSS
----------------------------------------------------------------------------------------------------------------
Subordinate Issues                      Review to identify inferred issues presented during               06/12
                                                                          claims processing
----------------------------------------------------------------------------------------------------------------
Rating Reductions                                          Review of due process procedures               11/09
----------------------------------------------------------------------------------------------------------------
Duty to Assist/DEV...............
----------------------------------------------------------------------------------------------------------------
Workload/Management of Aging        Provides for review of cases by division management for               06/10
 Claims: M21-4 2.05, f.10                                cases pending for more than 1 year
----------------------------------------------------------------------------------------------------------------
Duty to Assist                      Review of statutory requirements of VCAA, includes COVA               06/12
                                                                                    case, FLs, checklist
----------------------------------------------------------------------------------------------------------------
Review of Development                           Review VCAA and claims development/overview               01/07
----------------------------------------------------------------------------------------------------------------
Application of the Amputation              Application of the amputation rule; avoidance of               01/11
 Rules; Pyramiding (Exclude GSWs)                                 pyramiding (Exclude GSWs)
----------------------------------------------------------------------------------------------------------------
Duty to Assist-RVSR                                     DTA and development for all records               10/11
----------------------------------------------------------------------------------------------------------------
Telephone Development                      Good reference for development issues, including               06/12
                                                                      telephone development
----------------------------------------------------------------------------------------------------------------
General Policy in Rating                BASIC: but lays out part 3 and 4 and includes short               04/08
                                                                     review of each section
----------------------------------------------------------------------------------------------------------------
DBQs.............................
----------------------------------------------------------------------------------------------------------------
DBQs and Medical Opinions**                                                Key changes in HL, T, Diabetes,06/12
                                                                                     MEDICAL OPINION DBQ training
----------------------------------------------------------------------------------------------------------------
DBQ: Entry Level                                               Overview of DBQs, includes FLs, DUSB call, 12/11
----------------------------------------------------------------------------------------------------------------
DBQ FL 12-11                         Provices information and guidance pertaining to the 81               03/12
                                   DBQs available for VA use, including the 71 DBQs approved
                                                                      by OMB for public use
----------------------------------------------------------------------------------------------------------------
MISC Training....................
----------------------------------------------------------------------------------------------------------------
DRO Training Videos**              Quality Puzzle, Quality Review, IU, Effective Dates: VBA               04/12
                                                               Intranet/Training/What's New
----------------------------------------------------------------------------------------------------------------
SNL                                                                        Review of the SNL program      02/12
----------------------------------------------------------------------------------------------------------------
Dependency for Comp                    Evidentiary requirements for establishing dependents               12/11
----------------------------------------------------------------------------------------------------------------
SMC                                                                                        Levels of Speci08/10nthly Compensation Calculator
----------------------------------------------------------------------------------------------------------------
RVSR Evaluation Builder/Text         Provides an introduction to the Evaluation Builder and               07/11
 Generator                                                              guidance on its use
----------------------------------------------------------------------------------------------------------------
Intake Processing Center-           Overview of the implementation of the Intake Processing               01/11
 Implementation Handbook                                                     Centers in ROs
----------------------------------------------------------------------------------------------------------------