[Senate Hearing 113-040]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 113-040
 
        VA CLAIMS PROCESS: REVIEW OF VA'S TRANSFORMATION EFFORTS 

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 13, 2013

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

80-110 PDF                       WASHINGTON : 2013 


                     COMMITTEE ON VETERANS' AFFAIRS

                 Bernard Sanders, (I) Vermont, Chairman
John D. Rockefeller IV, West         Richard Burr, North Carolina, 
    Virginia                             Ranking Member
Patty Murray, Washington             Johnny Isakson, Georgia
Sherrod Brown, Ohio                  Mike Johanns, Nebraska
Jon Tester, Montana                  Jerry Moran, Kansas
Mark Begich, Alaska                  John Boozman, Arkansas
Richard Blumenthal, Connecticut      Dean Heller, Nevada
Mazie Hirono, Hawaii
                    Steve Robertson, Staff Director
                 Lupe Wissel, Republican Staff Director



                            C O N T E N T S

                              ----------                              

                             March 13, 2013
                                SENATORS

                                                                   Page
Sanders, Hon. Bernard, Chairman, U.S. Senator from Vermont.......     1
Isakson, Hon. Johnny, U.S. Senator from Georgia..................     3
Tester, Hon. Jon, U.S. Senator from Montana......................     5
Heller, Hon. Dean, U.S. Senator from Nevada......................     5
Burr, Hon. Richard, Ranking Member, U.S. Senator from North 
  Carolina.......................................................     6
Begich, Hon. Mark, U.S. Senator from Alaska......................    33
Moran, Hon. Jerry., U.S. Senator from Kansas.....................    38
Johanns, Hon. Mike, U.S. Senator from Nebraska...................    45
Blumenthal, Hon. Richard, U.S. Senator from Connecticut..........    49

                               WITNESSES

Hickey, Allison A., Under Secretary for Benefits, Veterans 
  Benefits Administration, U.S. Department of Veterans Affairs; 
  accompanied by Stephen Warren, Acting Assistant Secretary, 
  Office of Information and Technology; and Alan Bozeman, 
  Director, Veterans Benefits Management System Program Office...     6
    Prepared statement...........................................     9
    Response to posthearing questions submitted by:
      Hon. Bernard Sanders.......................................    17
      Hon. Richard Burr..........................................    18
      Hon. Mark Begich...........................................    19
      Hon. Mazi Hirono...........................................    22
    Response to request arising during the hearing by Hon. 
      Richard Burr...............................................    28
Bertoni, Daniel, Director, Education, Workforce, and Income 
  Security, U.S. Government Accountability Office................    52
    Prepared statement...........................................    54
Thompson, Joseph, Project Director, National Academy of Public 
  Administration and Former Under Secretary for Benefits, U.S. 
  Department of Veterans Affairs.................................    73
    Prepared statement...........................................    75
Stichman, Bart, Joint Executive Director, National Veterans Legal 
  Services Program...............................................    81
    Prepared statement...........................................    82
Violante, Joseph, National Legislative Director, 
  Disabled American Veterans.....................................    85
    Prepared statement...........................................    86


        VA CLAIMS PROCESS: REVIEW OF VA'S TRANSFORMATION EFFORTS

                              ----------                              


                       WEDNESDAY, MARCH 13, 2013

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
room 418, Russell Senate Office Building, Hon. Bernard Sanders, 
Chairman of the Committee, presiding.
    Present: Senators Sanders, Tester, Begich, Burr, Isakson, 
Johanns, Moran, and Heller.

          OPENING STATEMENT OF HON. BERNARD SANDERS, 
              CHAIRMAN, U.S. SENATOR FROM VERMONT

    Chairman Sanders. The Senate Committee on Veterans' Affairs 
hearing is going to begin.
    We are glad to see Senator Isakson with us. As I understand 
it, Senator Burr will be here later. OK. We have the Senator 
from Montana here as well, Jon Tester. I think we will see 
Senators coming in and out. This is a busy time in the Senate.
    We want to thank our panelists for being with us for this 
important hearing.
    Let me begin by saying that during the last several weeks, 
the Veterans' Committees in the House and the Senate have held 
four hearings including virtually all of the veterans' 
organizations.
    During their testimonies, the organizations raised a number 
of issues, but I think it is fair to say that the number 1 
issue they raised, the number 1 concern that they have and a 
concern that many of us on this Committee share is that the 
most pressing problem within the VA now is the very significant 
backlog that we have in processing claims for our veterans.
    That is the number 1 issue I believe that the service 
organizations believe is out there. It is my concern as well, 
being the number 1 issue facing the VA, which is why the very 
first hearing that we are having since I have become chair of 
this Committee will address this issue.
    My understanding is that as of March 2, 2013, 70 percent of 
the compensation and pension inventory of 895,000 claims have 
been pending for over 125 days. Further, the accuracy rate of 
86 percent at the end of fiscal year 2012 is significantly 
lower than what must be accomplished.
    In addition, such agencies as the GAO and the VA's own 
Inspector General have raised some very, very serious concerns 
about the work and efforts that the VA is undertaking in 
addressing the claims processing crisis.
    It is my view, and I believe that I speak for every Member 
of this Committee, that when men and women put their lives on 
the line to defend this country, they must be treated with 
dignity and respect when they return; not with red tape, not 
with bureaucracy, not with, in some cases, years of delay 
before they get the benefits to which they are entitled.
    Without being overly dramatic here, we all know that one of 
the tragedies facing the veterans' community right now is that 
22 veterans every single day are committing suicide, and I know 
that no one in the VA and no one in the Congress wants to add 
to that problem, wants to add to the frustration and the 
problems that veterans have by delaying the benefits to which 
they are entitled.
    That is the bad news; and those are some very, very serious 
problems that we are going to be discussing today. We look 
forward to the testimony of our panelists.
    Here is some better news--it is important to put this issue 
in a broader context. Despite, I believe, a popular 
misconception, as I understand it, the VA today is processing 
far more claims than they have ever processed before.
    So, this is not a case of the VA system falling apart and 
being unable to process claims. In fact, they are processing 
more claims today, significantly more than they have ever 
processed before.
    As I understand it, in 2001, the VA completed some 480,000 
claims. In 2002, about 796,000 claims. In 2003, 827,000 claims. 
During the last 3 years, the VA has processed over one million 
claims in each of those years.
    Further, it is generally believed that the VA did exactly 
the right thing--and I want to thank General Shinseki and the 
VA for doing this--making certain that Vietnam veterans who 
were exposed to Agent Orange and became ill as a result of that 
exposure, finally after years and years of delay, get the 
benefits that they were entitled to.
    In the last several years, the VA has processed some 
278,000 new claims for Agent Orange. It is generally believed 
that they had done a pretty good job in processing those claims 
and doing it in a timely manner.
    My last point. General Shinseki has set a very, very 
ambitious goal in terms of eliminating the backlog by 2015 and 
of having the VA process compensation claims so that no veteran 
or eligible spouse or child has to wait more than 125 days for 
a quality decision, meaning a 98-percent accuracy rate on 
claims.
    I think we can all agree that that is a very, very 
ambitious goal. Obviously, the subject of today's hearing is 
whether or not we are going to achieve that goal.
    Let me conclude. Later on today we are going to hear 
testimony from Joe Violante who is with the Disabled American 
Veterans. The DAV, as I understand it, probably helps more 
veterans process claims than any other organization in the 
country.
    What Mr. Violante is going to tell us is that the DAV 
believes that the VBA, with the work that the VA is now doing, 
is on the right path, that they have set the right goals, and 
that they have leadership committed to transforming and 
institutionalizing a new claims processing system to better 
serve veterans.
    That is more or less the testimony that we heard from the 
veterans' service organizations during the House/Senate 
legislative presentation hearings. The understanding that it is 
absolutely imperative that we move away from the paper system 
and into the 21st century where we have a paperless system; and 
there is the belief, I think, from the veterans' community that 
we are moving in the right direction, but that many, many 
problems remain which must be addressed.
    So, that is kind of where we are right now. I look forward 
to hearing the testimony.
    Now, let me give the mic over to Senator Isakson, who will 
be acting as Ranking Member until Senator Burr comes.
    Senator Isakson.

               STATEMENT OF HON. JOHNNY ISAKSON, 
                   U.S. SENATOR FROM GEORGIA

    Senator Isakson. Well, thank you, Chairman Sanders, and 
thank you for your vigilant effort on what is the number 1 
challenge facing the VA and the number-one frustration facing 
every American veteran returning home.
    I want to thank our witnesses for coming to testify today 
and welcome all in the audience for this hearing.
    As you know, the VA claims process has been plagued by 
errors, delays, and backlogs for many years. The latest 
examples to fix this system are: VA has hired thousands of 
claims processing staff; spent millions of dollars developing 
new IT solutions; and rolled out dozens of other initiatives.
    But, as the charts to your left indicate, this is yet to 
translate into better service for veterans, families, and their 
survivors.
    On chart one, over 4 years the number of claims waiting for 
a decision grew from less than 400,000 to nearly 850,000. Today 
it is even higher. The number of claims considered part of the 
backlog more than tripled.
    On chart two, you will notice the accuracy rate of VA 
decisions remained in the mid-80s, as Chairman Sanders referred 
to. The time it takes to process a claim has increased by 83 
days, which is continuing to trend upward.
    As chart three shows, if someone disagrees with VA's 
initial decision, it takes an average of 866 days for VA to 
decide the appeal, 7 months longer than in 2008.
    Despite these trends, VA leaders say they are on track to 
eliminate the entire backlog and raise quality to 98 percent by 
2015. In fact, the VA recently released a backlog reduction 
plan which reflects that VA aims to increase productivity by 
about 80 percent over the next 2 years.
    Perhaps more challenging, VA would need to significantly 
reduce its error rates while deciding hundreds of thousands of 
cases of additional claims each year. To gauge how realistic 
this may be, we should look at how well the VA has predicted 
its performance in recent years.
    For example, in 2011 and 2012, VA completed about 412,000 
fewer claims that had been projected. Last year VA estimated 
that during the current fiscal year, no more than 40 percent of 
claims would be backlogged and claims would be decided with 90 
percent accuracy in about 200 days. But today it takes 280 days 
for an initial decision. VA makes errors in 14 percent of the 
cases and 70 percent of claims are backlogged.
    If you look at chart four, in addition, there has been a 
shift in VA projections about when we should see results from 
initiatives to improve claims' processing.
    Back in 2010, we were told that those efforts would begin 
to yield results in 2011. As the chart shows, VA then projected 
that it would begin to reduce the backlog in 2012. Now, the VA 
expects the backlog to continue to grow until 2014.
    Also, in estimating the work that VA would need to do to 
eliminate the backlog, it appears VA did not take some factors 
into account, such as resisting laws that continue to increase 
the number of claims coming in. This was referred to by 
Chairman Sanders in his remarks.
    On top of that, both the Inspector General and the 
Government Accountability Office have raised concerns about 
VA's ability to improve accuracy and timeliness, highlighting 
that the new IT system only partially functioned and that there 
were weaknesses in VA's planning documentation. We have heard 
some veterans' organizations expressed doubt about VA and 
whether it will reach its goal by 2015.
    Given all of this, we cannot simply wait until 2015 to see 
if the VA initiatives worked. We need to make sure the VA has a 
realistic plan to begin improving timely, accurate decisions to 
anyone who is seeking veterans' benefits.
    If VA is not on track to do that, we must look at what can 
be done to make sure that there are not 2 years of discussion 
or, even worse, not 2 years more of discussion and continued 
delay in claims.
    To that end, VA must be completely transparent about what 
is working, what is not, and where changes are needed to bring 
about lasting improvement.
    I want to make a personal comment here after reading 
Senator Burr's speech because he is a little late and I am 
happy to do so.
    I have run a company, Chairman Sanders, for 22 years, 
during that period of time where most businesses in America 
converted from a paper and pencil operation to high-tech 
Internet technology.
    It is hard to do. I screwed up more times than I succeeded. 
But once I learned how hard that was going to be to do, I 
planned for those problems and tried to manage the system 
transition so that it had the least affect on my employees and 
my salespeople and their performance.
    I hope the VA will be honest in evaluating what its new IT 
system will and will not do, planning for the problems that 
always come about and making sure that the number 1 goal is to 
see to it the least affected persons are the veterans of the 
United States military.
    Mr. Chairman, thank you for calling the hearing. I look 
forward to working with you and the Veterans Administration on 
improving the backlog.
    In Georgia, I will tell you claims is the number 1 
challenge for my office, and I will continue to stay on this 
until it is done.
    Chairman Sanders. Thank you for much, Senator Isakson.
    Senator Tester.

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

    Senator Tester. Thank you, Mr. Chairman. I want to say, 
first of all, thanks for having this hearing. Second, 
congratulations on the new position. I look forward to working 
with you and hopefully I will continue to call you Chairman 
Sanders for a long time and not Bernie. OK.
    I also want to welcome the new Members, Senators Heller, 
Hirono, and Blumenthal. I look forward to their contributions 
to this Committee. It seems like every time I go to a Committee 
meeting and look across the way to Senator Heller sitting 
there. We have very similar Committee assignments.
    I also want to thank the witnesses. I want to thank you for 
the work that you have done and I want to thank you for the 
work you are going to do. It is not an easy issue.
    I think the first hearing we had in 2007, if not the first 
one, one shortly thereafter, dealt with the backlog issue. It 
has been going on much, much too long.
    You do not have an easy job. I think to get folks into the 
system and to do it accurately--making sure the folks who are 
trying to game the system do not take money away from the 
people who need it--is difficult but it needs to be done, and 
it needs to be done in a better, more timely manner than we 
have done so far.
    You know, the average Vietnam veteran had three to five 
injuries when filing for their VA claim. Now, I think it is 
closer to more than a dozen when new claims are being filed.
    We need to move forward in a better way. We need to have an 
open conversation on how to get that done, and we need to know 
if we are on the right path.
    As these wars wind down, that will be good thing as far as 
the pressure on you. Right now, though, we are just treading 
water. If we are doing a little better than that, you will have 
to tell me. It does not appear so, and we need to know what is 
working and have an honest discussion on that.
    With that, I just say thank you folks for your work once 
again. I look forward to your testimony.
    Chairman Sanders. Senator Tester, thank you very much.
    Senator Heller.

                STATEMENT OF HON. DEAN HELLER, 
                    U.S. SENATOR FROM NEVADA

    Senator Heller. Thank you, Mr. Chairman. Thank you for 
giving us the opportunity to discuss this issue.
    I agree with Senator Isakson that this is an issue that I 
hear a lot about. Even as recent as last night, I got a phone 
call from a woman in Reno who's husband has an Agent Orange 
issue and has been delayed for over a year and one-half. With 
the backlog of claims, they have concerns.
    I will be really brief here, Mr. Chairman. But I understand 
how difficult this is; I really do understand how difficult it 
is. When I was Secretary of the State of Nevada, when I first 
walked into the office, I walked into a vault that had all the 
records of every company ever established in the State of 
Nevada all the way back to 1864, and it was all on microfiche. 
We are talking hundreds of thousands of records, companies, so 
on and so forth, and there was only one person who knew how to 
find the record that we needed that day.
    It was a very, very difficult process. It was key in that 
office to take that fiche and move it to disk. Once we got it 
on a disk, we got it Internet based, and we made that 
transition over 3 or 4 years which was not easy. Believe me, I 
understand how difficult this process can be, but you plan and 
you plan.
    I am concerned, as everybody else here on this Committee 
is, the fact that we have 10,000 claims backlogged right now in 
Nevada.
    And the concern from every organization that has come 
before this Committee is that we are not going to meet that 
2015 deadline or the goal from the Secretary in order to 
eliminate this backlog.
    So anyway, I want to hear answers. I have some questions. I 
look forward to the questions but I, first of all, want to 
thank you for being here and for taking your time.
    Mr. Chairman, thank you for the opportunity.
    Chairman Sanders. Thank you, Senator Heller.
    Senator Burr.

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

    Senator Burr. Mr. Chairman, thank you. I thank you. 
Welcome, Ms. Hickey.
    Since Senator Isakson has already given my opening remarks, 
I will yield the floor to the chair.
    Chairman Sanders. Thank you very much.
    OK. We are ready to hear from our panelists. We are going 
to begin with General Allison Hickey, who is the Under 
Secretary for Benefits at the Department of Veterans Affairs.
    General Hickey is accompanied by Stephen Warren, the Acting 
Assistant Secretary for the Office of Information and 
Technology, and Alan Bozeman, the Director of the Veterans 
Benefits Management System Program Office.
    General Hickey, welcome and please begin.

 STATEMENT OF ALLISON A. HICKEY, UNDER SECRETARY FOR BENEFITS, 
 VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF VETERANS 
   AFFAIRS; ACCOMPANIED BY STEPHEN WARREN, ACTING ASSISTANT 
   SECRETARY, OFFICE OF INFORMATION AND TECHNOLOGY; AND ALAN 
BOZEMAN, DIRECTOR, VETERANS BENEFITS MANAGEMENT SYSTEM PROGRAM 
                             OFFICE

    Ms. Hickey. Thank you. Good morning, Chairman Sanders, 
Ranking Member Burr, and Members of the Committee.
    Thank you for the opportunity to discuss VBA's 
transformation efforts. I am accompanied today, as you have 
already said, by Mr. Stephen Warren, Acting Assistant Secretary 
for Information and Technology, and Mr. Alan Bozeman, to my 
right, the Director of the Veterans Benefits Management System 
Program Office.
    As a direct result of the support this Committee has 
provided, VBA is completing more compensation claims than ever 
before in VA history, over 3 million in the past three fiscal 
years and three times the amount since 2001 when this latest 
conflict began.
    Yet, despite these efforts, too many veterans still have to 
wait too long to get the compensation benefits they have 
earned, and that is unacceptable to us.
    My testimony today will focus on how execution of our 
transformation plan will allow VBA to eliminate the backlog in 
2015. I would first like to discuss the inventory of claims and 
the factors impacting our timeliness.
    The current inventory represents claims from veterans of 
all eras. The largest percentage of claims comes from our 
Vietnam-era veterans who make up 37 percent of our inventory 
and backlog. 1990s Gulf War-era veterans make up 23 percent, 
while veterans of the Iraq and Afghanistan conflicts today make 
up only 20 percent of that inventory and backlog. Our World War 
II- and Korea-era veterans make up less than 10 percent.
    The inventory contains original claims, those submitted by 
veterans who are claiming disability compensation from VA for 
the very first time, and supplemental claims from veterans who 
have previously filed and are seeking additional benefit.
    As of January, 61 percent of the inventory are supplemental 
claims or second filers; 39 percent are original first-time 
filers.
    These percentages hold true for the backlog as well. Of 
those veterans filing supplemental claims, 78 percent are 
currently receiving a monetary benefit from VA; 40 percent of 
veterans filing supplemental claims have a disability rating 
between 50 and 100 percent, receiving payments from $1,000-
$2,800 monthly.
    In all, about half of the veterans in the total inventory 
are already receiving some level of compensation from VA. What 
is clear is the demand for this benefit is at an all-time high.
    We have added more than 940,000 veterans, almost 1 million 
veterans to the VA compensation rolls by completing their claim 
over the past 4 years which is more than today's active-duty 
Army and Navy combined.
    Coupled with this increase are the impacts of claims 
associated with Agent Orange exposure and the dramatic increase 
in the number of individual medical issues included inside each 
claim. The bottom line, these claims are substantially more 
complex by more than 180 percent yet we still have done 27 
percent more of these claims today than in 2009.
    In 2009, Secretary Shinseki made the decision to add three 
presumptive conditions for Vietnam veterans who were exposed to 
the herbicide Agent Orange. Over the next two and half years, 
VBA dedicated over 2300 of our most experienced claims staff, 
about 37 percent of our workforce, to re-adjudicate these 
claims for these conditions that were previously denied.
    By October 2012, we had completed all 260,000 Agent Orange 
claims and paid over $4.5 billion in retroactive benefits to 
over 164,000 Vietnam veterans and their survivors.
    While the decision was absolutely the right thing to do, it 
did have an impact on our ability to keep up with new claims 
coming in and on aging claims already in the system.
    Another key factor is the increase in complexity of the 
claims themselves. There has been a 200 percent increase over 
the last 10 years in original claims containing eight or more 
medical issues.
    From 2009 to 2012, the number of medical issues inside the 
claims increased from 2.7 million to over 4 million, a 50 
percent growth in medical issues which is a truer measure of 
the time it takes to complete a claim.
    It is having a significant impact on our production, the 
growth in our inventory, and the timeliness of claims 
processing. Given a growing demand and complexity of our 
claims, it is clear to us that continuing a legacy approach in 
paper will not meet the needs of our veterans.
    I am happy to report that we have achieved momentum with 
our transformation plan that will improve how veterans' 
benefits are delivered for generations to come, and 2013 is the 
year of full deployment and change for us.
    Our transformation with its people, process, and technology 
initiative represents the single, largest reinvention of VBA in 
all of its history. Our focus is on managing that change while 
sustaining production and improving quality.
    VBA's employees are key to transformation success. Over 52 
percent of them are veterans themselves, and we have a work 
force that we have reorganized into new cross-functional teams, 
new segmented claims--express, special ops and cores--and after 
60 days in this new organizational model, overall productivity 
per claims rater has increased by 17 percent.
    The productivity of the work force and the accuracy of our 
decisions are being increased through new national training 
programs and standards. There are 2150 new employees who have 
received our new challenge training that now decide 150 percent 
more claims in their first 6 months on the job with a 30 
percent increase in their quality.
    Through process improvement teams, we have conducted rapid 
development, testing and launch of process initiatives like 
simplified notification letters, disability benefit 
questionnaires, acceptable clinical evidence, fully-developed 
claims and automated processing tools which are showing 
positive results with increased implementation.
    The Veteran Benefit Management System, or VBMS, is a web-
based electronic claims processing solution that serves as our 
technology platform for quicker, more accurate processing. 
National deployment of the first generation of VBMS to our 
regional offices began in late 2012 and is now in full swing 
with the 28 January 2013 release.
    We also now have end-to-end digital filing capability from 
portal to decision. With integration of the online portal 
eBenefits system with VBMS, veterans can now file a claim 
online using a ``TurboTax''-like system to upload their own 
evidence to support their claim.
    Chairman Sanders. General Hickey, summarize please.
    Ms. Hickey. I will absolutely.
    We will continue to pursue our plan and our initiatives of 
the direct and absolute imperative to improve delivery of 
benefits to our veterans, their families, and survivors. They 
deserve that from us. We are committed to make that happen, Mr. 
Chairman.
    [The prepared statement of Ms. Hickey follows:]
Prepared Statement of Allison A. Hickey, Under Secretary For Benefits, 
 Veterans Benefits Administration, U.S. Department of Veterans Affairs
    Good morning, Chairman Sanders, Ranking Member Burr, and Members of 
the Committee. Thank you for the opportunity to discuss VA's benefits 
claims transformation efforts. I am accompanied today by Mr. Stephen 
Warren, Principal Deputy Assistant Secretary for Information and 
Technology, and Mr. Alan Bozeman, Director of the Veterans Benefits 
Management System (VBMS) Program Office.
    As a direct result of the budget support provided by the Committee, 
VBA has completed more than one million disability compensation claims 
the last three years in a row--the highest numbers ever in the history 
of VA. Despite this stride, too many Veterans wait too long to get the 
benefits they have earned and deserve. My testimony today will focus on 
how execution of our Transformation Plan will allow VBA to meet the 
Secretary's goal of claims completed in 125 days at a 98 percent 
accuracy level in pursuit of eliminating the claims backlog in 2015.
                     meeting the needs of veterans
    Veterans, their family members, and Survivors deserve our very best 
performance and the ability to deliver an array of benefits and 
services that Veterans have earned--faster, more accurately, and with 
greater efficiency and effectiveness. It is the growing inventory of 
disability claims, and our need to quickly process those claims, that 
is driving the urgency with which we are advancing our Transformation.
    VBA completed over one million claims per year in fiscal years 
2010, 2011, and 2012. Yet the increased productivity in claims 
processing was not enough to keep pace with the number of claims 
received in several of those years. In 2010, VBA received 1.2 million 
claims. In 2011, VBA received another 1.3 million claims, including 
claims from Veterans made eligible for benefits as a result of the 
Secretary's decision to add three new presumptive conditions for 
Veterans exposed to Agent Orange. In 2012, VBA received 1.08 million 
claims. Over the last three years, the claims backlog has grown from 
180 thousand to 600 thousand claims at the beginning of this month.
    For decades, the VBA system has carried an inventory of pending 
claims, and a backlog that was undefined and therefore confused with 
inventory. In 2010, the Secretary of Veterans Affairs defined the 
backlog as any disability claim pending over 125 days and increased 
transparency by making our performance against our established goals 
available on the internet. The backlog grows when the capacity does not 
match demand.
    In 2009, based on the Institute of Medicine's Veterans and Agent 
Orange: Update 2008, and considering all available scientific evidence, 
the Secretary made the decision to add three presumptive conditions 
(Parkinson's disease, ischemic heart disease, and B-cell leukemias) for 
Veterans who served in the Republic of Vietnam or were otherwise 
exposed to the herbicide Agent Orange. Beginning in 2010, VBA 
identified claims for these three conditions for special handling to 
ensure compliance with the provisions in the Nehmer court decision that 
requires VA to re-adjudicate claims for these conditions that were 
previously denied. Nehmer claims for all living Veterans were completed 
as of April 2012. VA identified the next of kin for the last remaining 
Nehmer survivor claim and awarded benefits in October 2012. To date, VA 
has received more than 278 thousand claims and awarded over $4.4 B in 
retroactive benefits for the three new Agent Orange presumptive 
conditions to more than 164 thousand Veterans and survivors.
    Other factors that have resulted in the submission of more 
disability claims, and hence contributed to the backlog, include VA 
initiatives to increase access, and other conditions that increased 
demand for VA to address unmet disability compensation needs:

Increased Access
    1. Increased use of technology and social media by Veterans, 
families, and survivors to self-inform about available benefits and 
resources.
    2. Improved access to benefits through the joint VA and DOD Pre-
Discharge programs.
    3. Creation of additional presumptions of service connection 
resulting in more claims for exposure-related disabilities.
    4. Extensive and successful use of VA outreach programs to inform 
more Veterans of their earned benefits, which can include compensation 
claims.
Increased Demand
    1. Ten years of war with increased survival rates for our wounded
    2. Aging population of previous era Veterans such as Vietnam and 
Korea, whose conditions are worsening
    3. Impact of a difficult economy
    4. Growth in the complexity of claims decisions as of result of the 
increase in the average number of medical conditions for which each 
claimant files.

    The current composition of the inventory and backlog are claims 
from Veterans of all eras--from Veterans of the current conflicts to 
World War II Veterans who are just now filing a claim for the first 
time. As of January 31, 2013, the largest cohorts of claims come from 
our Vietnam-era Veterans who filed 448 thousand claims in FY 2012, and 
currently make up 37 percent of the inventory and 38 percent of the 
backlog. Veterans of Iraq and Afghanistan conflicts make up 20 percent 
of the total inventory and 22 percent of the backlog. Gulf War Era 
Veterans make up 23 percent of the total inventory and 22 percent of 
the backlog. Veterans of the Korean War and World War II and all others 
make up less than 10 percent of both total inventory and backlog. The 
remainder of the inventory and backlog is from Peacetime Veterans only.
                             transformation
    To meet the Secretary's goal of eliminating the backlog by 2015, we 
have set out to transform VBA into a 21st century organization. VBA's 
transformation is demanded by a new era, emerging technologies, and the 
latest demographic realities. In the face of increasing complexity and 
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 accuracy in 2015. VBA is 
retraining, reorganizing, streamlining business processes, and building 
and implementing technology solutions based on the newly redesigned 
processes in order to improve benefits delivery.
People
    VBA's employees are the key to Transformation success, and over 52 
percent of them are Veterans themselves. In order to have the best-
trained, most efficient and highly skilled workforce, VBA is changing 
how its workforce is organized and trained to decide disability 
compensation claims. Sixty-three percent of VBA's workforce has a 
bachelors' degree or higher. Average length of service is 11 years, and 
average age is 44. Fourteen percent are retirement eligible, and our 
turnover rate is only seven percent annually.
            Transformation Organizational Model
    VBA's new standardized organizational model incorporates a case-
management approach to claims processing. VBA is reorganizing its 
workforce into cross-functional teams that enable employee visibility 
of the entire processing cycle of a Veteran's claim. These cross-
functional teams work together on one of three segmented lanes: 
express, special operations, or core. Distinct processing lanes are 
based on the complexity and priority of the claims and employees are 
assigned to the lanes based on their experience and skill levels. 
Claims that predictably can take less time flow through an express lane 
(30 percent); those taking more time or requiring special handling will 
flow through a special operations lane (10 percent); and the rest of 
the claims flow through the core lane (60 percent). Lanes were 
established based on the complexity and priority of the claims and 
employees are assigned to the lanes based on their experience and skill 
levels.
    The Express Lane was developed to identify those claims with a 
limited number of medical conditions (1-2 issues) and subject matter 
which could be developed and rated more quickly, including fully 
developed claims. The Special Operations Lane applies intense focus and 
case management on specific categories of claims that require special 
processing or training (e.g., homeless, terminally ill, military sexual 
trauma, former prisoners of war, seriously injured, etc.). The Core 
Lane includes claims with three more medical issues that do not involve 
special populations of Veterans. Less complex claims move quickly 
through the system in the 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.
    Initially planned for deployment throughout FY 2013, VBA 
accelerated the implementation of the new organizational model by nine 
months due to early indications of its positive impact on performance. 
Given the magnitude of this change, each office transitions to the new 
organizational model individually. Significant support and training 
from VBA Headquarters have been critical in this stage. As of the end 
of 2012, the new organizational model was fully operational at 51 
regional offices, and three more have since implemented the new model. 
The remaining two regional offices will implement the model by the end 
of this month.
            Challenge Training and Quality Review Teams (QRTs)
    The productivity of the workforce and the accuracy of decisions are 
being increased through new national training programs and standards. 
VBA instituted Challenge training in 2011 and Quality Review Teams 
(QRTs) in 2012 to improve employee training and accuracy while 
decreasing rework time. Challenge training is focused on overall skills 
and readiness of the workforce, and QRTs focus on improving performance 
on the most common sources of error in the claims processing cycle; 
data on VBA's largest sources of error are captured and analyzed by its 
National Accuracy Team. Today, for example, QRTs are focused on the 
process by which proper physical examinations are ordered; incorrect or 
insufficient exams previously accounted for 30 percent of VBA's error 
rate. As a result of this focus, VBA has seen a 23 percent improvement 
in this area.
    The 1,900 new employees who have received Challenge training decide 
150 percent more claims per day than predecessor cohorts, with a 30 
percent increase in accuracy, (i.e. these new employees decide 150 
percent more claims per day than previous groups of employees at a 
similar stage in their development). This is a marked improvement in 
performance, and is being scaled across the entire enterprise as new 
employees are hired. Five Challenge training sessions are planned for 
FY 2013. As of March 1, 2012, VBA initiated a new Challenge course 
focused on improving the low performing regional offices. At the first 
office quality increased by eight percentage points in three months and 
the number of claims processed per month increased by more than 27 
percent. Similar results are being seen by the second RO that completed 
SET in January 2013.
    VBA tracks the impact of these initiatives on accuracy through a 
three-month rolling average accuracy metric that is reported in ASPIRE 
and can be seen online by anyone inside or outside VA. FY 2012 data 
demonstrated a three percent increase in national accuracy standards--
from 83 percent to 86 percent. The accuracy outcome objectives for the 
next three years are: 90 percent in FY 2013, 93 percent in FY 2014, and 
98 percent in FY 2015.
    The current 12-month measure of the accuracy of our disability 
rating decisions increased to over 86 percent--and further improved to 
over 87 percent when looking at just the last three months. It is 
important to recognize that under the existing quality review system, 
any one error on the claim, no matter how many medical conditions must 
be developed and evaluated, makes the entire claim in error--the claim 
is therefore counted as either 100 percent accurate or 100 percent in 
error, with no credit for anything in between. Issues are defined as 
individually evaluated medical conditions. A claim can, and often does, 
consist of many issues. Each issue represents a series of completed 
tasks, such as development, research, adjudication, and decision, that 
could result in a benefit adjustment for a Veteran, family member, or 
survivor. Given that the average number of claimed issues for our 
recently separated Servicemembers is now in the 12 to 16 range, we do 
not believe the current all-or-nothing measure reflects the actual 
level of decision accuracy achieved. When we measure the same claims 
based on assessments of the individual medical conditions rated 
(``issue-based accuracy''), the accuracy of our decisions is over 95 
percent. This issue-based accuracy approach also affords VBA the 
opportunity to target with precision those medical issues where we make 
the most errors--and includes employee level medical issue accuracy.
Process Initiatives
    Through process-improvement initiatives, VBA is rapidly developing 
and testing streamlined business processes, focusing on eliminating 
repetition and rework. VBA established a ``Design Team'' concept to 
support business-process transformation. Using design teams, VBA 
conducts rapid development and testing of process changes and automated 
processing tools in the workplace. This design team process 
demonstrates through pilot initiatives that changes are actionable and 
effective before they are implemented nationwide.
    Since 2009, VBA has actively solicited innovative ideas for process 
improvement from Veterans, employees, and industry stakeholders through 
a variety of structured mechanisms. Literally thousands of ideas were 
received and culled down to those with the largest potential to attack 
the backlog. For example, automated Disability Benefits Questionnaires 
(DBQs) (discussed below)--arguably one of the most highly leveraged 
changes--came from one of the VBA employee idea competitions. 
Additionally, VBA has also conducted Lean Six Sigma and Kaizen events 
on these selected targets of opportunity, all focused on five major 
areas of focus: wait time, rework, productivity, digital intake, and 
variance.
            Simplified Notification Letters
    The Simplified Notification Letter initiative has reduced 
keystrokes and automated production language in preparation of the 
Veteran's decision letter, thus improving rating decision productivity 
and accuracy. VBA implemented this initiative nationally on March 1, 
2012, and it decreased the number of claims ``waiting'' for a rating 
decision by 55 percent. This translated into over 10,000 more rating 
decisions in the month of December (94,292) than in the month of March 
(84,115). The SNL process does not change the way we consider and 
decide claims, but rather changes the primary focus of what appears in 
the final decision document. We do this in part through the use of an 
internal coding system designed to streamline processing and 
communicate standardized reasons and bases from the decisionmakers to 
the award processors (who generate the final notice letters, authorize 
the monetary awards, and perform other ministerial functions). SNL 
increased the number of auto-text selections available for raters to 
use to explain decisions, thereby improving decision accuracy and 
productivity.
            Calculators and Evaluation Builder
    VBA is building new decision-support tools to make our employees 
more efficient and their decisions more consistent and accurate. We 
already have developed rules-based calculators for disability claims 
decisionmakers to provide suggested evaluations. For example, the 
hearing loss calculator automates decisions using objective audiology 
data and rules-based functionality to provide the decisionmaker with a 
suggested decision.
    The Evaluation Builder is essentially an interactive disability 
rating schedule. The VBA decisionmaker uses a series of check boxes 
that are associated with the Veteran's symptoms. The Evaluation Builder 
determines the proper diagnostic code out of over 800 codes as well as 
the level of compensation based on the Veteran's symptoms. The Veteran 
receives an accurate rating decision every time the Evaluation Builder 
is used. This saves employees time that would have been spent looking 
up the rating schedule in a paper format. To date, five of the 15 body 
systems in the VA Schedule of Rating Disabilities have been embedded 
into VBMS, and the Evaluation Builder will have complete functionality 
(all body systems) in VBMS by November of this year.
            Disability Benefits Questionnaires (DBQs)
    DBQs replace traditional VA examination reports and are designed to 
capture all the needed medical information relevant to a specific 
condition at once and up front so that claims can be developed and 
processed in a more timely and accurate manner, with the end result 
being faster service for Veterans. DBQs change the way medical evidence 
is collected, giving Veterans the option of having their private 
physician complete a DBQ that provides the medical information needed 
to rate their claims--minimizing the need for a VA exam which adds 
additional time to the claim development process. Information in the 
DBQs maps to the VA Schedule for Rating Disabilities, and provides all 
of the necessary information to decide a disability claim. Fully and 
properly completed DBQs, whether from private providers or within the 
internal VA examination processes, have the potential to reduce rework, 
the largest category being exams with insufficient information.
    In FY 2013 to date, nearly 600,000 DBQs have been completed by VHA 
examiners. Since their introduction, VBA has received over 12,000 DBQs 
outside of the traditional examination process. Using DBQs, VA 
examination and examination-request accuracy improved to 92 percent 
nationwide, compared to the legacy quality program, which showed 
accuracy of 84 percent when last conducted in 2009. Seventy-one of 
eighty-one individual DBQs, unique forms designed to document specific 
health conditions are available to private physicians. VBA is reaching 
out to stakeholders, particularly Veterans Service Organizations 
(VSOs), State and County partners, and private medical doctors to 
request their support in encouraging Veterans to use DBQs for more 
timely and accurate rating decisions. VA recently secured DOD 
concurrence to pilot the use of DBQs within the Integrated Disability 
Evaluation System (IDES) process. VBA's future goal is to turn DBQ 
objective responses into data to drive a calculator-based business-
rules engine in VBMS to achieve automated decision support to improve 
consistency and accuracy of decisions and reduce processing time per 
case.
            Acceptable Clinical Evidence (ACE)
    ACE is a new approach that was implemented in October 2012. This 
process allows clinicians to review existing medical evidence and 
determine whether that evidence can be used to complete a DBQ without 
requiring the Veteran to report for an in-person examination. For many 
Veterans, this means they no longer need to travel and take time off 
for an examination, which can be a significant burden requiring them to 
leave work and interfering with their family life. Clinicians also have 
the option to supplement medical evidence with telephone interviews 
with the Veteran, or to conduct an in-person examination if determined 
necessary. To date, VA has processed 1,931 claims using the ACE 
initiative.
            Compensation and Pension Records Interchange (CAPRI)
    CAPRI software provides VBA employees with a standardized, user-
friendly method to access Veterans' medical records throughout the VA 
healthcare system. In November 2011, VBA stopped printing Veterans 
Health Administration (VHA) treatment records, saving the effort and 
dollars associated with printing, filing, and storing these records. 
Under a partnership with VHA, the CAPRI program has recently been 
enhanced to send records electronically to VBA's paperless repository 
with just a few mouse clicks, further simplifying the process and 
reducing the task time. As of March 1, 2013, 45 sites within VBA have 
received this upgrade, with deployment for remaining sites scheduled to 
begin on March 31, 2013. To date, VBA has avoided printing more than 90 
million pages of digital medical records (currently averaging six 
million/month) and spending over 422,000 man hours printing and 
filing--saving time and resources that are redirected toward backlog 
elimination. Because of these CAPRI enhancements, VBA estimates a $2.5 
million cost avoidance annually on paper and toner that is also being 
used to support staffing resources to help eliminate the backlog.
            Fully Developed Claims (FDCs)
    FDCs are critical to achieving VBA's goals. A fully developed claim 
is one that includes all DOD service medical and personnel records, 
including entrance and exit exams, applicable DBQs, any private medical 
records, and a fully completed claim form. An FDC is critical to 
reducing ``wait time'' and ``rework.'' Today, VBA receives only 4.8 
percent of claims in fully developed form, which equates to 5,600 
claims this fiscal year through February. When a qualified FDC is 
received, VBA is able to discharge its evidence-gathering 
responsibilities under the Veterans Claims Assistance Act much more 
efficiently than in traditional claims. This evidence-gathering period 
is a major portion of the current 262-day process. Today, VBA completes 
these FDCs in 117 days. VBA's target for FY 2013 is to increase these 
FDCs to 20 percent--meaning VBA will have the ability, if this goal is 
reached, to decide 153,000 additional claims in 117 days.
            Internal Revenue Service and Social Security Administration 
                    Data Sharing
    VA developed an expanded data-sharing initiative with the Internal 
Revenue Service (IRS) and Social Security Administration (SSA) for up-
front verification of income for pension applicants and to streamline 
income verification matches. This initiative enabled VBA to eliminate 
an annual reporting surge of 150,000 work items and redirect 
significant FTE to address the backlog of Dependency and Indemnity 
Compensation (DIC) claims from Survivors.
Technology
    Key to VBA's transformation is ending the reliance on the outmoded 
paper-intensive processes. VBA is deploying technology solutions that 
improve access, drive automation, reduce variance, and enable faster 
and more efficient operations. VBA's digital, paperless environment 
also enables greater exchange of information and increased transparency 
to Veterans, the workforce, and stakeholders. Our technology 
initiatives are designed to transform claims processing from the time 
the Servicemember first enrolls in the joint VA and DOD eBenefits 
system and submits an on-line application to the issuance of the claims 
decision and receipt of compensation payments.
            Veterans Benefits Management System (VBMS)
    VBMS is a web-based, electronic claims processing solution 
complemented by improved business processes. It will assist in 
eliminating the existing claims backlog and serve as the technology 
platform for quicker, more accurate claims processing.
    National deployment of VBMS began in 2012, with 18 regional offices 
operational as of the end of the calendar year. Deployment to the 38 
remaining stations is ongoing. We estimate that once VBMS is fully 
developed in 2015, integrated, and implemented, it will help improve 
VBA's production by at least 20 percent (in each of fiscal years 2014 
and 2015) and accuracy by at least eight percent.
    The evolution of VBMS is occurring across four distinct phases, or 
generations of development. Generation One of VBMS began in 2010 with 
the conceptualization, piloting, development, and deployment of 
baseline system functionality with improved quality (required actions 
and automation) and efficiency (no paper). Generation One of VBMS 
concluded with the successful implementation of Release 4.1 in 
January 2013. This generation culminated in a foundational web-based, 
electronic claims processing solution featuring:

     Integrated claims establishment, development, and rating 
capabilities;
     Basic baseline automation via features such as automated 
letter generation and data population; and
     Basic workflow and workload management capabilities.

    With the deployment of the latest system release, integration with 
VONAPP Direct Connect (VDC) and the Stakeholder Enterprise Portal (SEP) 
further enhanced the system's capabilities by improving data exchange 
and status transparency with applicants, VSO partners, State and County 
Veterans agencies, and other stakeholders.
    At the end of February, 2013, 1,084 paper-based and electronic 
claims have been rated using VBMS and 77,393 electronic folders 
(eFolders) have been created in VBMS. Claims are being completed in 
VBMS in an average of 92.4 days. There are over 12,000 users of VBMS to 
include VHA and VSOs. VBMS has also successfully received over 2.5 
million documents and over 32.2 million images.
    As we move into Generation Two of VBMS, the focus is on building 
additional system capabilities while leveraging simple automation 
features and deploying the system to all remaining sites. Upcoming 
system releases include planned improvements to correspondence and work 
queue tools, additional rating calculator functionality, and more 
extensive data exchange and system integration capabilities.
    National deployment of VBMS to all 56 regional offices is on track 
for completion in 2013. Each VBMS site deployment is supported by 
organizational change management practices (including training) to 
ensure business lines are able to adapt to and adopt the new 
technologies and solutions.
    Generation Three of VBMS in 2014 will focus on continuing to 
improve electronic claims processing by providing increased system 
functionality and more complex automation capabilities for all VBMS 
end-users. VBMS enhancements will reduce dependency on legacy systems 
for claims establishment, development, and rating. VBMS will have the 
capability to accept electronic Veterans' Service Treatment Records 
(STRs) and Personnel Records from DOD in support of the VOW to Hire 
Heroes legislation. Additionally, VBMS end-users (to include VA Medical 
Center personnel and VSOs) will be able to leverage enhanced system 
functionality to perform their work more efficiently and accurately. 
Development of functionality will provide end-users with the ability to 
process claims electronically from receipt to payment. The addition of 
functionality throughout 2014 and stabilization of system capabilities, 
in conjunction with business process improvements, will increase 
production and quality of claim decisions. This period of stability 
will also allow VA an additional opportunity to assess and validate the 
effectiveness of the model as a whole and implement improvements as 
needed.
    Generation Four of VBMS in 2015 will capitalize on efficiencies and 
quality improvements gained during the year of stabilization. These 
enhancements will allow end-users to focus on more difficult claims by 
reducing the time required to process less complex claims. This period 
will also allow VA to identify additional automation and process 
improvement opportunities, enabling VA to meet the Secretary's goal of 
processing all claims within 125 days at 98 percent accuracy.
    When a claim is granted in VBMS, a payment is processed, and 
notification is sent to the Veteran through eBenefits and stakeholders 
through Stakeholder Enterprise Portal (SEP). This notification 
completes the full lifecycle of paperless claims processing, from 
portal to payment.
            Veterans Relationship Management (VRM)
    VRM engages, empowers, and serves Veterans and other claimants with 
seamless, secure, and on-demand access to benefits and service 
information. Veterans now have access to benefits information from 
multiple channels--on the phone, on line, or through our shared DOD/VA 
portal called eBenefits. VRM provides multiple self-service options for 
Veterans and other stakeholders.
            eBenefits
    eBenefits--a joint VA/DOD client-services portal for life-long 
engagement with Servicemembers, Veterans, and their families--is a key 
component of VRM. eBenefits currently provides users with over 45 self-
service options and greater access to benefits and health information 
at the time and method of their choosing. Through the eBenefits portal, 
users can now check the status of claims or appeals, review VA payment 
history, obtain military documents, and perform numerous other benefit 
actions. Veterans can also 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.
    There are currently over 2.5 million eBenefits users. Through self-
service, eBenefits users have generated over 228,000 requests for 
official military personnel documents, 198,000 requests for VA 
Guaranteed home loan certificates of eligibility, 16.5 million claim 
status requests, and over 1.7 million self-service letters. Additional 
functionality and features will continue to be added to the site in the 
future, and VA will use milestones and life events to proactively 
notify Veterans about benefits they may be eligible to receive.
            VDC (Veterans Online Application, Direct Connect)
    VDC incorporates a complete redesign of the legacy VONAPP 
application system, leveraging the eBenefits portal. Claims filed 
through eBenefits use VDC to load information and data directly into 
the new VBMS application for paperless processing. Veterans can now 
file both original and supplemental compensation claims through VDC. 
Since the expanded version of VDC deployed in October 2012, over 1,500 
claims have been received.
            Stakeholder Enterprise Portal (SEP)
    SEP is a secure web-based access point for VA's business partners. 
This portal provides the ability for VSOs and other external VA 
business partners to represent Veterans quickly, efficiently, and 
electronically. Because SEP is a new release, specific results are not 
yet available.
            VCIP
    VBA recently established the Veterans Claims Intake Program (VCIP). 
This program is tasked with streamlining processes for receiving 
records and data into VBMS and other VBA systems. Scanning operations 
and the transfer of Veteran data into VBMS are primary intake 
capabilities that are managed by VCIP. As VBMS is deployed to 
additional regional offices, document scanning becomes increasingly 
important as the main mechanism for transitioning from paper-based 
claim folders to the new electronic environment. The VCIP contractors 
began scanning on September 10, 2012. The ramp-up volume mirrored the 
VBMS deployment plan for the 18 regional offices on VBMS as of the end 
of CY 2012. By the end of December 2012, the VBA contractors were 
providing five million images per month. By the end of CY 2013, the 
contractors will be providing up to 70 million images per month as they 
convert paper records to electronic format.
Strategic Planning and Governance
    VBA's Office of Strategic Planning (OSP) coordinates VBA's 
strategic planning and the governance process for developing new 
transformation initiatives. The focus of this office is on creating a 
culture centered on advocacy for Veterans, reengineering business 
processes, integrating new technologies, and redesigning our 
organization and infrastructure. New ideas are approved through a 
governance process that includes senior VBA leadership who serve on the 
VBA Transformation Governance Board responsible for evaluating and 
making recommendations for my approval. This ensures VBA's focus is on 
implementing initiatives that will achieve the greatest gains, without 
degrading current performance.
    The VBA Implementation Center/Operations Center (VBA-IC/OC) is a 
division of the Office of Field Operations. The VBA-IC/OC prepares, 
executes and assesses the implementation of transformation initiatives, 
managing the project lifecycle through a comprehensive Work Breakdown 
Structure (WBS) and Critical Path methodology. The VBA-IC/OC also 
serves as the liaison between the field and Headquarters throughout the 
implementation process, providing channels of communication that are 
essential to successful implementation. The VBA-IC/OC monitors and 
supports regional offices through an end-user hotline, which is open 
during normal business hours. In addition, I hold weekly three-hour 
``pulse-check'' calls with the employees of all regional offices 
adopting new initiatives to ensure all issues are raised and properly 
assessed. The VBA-IC/OC gathers and reports implementation performance 
metrics to provide support for VA leadership decisionmaking.
                              stat reviews
    VBA's Stat Reviews are a performance technique and tool using 
statistical data (Stat) and visual displays of that data to monitor 
progress and improve performance. This process involves in-depth 
performance metric reviews with VBA's Office of Field Operations and 
other members of VBA leadership to analyze and manage performance more 
effectively.
    VBA's Stat Reviews are based on highly successful performance 
management programs conducted governmentwide. I sit at the table with 
regional office directors in the day-long meeting to discuss challenges 
and successes, using performance measures for accountability. This 
allows VBA leadership to more easily identify what improvements are 
needed to produce desired performance results. Stat Reviews also help 
VBA leadership understand what is or is not working, while motivating 
regional office managers and employees to focus their energy and 
creativity on achieving specific results.
    The Stat Review process encourages:

    1. Focus on accountability to achieve workload performance metrics.
    2. Information-sharing of best practices across VBA regional 
offices and VBA leadership.

    As a monthly event, the Stat Reviews identify patterns occurring at 
various regional offices, and every regional office participates either 
in person or by teleconference. These reviews help to ensure we have 
alignment across ROs on Transformation and that best practices and 
lessons learned are shared quickly across leadership teams.
                              partnerships
    Support from our partners and stakeholders is critical to better 
serving our Veterans, Servicemembers, and their families. Our 
transformation changes our interactions with employees, other Federal 
agencies, VSOs, and State and County service officers. VBA has worked 
to create partnerships through pilot projects with these organizations 
to improve benefits delivery. I continue to meet monthly with the 
Executive Directors of six national VSOs and have established quarterly 
stakeholder meetings with a larger group of VSOs directly affected by 
new processes and initiatives. VBA engages these organizations for 
their feedback and input at the beginning stages of the various 
initiatives.
    While stakeholder engagement is important to nearly all of VBA's 
transformation initiatives, support from VSOs and State and County 
service officers will be especially critical to the success of four 
initiatives: eBenefits, SEP, FDC, and DBQs. VBA has involved 
stakeholders in development, user-access testing, and training for 
these initiatives, and we are now partnering to increase Veterans' 
awareness and utilization in order to expedite the claims process.
    VBA is exploring incentives for its VSO and State and County 
partners to increase FDC submission because of the game-changing impact 
this can have on claims-decision timeliness and eliminating the 
disability claims backlog. A 20-percent FDC submission level is 
estimated to increase annual production by 70,000 claims and reduce 
overall average days to complete by 18 days.
    VBA has an agreement with DOD to provide 100-percent-complete 
service treatment and personnel records in an electronic, searchable 
format for the 300,000 annually departing Active Duty, National Guard 
and Reserve Servicemembers. This will further increase the number of 
FDCs. When implemented, this action has potential to cut as much as 60-
90 days from the ``awaiting evidence'' portion of claims processing, 
and reduce the time needed to make a claim ``ready for decision'' from 
133 days currently to 73 days for departing Servicemembers.
    VBA will continue to pursue various partnerships with Federal 
agencies, VSOs, as well as profit and non-profit organizations to 
expand and enhance our transformation initiatives.
                               conclusion
    VA is in an era of unprecedented production and unprecedented 
demand, and our Transformation Plan is critical to achieving our goals 
for improving the delivery of benefits to our Veterans, their families, 
and Survivors. We will continue to vigorously pursue our people, 
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.
                                 ______
                                 
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Bernard Sanders 
                 to U.S. Department of Veterans Affairs
    Question 1. General Hickey's written testimony stated:

        ``It is important to recognize that under the existing quality 
        review system, any one error on the claim, no matter how many 
        medical conditions must be developed and evaluated, makes the 
        entire claim in error--the claim is therefore counted as either 
        100 percent accurate or 100 percent in error, with no credit 
        for anything in between. Issues are defined as individually 
        evaluated medical conditions. A claim can, and often does, 
        consist of many issues. Each issue represents a series of 
        completed tasks, such as development, research, adjudication, 
        and decision, that could result in a benefit adjustment for a 
        Veteran, family member, or survivor. Given that the average 
        number of claimed issues for our recently separated 
        Servicemembers is now in the 12 to 16 range, we do not believe 
        the current all-or-nothing measure reflects the actual level of 
        decision accuracy achieved. When we measure the same claims 
        based on assessments of the individual medical conditions rated 
        (``issue-based accuracy''), the accuracy of our decisions is 
        over 95 percent. This issue-based accuracy approach also 
        affords VBA the opportunity to target with precision those 
        medical issues where we make the most errors--and includes 
        employee level medical issue accuracy.''

    This is a significant departure from the current method by which VA 
measures accuracy. Will VA also continue to measure accuracy by claim 
in order to allow stakeholders to evaluate quality in multiple ways 
including using comparable historical accuracy measurements?
    Response. VBA is currently tracking these measures in parallel. We 
continue to track the accuracy of each claim being reviewed under our 
existing quality review system as well as under the issued-based 
accuracy review approach.

    Question 2. During the hearing VA testified that VBA now receives 
information on a weekly basis from the Social Security Administration 
and the Internal Revenue Service. Are all regional offices currently 
receiving Social Security medical evidence on a weekly basis? Is this 
evidence being received in an electronic format which can be 
incorporated into VBMS? How many files have been received from the 
Social Security Administration at each regional office under this 
procedure?
    Response. Under the authority provided by 26 U.S.C. Sec. 6103(l)(7) 
and 38 U.S.C. Sec. 5317, VA obtains from the Social Security 
Administration (SSA) and the Internal Revenue Service (IRS) income 
information for certain VA beneficiaries. VA uses this information in 
its Income Verification Match (IVM) program to verify entitlement to, 
among other things, VA's needs-based pension benefits. As discussed in 
the hearing, VA is working with IRS and SSA to expand the IVM program 
and develop a process in which VA exchanges records on a weekly basis 
with IRS and SSA to determine eligibility for pension before VA makes 
payments.
    In addition, VBA and SSA officials meet weekly to develop 
strategies for more quickly obtaining SSA medical records needed for 
VBA claims. As a result, SSA is now directly uploading electronic 
medical records into VA's systems at four regional offices. Working 
collaboratively, SSA and VA have standardized the file size and format 
and also implemented procedures to exclude VA medical records from the 
SSA records sent. These improvements have reduced duplication and 
streamlined the transmittal and review process. Early results, based on 
two months of testing at these four stations, reflect that VA is 
receiving SSA records in an average of nine days, which is an 
improvement compared to the average of fifteen days using the current 
manual process (obtaining the information on a CD) and sixty days using 
the old paper process. VA plans to begin a phased deployment, starting 
with a regional office that is using VBMS, to finalize procedures 
before implementing nationwide.

    Question 3. Please explain how external users of VBMS, including 
VSOs and contractors who conduct disability exams, connect to and 
utilize VBMS. Have external users reported issues of network latency or 
reliability of connection for external VBMS users? If there have been 
reported issues, describe actions taken to address these issues and 
whether the issues have been resolved?
    Response. All VBMS users access the application through the VA 
network to ensure security of Veterans claim information and data. If 
users are located at a VA facility, VBMS is accessed through the local 
VA network. If users are not located at a VA facility, they must first 
access the VA network using approved VA software to create a Virtual 
Private Network connection.
    VBA continues to address and resolve all reported instances of 
latency and issues with access. For example, in response to VSOs 
reporting an issue with the total number of claims loaded into the VSO 
work queue, VBA upgraded VBMS to increase the number of claims visible 
by VSOs to 1,000 in February 2013. In addition, contract examiners 
using a central location to access VBMS and distribute claims 
information to contract examiners throughout the country, reported an 
issue with viewing large files. Collaboration with the central location 
identified the need to issue government furnished equipment to ensure 
access and visibility at the central location. In addition, users not 
located at VA facilities may experience slow response times (latency) 
due to speed of the user's connection as well as other internet-related 
performance and connectivity issues outside the control of VA. VBA is 
committed to ensuring all users requiring access to VBMS have the 
necessary access and continuing collaboration with our partners.

    Question 4. Testimony indicated VBA's target for FY 2013 is to 
increase use of fully developed claims to 20 percent. Based upon Fast 
Letter 12-25, many claims are excluded from consideration as fully 
developed claims. For example, if a veteran has another claim pending 
or has an appeal pending and the claims folder is not located at the 
home RO, VA will not accept a fully developed claim on another issue.

    a. Please provide information concerning the number of claims filed 
as fully developed claims which are rejected because another claim is 
pending or on appeal?
    Response. Fiscal year to date, 17 percent of claims filed as fully 
developed have been excluded for various reasons.

    b. What is VA's rationale for refusing to process fully developed 
claims in these circumstances?
    Response. VA designed the Fully Developed Claims (FDC) program to 
provide claimants the fastest possible decision on their claims. When a 
subsequent claim is received, VA must complete new development actions 
often required by the subsequent claim, which may impact the rating 
decision and delay completion of these claims. At the request of 
stakeholders, VA made an exception to this rule if the pending claim is 
an appeal, and the claim folder is located at the regional office of 
jurisdiction rather than at the Board of Veterans' Appeals (BVA). This 
specific exception maintains the integrity of the FDC program and its 
promise of expeditious processing as it does not impact the timely 
completion of the FDCs.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Richard Burr to 
                  U.S. Department of Veterans Affairs
    Question 1. At the hearing, General Hickey provided this testimony:

        ``There are two major things that we need in order to decide 
        those claims that are in inventory and in backlog. Three out of 
        five times that we have an old claim it's because of this 
        issue. We need data from [the Department of Defense] in terms 
        of the complete medical history of that member when they leave 
        service in order for us to decide a claim. We also need their 
        complete personnel records in order to know what their 
        character of service is. Without those, we must ask. When we 
        ask, we have in legislation today a 60-day wait period before 
        we may ask again. So there is built into our process part of 
        that problem.''

    A. Please identify the specific legislative provision that is 
referenced above and explain why VA interprets it as requiring a 60-day 
wait period.
    Response. General Hickey was referring to VA's duty under the 
Veterans Claims Assistance Act, 38 U.S.C. 5103A(b)(3), requiring that 
VA continue efforts to obtain Federal records ``unless it is reasonably 
certain that such records do not exist or that further efforts to 
obtain those records would be futile.'' VBA has implemented this 
statutory requirement by providing guidance in its procedures manual, 
directing that VA claims processors are to make an initial request for 
Federal records, wait for 60 days for a response, to be followed by 
another request for the records, with a subsequent follow-up waiting 
period of 30 days. This ``futility standard'' for obtaining Federal 
records often adds considerable time to the claims process. The 
corresponding duty for non-Federal records requests only requires 
``reasonable efforts'' to obtain them rather than ``exhaustive 
efforts.''
    Neither statute nor regulation specifies a required wait time for 
response from a Federal agency. VA has discretion to determine what 
efforts and time limits are necessary to meet the statutory 
requirements for seeking records of another agency. However, the 
statute requires VA to continue to seek Federal records until it is 
reasonably certain that such records do not exist or that further 
efforts to obtain them would be futile. Such legislation was enacted to 
better define the standards for VA requests for private (but not 
Federal) records in August 2012, as section 505 of Public Law 112-154.

    B. For the record, please provide a copy of any relevant VA 
policies (including regulations, Manual provisions, Fast Letters, 
Training Letters, or other internal VA guidance) regarding the 
procedures to be followed in obtaining evidence from the Department of 
Defense or Social Security Administration.
    Response. Please see the attached documents, which explain the 
policies and procedures surrounding VBA interaction with the Department 
of Defense and Social Security Administration in obtaining evidence 
required to process Veterans' claims. Attachments include:

     User guides for
         - the Defense Personnel Image Retrieval System (DPRIS), and
         - the Personnel Information Exchange System (PIES)
     A PowerPoint slide show that introduces DPRIS and its 
functionality
     Compensation Service Fast Letter (FL) 11-01, MILPAY 
Application for VA Readjudication of Nehmer Claims
     Compensation Service Training Letter (TL) 09-02, Uploading 
DPRIS-Imaged DD Forms 214 and 215 into Virtual VA
     Two documents containing text from 38 Code of Federal 
Regulations (CFR)
         - 3.159, Department of Veterans Affairs Assistance in 
        Developing Claims, and
         - 3.201, Exchange of Evidence; Social Security and Department 
        of Veterans Affairs
     Documents containing text from M21-1MR
         - Part III, Subpart iii, Chapter 2, Developing for Service 
        Records
         - Part III, Subpart iii, Chapter 3, Information Requests to 
        and From the Social Security Administration (SSA), and
         - Part IV, Subpart ii, Chapter 1, Development.

    C. Please provide any relevant statistics on the number of claims 
that are considered backlogged solely because VA has not received 
relevant evidence from the Department of Defense or Social Security 
Administration.
    Response. This response requires programming for a data pull and 
will be provided at a later date.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Mark Begich to 
                  U.S. Department of Veterans Affairs
    Question 1. What type of time motion study is being conducted to 
study VBMS' efficiencies/inefficiencies? Will this study be used to 
develop performance standards for employees? Is the study group 
soliciting the input of the employees doing the work on the front 
lines? (Senator, a few years ago IBM did a study of this at the 
direction of the Committee and determined that an evidence based time 
motion study was a good idea!)
    Response. VBA is currently conducting a time motion study to 
enhance its capacity management and estimating capabilities. VBA is 
observing employees at six regional offices and recording the time 
required to execute key claims processing activities. VBA is also 
conducting analysis to determine the frequency with which these 
activities are executed to fully adjudicate disability compensation and 
pension claims. Together, these analyses provide a basis for 
determining the manpower required to complete specific claims. Although 
the study is focused on the claims process in its entirety, observers 
will be noting when activities are implemented using VBMS, providing a 
basis for assessing how the system is impacting process efficiency. The 
data derived from this study will contribute to an evaluation of the 
entire claims process and assist in determining what improvement can be 
made in accomplishing the elements leading to claims completion. The 
results of the study will not be used to develop new performance 
standards.

    Question 2. Are you aware that in certain facilities, 49% of 
employees are not able to achieve the new performance standards?
    Response. Performance standards are used to make a basic 
determination that an employee is meeting his or her job requirements. 
Employees receive on-going feedback on the elements included in their 
performance standards. We recognize the importance of assessing the 
impact of our transformational initiatives on employees' job 
requirements and appropriately adjusting performance standards.
    We recently revised our performance standards to account for 
segmented lanes. On December 1, 2012, the regional offices implemented 
new performance standards. We are still within a 90-day period allowed 
for Veterans Service Representatives (VSRs) and Rating VSRs (RVSRs) to 
become comfortable with the new standards. VBA established a new team 
to work in conjunction with our labor union partner, the American 
Federation of Government Employees (AFGE) to continue to develop 
standards that will better serve Veterans and our employees as we move 
into an electronic environment.

    Question 3. What type of training will VA be introducing to update 
employees on VBMS?
    Response. VBMS is using a combination of web-based training (WBT) 
and ``train-the-trainer'' concepts to ensure all VBMS users receive 
system training and are prepared to use VBMS.
    Robust WBT focuses on application training in which users learn how 
to operate the new system and utilize the latest functionality. This 
system training includes curricula tailored to job functions and 
support resources to serve as quick reference guides.
    The ``train-the-trainer'' component focuses on ensuring resources 
are available to support users at regional offices. These local points 
of contact, called Superusers, provide local training and prepare users 
to successfully adopt VBMS. Superusers receive distance learning 
training in addition to WBT and ongoing support sessions. Superusers 
deliver information from their training to employees at their 
respective regional offices. For example, prior to the release of new 
system functionality, VBMS Superusers receive Delta training, which is 
conducted virtually using Live-Meeting, on new functionality related to 
major system releases. After attending Delta training, Superusers 
facilitate Delta training to users at their Regional Office. Delta 
training materials and instructions are made readily available to the 
Superusers.

    Question 4. Is VA soliciting input from employees on VBMS? What is 
the mechanism for employees to discuss problems with the new system 
with management?
    Response. VA is utilizing a user-in-the-middle approach to solicit 
system requirements for the development and enhancement of VBMS. Field 
subject matter experts (SMEs) from across the country participate in 
requirements gathering sessions with system developers every three 
weeks in Charleston, South Carolina and in the Washington, DC 
metropolitan area. SMEs provide input and are able to see their input 
during pre-implementation review sessions.
    Regional offices where VBMS is fully implemented participate in a 
biweekly end-user experience conference call with the VBA Operations 
Center to discuss issues and provide feedback on VBMS. Regional offices 
may also exercise two additional options to provide feedback: the VBMS 
Issue Tracker and a dedicated telephone hotline.

     The VBMS Issue Tracker is for non-sensitive and/or non-
urgent issues requiring guidance and/or clarification.
     The telephone hotline is for sensitive and/or urgent 
issues where production is impacted. Stations may call into the hotline 
and at that point, support is provided from a number of resources until 
the issue is resolved.

    Additionally, end-users at regional offices where VBMS is fully-
implemented participate in a weekly call with the Under Secretary for 
Benefits to discuss both positive impact of the system as well as 
issues of concern. Issues that end-users express as critical or 
necessary to perform their job are addressed on the call and when 
possible, new requirements and/or fixes are worked into a software 
patch or future release. VBMS streamlined the release methodology by 
implementing a Continuous Release process. This process leverages agile 
methodologies to implement system updates via a continuous and steady 
product release schedule. Each software release includes new 
functionality and prioritized defect fixes. For example, the latest 
VBMS Release 4.2 resolved more than 300 defects in addition to adding 
new correspondence, rating, and evidence management functionality. The 
incremental delivery approach allows the software development team to 
continuously and quickly respond to user needs and feedback as the 
software product is built. As the system evolves, new functionality 
will be delivered to the field and build upon the foundational 
architecture available in the latest system release.

    Question 5. Are the scanning contractors paid by the page? What 
types of quality review is VBA conducting to assess the quality of the 
contractor's work?
    Response. Scanning contractors are paid by the image, which is 
defined as one side of one paper page. For quality review, VBA 
contracted for independent verification and validation with a service-
disabled, Veteran-owned small business to evaluate the scanning 
contractors' digital images. Metrics include image quality (99 percent) 
indexing accuracy (99 percent) and data extraction from completed VA 
forms (95 percent).

    Question 6. Are there any plans to hire service-connected disabled 
veterans to work directly for VBA to carry out scanning functions? Have 
you assessed the quality and security risks involved in using outside 
contractors?
    Response. VA's focus is claims processing. The business case 
analysis supports a centralized scanning model, with image volumes that 
necessitate contractor support. VA incorporated a preference for 
Veteran-owned small businesses as an evaluation factor. One of the two 
VBMS scanning contracts was awarded to a service-disabled, Veteran-
owned small business. VA requires both scanning contractors to 
incorporate Veterans hiring into their staffing plans. Also, VA 
facilitates direct communications between Vocational Rehabilitation and 
Employment Service, Vet Center Veteran candidates, and scanning 
contractors.
    VA assessed the security and quality risks associated with outside 
contractors for this work. Outside vendors must comply with all VA 
security regulations and have site security better than or equal to VA 
regional offices. VA is not currently staffed, equipped, or trained to 
do large-scale imaging and image quality review. Outside vendors 
contribute their organizational expertise in document conversion and 
industry best practices in image quality reviews.

    Question 7. Have you put in place any plans for VBA claims 
processors who are unable to read low quality scans (with bent or 
upside pages?)
    Response. Yes, VBA has done the following to help claims processors 
view scanned images:

     During the second quarter of FY 2013, scanning contractors 
implemented software that auto-rotates an image.
     VBA implemented procedures for claims processors to 
resolve incorrectly oriented VBMS images.
     VBMS rotation-functionality enables claims processors to 
orient an inverted page when this occasionally occurs.
     For systemic incorrectly-oriented images, claims 
processors notify the VBMS help desk or designated VBA staff to request 
re-scanned or re-oriented images.

    Some records, by virtue of their original condition, are in such 
poor condition that a legible copy is unattainable. VBA provided the 
scanning vendors with specific guidelines to identify these types of 
documents. Specifically, if images within a document do not scan 
clearly or are otherwise unclear, the scanning vendors are instructed 
to label those items as the ``best copy'' available. This process 
identifies documents that are creased, frayed, deteriorated, torn, 
faded, stained, or otherwise damaged. For documents that are bent or 
creased, the vendor utilizes specific document preparation techniques 
to straighten the document for scanning.

    Question 8. The next questions are about the VBMS system. There are 
significant bottlenecks in the implementation of this cost saving 
program.
    a. Has the VA assigned a senior management team to investigate 
these bottlenecks?
    Response. Yes, the Under Secretary for Benefits (USB) tasked the 
Principal Deputy USB to examine the bottlenecks, and in conjunction 
with the Assistant Deputy Chief Information Officer for Program 
Management, they worked to resolve these issues. With resolution of 
these issues achieved, VBA has developed and is implementing a plan to 
ensure nationwide VBMS deployment by the end of 2013.

    b. What action plan has the VA developed to stem the bottlenecks 
and significantly increase the document flow to the imaging facility?
    Response. VA closely analyzes shipping rates and makes necessary 
adjustments to meet contractual minimums at the imaging facilities. The 
current configuration of the scanning contract identifies a 20 million 
minimum monthly image volume for each vendor, or a 40 million monthly 
cumulative image volume. Once the national deployment VBMS is completed 
and a review of contractor performance for the initial term is 
conducted, there is the capability and capacity to exceed these 
minimums based on organizational needs and through coordination with 
the scanning vendors. Normal shipping procedures are accomplished 
within four days. Once materials are received, the vendors process and 
upload the corresponding images within a five-day timeframe.
    To ensure there is no disruption to claims processing, VBA has 
implemented a phased deployment schedule to regional offices. A 
critical component of this schedule requires offices to send claims to 
the scanning vendors shortly in advance of the VBMS deployment date. 
This ensures that claims are not pending in VBMS and are ready to work 
as soon as the deployment activities are complete for the regional 
office.
    As VBMS is deployed to all stations, additional claims become 
eligible for VBMS processing. This increases the pool of claims that 
are eligible for imaging.

    c. What is the timetable for achieving the maximum ship or transfer 
rate of files to the scanning facility to achieve the desired results?
    Response. The primary goal of the scanning contract is meeting the 
digital image demand to support VBMS deployment schedule and claims 
processing. The current scanning focus is on new or reopened VBMS 
claims. Volumes shipped to the scanning contractors will satisfy 
guaranteed minimum images, but will not achieve maximum ship rates. 
Alternative plans to increase volume include special projects to back-
scan inactive claims.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Mazie Hirono to 
                  U.S. Department of Veterans Affairs
    Question 1. What specific legislation could Congress propose to 
improve the VA's claims process, electronic transformation efforts and 
goals for a seamless transition for servicemembers from DOD to VA?
    Response. VA is in the process of submitting several legislative 
proposals to enhance and modernize the disability claims process with 
its fiscal year (FY) 2014 budget. In addition, VA is working diligently 
to implement the Honoring America's Veterans and Caring for Camp 
Lejeune Families Act of 2012, Public Law 112-154, which contains 
provisions that will improve the claims and appeals processes.

    Question 2. 2015 is Secretary Shinseki's stated target year for 
eliminating the VA's backlog of compensation claims along with a 
maximum waiting period 125 days for a decision. Based on this month's 
claims processing performance rate, is VA on track to meet this goal?
    Response. VBA's Transformation Plan is designed to eliminate the 
claims backlog and achieve our goal of processing all claims within 125 
days with 98 percent accuracy in 2015. Initially planned for deployment 
throughout FY 2013, VBA accelerated the implementation of the new 
organizational model by nine months due to early indications of its 
positive impact on performance. National deployment of Generation One 
of VBMS (our baseline system) began in 2012, with 18 regional offices 
operational as of the end of the calendar year. Deployment to the 
remaining stations is scheduled to be completed by the end of calendar 
year 2013.
    Generation One of VBMS, our foundational web-based electronic 
claims processing system, is now in use at 25 regional offices and the 
Appeals Management Center. We will complete the deployment of VBMS to 
all regional offices by December 2013. We will also continue to enhance 
the automated functionalities and build additional system capabilities 
in three future generations of VBMS to be deployed over the next two 
years. As we move into future generations of VBMS, our focus is on 
leveraging more complex automation features and more extensive data 
exchange and system integration capabilities so that our employees will 
be able to process claims electronically from receipt to payment.

    Question 3. As you noted in your testimony, you gave the profile of 
the average Veteran Benefits Administration (VBA) employee and you 
stated that they are key to its transformation success into a 21st 
century organization. As their work specifically impacts veterans and 
their families, what percentage of VBA employees are veterans 
themselves?
    Response. As of February 28, 2013, 52 percent of VBA employees are 
Veterans.

    Question 4. In its December 2012 report, GAO recommended that VBA 
``seek improvements for partnering with relevant Federal and state 
military officials to reduce the time it takes to gather military 
service records from National Guard and Reserve sources.'' What has the 
VA done to date in this regard?
    Response. Since the GAO report, VBA has accomplished the following:

     The Chief, National Guard Bureau (NGB) recently hosted the 
Under Secretary for Benefits as a pivotal speaker during the National 
Guard Senior Leadership Conference held on February 27, 2013. 
Significant messages specifically addressed National Guard and Reserve 
benefits and resources, elements of today's operating environment, and 
collaborating in 2013 and beyond.
     The Chief, NGB and the Under Secretary for Benefits agreed 
to charter an NGB/VBA Collaboration Team to immediately leverage 
efforts between both staffs to identify and prioritize key cooperative 
actions. The Collaboration Team will examine ways to refine the process 
of records retrieval and identify procedures to improve the claims 
process.
     VA is including separating full-time National Guard and 
Reserve members (Titles 10 and 32) in its implementation of the VOW to 
Hire Heroes Act of 2011.
     The Under Secretary for Benefits instructed all VBA 
regional office directors to contact their respective state Adjutant 
Generals to further engage in their critical relationships and identify 
and overcome any barriers to obtaining Servicemembers' personnel and 
medical records.
     VBA created a comprehensive web site specifically aimed at 
informing National Guard and Reserve members on how to take advantage 
of their VA benefits (http://www.benefits.va.gov/guardreserve/).
     The VBA and DOD Disability Claims Reduction Task Force was 
formed to help VBA partner with Federal and state officials to reduce 
the time it takes to gather military service records from DOD, 
including National Guard and Reserve records.

    Question 5. My understanding is that VBMS, the electronic Veterans 
Benefits Management System has already been deployed to at least 18 VBA 
regional offices and will be fielded to all 56 regional offices by the 
end of this year. Secretary Shinseki has stated that ``the faster we 
field VBMS, the more time we will have to eliminate the backlog.'' What 
is the status of its implementation at the Honolulu Regional Office and 
by how much do you estimate it will improve the processing rate at that 
office?
    Response. Deployment of VBMS to the Honolulu Regional Office is 
scheduled for May 24, 2013. We anticipate that VBMS will provide a 15-
20 percent increase in station production in each of fiscal years 2014 
and 2015 as we continue to add enhanced functionalities and automated 
tools to VBMS.

    Question 6. As you noted in your testimony you mention that the VBA 
has taken suggestions from veterans and veterans organization on how to 
improve the system? Aside from those the VA has already implemented, 
what other proposals are being considered?
    Response. Employees, Veterans, Veterans Service Organizations, and 
other stakeholders are encouraged to provide transformation ideas to 
VBA's Office of Strategic Planning for consideration and evaluation in 
accordance with our governance review process. This process includes a 
determination as to whether the idea has merit, should be considered 
for a pilot, warrants a design team evaluation, and satisfies cost 
benefit considerations. Additional input is received from Veterans 
Service Organizations during the development and testing of 
initiatives. Numerous ideas are in different phases of this evaluation 
process, including, but not limited to, the following:

     Appeals Design Team: Identifying recommendations to 
improve the timeliness, consistency, and accuracy of the appeal 
process.
     Private Medical Records: Expediting claims development by 
utilizing a contractor to aggressively pursue private medical records. 
The goal is to support our duty to assist Veterans by obtaining and 
electronically incorporating records into the Veterans claims for more 
timely adjudication.
     Click 2 Benefits: Establishing kiosks in VA medical 
facilities that are geographically separated from VA regional offices. 
These kiosks would support Veterans speaking with a VSR, who could be 
hundreds of miles away. It facilitates better communication when a 
Veteran needs assistance and cannot physically go to a regional office.
     Issue-Based Quality Review: Evaluating rating quality 
based on each individual medical issue addressed within the rating 
decision. This approach more accurately reflects the actual quality of 
rating decisions. It also provides a greater level of specificity about 
errors being made that can be corrected by incorporating the lessons 
learned into National Challenge Training.
     Rules-Based Processing: Automatically processing incoming 
dependency change requests utilizing a rules-based processing system. 
Successfully developing automated rules-based processing will relieve a 
significant portion of the workforce from handling these requests and 
allow them to work on more disability claims.
     Telework: Developing and implementing a telework pilot 
program to meet agency telework requirements, while improving employee 
productivity and allowing office space to be more effectively shared 
and utilized.

    Question 7. Has the VA looked into hiring temporary claims 
processors, preferably veterans, similar to how the State Department 
has done with limited non-career appointments for visa processing? Does 
VA currently have the authority to do this?
    Response. Because of the extensive training required to process 
disability claims, VA prefers to use the funds made available by 
Congress to hire and train permanent employees.

    Question 8. You mentioned in your testimony that VA has partnered 
with the IRS and the Social Security Administration to share data for 
up-front verification of income for pension applicants and other 
claims. Are there other relevant Federal agencies that VA could partner 
with to streamline other claims processing?
    Response. VA partners with numerous Federal agencies to streamline 
claims processing. In addition to the IRS and SSA, VA also partners 
with the Department of Justice, the Department of Defense, the Bureau 
of Prisons, Health and Human Services, Department of Education, the 
Small Business Administration, and the Office of Personnel Management.
    VA is currently working with the Centers for Medicare and Medicaid 
Services (CMS) to establish a new Computer Matching Agreement (CMA). 
The purpose of this CMA is to enable VA to identify pension 
beneficiaries who are receiving Medicaid-covered nursing home care in 
order to timely adjust their pension payments to the $90 monthly rate 
limit as prescribed by Section 5503(d)(2) of title 38, United States 
Code.

    Question 9. What outstanding requirements does VA need to meet in 
order to complete integration with DOD by 2015?
    Response. The Department of Veterans Affairs (VA) and the 
Department of Defense (DOD) are making significant progress with 
respect to sharing the information required to provide our 
Servicemembers and Veterans the benefits they have earned by virtue of 
their military service:

     Personnel and Separation Data
         - VA and DOD currently share personnel and beneficiary 
        information via the VA and DOD Information Repository (VADIR)
         - VA needs, and DOD is working to share, the entire personnel 
        record by the end of CY 2013
     Integrated Disability Evaluation System (IDES) Case Files
         - VA and the Military Services have begun to share Integrated 
        Disability Evaluation System (IDES) case files electronically 
        at several pilot locations across the country. Approximately 
        3,100 cases have been successfully transferred electronically 
        as of December 14, 2012
         - VA needs, and the DOD is working aggressively to complete, 
        the automation of the actual transfer of the IDES Case File 
        from DOD to VA without human intervention. This automation will 
        eliminate the manpower associated with the current manual 
        process, thereby freeing up valuable resources to be 
        reallocated to other IDES-related tasks
     Service Treatment Records (STR)
         - VA personnel have the ability to view Servicemember medical 
        records today
         - Additionally, as noted above, the DOD has started to provide 
        the STR electronically to the VA for Servicemembers enrolled in 
        the IDES program
         - VA needs, and DOD is aggressively working to provide, the 
        STR electronically at time of discharge for all Servicemembers 
        by the end of CY 2013
         - VA needs, and DOD is aggressively working to ensure, that 
        all relevant medical information, including relevant 
        information related to purchased care, is included in the STR 
        provided to VA by DOD
     Interagency Case Management and Care Coordination 
Information
         - VA and the Army currently share Care Coordinator information
         - VA and DOD both need, and are aggressively working to fully 
        implement, the Interagency Comprehensive Plan (ICP) which will 
        expand the existing sharing mechanism to share a single 
        comprehensive care coordination plan amongst all DOD and VA 
        case management and care coordination programs.

    Question 10. Assuming all outstanding VA claims are approved, what 
would be the cost to provide the benefits and services claimed?
    Response. As of March 14, 2013, 862,929 claims were pending for an 
average of 280 days. If VBA granted all claims without regard for 
eligibility, under payments, and overpayments, and started payments on 
April 1, 2013, total obligations are estimated to be an additional $8.8 
billion in 2013.
    Of the pending claims, we assume 39 percent are claims for service-
connection, and the remaining 61 percent are claims for an increased 
disability rating. VA assumes that claims for service connection would 
receive a payment at the 40 percent rate as this is the average 
disability rating for Veterans currently in receipt of compensation. 
Based on historical information, on average, Veterans who reopen their 
claims and are granted an increased rating change from a 40 to 60 
percent combined disability rating. Obligations for these Veterans were 
calculated by applying the difference in degree of disability average 
payment for six months. All retroactive payments were based on 280 days 
pending and have been factored into this estimate.

    Chairman Sanders. Thank you very much, General.
    Mr. Warren.
    Mr. Warren. I have no statement, Mr. Chairman.
    Chairman Sanders. OK. Let me begin by raising the issue 
that Senator Isakson raised a few moments ago. In my view, the 
goal of the VA--the very significant step forward in terms of 
accuracy and processing claims in a rapid way by 2015--is a 
very, very ambitious goal.
    I think what you have heard this morning from people around 
this table, from Senator Isakson and others, is, in some ways 
we have heard this before.
    The goal is a strong goal and I support that ambitious 
timeline. The question I am asking you, General Hickey, is what 
reason do we have to believe, what evidence are you going to 
give us to suggest that you, in fact, are going to achieve that 
very ambitious goal.
    Ms. Hickey. Thank you, Chairman Sanders, for the question. 
I will tell you that everything in this plan has been tried in 
a real live environment in different regional offices across 
the country. We are not just leveraging the pilots that we have 
done for those initiatives; we are actually leveraging some of 
the experience we have had from previous efforts to improve our 
performance.
    I will give you an example. While not a compensation claim, 
one of the other major business lines that we have is education 
claims. We started from a dead start in paper. We did not do so 
red hot. It took us 49 days to do a claim for a student in 
school.
    In 2009, we brought on a first version of our long-term 
solution, our paperless IT system for education claims, and cut 
the time to do a claim in half and increased our quality.
    Chairman Sanders. Are you suggesting that the technological 
breakthrough you made in terms of processing student claims is 
an indication of what you can do in terms of veterans claims?
    Ms. Hickey. I am, Chairman Sanders, and I have a much 
stronger word than hope. I now have a reality point to lay 
before you all. Since 24 September 2012, we added a new 
capability into the long-term solution that lets us take 50 
percent of our claims, automate those claims where they come 
in, and not a single person touches them. They fly through the 
system and they are completed in a day.
    Chairman Sanders. This is the student process?
    Ms. Hickey. Absolutely, Mr. Chairman, this is the student 
process.
    Chairman Sanders. OK.
    Ms. Hickey. Let me tell you what the results of that is now 
that we have that new automated capability in the system.
    At this time last year if I had been sitting before you as 
I might have been on an occasion talking about education claims 
backlog, I would have told you I had 200,000 claims in 
inventory. Today I have 50,000 claims in inventory, because of 
the speed of the automation, which helps us cross-check against 
the rules, know that that student is where they need to be, and 
getting the pay they need to get. The use of this automation 
has really significantly improved the way we are doing 
education claims this semester.
    Chairman Sanders. OK. Let me ask you this. There has been 
consternation on this Committee and I think within the service 
organizations about the decision made by the DOD, I think it 
was the DOD, not to go forward in terms of collaboration with 
the VA in terms of the one system, one computer system for both 
agencies.
    What impact is that decision going to have in your efforts 
to expedite claims?
    Ms. Hickey. Chairman Sanders, I am going to first address 
at a very high level what we require from DOD and then I am 
going to ask my colleague, Mr. Warren, to address specifically 
iEHR.
    There are two major things that we need in order to decide 
those claims that are in inventory and in backlog. Three out of 
five times that we have an old claim it is because of this 
issue.
    We need data from DOD in terms of the complete medical 
history of that member when they leave service in order for us 
to decide a claim. We also need their complete personnel 
records in order to know what their character of service is. 
Without those, we must ask. When we ask, we have in legislation 
today a 60-day wait period before we may ask again.
    So, there is built into our process part of that problem. 
As of January, I have an agreement with DOD, under the great 
leadership of Mr. Fred Vollrath, now in OSD, where DOD now has 
a new cell in every single service where they will gather all 
records including TRICARE and contract medical records. They 
will pull it all together. They will validate for me that it is 
full and complete as of that time. They will put their 
signature on top of that document and give it to me. That is a 
game changer for us.
    Chairman Sanders. So, is it fair to say that we are not 
going to make the kind of progress we want unless there is 
better cooperation between the DOD and the VA?
    Ms. Hickey. DOD and VA cooperation is critical, absolutely 
critical to our eliminating this backlog and to our doing 
claims well. But specifically iEHR, I would like to defer to 
Mr. Warren, who is more actively engaged in that process.
    Chairman Sanders. Mr. Warren.
    Mr. Warren. Mr. Chairman, to your question about a change 
in direction, I think you would be surprised to hear that 
everything we hear in the press is not necessarily correct.
    Chairman Sanders. We are shocked by that, those of us on 
the Hill.
    [Laughter.]
    Mr. Warren. And appalled. Sir, I would like to share with 
you that we remain committed to that single, joint, common, 
integrated electronic health record. We stay on that path. We 
are on that path.
    Chairman Sanders. Does the DOD remain committed?
    Mr. Warren. The DOD has stated that they are committed to 
the goal of reaching IOC, or initial operating capability, at 
the two sites by 2014 and full operational capability by 2017.
    The announcement that I think was misconstrued was that 
because some progress had not been happening at the pace that 
it needed to, we threw some accelerators in there. We said, let 
us show we can do this. Let us show that we can deliver. If you 
will, the PMAS (Program Management Accountability System) to 
the iEHR approach. So the drive and the commitment was, now, 
let us take Janus--the interface that we use to access both 
systems--and accelerate it to seven more sites, and that is 
supposed to be completed by July 31. The Interagency Program 
Office (IPO) is committed to that.
    Chairman Sanders. My time has expired.
    Mr. Warren. Yes, sir.
    Chairman Sanders. Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Mr. Warren, I read a release that was put out jointly. Your 
interpretation is not what I read. DOD is headed for a totally 
separate system. There is no assurance that it is going to be 
integrated in a way that will talk to VA. As a matter of fact, 
there is every reason to believe that if you talk to the DOD 
folks, there are no plans to have a seamless, single system.
    So, I will question that right from the start and I am sure 
when the Secretary is here for the budget hearing, this will be 
the subject of conversation.
    Ms. Hickey, wonderful testimony. It almost makes me 
embarrassed to ask questions that deal with facts, because I am 
looking at a trend line as it relates to backlogs of disability 
claims that, quite frankly, are just inconsistent.
    You talk about the increase over the last 10 years. I can 
look back just at last year to projections from the VA as to 
progress we were going to make on disability claims. Certainly, 
it took into account all the changes that you have seen for the 
last 10 years. It took into account the Secretary's decisions 
to extend additional benefits to Agent Orange victims. If it 
did not, then we have a major problem within the VA on how we 
plan.
    But let me ask you. I think it is important for VA to be 
completely transparent about the efforts to reduce the backlog. 
In that regard, the backlog reduction plan VA submitted to 
Congress notes, ``VBA is tracking execution of its 
transformation plan against its key measures of performance 
that are tracked daily, weekly, and monthly.''
    To start with, I would like to ask you to provide the 
Committee on a regular basis with those performance metrics, 
particularly in the data that is not included in the Monday 
morning workload reports and the ASPIRE Dashboard.
    Do I have your commitment to do that on a monthly basis?
    Ms. Hickey. Senator Burr, you are right in saying that 
things have changed for us. Our demand has increased. That was 
part of the reason for my focus on explaining what was in the 
inventory for you. We have been now 10 years at war where our 
men and women are 10 times more likely to survive than their 
previous cohorts.
    Senator Burr. I appreciate that. Do I have your commitment 
to provide this Committee with those performance metrics on a 
monthly basis?
    Ms. Hickey. Senator Burr, I provide to this Committee on a 
daily basis everything we do. As of last year, we are actually 
transparent to a fault. Not just to this Committee, we have----
    Senator Burr. General Hickey, this is a very specific 
question. It is not broadly asked and I really do need a yes or 
no answer. You state in your submission to Congress that VBA is 
tracking execution of its transformation plan against its key 
measurements of performance that are tracked daily, weekly, 
monthly.
    Can you provide us those on a monthly basis that are not 
included in the Monday morning workload reports and the ASPIRE 
Dashboard?
    Ms. Hickey. Senator Burr, we will continue to provide you 
and your staff the information we have provided and we will 
continue to make it transparent to the world as we do today in 
our ASPIRE Dashboard, in our annual reports, in our quarterly 
reports, in the request that you asked for.
    Senator Burr. I will take that as a no then.
    Ms. Hickey. Thank you, Senator.
    Senator Burr. Mr. Bozeman, as you know, when staff from the 
Committee went to VA last week for a demonstration of the VBA 
management system, it did not work. I do not think we need to 
get into exactly what happened, but I would like to know how 
often users in the field have IT problems that interfere with 
their ability to process claims in VBMS?
    Mr. Bozeman. Thank you, Ranking Member Burr, for your 
question. You are correct. The demonstration to the staff was 
conducted in what we consider a lower item level of buyer. It 
is not the production environment of VBMS. So, we did encounter 
some difficulties due to some changes we were making in the 
software at the time.
    So, I apologize to the Committee for that demonstration. 
However, field users in production VBMS have sustained very 
little outage time in VBMS over the course of, since generation 
one software was available.
    There would be isolated pockets which affect certain users 
with certain roles from time to time. Those are reported on our 
help desk. We isolate those issues, and resolve them as 
expeditiously as possible, sir.
    Senator Burr. Can you provide for the Committee the 
percentage of time that that system is unavailable to those in 
the field that are working on it?
    Mr. Bozeman. I do not have that at my disposal. I will take 
it for the record.
    Senator Burr. Is that something we track?
    Mr. Bozeman. Yes, we do track that, sir. Assistant 
Secretary Warren may be able to provide further insight on 
system outages.
  Response to Request Arising During the Hearing by Hon. Richard Burr 
 from Matthew Santos, Congressional Relations Officer, U.S. Department 
                       of Veterans Affairs, OCLA
    Provide details on the time lost due to problems with VBMS/VBMS-R?
    Response. The VBMS application itself has experienced little down 
time prohibiting users to process claims. Between December 6, 2012, and 
February 20, 2013, the VBMS application experienced a total of 2 hours 
and 43 minutes of unplanned downtime over the course of two production 
outages:

     On December 6, 2012, users were being redirected to the 
VBMS login screen when they attempted to change tabs while in the 
rating application. The issue lasted for two hours and 13 minutes. It 
was determined that a security certificate on a VBMS server was not 
properly renewed during an anticipated service interruption which 
occurred the previous night. The certificate was redeployed to the 
affected application server and it was returned to service.
     On February 20, 2013, users were unable to access the 
rating application for 30 minutes due to a stuck thread. The server was 
restarted and access was restored.

    A VBA system wide outage occurred on January 28, 2013. The VBA 
corporate database became unavailable for 1.5 hours when a system board 
housing the corporate database at the Austin Information Technology 
Center (AITC) failed. During this unavailability, users were unable to 
access VBA applications including: VBMS, VETSNET, and Virtual VA.

    Senator Burr. I hope that would be provided to the 
Committee.
    General Hickey, according to your plan for reducing the 
backlog, VA's goal is to have 20 percent of the claims fully 
developed at submittal during fiscal year 2013.
    At the time VA released that plan, only 3 percent of the 
claims were fully developed; and according to your testimony, 
it is now 4.8. Tell me, if you will, how are we going to get to 
20 percent?
    Ms. Hickey. Thank you, Senator Burr, for the question. I am 
going to say that the way we are doing that is with the 
absolute dedicated commitment of our partners in our veterans' 
service organizations. Specifically, a new effort led by the 
American Legion, DAV, VFW, and others; they are working hard to 
help us with that.
    Senator Burr. How did you come up with 20 percent? Why was 
it not 40?
    Ms. Hickey. Today, 60 percent of the time our veterans are 
represented by one of these VSOs in our system of both 
inventory and backlog.
    So, we took the opportunity to say let us start, let us 
ramp up, let us grow in our capability for our VSOs to help us 
do that part of our claims development effort that takes the 
biggest amount of time.
    Senator Burr. So, if we do not hit 20 percent, what effect 
does that have then on the backlog problem that we have?
    Ms. Hickey. So, the 20 percent is a relatively new target 
that we have and we have asked our VSOs to help us with. They 
are eager, they are involved, they are engaged, they are 
training right and left on how to do that with their 
representatives who are in the field working every single day 
with the veteran.
    Just for example, very quickly, those VSOs have more face-
to-face contact when that veteran is working with them, and 
they have the opportunity to say, OK, you are claiming this 
condition, do you have a copy of your medical records or your 
private medical records that will help us make that decision 
for that rating condition. Our VSOs are critical partners in 
our effort to do this.
    Senator Burr. Thank you, Mr. Chairman.
    Chairman Sanders. Senator Tester.
    Senator Tester. Thank you, Mr. Chairman.
    I am going to go back to a point that the Chairman and the 
Ranking Member talked about, and that is, that I think 
partnerships are critically important. You talked about VSO 
partnerships. I think there is another partnership out there 
that is very important and it is with the DOD.
    The Ranking Member noted that the DOD is on a totally 
different plane and that a single seamless is not on the so-
called DOD radar screen.
    I do not know if that is true or not. If it is, it is very 
disturbing. That is not your problem. That is our problem, to 
make sure that the DOD steps up to the plate and does what they 
need to do so you can be successful in what you have to do.
    Could you give me any kind of analysis without throwing DOD 
under the bus, but please do if it is warranted, on what they 
are doing as far as helping you out making sure that there is a 
seamless transition for veterans?
    Ms. Hickey. Thank you, Senator Tester, for your question. 
There are many things that have been happening over the last 
year in agreement with DOD.
    First of which I already described. They have now made an 
agreement with me as of January to give us 100 percent 
certified full and complete medical records. We have never had 
that in our history before. We have had to go look for those 
records. They are now going to give them to us.
    Senator Tester. Is that effective immediately?
    Ms. Hickey. It is effective immediately. They are doing it 
right now. Every single service has stood up a team across the 
services. Every separating servicemember and every retiring 
servicemember's records now go through this process with any 
service and then they will come to me with that designation. 
DOD is taking responsibility to ensure that the records are all 
up to speed so I do not have to keep looking.
    The second major effort that they are doing, and I think 
this is important, is that they have a team of people now 
sitting over with me to work on those really old claims that we 
have not been able to find records to justify the decision we 
want to make for a veteran. Their team is helping us to dig 
through all of their archives to find those records right now.
    So, those are two big areas where they are working with us 
very closely.
    Senator Tester. What can they do better?
    Ms. Hickey. They are working on it with us more 
effectively, but we still need to work on getting those papers 
that they will give me over the next year converted into images 
sooner and turned into a system that they will now have in 2013 
called HAIMS, the Health Artifacts and Information Management 
System, which will bring the records in electronically to me so 
I can get those images across without having to deal with more 
paper coming in the door.
    Senator Tester. All right. How about your partnership with 
groups like Social Security and the IRS?
    Ms. Hickey. I have a really good new story to tell you 
about that. I have had strong new relationships with both SSA 
and IRS. They have critical information on earned and unearned 
income for us to be able to make decisions very quickly, 
especially for our folks who are the most destitute in our 
environment.
    Social Security and IRS have now made a decision to give us 
access to current data every week rather than once a year. The 
good news for our veterans is I have been able to take 100 
people that used to have to spend 4 months doing nothing but 
matching and looking for earned income and validating earned 
income out of a year old's worth of database, and I now have 
them pointing at doing DIC claims which are our most vulnerable 
widowed and orphaned individuals, getting them the resources 
they need faster.
    Senator Tester. OK. A different area. From your 
perspective, what role does insufficient staffing play in the 
backlog?
    Ms. Hickey. Good question. I want to thank this Committee 
for the staffing we do have. I want to thank this Committee for 
the growth in budget that this organization has never enjoyed 
before this Administration and so thank you very much.
    I am reluctant to say let us throw more people at a problem 
where I have the capability to potentially make the work go 
faster by the nature of the change in the process we are doing 
and the changes in the technology.
    By example, when we went into a paperless environment for 
our loan guaranty efforts, we reduced the amount of work that 
had to be done by people because the system assisted or because 
the process assisted.
    I know we are all in a difficult economic environment. I 
would prefer to not make your life harder generating more 
people when I think that I might have oxygen in the system 
associated with what we are doing in the people aspect, the way 
we are organized and trained to do the work.
    You want me to be the most efficient, right? You want me to 
be the most effective, right? I want to get the efficiency and 
effectiveness out of a 1950s industrial age process, and bring 
us into the 21st century. If I get through that and I still 
need more people, I will come to you.
    Senator Tester. I certainly appreciate that perspective and 
appreciate the lean and mean and efficiency perspective, and I 
know that you are committed to making sure that this problem 
gets solved.
    I am out of time, though I would love to talk to you about 
the Ruth Moore Act, which I think I will put in questions for 
the record for you to answer.
    One other thing, if I might have the liberty, you talked a 
little bit about a 60-day window where you could ask veterans 
for information and you had to wait another 60 days.
    Ms. Hickey. We do, Senator Tester. By the current rules, 
when we asked for records, we must wait a 60-day waiting period 
for a response.
    Senator Tester. Is that an internal rule or is that a rule 
that we have set up?
    Ms. Hickey. I believe that that is in legislation.
    Senator Tester. OK. We may want to visit about that.
    Chairman Sanders. Thank you, Senator Tester.
    Senator Isakson.
    Senator Isakson. Thank you, Mr. Chairman.
    Mr. Warren, the VA Inspector General reported that the 
partial VBMS capability that has been deployed to date has 
experienced, ``system performance issues.'' What are those 
system performance issues?
    Mr. Warren. Thank you, Senator, for that question. I would 
like to point out two items, if I could. The first is that 
report was issued in September, last September. So, it was 
dealing with the pilot prototype system. Two, the Department 
did not agree with the conclusions that the Inspector General 
reached in their report.
    Senator Isakson. So, you have had no system performance 
issues?
    Mr. Warren. We had performance issues with a pilot system 
that was deployed whose intent was to find the issues we needed 
to solve before we reached full deployment of a first 
generation system. So, the report basically stated what we were 
trying to do which was to put it out there, put it out there 
fast, find out what works, find out what does not work. Make 
the improvements, and then deploy it against the enterprise.
    Senator Isakson. And that process has worked?
    Mr. Warren. That process continues to work. We are using an 
agile methodology. So, one of the things that you will see 
different we applied it to Chapter 33 as a rolling change, add 
functionality, add capability is we get systems out there. We 
get capability out there quicker. We are not waiting 5 years to 
design a system that fails. We are making changes. We are 
deploying them every 3 months.
    On some systems like eBenefits, we make deployments every 
month. The goal is to get capability in the hands of the user 
so we can evolve it, we can improve it, and bring that benefit 
to the veterans along the way.
    Senator Isakson. In Secretary Hickey's testimony--I think I 
wrote this down right--she said the redeployment of VBMS was in 
full swing from portal to decision. Is that an accurate 
statement?
    Mr. Warren. That is an accurate statement.
    Senator Isakson. Then let me follow-up because I was not 
questioning it but I wanted to make sure it was accurate 
because, as I understand, and I could be wrong; this could be a 
problem. But I understand that is accurate with regard to 
pretty simple decisions that are made in terms of rating 
claims, but complex cases which, as the Secretary has mentioned 
that they have grown, is VBMS capable of making rating 
decisions on complex cases?
    Ms. Hickey. Senator Isakson, if I can answer that question, 
yes. That is the short answer. In a very old version, the pilot 
version of this last summer, there was some restriction to 
limit it to claims with less medical issues. Not anymore.
    We now rate everything. In fact, if you are one of the 20 
stations that are now live on VBMS, every new claim you have, 
whether it is an original one or a supplemental one, as it is 
coming in the door now immediately gets turned into the 
electronic environment. It is scanned, it is uploaded, it is 
ingested electronically; and we are not bringing the paper 
through the system from this point forward.
    Senator Isakson. What software does VBMS run on?
    Ms. Hickey. I will defer that to my IT colleague.
    Mr. Warren. Sir, we could probably spend a couple of hours 
walking through all of the different pieces.
    Senator Isakson. Let us not do that.
    [Laughter.]
    Mr. Warren. So, I do not think you would like to.
    So, when we talk about VBMS, we use Internet Explorer which 
is the browser. We use Windows 7 which is the desktop. We use 
an Internet Explorer server. So, there are a multitude of tools 
that we use. We use Oracle at the back-end. This is not a pitch 
for any of those companies. But again, we are using the tools 
that are used in industry today for these types of systems.
    Senator Isakson. Do you use SAP?
    Mr. Warren. No, we do not use SAP.
    Senator Isakson. That is good. OK.
    My last question. On the transfer of medical records from 
DOD to the Veterans Administration, that is done electronically 
now?
    Ms. Hickey. Today's medical records we received in paper.
    Senator Isakson. When you have fully installed VBMS, will 
DOD be able to transfer information electronically?
    Ms. Hickey. So, Senator Isakson, that is a great question, 
and that is exactly what we are planning for with the new HAIMS 
system that the DOD is building, which will be delivered 
December of this year. The intention is for them to upload 
those claims into an electronic system that feeds directly into 
VBMS.
    Senator Isakson. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Sanders. Thank you, Senator Isakson.
    Senator Begich.

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

    Senator Begich. Thank you, Mr. Chairman.
    Let me follow up on that last question. I thought I read 
something that DOD had some issues with their electronic 
transfer of the records.
    Ms. Hickey. Senator Begich, the part that I am talking 
about is a different agreement that I have with DOD where they 
are consolidating and pulling together all their paper medical 
records in order to give it to me to make a decision, full and 
complete records with their TRICARE and their contract medical 
records.
    I think the issue that you are talking about is iEHR and I 
will defer that question to my colleague, Mr. Stephen Warren.
    Mr. Warren. So, if I could do just a quick sidebar in terms 
of the different terms that are used out in the popular press.
    Interoperability is the movement of information back and 
forth. There is the movement of medical information, clinician 
to clinician today from DOD to VA. There is a translation that 
takes place. It is not all the data. It is a limited amount of 
data.
    Senator Begich. Electronically?
    Mr. Warren. Electronically. So, there is a limited flow. It 
is not the full treatment record.
    Senator Begich. Correct.
    Mr. Warren. So, as a servicemember comes in to a VA 
facility--either Guard, Reserve--and now they are a veteran 
when they come over, we see some large percentage of data, not 
all of it. So, that is interoperability.
    The announcement that came out recently dealt with the goal 
to get to that single, joint, common, integrated electronic 
health record.
    Senator Begich. Right.
    Mr. Warren. One system so you do not have to worry about 
translation.
    Senator Begich. Right.
    Mr. Warren. It supports that goal of the virtual lifetime 
electronic record.
    Senator Begich. Right.
    Mr. Warren. So, when that citizen raises their hand like I 
did coming into the service, the data gathered from there 
forward is part of the benefits determination for compensation.
    Senator Begich. Right.
    Mr. Warren. The larger issue.
    The VA is committed to that single integrated electronic 
health electronic health record.
    Senator Begich. I get that the VA is. It is the DOD, and I 
guess--Mr. Chairman, one thing that would be unusual but maybe 
we should have is DOD sitting here because I was on the Armed 
Services Committee 4 years and they still cannot get an audit 
of DOD. It is one Federal agency that cannot get their act 
together when it comes to figuring out how to audit what they 
do over there.
    So, I understand that you have an agreement. But I have 
been here now four years and claims--and I saw a scathing 
report which, of course, Alaska was highlighted in there for 
delays in disability claims.
    The number 1 issue I get in my office is the lack or 
inability to get these records and determine disability claims. 
On top of that, it is this ability to get the records from DOD 
over to VA.
    You are putting a lot of faith in DOD who still cannot even 
do an audit of their own functions--the only agency in the 
Federal Government.
    So, can you actually say right here--and you said it a 
couple of times. I want to hear you say again that at the end 
of 2013--because that is what I heard you say--we will be 
moving electronically the full records from DOD over to the VA 
so that I do not have to spend time with my staff on a regular 
basis calling up DOD saying, ``What the hell, where is the 
information,'' and then, ``VA why do you not have it yet?''
    Ms. Hickey. So, Senator Begich, what I will tell you----
    Senator Begich. That is a very simple question. Yes or no.
    Ms. Hickey. And the very simple answer is I will have 
images from the record. He will not have data yet.
    Senator Begich. How are you going to get to that point, I 
mean, getting the images? First off, I was somewhat surprised 
and I thought the answer that DOD now is just kind of shipping 
over boxes of material. I am simplifying it but it is paper 
material, right?
    Ms. Hickey. It is largely.
    Senator Begich. So now, you have a contractor that is 
scanning all this stuff which I have questions on its ability: 
how fast it is moving; efficiency; your own ability to audit 
that.
    But then you just get a pile of images. You know, I can 
scan stuff all the time and get a pile of images. How you 
interpret them to determine the outcome for that individual who 
is trying to get a claim?
    Ms. Hickey. Senator Begich, that's a great question. I will 
tell you how we did it. We used to take a stack of paper this 
big with peoples little rubber finger tips on their fingers and 
their eyeballs while trying to remember their rules in their 
head and that is what we asked our hard-working employees, 52 
percent of which are veterans themselves.
    Today in VBMS, they do not deal with the paper. Their 
rubber fingertips are gone. They do not have to remember all 
the rules. They are built into the system. The images come 
through. They can Google search throughout these document to 
find that information. That is what VBMS does for us.
    Senator Begich. Right. On new claims?
    Ms. Hickey. On all claims coming in the door today whether 
they are a Vietnam veteran, a World War II veteran, or today's 
veterans.
    Senator Begich. Do you have data that shows the difference 
between the process time, the results, and efficiency between 
the ones that are now coming in versus the almost millions 
sitting in the backlog?
    Ms. Hickey. Senator Begich, I will have it. I have just put 
20----
    Senator Begich. When will you have it?
    Ms. Hickey [continued].----ROs on it on 28 January, on what 
I consider, for the first time, the portal to decision 
processing.
    Senator Begich. Right. When will you have that?
    Ms. Hickey. I am measuring it all the time. So, as soon as 
I have a valid enough sample to give you, I will give it to 
you.
    Senator Begich. I want to go back to Senator Burr's 
question. It seemed like such a simple one. You obviously do a 
monthly matrix of some sort. It sounds like even weekly with 
now some of the data given on earned income.
    But can you just answer that question very simply? That you 
will provide--I heard your answer. It was kind of a stock 
answer that data that we request we will provide.
    The matrix that you have--because I know, as a former 
mayor, every agency in my department that I operated and 
managed had dashboards that gave data and weekly, daily, and 
monthly on the accessibility.
    I echo what Senator Burr asked and that is, will you 
provide that data on a monthly basis so we understand the 
success or failure; because, honestly, when I look at the 
numbers, 4 years later from my time here it is not getting 
better.
    I can tell you the increase in calls that I get in my 
office are not going down. So, answer yes to Mr. Burr's 
question or no. I do not want the stock answer that I know you 
all get because OMB does sanitation to all your commentary.
    I just want to know the real simple answer. Yes or no.
    Ms. Hickey. Senator Begich, I will provide information to 
you.
    Senator Begich. Yes.
    Ms. Hickey. I will provide information to you, yes.
    Senator Begich. There we go.
    OK, Mr. Burr, we maybe got halfway there; three quarters of 
the way.
    This will be the last comment, Mr. Chairman, thank you.
    The VSOs do so much good work. It almost seems like they do 
all this work and then VA duplicates the work and it seems like 
we should figure out some partnership where VSOs can help us 
move some of these claims because they do a lot of work on that 
front. They have about an 80 percent hit rate. That is not a 
bad success rate based on the history here.
    I will leave it at that and maybe ask for the record, Mr. 
Chairman, if that is OK.
    Ms. Hickey. Chairman, may I answer that question?
    Chairman Sanders. Briefly.
    Ms. Hickey. Senator Begich, we have a very deep 
relationship with our VSOs which is getting stronger every day. 
They are on VBMS with us. They are inside the fence line now 
more than they have ever been before. I am working very closely 
with them and am very thrilled with their willingness to do 
fully-developed claims which, in fact, will help exactly the 
issue that you are discussing.
    Chairman Sanders. Senator Heller.
    Senator Heller. Thanks for holding this hearing. This is 
good. This is really what we need across this country and in 
Nevada obviously I get the same phone calls that the other 
Senators are getting.
    I certainly do appreciate Senator Tester's remarks. I am 
glad he is across the way. We have a tendency of marching, 
looking down the same road here. He made a comment that I want 
you to clarify that perhaps I do not understand, and that is in 
your testimony you stated that by law the VA must wait 60 days, 
by law.
    Ms. Hickey. Yes, Senator.
    Senator Heller. It is not part of your manual. It is by 
law.
    Ms. Hickey. Yes, Senator, and then if I ask 60 days later 
and I do not get it, I must wait another 30 days.
    Senator Heller. By law?
    Ms. Hickey. By law.
    Senator Heller. OK. So, you have a claim and you called the 
VA's office or you fax them or whatever it may be. You set that 
in a file for 60 days. You do not do anything with it. You just 
wait for 60 days; and if you do not get a response, then you 
respond after 60 days; and then you must wait another 30 days.
    Ms. Hickey. So, Senator, it is not that I do not do 
anything with it. We do many things with the claim besides 
that. We will continue to gather other evidence. We bring in 
private medical evidence from our veterans. We will get that. 
We will get our medical records; if the veteran is already 
seeing a VHA doctor, we will pull that in. We will continue to 
try to do everything we can to get that claim further down the 
process. But then we will, on occasion, more than one occasion, 
hit a brick wall.
    Senator Heller. Let me move in a different direction with a 
similar question, and that has to do with the GAO report. Tell 
me if this is accurate.
    When obtaining Social Security Administration records, 
VBA's policy manual instructs claims staff to fax a request for 
medical information and wait 60 working days to follow up if 
SSA does not reply. Then, staff faxes a follow-up request and 
then waits another 30 days.
    Is that part of your manual or is that also by law?
    Ms. Hickey. It is also by law, but it is no longer an issue 
because now Social Security and IRS are giving us weekly data. 
We have made agreements and are actually already seeing the 
flow of that information. I am very appreciative to our Social 
Security and our IRS partners in that effort.
    Senator Heller. OK. So that is solved.
    Ms. Hickey. It is solved.
    Senator Heller. I was going to say because that would make 
it about 25 percent more efficient, 25 to 35 percent more 
efficient if we could take those filings and at least make a 
phone call.
    My staff, you know, we get a number of cases and we get 
2500 cases a year; and we work with the same agencies you work 
with; and if we do not get an answer within 5 days, we pick up 
the phone and say, hey, where is our answer? We do not wait 60 
days, we do not wait 30 days. But, of course, by law we are not 
limited to those delays.
    Let me ask you another question, and I certainly do 
appreciate the good hard work of the VA. My father is a 
veteran. He turns 80 this year. He has received some really 
good service from the VA, the hospital in Reno; and I certainly 
have nothing but praise, nothing but praise for these hard-
working individuals.
    I have been to, though, the VA claims office in Reno; and, 
as I mentioned earlier in my comments, we are some 10,000 
claims behind.
    Over the last 5 years, I have consistently asked them, what 
do you need? What do you need? Do you need more individuals? Do 
you need more resources, bodies? What is it going to take to 
fix this backlog? And they have consistently told me we are 
going to solve this without additional resources or without new 
bodies.
    I had it here a second ago; but according to the GAO 
report, it said according the VBA officials, staff shortages 
represents a primary reason for backlog.
    So, I guess I'll just ask the question again--and I think 
you have touched on this but maybe you can reiterate--what is 
the issue? Do you need more individuals, personnel, in order to 
fix this backlog?
    Ms. Hickey. Senator, thank you for your question. I have 
been to the Reno office as well and it is a terrific group of 
people out there working on behalf of Nevada veterans.
    Senator Heller. Yes, it is.
    Ms. Hickey. What I will say is the demand has risen, and I 
will go back to saying we have done a million claims the year. 
These hard-working folks out there want to do what is right for 
veterans, want to do what is right for the family members.
    Senator Heller. I agree.
    Ms. Hickey. They are not only doing a million rating 
claims, they are doing a million non-rating claims. They are 
not only doing that, they are doing half a million pension 
claims in the same year. They are doing 4.7 million medical 
issues a year. They are producing at record, record levels on 
behalf of our veterans. But the demand is coming in at record, 
record levels.
    The only way to go after this is to fundamentally reinvent 
ourselves, which is what we are doing in this transformation 
effort. You get to that many transactions in a year, you have 
got to have the benefit of some automation, some rules-based 
capability, all of which we have built now. We are continuing 
to add functionality every 8 to 10 weeks to get some additional 
rules and automation built into the system, to take some of the 
load off a person manually doing this much paper out of the 
system, to create that oxygen in the system so that the men and 
women--the 20,000 employees I have across the Nation who get up 
every single morning dedicated and committed to this mission--
have an opportunity to really meet the needs of our veterans, 
their family members, and survivors as they truly wish to do.
    Senator Heller. Thank you, General.
    Thank you, Mr. Chairman.
    Chairman Sanders. Thank you, Senator Heller.
    Senator Moran.

                STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. Mr. Chairman, thank you.
    Madam Secretary, thank you for being here. You can sense 
the frustration that many of us have on this topic and part of 
it is that we have heard the potential for success so many 
times without seeing the results that we want to see.
    I heard this last week when Disabled American Veterans from 
Kansas, The American Legion, VFW, all came in the office. This 
now is their number 1 priority and the most significant 
complaint that I continue to receive from Kansas veterans and 
their families.
    When I came to Congress, now sometime ago--I had served on 
the Veterans' Committee my entire time in the House and now in 
the Senate--it was always health care that was the hot topic. 
Now it seems to me that the health care side of VA has done 
things that apparently the benefits side has not because the 
number of complaints about the quality and access to health 
care has diminished significantly and the number of complaints 
about benefits has increased dramatically.
    So, I do not know whether there is a role model within the 
VA; and while the health care side is not perfect, the progress 
and improvements seem to be evident, so you may have a role 
model within your own Department for guidelines.
    In addition to that, I assume that you have consulted with 
the private sector in trying to find out how they deal with 
this magnitude of claims and I assume--these are questions, you 
can tell me that my assumptions are wrong--that you have had 
genuine and real conversations with the employees that you 
describe as so loyal and so dedicated.
    I often think that Federal agencies, and employers in 
general, never take advantage or rarely take advantage of the 
knowledge of their own employees who may have the best 
solutions because they are the ones who deal with the issues 
every day.
    In regard to employees, is there a reward or benefit that 
accrues for employees who provide timeliness and accuracy in 
the benefit process?
    And finally, what is the process that you have in place to 
help the veteran who is in a dire circumstance?
    Often the calls, the concerns, the conversations that I 
have as a Member of Congress--and I would guess my colleagues 
as well--are from somebody who is about to lose their home to 
foreclosure or who say my dad is homeless and we have been 
waiting on an answers from the VA on benefits that very well 
may enable him or her to make their mortgage payment or get off 
the street.
    What process is in place that allows you to prioritize 
those claims in which, if you fail to provide the benefits, the 
veteran suffers dramatically?
    Ms. Hickey. Let me start, Senator Moran, with the last 
thing you mentioned which is how do we help our veterans who 
are in the most dire circumstances.
    We actually prioritize them. When we hear words like 
terminally ill, we hear words like on the verge of 
homelessness, we hear words like former prisoner of war, we 
hear words like Medal of Honor recipient, we prioritize those 
above all other claims.
    We routinely pull those out of the process and we raise 
those up and we do those quickly. So, I will start there by 
answering that question very clearly.
    Second, I will tell you that everything in this plan did 
not originate at 1800 G Street over in VA. In fact, every one 
of the initiatives that are in this plan were pulled together 
by including the thoughts of our employees. Many of the 
initiatives are employee-generated initiatives. We could not do 
it without them.
    We have industry partners who are part of the process of 
helping us think this through. We have had conversations with 
Federal agencies that have gone through this before. I was at 
the IRS yesterday--we have meetings with them frequently--
talking about how they went paperless, what were the issues 
that they saw, how can we prevent those issues as we go 
paperless. It's the same with Social Security.
    We have definitely partnered with our VHA partners in doing 
this; and I would just say, VHA enjoyed the benefit of 
resources that VBA did not until 3 or 4 years ago. We were not 
so high on the priority budget list. We have been now and--I am 
so appreciative of that over the last 4 years, but we were not 
prior to this. Certainly not on the IT priority list. We are 
now. That is a very positive thing.
    But the last thing I really want to tell you is I leave 
today from this hearing and I go do what I have been doing for 
the last 4 months. I get on a call with staff in all of our 
regional offices who are in VBMS today, all the way down to 
bargaining unit employees, and I ask them to tell me the good, 
the bad, and the ugly.
    We do it every week. I make every one of the program 
officers in there, all the IT people listening and these folks 
tell us like it is. When they do so, I take it, I task it, we 
get it fixed, and we get it done so that it gets better every 
single time.
    The people who are making VBMS today better are not our IT 
friends. It is our subject matter experts in the field who are 
getting on the system going bang, bang, bang on the keys, 
saying if you did that thing for me I could go much faster.
    They are doing that today by the bucket loads. I am so 
appreciative of getting that bargaining unit level employee's 
input into our process and make sure that I get it every single 
week. I do not miss that phone call.
    Senator Moran. Thank you, ma'am.
    Chairman Sanders. I thank you. You have stimulated 
interest, and there is a desire to ask you some more questions. 
So, we will go a second round.
    Let me start that off by asking you something that I 
probably should have asked you at the very beginning. You know, 
we have talked about the 60-day requirement. We have talked 
about perhaps impediments in law.
    The goal of everybody up here is to see the claims process 
move as rapidly and as accurately as possible--no difference of 
opinion.
    If you were sitting here as a lawmaker, what changes would 
you make to help expedite the process, and say a few words. I 
know there are differences of opinion about the 60-day 
requirement and some of the VSOs have concerns about due 
process and so forth. Say a word about that but tell us what 
you would do up here in terms of law as to what we could do to 
expedite the process.
    Ms. Hickey. Thank you, Chairman Sanders.
    First of all, I will tell you our appeals process today--I 
could take 100 days and shave it off tomorrow if I had a 
standard notice of disagreement form. I do not. Our veterans do 
not have a standard form to appeal to us with, one that has all 
the information we need in order to identify that appeal. 
Frankly, we do not even know it is an appeal and we lose 100 
days in the process.
    So, we have asked for a standard notice of disagreement 
appeal form. That is one way to cut the appeals process down. 
We have a new 526EZ form, which, by the way, is online to 
facilitate our online transmission like you do your taxes 
today. What the 526EZ form does is it takes the requirements 
for what has become a bit of a timeliness factor of back-and-
forth mail, puts it right up front on the form and tells that 
veteran what we need from them in order to decide that claim.
    This fulfills part of our due process, part of our VCAA 
requirement, and when we do it electronically, I am not sending 
letters back and forth and the veteran is not sending letters 
back and forth. It has the ability to cut out time.
    If that were a mandatory form, that would be better for 
both the veteran and timeliness factors and it would be better 
for us to continue moving that claim.
    The other thing I will tell you is we are looking at this 
issue--which today I know a lot about--our pension recipients. 
I know they are in some of the most dire circumstances because 
there is a means-tested environment.
    I know when that pension veteran dies, today I am required 
by law to make that pension widow send me a claim and go back 
to the process to validate that pension. These are, for the 
most part, poverty-level widows that I ought to just be able to 
continue that pension, pay those pension widows at a very 
difficult time in their lives and then go back and audit them 
just to make sure that we are OK. I ought to have a period of 
time where I can do that. We are looking at that issue. I would 
need legislation to amend that issue.
    Those are the kind of things we are thinking about. I have 
78 percent of our veterans who are taking the GI Bill who tell 
me today, quit sending me the letter, just post it on 
eBenefits. I still have a requirement to send them a letter. 
That is cost. That is FTE. That is mail. That is ink. That is 
all the rest of those things.
    Chairman Sanders. I appreciate your comments and I suspect 
there is more that you are thinking about. I think this is an 
issue that we should explore together.
    Let me just ask you another question. As I understand it, 
VBMS is today operational in 18 regional offices.
    Ms. Hickey. Twenty today.
    Chairman Sanders. Twenty regional offices, right. And your 
testimony indicates that it will be deployed to the remaining 
38 offices this year.
    Ms. Hickey. We will have all 56 regional offices, yes, 
Chairman, on it by December of this year.
    Chairman Sanders. Given the problems that keep popping up, 
are you confident that you can make that expansion work well?
    Ms. Hickey. I am as of 28 January 2013. I believe I have a 
solid, not perfect, but a solid, dependable portal-to-decision 
system in place to be able to get more and more people on it, 
to be able to check it.
    Now, with that system in place, if I run into a problem, I 
am going to slow down. I am going to be methodical, deliberate, 
and I have demonstrated I will. I did it last fall.
    We were going to accelerate and put on those first ROs by a 
certain date. It had four major problems with it. I said, no, I 
will not deploy this until we get those four major problems 
fixed.
    They did. They fixed them. They are gone out of the system; 
and as a result, we went ahead and moved forward and now I have 
20 stations on. There will be another five next week. That is a 
solid system. Is it perfect? No. But our people will make it 
perfect.
    Chairman Sanders. All right. My time is expiring here but 
what I would appreciate receiving from you as soon as possible 
is a memo telling me the very specific ideas that you have as 
to how Congress can move forward in helping the VA expedite the 
process and improve accuracy. Is that something you can get me?
    Ms. Hickey. I can, Chairman.
    Chairman Sanders. OK. Thank you.
    Ms. Hickey. Thank you, Chairman.
    Chairman Sanders. Senator Burr.
    Senator Burr. General Hickey, I sense a level of 
frustration with some of the questions we have asked, and I 
feel compelled to state to you that most of the questions deal 
with prior testimony, prior goals established by you or within 
the VA.
    And I hope you do not take offense. I sense an obligation 
on the part of the Oversight Committee to track whether, in 
fact, you hit your goals and to fully explore if you do not 
what the reason was, to look at goals for next year, and to ask 
simple questions like what went into choosing that as a goal.
    One of the goals that you have out there right now is that 
the backlog is going to disappear in 2015. What is the plan if 
it does not?
    Ms. Hickey. So, first, Senator Burr, I will apologize for 
my Irish heritage. Please do not interpret my hand-waving, 
pilot-talking excitement and energy around what we are doing 
right now as frustration; and I totally, totally understand and 
believe that you have oversight over what I do and hope to be 
very responsible to you in that regard.
    So, my apologies for maybe perhaps projecting frustration. 
Not there. Not there at all with you. I will deliver for you as 
you need. But I have confidence that we will, in executing this 
plan, be better positioned for anything that happens. We have 
to do this. We cannot rely on the way we did things in the 
past.
    Senator Burr. We have wished a lot of years in disability 
claims as we have seen the trend to go up, we have seen the 
productivity of FTEs go down as we have added FTEs. You have 
seen the charts. You know the numbers.
    If the numbers are not right, again, I open up to you. 
Prove to me where I am wrong. I look at them. But if it does 
not work, what is the back-up plan?
    What do we do in 2015 if, in fact, we still see a trend 
going up of disability claims backlog? What do we do then?
    Ms. Hickey. Senator Burr, you know one of my many jobs I 
had in my past life as an Air Force veteran was to help deploy 
quality management principles and practices and the idea that 
you never stop thinking you have got a perfect plan. You 
continue to look for ways in which to improve on what you have 
done.
    We will continue. From this point forward, we are doing it 
today. We are not even resting on what is in the plan. We are 
looking and delving into ways we can add even greater and 
greater functionality to the system. We are looking for ways in 
which we can shave off issues relative to accuracy.
    By the way, I would just like to tell you, we have actually 
this last year reversed a 4-year downward trend in our 
accuracy. We have increased our accuracy nationwide by almost 4 
percentage points and we continue to do that by an investment 
that frankly is made in this plan, which is our new challenge 
training, which has resulted in people doing claims faster at a 
much higher quality level, as found by our quality review team 
people we have in the system.
    Senator Burr. Let me stop you if I can and I commend the 
Chairman for asking for your suggestions in writing. I would 
remind you, we have asked every year for the legislative 
changes that need to be made to facilitate a faster, more 
accurate system and, to the best of my knowledge, this is the 
first time we have heard suggestions.
    Hopefully, those are things that you are going to work out 
with the VSOs because, as the Chairman said, VSOs have a little 
problem with the 60-day wait for the due process. But we are 
willing to entertain legislative changes where there is 
consensus and where there is a belief that we can improve 
accuracy and timeliness.
    Is there currently a hiring freeze on claims processors 
nationally?
    Ms. Hickey. Senator Burr, there is not a hiring freeze on 
claims processors, but I will tell you I am maxed out right now 
for my end stream. I have everybody in a seat.
    Senator Burr. But there is not a directive at headquarters 
that there is a hiring freeze?
    Ms. Hickey. No.
    Senator Burr. OK.
    Mr. Chairman, I am going to end questions there, but I do 
want to loop back to something and it is something that Senator 
Begich stopped on.
    I am not going to ask the question again. I am just going 
to state fact. I think that this Committee needs the 
performance metrics that you do not find on the dashboard and 
you do not get in the monthly report for us to do our oversight 
correctly. I can only speak for myself.
    If we do not receive that, I will do everything I can to 
fence off headquarters money until the VA provides the 
Committee with that metrics performance. So, hopefully, take 
that back if, in fact, within the administration at VA that is 
a bit of information they do not want to share with us, then I 
will exercise the right of the Oversight Committee and the 
Authorizing Committee and I will work with appropriators to try 
to fence that off until we get it.
    Thank you.
    Chairman Sanders. Senator Tester.
    Senator Tester. Thank you, Mr. Chairman.
    I would just say I think we have got to be very specific on 
what we are asking for if we are going to ask them to take time 
to do it. That is all.
    I think we need the information that we need to make our 
decisions and hold them accountable but it has got to be pretty 
specific what we are asking for and I do not mean to disagree 
in the least.
    Senator Burr. I will assure my good friend from Montana 
that I will put it in writing. It will be very specific, and it 
was specific.
    Senator Tester. Metrics other than the dashboard; I think 
we need to be more specific than that.
    Senator Burr. I think General Hickey knows exactly what I 
am asking for.
    Senator Tester. OK. That is good because I do not.
    Ms. Hickey. Senator Burr, I look forward to receiving your 
request with the ones that you are looking for.
    Senator Tester. OK. First of all, I appreciate your passion 
and I think the Ranking Member is correct. We have asked and I 
very much appreciate you stepping up to the plate and giving us 
some good, solid, and I think pretty sound suggestions on how 
we can eliminate some of the red tape, so I want to thank you 
for that.
    I want to clarify a little bit on the Guard and Reserve 
medical records. Are they part of the guaranteed delivery from 
DOD to VA?
    Ms. Hickey. They are, but there are complications, Senator 
Tester, with that. I will tell you that I have recently met 
with all the adjutants general from all the States, including 
yours, as well as the National Guard Bureau leadership here 
just in the last couple of weeks to ask for their help in 
getting a hold of National Guard records in particular, and I 
hope to be meeting with the Reserve leadership soon to do the 
same.
    The complication with National Guard records are that they 
have gone and served with units that are not in their States 
over the last decade of conflict in Iraq and Afghanistan.
    So, finding those records in other units in other States, 
in other places becomes a very, very difficult task. What I 
will tell you is the request I made of the adjutants general--
and I have already had five come forward and say you bet you I 
will do it--is for them to stand up people who stayed active 
duty, if nothing else, and help us go dig and find records on 
claims that we have that are in the National Guard. I am very 
appreciative of the National Guard adjutants general standing 
up to that task.
    Senator Tester. Well, I think it is very, very important to 
get access to those records ASAP. These folks are being used as 
active military at this point in time.
    Ms. Hickey. I agree with you.
    Senator Tester. OK. You are familiar with Quick Start and 
VBMS discharge I would assume.
    Ms. Hickey. Yes, I am.
    Senator Tester. They have been described to me as pretty 
ineffective. In fact, if they do not use them, they tend to get 
their benefits quicker just going to the VA. Give me your 
assessment and if you have heard similar concerns.
    Ms. Hickey. Very frankly, Senator Tester, when we were 
doing the Agent Orange work and when we were taking 37 percent 
of our workforce out of the system, that was every bit of our 
search capability across the country including all of the day-
one brokering centers. Those are our 13 resource centers out 
there that handle national level work.
    All 13 of those were pointed at doing the Agent Orange 
Nehmer work. Therefore, what suffered in some respects, along 
with every other cohort of veterans, was our BDD and Quick 
Start work.
    The better news: as of March last year, we redirected our 
day-one brokering centers as soon as they finished the 
veterans' Agent Orange claims, we redirected half of them 
toward BDD/Quick Start work. We have cut the inventory in half 
since doing that.
    And then, when we finished the survivor claims in October, 
we redirected more capability to work on the BDD/Quick Start 
claims.
    Senator Tester. So, I got that. What you are saying is that 
the problem--because I am just trying to figure this out--the 
problem was not with the DOD, it was with the VA. And it was 
there because we gave you another job with the Agent Orange.
    Ms. Hickey. Probably complicated by both. We still had to 
get medical records. We still had to get TRICARE and contract 
medical records but was less complicated by DOD in that process 
than it was with us and the fact that we are doing Agent Orange 
work. It took 37 percent of our workforce.
    Senator Tester. OK. I got you.
    We have heard conflicting feedback from the VA advocates 
and employees regarding the role out of VBMS. Given the 
dramatic implications on not only the veterans but their 
families and the VA as a whole, there has been feedback that 
says there should be an independent panel to take a peek at 
what is going on. That has been the recommendation of the DAV, 
in fact.
    Do you think that would be appropriate, do you think that 
would be necessary, do you think it would be beneficial?
    Ms. Hickey. I actually use a lot of independent feedback 
right now for doing this and have a lot of independent folks 
that like to come look at us. In fact, I am going through 
another OIG look and another GAO look right now since their 
previous reports.
    I also would say DAV and others have actually been very 
instrumental in helping us build the VBMS. We brought them in 
at the requirements development portion of building the new 
paperless IT system. I depend heavily on all of our VSOs. I 
meet with them monthly and more frequently, if necessary. 
Frankly, I just took them down to Atlanta a month ago, and 
showed them the whole process end to end.
    Senator Tester. So, what you are saying is outside of the 
DAV you are already using independent IT experts to review VBMS 
and its plans and its progress and that kind of stuff.
    Ms. Hickey. I consider GAO and IG people fairly independent 
from VBA people and so I would say, yes. I have a fairly strong 
group of people keeping an eye on us and I think that one more 
set is not necessary at this time.
    Senator Tester. Do they have the expertise in IT?
    Ms. Hickey. I will defer to my colleague, Mr. Warren, on 
that issue.
    Senator Tester. Go ahead.
    Mr. Warren. I think to your question, does it make sense, 
is there value in inviting folks who know how to do the agile 
development methodology come in and look at what we are doing 
to make sure we are on the right path, makes sense.
    We tried going down this path and we kept running into 
Federal Advisory Committee Act (FACA) in terms of how do you 
put advisory groups together. We have MITRE right now looking 
at the architecture, pulling in externals but finding a group, 
in the pure IT realm, because several times we have run into 
the oversight folks from the GAO and the IG not having the 
depth and knowledge necessary to truly understand what is 
agile, what is iterative.
    So, there is an interest. We have been trying to pursue it. 
We've run into some roadblocks.
    Senator Tester. Thank you. And once again I want to thank 
you guys for your service. I appreciate the job you do.
    Chairman Sanders. Thank you, Senator Tester.
    Senator Johanns.

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

    Senator Johanns. Mr. Chairman, thank you for being here 
today. Let me, if I might, follow-up on Senator Tester's 
question about the oversight group because I, having sat in a 
position similar to yours, you know; there was always a 
willingness to put together an oversight group.
    And as much as I value that, typically one of the things 
that I do not want to have happen is that, of course, with a 
new group everybody has to come up to speed. The group has to 
come up to speed, and we might be inadvertently actually 
slowing things down.
    Do you have any thoughts on that?
    Ms. Hickey. Senator Johanns, thank you very much for that 
question.
    It does suck up energy when we have to work with another 
group for them to come in and look at it. We do not mind doing 
that. That is part of the rule of oversight. We will do that.
    But the very same people that are producing the data for 
how we are doing are the very same people that have to pull off 
that task and now go and start working at gathering data and 
pulling data for new requirements that others need.
    So, it is a burden. It is a necessary burden in life to 
ensure that you are doing a good job. So, we will continue to 
do that for OIG and GAO and our partners that you asked to do, 
but it is a burden.
    Senator Johanns. Yes. Let me ask you about the issue of the 
medical records with National Guard and, I guess, Reserve too, 
right? I note they are a part of the agreement. That would seem 
to be pretty straightforward. You provide medical records.
    But having said that, it is obviously not very 
straightforward. I do not want to pull rank on anybody, but it 
seems to me if you really need help with freeing up medical 
records, let us know and we can also make that request. Now 
again, I am sure that makes you a little uncomfortable, that 
you are end running people that you are trying to work with. 
But with the challenges you are dead stalled, right, until you 
get medical records?
    Ms. Hickey. For the final decision, yes, Senator.
    Senator Johanns. Yes. Until that happens you cannot get to 
a final decision I would not think.
    Ms. Hickey. I can move the claim forward with the other 
kinds of evidence that I can gather, but I cannot make a 
decision on that claim; a rater cannot rate that claim until we 
have those medical records.
    Senator Johanns. Now, I am sure that is not the explanation 
to everything, obviously, but how many cases would be out there 
where you just simply need some medical records to move 
forward?
    Ms. Hickey. I will give you an example by looking at the 
claims that we are really focused on right now, which are our 
very oldest claims, our 2-year and older claims; and I will 
tell you for every five of them, three of them are waiting 
medical records.
    Senator Johanns. That gives us a pretty good insight into 
at least a piece of the problem and if we could somehow jar 
that loose and you could deal with those claims in an 
expeditious way, it seems to me we take a pretty sizable step 
forward in dealing with these issues.
    Ms. Hickey. It is a game changer, Senator.
    Senator Johanns. It would really be a game changer. The 
Chair asked you about a legislative approach. Again, I am 
guessing you are feeling uncomfortable, my goodness, I am 
trying to work with these people while somebody is pressing me 
about there being another strategy.
    I am interested in knowing and I think the Committee would 
be interested to know, is there another strategy to try to 
break the logjam here, get you medical records, get these 
claims decided, and get these people the benefits they deserve?
    Ms. Hickey. So, to give credit to my DOD friends who are 
stepping forward with us through our joint governance bodies 
that have been working this issue, we recently made the 
decision between DOD and VA to do mandatory separation health 
exams.
    What that gets us is huge. That gives us a comparison 
between when you came into service and when you separate. At 
the time that you joined the military, you went through what we 
call a MEPS station, and we went extremely deep on your medical 
status at that time.
    We do the same thing with a really good, strong, in-depth 
separation health exam at the end of your service. We now know 
everything that is service-connected between the two.
    DOD and VA have been working on that idea and we have the 
agreement now. We are digging in. The devil is in the details 
and we are working that issue inside of our governance 
structure process.
    Senator Johanns. Can you give us any kind of a sense of a 
timeline as to when you think you are going to work that 
intergovernmental process to a result?
    Ms. Hickey. Left to me, you know, the energy that you see 
that can sometimes be seen as frustration is also the energy 
you see on ``get 'er done.'' So, we are pushing hard to ``get 
'er done.''
    Senator Johanns. I would sure feel a lot more comfortable 
if there were some way you could look out there and say ``get 
'er done'' means 12 months or 18 months or something else, 
because I think this is sizable. I think if there were a 
breakthrough, you would be back here a year from now saying I 
have got a great story to tell you.
    Ms. Hickey. Senator, we have one of these meetings coming 
up shortly. I will push to see if we cannot get some milestones 
in place.
    Senator Johanns. And we would love to hear about it.
    Thank you, Mr. Chairman.
    Chairman Sanders. Thank you, Senator Johanns.
    Senator Begich.
    Senator Begich. Thank you very much, Mr. Chairman.
    Let me follow up on that very good question by Senator 
Johanns. In one of your comments you said, ``left to your own 
devices.'' Is there something we can do to help with other 
agencies or groups that you are working with?
    Ms. Hickey. Senator, there are two groups I would say will 
help us make this transformation. One is our private medical 
physicians who can now give us medical evidence for 71 of our 
81 major body systems that they fill out on a form called a 
Disability Benefits Questionnaire. We shorten it to DBQ.
    When they fill that out, those boxes are made to give us 
explicitly the data that we need to make a decision. Today our 
VHA doctors are giving us those forms, and have been since the 
inception, and we have received 1.5 million of them. That helps 
us to make that decision right the first time if it is filled 
out completely.
    We have about 15,000 since we have initiated this with 
private medical physicians. Reaching out to the Nation's 
private doctors and asking them to help us take care of these 
veterans by doing DBQ's is another way to bring in the body of 
the Nation's help for these veterans.
    The second thing I will tell you is actually in the 
veterans themselves. They can help us by bringing us the 
medical records they do have, by giving us copies of their DD-
214, by filing online from this point forward, and then coming 
online and using our VSOs.
    I actually think we will have better, higher quality claims 
if our veterans go to a VSO across the board for assistance in 
bringing us in a fully developed claim, bringing us in all of 
the evidence we need to make a decision on that claim.
    Our VSOs are trained very well on how to do that. I rely on 
them across-the-board, not only our VSOs in national 
organizations, but our State and county service officers are 
involved and engaged in that as well.
    Senator Begich. Very good. Let me ask you. Do you keep or 
can you develop--now that we are ending the second war that we 
have been engaged in the last 10 years, are you able to say 
over the next period of time, assuming certain growth rates in 
the Army and the Air Force and other services, what the VA 
numbers that you have to manage will be? Do you have such a 
document you could share with the Committee? Do you see?
    Ms. Hickey. Yes, I do.
    Senator Begich. Can you project out and say, OK, by such-
and-such a day we are going to be----
    Ms. Hickey. I do, Senator. I will tell you that I have 
rudimentary capability. I will not tell you I have a model akin 
to what the VHA has, but I am building it right now.
    That is something we needed to do in VBA and we are doing 
it now. I will tell you what will drive VBA's workload that is 
different than the way VHA looks at it. VHA looks at it from a 
veteran who is utilizing medical care. I have to look at it 
from how many medical issues inside a claim will drive 
workload. And that is a shift.
    Senator Begich. A given variable.
    Ms. Hickey. It is a different variable. Our World War II 
veterans filed maybe 20 percent of the time with one or two 
medical issues. Our Vietnam veterans filed three to four 
medical issues maybe 25-28 percent of the time.
    Today's veteran is filing at a much higher rate and with 
many more medical conditions inside of their claim. Why? One, 
we have done outreach, phenomenal outreach over the last 4 
years. In fact, the year before last we touched 269,000 
veterans. This last year we touched 609,000 veterans to teach 
them about their benefits.
    Senator Begich. Got you. Last question. When you mentioned 
the National Guard, you mentioned there are five States that 
have actually added personnel or done something internally to 
help amend your work. Is that what I heard?
    Ms. Hickey. This is a brand-new thing, less than a month 
old. They have agreed to try to help us by standing up that 
capability.
    I will tell you one of the adjutants general that I believe 
does the best of this across the Nation--he is certainly held 
up by my personnel--is the Indiana TAG who has been helping us 
remarkably well already. I believe he sort of sets the bar.
    Senator Begich. A good model.
    Ms. Hickey. A good model. He has people on the call, on the 
phone, ready to go look for that veteran's medical information, 
that veteran's personnel records to help us close on that 
claim.
    Senator Begich. Is Alaska one of those five yet?
    Ms. Hickey. They are actually doing well in Alaska. I know 
we have a new regional office director over there for the last 
year and one-half. I am hearing very positive things about him 
from your State director.
    Senator Begich. Very good.
    Ms. Hickey. I actually believe you will see Alaska's 
numbers looking very good this year compared to where they have 
been in the past.
    Senator Begich. Very good. Let me end, Mr. Chairman, to 
say, you know, we love our veterans in Alaska. We have 77,000 
veterans, one of the highest per capita in the Nation, and the 
VA does exceptional work. We have these challenges. You 
recognize that we have to continue to work through them.
    I just want to thank you and your team and the many people 
who work on the front lines every day trying to deal with the 
huge demands that are increasing literally daily on your 
organization and other veterans' organizations.
    So, thank you for your testimony. Thanks for suffering 
through some of our questions.
    Ms. Hickey. Thank you, Senator.
    Chairman Sanders. Senator Blumenthal.

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Senator Sanders, and thank 
you for holding this hearing and thank you to our witnesses for 
your service to our Nation.
    General Hickey, I have been following some of your 
testimony and I apologize if my questions may repeat some of 
what you have already said. But I would like to take a moment 
to focus on the ``people'' piece of the VBA's transformation 
efforts.
    I have heard from some of the employees in Connecticut as 
to how they are evaluated in terms of claim processing, and 
many have said that they believe that the system actually 
values quantity over quality and accuracy. Accuracy obviously 
is an extraordinarily important part of what they do.
    Their view about quantity over quality and accuracy seems 
to be inconsistent or contradictory to what you have shared so 
far with this panel today. So, I wonder if you could please 
expand on how the VBA evaluates its employees and incentivizes 
high performance.
    Ms. Hickey. Thank you, Senator Blumenthal. I will be happy 
to do that.
    First and foremost, I would like to say, the 20,000 
employees that work in VBA every day are absolutely committed 
to this mission in a way that is not driven by a job or a 
paycheck.
    It is driven by the fact that 52 percent of them are 
veterans themselves; and when I go to ROs and I have been to 36 
or 37 of them now--I've lost count--I talk to those employees 
and ask how many of them have a direct family member who is a 
veteran. Ninety-eight percent of the hands go up in the room.
    That is why they do this job every day, and they come to 
work every day working hard to try to make a difference for our 
veterans and family members and survivors.
    Here is what I will tell you. I have heard some of the same 
things that you have heard. I am trying to change it. It is a 
culture change. The way I am trying to change it is to have 
made bigger emphasis over the last year and a half on quality.
    My message to everyone is, it is not an either/or decision. 
It is not production over quality but you also cannot spend 
forever doing one claim and not get it done fast enough.
    So, that is why I made a serious investment in challenge 
training. We have totally redone the way in which we train our 
personnel and there are great results as a consequence of doing 
that challenge training.
    In the past, basically you got taught somewhere between 1 
and 6 months how to do it. You largely got a little curriculum 
and your buddy next door that taught you how they did their 
claims. That is how you got taught to do your claim.
    Today we do not do that. We have a national curriculum 
built by award-winning people who know how to develop 
curriculum, that are trained to do that. There are pre-tests 
and post-tests. There is actual live claims development in the 
course. We check you at the 3-, 6-, 9-, and 12-month process to 
see how you are doing and how you are sustaining.
    The results of many of those classes now are the following: 
if you are a new person who has gone through the challenge 
training, in the first 6 months you are capable of doing 150 
percent more claims than your predecessors who did not go 
through challenge training at a 30 percent increase in 
accuracy, and I have data to support that.
    The second thing I have done is I took 583 people who were 
doing claims off the line and I invested them into checking and 
improving the quality of those claims. They have been doing 
that under the name QRT, Quality Review Team, for the last 
year. They are inside the ROs. They are trained to the 
standards of our national quality team and they are managed and 
monitored at that level.
    I believe we had too much of a ``got you'' in this area so 
what I asked those Quality Reviews Teams to do is take claims 
that are in process out of the place where we nationally have 
problems. You pull those claims. You find them. Where you see 
an error, you go to that person, that employee and they fix it 
now; it does not count against their performance.
    It is a Mulligan, it is a do over. Fix it now. The benefit 
we get out of that is, one, it is not a ``got you.'' So, 
employees do not feel this overwhelming pressure.
    Two, it is a training moment. They are now learning how to 
do that right before they have gone three or four more months 
of doing it wrong. So, we have data that shows we have caught 
several areas and reversed those as a result of that.
    The other thing that I will tell you that I have just done, 
and we have just finished all the work to make it so, is look 
at quality by individual medical issue. A veteran comes in to 
us in the way you all see, I think many people see us in the 
world as processing one claim. We do not do one claim. We do 
all the individual medical issues that are each treated as an 
individual claim.
    Our people who are doing the claims, though, are not rated 
on how well they did all of those individual medical issues, 
which is where the real work is and where the real decisions 
happen. Instead, they are rated on the overall claim. It is a 
100 percent up or down vote.
    So, if you have, as we are receiving today, 16-medical 
issue claims and you do 15 of those 16 perfectly, and you miss 
it on the 16th, you are not given a 90 percent. You are given a 
zero.
    But today I have changed the system. I am changing the 
rules to say, your quality as an employee will be rated on how 
you do individual medical issues, and then we will be able to 
have a better conversation. We will be able to look at your 
quality better according to where the real work happens at the 
medical issue level.
    I will tell you the results. I know already since October I 
have 11 stations right now today that are at 98 percent quality 
when I look at it as a medical issue level quality.
    I have half my stations at 95 percent quality when I look 
at them from the medical issue level. All of my stations but 
two are above 90 percent quality when I look at them from the 
medical issue level.
    When I give you credit for the things you do right, but I 
get you to re-do the ones you do not, I grade you on the ones 
you do not.
    That is what we are doing. That is what I am trying to do 
to really help our employees understand it is an ``and'' 
equation. It is production and quality, and we are building 
rules into the VBMS that help them with that. We are building 
calculators that help them with that, all to drive their 
quality higher.
    Senator Blumenthal. I appreciate that answer, which was 
excellent. It actually answered some of my follow-up questions. 
But I want to, if I may, Mr. Chairman, ask one more quick 
question. Or, maybe I will submit it for the record. It 
concerns the transition from two separate electronic medical 
systems to a single one. I know there have been questions about 
it before, and maybe I can follow up, Mr. Chairman, with 
questions submitted in writing.
    Chairman Sanders. Absolutely.
    Senator Blumenthal. Thank you.
    Ms. Hickey. Thank you, Senator.
    Chairman Sanders. Well, this brings our testimony to a 
close. General Hickey and your staff there, this issue I think 
you have heard from everybody up here is the major issue 
concerning the veterans' organizations and veterans throughout 
this country and this Committee.
    So, we are going to monitor what you do very, very closely. 
But we are not going to do only that. We need your ideas, as I 
indicated earlier, and your advice as to how legislatively and 
in other ways we can be effective in expediting the process and 
improving accuracy. It is an effort that we are going to have 
to work together on. I look forward to doing that.
    Last, my wife is Irish. Your emotionalism does not make me 
nervous. You have not thrown anything at me yet. So, thank you 
very much for the hard work and the focus you are giving to the 
issue. Thank you very much.
    Ms. Hickey. Thank you.
    Chairman Sanders. We will now hear from our next panel. Let 
me thank our panelists for being here. I want to welcome Daniel 
Bertoni, who is the Director of Education, Workforce, and 
Income Security for the Government Accountability Office, the 
GAO.
    Following Mr. Bertoni is Joseph Thompson. Mr. Thompson 
formally served as the Under Secretary for Benefits at the 
Department of Veterans Affairs and currently serves as Project 
Director with the National Academy of Public Administration.
    Following Mr. Thompson we have Bart Stichman--I hope I am 
pronouncing that correctly--who is the Joint Executive Director 
of the National Veterans Legal Services Program.
    And certainly last but not least, we have Joe Violante, who 
does a great job as the National Legislative Director for the 
DAV, the Disabled American Veterans.
    Thank you all very much for being with us. Mr. Bertoni if 
you could begin.

 STATEMENT OF DANIEL BERTONI, DIRECTOR, EDUCATION, WORKFORCE, 
   AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Bertoni. Mr. Chairman, Ranking Member Burr, Members of 
the Committee, good morning.
    I am pleased to discuss the Department of Veterans Affairs 
disability compensation claims process which paid over $39 
billion in benefits to over 3 million veterans last year.
    For years, VA's disability process has been the subject of 
concern to many due to long waits for decisions and large 
numbers of pending claims. Moreover, since 2009, VA's backlogs 
of claims has more than tripled to nearly 600,000.
    My statement today is based on our December 2012 report and 
discusses factors contributing to the lengthy claims and 
appeals processing and the status of VA's efforts to improve 
service delivery.
    In summary, we found that rising workloads along with 
program rules and inefficient processes have contributed to 
lengthy processing times. As the population of new veterans has 
swelled in recent years, the number of claims received by VBA 
increased 29 percent over 2009 levels.
    These claims generally have a high number of disabling 
conditions and often involving impairments which make their 
assessment more complex.
    Moreover, due to new regulations establishing benefit 
eligibility for new diseases associated with Agent Orange 
exposure, VBA diverted substantial staff resources from 2010 to 
2012 to adjudicate 260,000 additional claims, further 
exasperating workloads and challenging its ability to make 
timely decisions for all claims.
    Issues with design and implementation of the program have 
also contributed to timeliness challenges. For example, the law 
requires VA to assist veterans in obtaining all relevant 
records from both public and private sources. However, delays 
in obtaining military records, especially for Guard and 
Reserve, and Social Security Administration medical records 
have impacted the timeliness of decisions.
    Program rules require steps to consider all evidence 
submitted even if it is provided very late in the process, 
possibly delaying a decision for several months.
    Further, VBA's paper-based claims processing system 
involves multiple handoffs which can lead to misplaced and lost 
documents and cause unnecessary delays. As a result, the 
evidence gathering phase alone of VBA's claims process took an 
average 157 days last year.
    VBA has a number of initiatives under way to improve the 
timeliness of claims and appeals processing, although prospects 
for improvement are uncertain. This includes using contractors 
to assist with evidence gathering for nearly 300,000 claims and 
shifting workloads from regional offices with large backlogs to 
13 specialized processing centers.
    VBA is also modifying certain procedures to speed 
decisionmaking. For example, veterans can now receive expedited 
processing for submitting claims that are certified as having 
all required evidence. However, to-date very few veterans have 
elected this option.
    To decrease the time it takes to gather medical evidence, 
VBA is also using contractors to obtain medical records from 
private physicians and encouraging the use of standardized 
forms for submitting information. However, results to date have 
been mixed.
    The agency has also redesigned its claims process model 
whereby specialized teams triage and process claims based on 
complexity. As of December 2012, VBA had implemented this 
initiative at 51 regional offices.
    Finally, the agency is developing a paperless claims 
processing system which will ultimately allow staff electronic 
access to claims and supporting evidence.
    However, at the time of our review, the system was not 
ready for national deployment due to a number of software and 
performance issues. Despite these challenges VBA still intends 
to fully implement the system by the end of calendar year 2013.
    In conclusion, we have noted that VA's efforts to improve 
the disability claims process should be driven by a 
comprehensive plan. However, when we reviewed the documents, we 
found that they fell short of established criteria.
    Specifically VBA could not provide us with a robust plan 
that tied together its many varied initiatives, their 
interrelationships, and the subsequent impact on claims and 
appeals processing.
    We also noted that absent such a plan to manage and 
evaluate the effectiveness of its efforts, the agency risks 
spending limited resources on initiatives that may not 
sufficiently expedite disability claims process.
    Subsequent to our report and recommendations, the agency 
published an ambitious plan to eliminate the compensation 
claims backlog in 2015. While this plan includes additional 
performance metrics and a discussion of implementation of 
risks, it still falls short in the areas of performance 
measurement, risk mitigation, and some key assumptions.
    Mr. Chairman, this concludes my statement. I am happy to 
answer any questions that you or other Members of the Committee 
may have.
    Thank you.
    [The prepared statement of Mr. Bertoni follows:]
Prepared Statement of Statement of Daniel Bertoni, Director Education, 
 Workforce, and Income Security Issues, U.S. Government Accountability 
                                 Office

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chairman Sanders. Mr. Bertoni, thanks very much.
    Mr. Thompson.

   STATEMENT OF JOSEPH THOMPSON, PROJECT DIRECTOR, NATIONAL 
ACADEMY OF PUBLIC ADMINISTRATION AND FORMER UNDER SECRETARY FOR 
         BENEFITS, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Thompson. Thank you, Mr. Chairman and Members of the 
Committee. I appreciate the opportunity to testify for the 
National Academy of Public Administration regarding VBA's 
efforts to transform its claims process.
    Chartered by Congress, the Academy is an independent, non-
profit, and non-partisan organization dedicated to helping 
government leaders address today's most critical and complex 
challenges.
    The Academy has had the privilege of working with VA over 
the last several years on a number of serious issues. The VBA 
has embarked on an important effort to automate and improve its 
claims processing, and the Academy believes the agency is 
taking some positive steps to accomplish this.
    However, its ability to get the job done will depend on the 
successful adoption of change management practices, some of 
which are discussed in my written testimony.
    Deciding veterans disability claims has always been a 
complex and time-consuming task. In the post-9/11 world, VBA 
has faced major workload issues which everyone in this room is 
familiar with.
    VBA's total claims processing capabilities have grown 
significantly frankly from the time I was there until today. 
Unfortunately, the claims work has grown even faster. I would 
like to try to discuss some of the approaches VBA has taken to 
the backlogs and the Academy's look at that.
    The plan identifies strategies in three major areas: 
people; process; and technology. Those are, in fact, the key 
levers of organizational change. The Academy believes this is a 
fundamentally sound approach and offers a number of suggestions 
in the written testimony of the Committee and for VBA to 
consider concerning potential implementation issues.
    Strategic plans are important but, as the saying goes, no 
battle plan survives contact with the enemy. It would be 
surprising if there was not some important upcoming development 
that fundamentally reshapes the veterans' claims processing 
environment.
    Because of this, resiliency and adaptability may, in fact, 
be the most important organizational characteristics VBA will 
need to prevail in its change efforts. Let me also say that the 
breadth and scope of the change that is underway is massive and 
we know the agency is moving heaven and earth to implement 
these changes.
    There are, however, a number of cautionary notes that the 
Academy would sound that are offered for consideration 
regarding the transformation process.
    One, the agency does not appear to have much, if any, surge 
capacity, that is, the ability to bring resources to bear if 
circumstances require it. There is just no slack in the system 
and we think that is a dangerous situation.
    Second, the technological advances are the key, in the 
Academy's opinion, to VBA's future. Having digital claims 
records, using a rules-based claims systems, exchanging 
information electronically, these changes will ultimately 
transform the operation.
    However, technological changes not only have an enormous 
potential to make claims processing better in the long run, 
they also have an even greater chance of making claims 
processing more difficult in the short run.
    This is typically what happens in large information 
technology implementation efforts. It goes on throughout the 
Federal Government. Glitches are the norm and time, serious 
amounts of time are spent fixing them.
    Some of the development difficulties with VBMS we believe 
are evidence of that. The performance targets set for 2015 such 
as the elimination of 700,000 claims and the backlog and making 
decisions at a 98 percent accuracy rate are indeed stretch 
goals.
    In order to accomplish them, every initiative will have to 
have worked precisely as planned, but as I noted that is not 
the norm for these types of efforts.
    Managing large-scale change, coupled with high workload, is 
a balancing act; and given the extreme amount of work in the 
pipeline and the comprehensiveness of the plan changes, it is 
practically challenging for VBA.
    Good communications with the people implementing these 
changes are critical--I was glad to hear of the Under 
Secretary's efforts in that area--to understanding its impacts, 
as is taking the time to assess and continually reassess the 
actual impacts in real time. This should lead to making 
adjustments and accommodations to the plans. [Laughter.]
    Just make sure you do not overwhelm your own people with 
the changes. All of this, again, speaks to the need for 
fragility and adaptability.
    In closing, Mr. Chairman, let me state the Academy believes 
VBA has taken important steps to bring about the fundamental 
change everyone seeks.
    However, the volume of work currently sitting in regional 
offices combined with the extent of the changes underway make 
achieving success no sure thing. To be successful, VBA will 
need to manage this change with great care and will need 
everyone's support, including Congress, the Administration, the 
VSOs, in making sure that veterans and their families get the 
help they need in the manner they deserve.
    Mr. Chairman, that concludes my opening statement. I will 
be pleased to answer any questions you or the Committee may 
have.
    [The prepared statement of Mr. Thompson follows:]
   Prepared Statement of Joseph Thompson, Project Director, National 
                    Academy of Public Administration
    Mr. Chairman, Ranking Member Burr, and Members of the Committee, I 
appreciate the opportunity to testify today on behalf of the National 
Academy of Public Administration as to the Academy's perspective on the 
efforts of the Department of Veterans Affairs to transform its claims 
process. This is an important topic to our Nation, to the veteran 
community and to me personally. I am a former career employee of the 
Department of Veterans Affairs who was honored to serve as the 
Undersecretary for Benefits from 1997 to 2001. As a Vietnam veteran, I 
was fortunate to have the programs our Nation provides to help 
returning servicemembers available to me. Without hesitation, I can say 
these programs have served our Nation well and transformed the lives of 
countless veterans and their families. I am one of those whose life was 
made immeasurably better because of the help I received from VA. Since 
retiring, I have had the opportunity to work with leaders in a number 
of Federal agencies on business process improvements, primarily as a 
senior advisor at the National Academy. It is in that capacity that I 
am here today.
    Established in 1967 and chartered by Congress, the Academy is an 
independent, non-profit, and non-partisan organization dedicated to 
helping leaders address today's most critical and complex challenges. 
The Academy has a strong organizational assessment capacity; a thorough 
grasp of cutting-edge needs and solutions across the Federal 
Government; and unmatched independence, credibility and expertise. Our 
organization consists of nearly 800 Fellows--including former cabinet 
officers, Members of Congress, Governors, mayors, and state 
legislators, as well as distinguished scholars, business executives, 
and public administrators. The Academy has a proven record of improving 
the quality, performance, and accountability of government at all 
levels.
    The Academy has had the great privilege of working with VA on a 
number of critical issues. From 2007 to 2011, the Academy provided 
advice on how VA can improve its service to veterans and sustain a 
process of continual improvement; strengthen its Fee Care Program; and 
develop effective national strategies to recruit and retain a high-
performing, diverse workforce. Specifically, the Academy established 
independent Panels to help VA in the following areas:

     Analysis of the Veterans Health Administration Non-VA 
(FEE) Care Program. The Academy conducted an independent study to 
analyze the current organizational model supporting the Non-VA Care 
(FEE) Program, with the objective of providing the Veterans Health 
Administration with options on the most efficient model for the future. 
This assessment evaluated other Federal and commercial health care 
programs, compared these programmatic structures with the current 
structure, and assessed how other models might improve outcomes. The 
Panel issued a number of practical recommendations for how VHA could 
improve the management of this program.
     After Yellow Ribbons: Providing Veteran Centered Services. 
As part of a broader effort to help VA improve its service to the new 
and preceding generations of veterans, in 2008, Congress asked the 
Academy to study the management and organizational challenges facing 
VA. The Academy conducted research and developed extensive knowledge of 
VA, which was applied to assess the effectiveness of VA's 
organizational structure, management, and coordination processes, 
including seamless transition, used by VA to provide health care and 
benefits to active duty personnel and veterans, including returning 
Iraq and Afghan war veterans. The Academy Panel focused on the need to 
ensure coordinated and effective services for those who return to 
civilian life after having been severely injured while in combat. The 
Academy Panel's report recommended actions to improve service to 
veterans and sustain a process of continual improvement.
     Recruiting and Retaining a Diverse High-Performing 
Workforce. In September 2007, VA sought the Academy's assistance to 
help address its national and local-level diversity disparities, as 
well as diversity among its Senior Executive Service leadership. VA 
sought an independent and objective analysis of its current practices 
to ensure that the agency is able to acquire and retain the talent 
vital to achieving its current and future core missions. The Academy 
Panel identified an opportunity for VA to reshape the workforce; 
improve diversity; and strengthen the healthcare, administrative, and 
leadership pipelines needed to ensure the right competencies are in 
place for the future. A specific area of emphasis involved identifying 
recruitment and retention challenges that confront VA for its mission-
critical occupations as it seeks to improve the diversity profile and 
strengthen the performance of its leaders and workforce. The Panel 
developed a barrier analysis methodology, tools, and strategies to 
assist VA in identifying structural, personnel availability, and 
attitudinal barriers.

    The Veterans Benefits Administration (VBA) has embarked on an 
important change to automate and improve its claims processing and has 
identified ambitious processing goals to achieve by 2015. The Agency 
has taken some positive steps in designing and implementing a dramatic 
transformation of its claims processing system, but its ability to 
deliver will depend on its successful adoption of change management 
practices, as well as continuing support from veterans service 
organizations, Congress and the Administration.
    As part of my testimony today, I will examine some the challenges 
facing VBA's claims processing; discuss key principles of strategic 
planning and change management, including effective practices elsewhere 
in the Federal Government; and offer advice on how VA, the 
Administration, and the Congress can best move forward in this critical 
area. The Academy's Congressional charter precludes the organization 
itself from taking an official position on legislation, and my 
testimony does not represent an official position of the Academy.
       ``to care for him who shall have borne the battle * * *''
    The Obama Administration has stated, ``[w]e have a sacred trust 
with those who wear the uniform of the United States of America. For 
their dedicated service defending the United States, veterans receive 
an array of benefits and services.'' \1\ It is important to ensure that 
we have a claims processing system that honors this trust. In essence, 
VA is charged by the American people with fulfilling the social 
contract that arises when a young enlistee raises his or her hand and 
swears an oath to ``support and defend the Constitution of the United 
States against all enemies * * *'' Whether debilitating wounds suffered 
in combat or injuries suffering in furthering the mission of the United 
States military, disabled veterans have earned their benefits through 
their service.
---------------------------------------------------------------------------
    \1\ http://www.whitehouse.gov/omb/factsheet--department--veterans
---------------------------------------------------------------------------
    Deciding veterans' disability claims has always been a complex and 
time-consuming task. New laws, court cases, and new program 
requirements each add to the difficulty and length of the process. In 
the post-9/11 world, VBA faces major claims processing challenges 
driven by several factors: a surge in claims both from newly separated 
Iraq and Afghanistan veterans as well as claims from older veterans, 
including many thousands of dioxin exposure-related claims from Vietnam 
veterans; increasing complexity of claims such as Traumatic Brain 
Injury, as well as a significant increase in the number of claimed 
disabilities to be decided in each claim; new laws and precedential 
court cases which have driven claims volume increases and processing 
delays; and difficulties in implementation new technologies.
    These challenges threaten VBA's ability to meet its obligations to 
process veterans' claims in a timely manner. Figure 1 shows the 
downward trend in the veteran population from 2000 to 2036, a decline 
which began over three decades ago. With a declining slope, the normal 
expectation would be for a commensurate decline in VBA's workload. The 
opposite is true. Driven by the increase in claims and the growing 
complexity of the claims processing environment, VBA's workload is 
actually increasing, and has been doing so for many years.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Figure 1. Projected Veteran Population (2000 to 2036)

    VBA's total claims processing capabilities have grown significantly 
over the last decade. Unfortunately, the claims work has grown even 
faster. Overcoming this daunting complex of challenges facing VBA will 
require transformation--an integrated set of changes in organization, 
process, workflow, people/skills, technology, and culture.
                  vba's plan to eliminate the backlog
    In January 2013, VBA released a plan, Department of Veterans 
Affairs Strategic Plan to Eliminate the Compensation Claims Backlog 
that outlines the efforts to eliminate the claims backlog and improving 
decision accuracy to 98 percent in 2015. Those are very ambitious goals 
and to achieve them, not only is a robust and thoroughgoing plan 
necessary, everything will have to go exactly according to that plan or 
the organization will have to be extremely agile in dealing with the 
exigencies.
    VBA's plan identifies strategies in three major areas--people, 
process, and technology--that are the key levers of organizational 
change. This is a fundamentally sound approach. Not only are these 
areas essential to any large-scale organizational change process, they 
all have a symbiotic relationship with each other:

     The ``people'' approach has four cornerstones: improved 
training; case management of claims; cross-functional teams to handle 
the claims work; and triaging claims into those which can be done 
quickly, those that require special handling, and everything else. Each 
of these areas has been used successfully in many organizations and I 
believe can be helpful to VBA in getting its work done:

          - Training is a key lever because of the wholesale change VBA 
        is undergoing. Keeping up with process and technology changes 
        alone will be take considerable work but is absolutely 
        essential to organizational progress.
          - Case management and cross functional teams are, in my 
        opinion, the best way to handle anything as complicated as a 
        veteran's disability claim. The ability to have ``end-to-end 
        ownership'' of a claim as well as a having a VA advocate to 
        help the veteran through this complicated process are both 
        extremely worthwhile efforts that should fundamentally improve 
        service to veterans and their families.
          - Triaging can also be very helpful to increase productivity 
        and reduce cycle times. The dangers in its use is that it can 
        lead to ``cherry-picking'' the easiest claims and sometimes 
        results in employees being pigeonholed in single purpose jobs 
        over extended periods of time.

     The ``process'' approach is concerned with improving 
fundamental business processes. The initiatives described include:

          - Disability Benefits Questionnaires (DBQs), which are forms 
        that physicians complete during an exam that contain explicit 
        medical information needed to decide a disability compensation 
        claim. This is a good idea that should improve productivity and 
        reduce processing times provided there is widespread 
        utilization. This is a good first step but in order to provide 
        the basis for transformational change, the data on the form 
        could automatically populate VBA's claims processing system and 
        generate a prospective award that a claims processor can 
        approve or amend, as necessary. This would reduce an enormous 
        amount of time required to re-key the data when it is received 
        from the physician and significantly shorten the ratings 
        process.
          - Simplified Notification Letters initiative, which 
        automatically generates the text for veterans' claims decision 
        letters, is also on the right track in terms of saving time and 
        effort. A suggested metric VBA might want to use to evaluate 
        this new process would be to track the percent of veterans 
        receiving the letter who have follow-up inquiries or appeal 
        their claims, i.e., are they more or less satisfied with the 
        information they receive through this new process as opposed to 
        those veterans serviced under the old process?
          - Fully Developed Claims are also a good step to reducing 
        cycle times but the volumes are disappointing. VBA's look to 
        incentivizing the process is a good step to take because every 
        claim that comes in under this process is not only a time and 
        resource saver for VBA but is also a significant improvement in 
        the service provided to veterans.
          - Data exchanges with other Federal entities is absolutely 
        necessary and is an area which the Congress and the 
        Administration can play a key role in helping to convince some 
        of these other agencies to cooperate with VBA in building these 
        new systems. It has to be extraordinarily frustrating in the 
        year 2013 for VBA field staff to have to use fax machines and 
        search for unlisted phone numbers to secure information to help 
        veterans.

     The ``technology'' approach centers on the development and 
implementation of the Veterans Benefits Management System (VBMS), which 
is a web-based, electronic claims processing system. This centerpiece 
of VBA's technology approach has enormous potential to improve claims 
processing but is not meeting its initial milestones. This will likely 
prove to be the single most important change VBA is currently 
undertaking.
    A second technology effort involves the Veterans Claims Intake 
Program (VCIP), which is an effort to scan claims folder documents into 
an electronic environment. Having these scanned claims images will 
provide VBA with flexibility in terms deciding how and where work gets 
done and should reduce the amount of lost or misplaced documents but it 
probably will not help improve productivity significantly. Looking at a 
scanned image instead of a piece of paper does not necessarily make a 
claims examiner's job any faster. The true productivity boost for 
``electronic documents'' will come when their data automatically 
populates VBA's claims records.
         key strategic planning and change management practices
    The transformation of VA claims processing is an important and 
ambitious undertaking. VA has engaged in large-scale transformations 
before--most notably, during the 1990s when VHA transformed the veteran 
healthcare system into a high-quality healthcare benchmark for the 
Nation. At that time, both internal and external stakeholders realized 
that the status quo would not get the job done and that fundamental 
change was necessary. While creating new organizational structures, 
such as VISNs, the Undersecretary for Health decentralized power to the 
field and established robust performance measures to ensure 
accountability. The external environment, the leadership, and the 
organizational design were all positive contributors to the 
transformation.
    In order for the promise of the claims processing transformation to 
be fully realized, VA will need to adopt effective strategic planning 
and change management practices. Both OMB and GAO have produced 
guidance for the development and content of strategic plans.\2\ The 
Government Performance and Results Act of 1993 mandated that every 
major Federal agency develop a mission statement, set goals, measure 
performance, and report accomplishments. The practice of requiring 
strategic plans for components within agencies was a natural outgrowth 
of this requirement since component strategic plans are the key to 
ensuring the achievement of agency-wide objectives.
---------------------------------------------------------------------------
    \2\ See OMB Circular No. A-11, Part 2 and GAO, Executive Guide: 
Effectively Implementing the Government Performance and Results Act, 
GAO/GGD-96-119, June 1996.
---------------------------------------------------------------------------
    In its Executive Guide, GAO cites the following practices as 
critical to successful strategic planning:

     Stakeholder involvement, including Congress and the 
Administration, state and local governments, third-party providers, 
interest groups, agency employees, fee-paying customers, and the 
public;
     Assessment of the internal and external environment 
continuously and systematically to anticipate future challenges and 
make future adjustments so that potential problems do not become 
crises; and
     Alignment of activities, core processes, and resources to 
support mission-related outcomes.

    Successful strategic planning practices:

     Present a comprehensive mission statement.
     Establish long-term goals for all major functions and 
operations.
     Identify approaches and strategies to achieve the goals 
and objectives and obtain the various resources needed.
     Document the relationship between long-term goals/
objectives and annual performance goals.
     Identify key factors external to the agency and beyond its 
control that could significantly affect achievement of the strategic 
goals.
     Describe how program evaluations have been used to 
establish or revise strategic goals, and a schedule of future program 
evaluations.

    Strategic plans are important, but it is necessary for departments 
and agencies to be able to make ongoing adjustments. As a military 
strategist once noted: ``No battle plan survives contact with the 
enemy.'' It is important for planning to be fluid and flexible enough 
to respond to an evolving environment and given the history of veterans 
programs, it would be surprising if there wasn't some important 
development that fundamentally impacted the veterans claims processing 
world.
    Leadership plays an even more important role in bringing about 
fundamental change than the strategic plan. There are some well 
established principles for leading change management including:

     Ensuring top leadership drives the transformation. Strong 
and inspirational leaders are indispensible in any organization, 
especially those organizations undergoing large-scale transformations.
     Establishing a clear vision and integrated strategic 
transformation goals. Successful transformations depend on developing 
and continuously communicating the overarching vision and strategic 
goals of the future state organization.
     Redesigning organizational structures, if necessary, to 
enable the vision. Wholesale change requires a careful examination of 
organizational structure and processes to determine if these need to be 
revised to facilitate this transformation.
     Creating a sense of urgency, implement a timeline, and 
show progress from Day One. Change management thought leaders agree 
that a primary driver of a successful transformation effort is 
identifying a high-level of urgency throughout the organization.
     Charting the course with a clearly-defined timeline and 
details of the progress are essential for supporting the change 
initiative and instilling buy-in throughout the affected stakeholder 
community.
     Communicating frequently through multiple channels to 
multiple stakeholders. Successful change initiatives are driven by a 
comprehensive, consistent communication strategy that strives for both 
understanding and buy-in.
     Dedicating a powerful implementation guidance team to 
manage the transformation process. Large-scale change does not happen 
without a powerful guiding force and a fragmented management team 
cannot do the job.
     Engaging employees to seek their improvement ideas, build 
momentum, and gain ownership for the transformation. Successful 
transformations involve employees from the beginning to gain their 
ownership for the changes occurring in the organization.
     Sustaining the effort. A successful organizational 
transformation requires the adoption of a new culture and changes will 
be permanent only if employees are able and willing to embrace a new 
set of values and norms.

    While the Academy has not systematically reviewed VBA's current 
change management efforts, a review of the literature produced by the 
Agency as well as reports and studies suggest that the leadership is 
well-versed in these concepts and is, in fact, following many of the 
principles noted above. It is also apparent that VBA leaders both in 
Headquarters and in the field are working hard to bring about the 
transformation. The breadth and scope of what is underway is massive. 
There are, however, a number of cautionary notes that are offered for 
consideration regarding the transformation process underway:

     The Agency does not appear to have much, if any, surge 
capacity--that is, the ability to bring additional resources to bear if 
an exigent circumstance arises that impacts workloads. This can be 
discerned from reviewing GAO and VAOIG studies as well as looking at 
VBA's published performance reports. It is not clear what will happen 
if there is some ``seismic shock'' to the workload akin to what 
happened with the Veterans Claims Assistance Act of 2000 or the 
``Nehmer'' cases VBA recently completed or even small but significant 
shocks.
     Technological advances are the key to VBA's future. It is 
likely that VBA's future, in terms of the increasing complexity of 
claims, is likely to resemble its past. In these times of budget 
austerity, the only way to ensure that you have the capability to deal 
with growing or changing workload will be to have the electronic tools 
that not only make the work faster and more accurate but also allow for 
more organizational agility in terms or adapting to the ever-evolving 
environment. Having digital claims records, using rule-based claims 
development and processing tools and communicating and exchanging 
information with key claims information providers will transform the 
operation.
     Technological changes being implemented not only have 
enormous potential to make claims processing better in the long run, 
but also have an even greater chance of making claims processing more 
difficult in the short run. This is practically a truism for large-
scale information technology initiatives, and VBA would hardly be the 
first Federal agency to face this situation. Whether due to staff 
downtime to learn new processes, insufficiently tested software, poor 
interfacing between the new technology and the old processes or any 
number of other ``glitches,'' there is always an excellent chance that 
the new systems do not, in the short run, live up to expectations. Some 
of the development difficulties with VBMS are testimony to that.
     Implementing large-scale change during periods of high 
workload volumes is always a careful dance involving moving ahead with 
planned changes while simultaneously trying to not seriously disrupt 
workflow. This can be a dilemma for any leader but given the extreme 
amount of work in the pipeline and the comprehensiveness of their 
planned changes, it is particularly challenging for VBA. It is 
important during such times to have good communications with the people 
implementing these changes--the field staff in regional offices, both 
leaders as well as rank and file staff. It is also important to take 
the time to assess and reassess the actual impacts of the changes in 
real time and to also determine the cumulative impacts of the changes.
     Keeping the focus on the quality of the claims 
decisionmaking process is critical. When workloads remain high and 
major new processing changes are implemented, the emphasis often moves 
to meeting production goals, sometimes at the sacrifice of quality. VBA 
leaders have high goals set for quality but as workload continues to 
remain high, they will have to be vigilant to make sure this does not 
lead to declines in quality.
     The performance targets set for 2015--elimination of the 
700,000 claims backlog and making decisions at a 98% accuracy rate--are 
indeed stretch goals. In order to accomplish them, every initiative 
will have to have worked precisely as planned. To make this happen, VBA 
will have to work extremely hard, avoid any serious changes to the 
claims processing environment and have the support of all the 
stakeholders in this room today--Congress, the Administration, VSOs, 
and other elements of VA.

    VBA's greatest strengths are its people and its mission. The 
benefits programs VBA administers were signed into law by presidents 
Washington, Madison, Lincoln, Wilson and Franklin Roosevelt. For over 
two centuries, these programs have succeeded in transitioning 
generations of warriors successfully back into civilian society and VA 
leaders should take every opportunity to remind employees of the 
Agency's rich history. They also need to remind staff that people who 
come to VBA for help are dealing with some of the most significant 
events in life: disability, illness, death, buying a home and going to 
school. The actions of VBA employees make a critical difference in the 
lives of these veterans and their families. This is no less true today 
than it was 200 years ago. An ongoing and consistent message to 
reinforce that fact can be an important driver for bringing about 
transformational change.

    Mr. Chairman, that concludes my written statement, and I would be 
pleased to answer any questions you or the Committee members may have.

    Chairman Sanders. Thank you very much, Mr. Thompson.
    Mr. Stichman.

STATEMENT OF BART STICHMAN, JOINT EXECUTIVE DIRECTOR, NATIONAL 
                VETERANS LEGAL SERVICES PROGRAM

    Mr. Stichman. Thank you, Mr. Chairman, Ranking Member Burr 
and Members of the Committee. Thank you for the opportunity to 
present the views of the National Veterans Legal Services 
Program, a VSO, on the VA's efforts in addressing the claims 
required to be adjudicated under the order of the U.S. District 
Court in Nehmer versus U.S. Department of Veterans Affairs.
    As background, Nehmer is a class action lawsuit that was 
initiated by NVLSP in 1986 on behalf of Vietnam veterans and 
their survivors.
    The lawsuit challenged a VA regulation that provided that 
chloracne, a skin condition, is the only disease that has a 
positive association with exposure to Agent Orange.
    It is important to understand that the requirement in the 
Nehmer consent decree to re-decide past claims denials is only 
triggered if and when the VA Secretary decides that the 
scientific evidence now shows that a positive relationship 
exists between Agent Orange exposure and a disease whose 
positive relationship with Agent Orange had not previously been 
recognized by VA.
    So, it was in 2010 when Secretary Shinseki was 
simultaneously faced with, one, a growing backlog of VA claims 
and, two, the conclusion of the National Academy of Sciences in 
its latest report under the Agent Orange Act of 1991 to place 
three new diseases, ischemic heart disease, Parkinson's 
disease, and chronic B-cell leukemia in the same category of 
association with Agent Orange exposure as all of the other 
diseases that prior VA Secretaries had concluded should be 
afforded presumptive service-connected status due to their 
association with Agent Orange.
    Secretary Shinseki knew that, if he agreed as a result of 
the latest NAS report to add these three new diseases to the 
list of diseases already accorded presumptive service 
connection, VA adjudicators would be required by the Nehmer 
consent decree to re-decide more than 150,000 past claims and 
tens of thousands of new claims for these three diseases at the 
exact same time that the same adjudicators were faced with the 
growing backlog of other claims.
    But in a courageous decision that gave appropriate 
recognition of both the scientific evidence and the service and 
needs of disabled Vietnam veterans who risked harm to 
themselves in serving their country in Vietnam, Secretary 
Shinseki agreed in August 2010 to add these three diseases as 
presumptively service-connected due to Agent Orange exposure.
    In the years prior to the administration of Secretary 
Shinseki, VA efforts to implement the Nehmer consent decree 
were shoddy. Things changed under Secretary Shinseki.
    The VA ensured that the 150,000 past claims for these three 
diseases were decided speedily and accurately. He accomplished 
this through two key management decisions.
    First, he wisely assigned decisionmaking on these 150,000 
past claims and 60,000 new claims to a large group of VA 
adjudicators whose primary task was devoted to these claims.
    Second, he assembled a competent management team to train 
these adjudicators through use of a 130-page training guide and 
a training video. The end result was speedy and quality 
decisionmaking.
    On October 30, 2010, 2 months after the decision to add the 
three diseases, VA began to adjudicate these past claims and 
they adjudicated 146,000 of these claims by August 1, 2012, in 
an accurate and timely fashion I am happy to report.
    I did want to bring one of the veterans who got one of 
these decisions with me but we were unable to get him to come 
due to transportation problems. He is confined to a wheelchair 
but he authorized me to tell you about his re-adjudication by 
the VA.
    He has coronary artery disease which was first diagnosed 
when he was 39 years old in 1987. He served in the Army from 
1966 to 1968 including a 6-month tour in Vietnam and his 
original claim was denied because coronary artery disease was 
not recognized at that time.
    In a nine-page letter he received and a 19-page rating 
decision which I have here, he not only was given an earlier 
effective date and a grant of service connection for coronary 
artery disease back to 1989 but, while the VA was reviewing his 
claims file, they found a number of past errors that they 
rectified.
    In the same decision, they gave him an earlier effective 
date for his grant of service connection for diabetes mellitus 
which is another Agent Orange related disease back to 1991; an 
earlier effective date for the grant of special monthly 
compensation based on housebound status back to 1991; an 
earlier effective date for service connection for erectile 
dysfunction retroactive to 2004; an earlier effective date for 
special monthly compensation based on loss of use of a creative 
organ back to 2004; and an earlier effective date for service 
connection for an eye disease related to diabetes retroactive 
to 2002.
    Chairman Sanders. Mr. Stichman, if you could come to a 
conclusion.
    Mr. Stichman. This shows the quality of the decisionmaking 
that the VA made during this period. Thank you.
    [The prepared statement of Mr. Stichman follows:]
  Prepared Statement of Barton F. Stichman, Joint Executive Director, 
                National Veterans Legal Services Program
    Mr. Chairman and Members of the Committee: Thank you for the 
opportunity to present the views of the National Veterans Legal 
Services Program (NVLSP) on VA's efforts in addressing the claims 
required to be adjudicated under the order of the U.S. District Court 
of the Northern District of California in Nehmer v. U.S. Department of 
Veterans Affairs, as well as our assessment of VA's transformation 
efforts aimed at improving the timeliness and accuracy of claims 
decisions.
        secretary shinseki's appropriate decision in 2010 under 
                      the agent orange act of 1991
    As background, Nehmer v. U.S. Department of Veterans Affairs is a 
class action lawsuit that was initiated by NVLSP's attorneys in 1986 on 
behalf of Vietnam veterans and their survivors. The lawsuit challenged 
a VA regulation, former 38 CFR 3.311a, that provided that chloracne, a 
skin condition, is the only disease that has a positive association 
with exposure to Agent Orange or the other herbicides containing dioxin 
that was used by the United States in Vietnam. In 1989, the district 
court invalidated this regulation and voided all VA decisions denying 
benefit claims under the regulation. The VA decided to comply, rather 
than appeal this decision.
    In 1991, NVLSP's attorneys negotiated a favorable consent decree 
with the VA in Nehmer. The Nehmer consent decree requires VA, whenever 
it recognizes in the future that the scientific evidence shows that a 
positive relationship exists between Agent Orange exposure and a new 
disease, to (a) identify all claims based on the newly recognized 
disease that were previously denied and then (b) pay disability and 
death benefits to these claimants, retroactive to the initial date of 
claim. Between 1991 and 2009, VA has recognized that scientific studies 
show that there is a positive association between Agent Orange exposure 
and diabetes, and more than a dozen different types of cancer.
    In assessing VA's transformation efforts in improving claims 
processing under the tenure of Secretary Shinseki, it is important to 
understand that the requirement in the Nehmer consent decree to 
redecide past claims denials is only triggered if and when the VA 
Secretary decides that the scientific evidence now shows that a 
positive relationship exists between Agent Orange exposure and a 
disease whose positive relationship with Agent Orange had not been 
previously recognized by VA.
    So it was in 2010, when Secretary Shinseki was simultaneously faced 
with (a) a growing backlog of VA claims, due in part to the increasing 
number of claims being filed by veterans returning from Iraq and 
Afghanistan, and (b) the conclusion of the National Academy of Sciences 
(NAS) in its latest report under the Agent Orange Act of 1991 to place 
three new diseases--ischemic heart disease, Parkinson's disease, and 
chronic B-cell leukemia--in the same category of association with Agent 
Orange exposure as all of the diseases that prior VA Secretaries had 
concluded should be accorded presumptive service-connected status due 
to their association with Agent Orange.
    Secretary Shinseki knew that if he agreed as a result of the latest 
NAS report to add these three new diseases to the list of diseases 
already accorded presumptive service-connected status due to Agent 
Orange exposure, VA adjudicators would be required by the Nehmer 
consent decree to redecide more than 150,000 past claims for these 
three diseases--at the exact same time that these same adjudicators 
were faced with the growing backlog of other claims. He could have 
avoided the need to redecide these 150,000 past claims by simply 
refusing to add the three diseases as related to Agent Orange exposure. 
But in a courageous decision that gave appropriate recognition to both 
the scientific evidence and the service and needs of hundreds of 
thousands of disabled Vietnam veterans who risked harm to themselves in 
serving their country in Vietnam, Secretary Shinseki agreed on 
August 31, 2010 to add these three diseases as presumptively service-
connected due to Agent Orange exposure.
                va's efforts in addressing nehmer claims
    In the years prior to the administration of Secretary Shinseki, 
VA's efforts to implement the Nehmer consent decree were shoddy. On 
several occasions, NVLSP's attorneys had to file a motion to enforce 
the consent decree due to VA failure to comply with the terms of the 
consent decree. On each of these occasions, the U.S. District Court or 
the U.S. Court of Appeals for the Ninth Circuit ruled against the VA. 
VA's performance was so bad that the U.S. District Court had to issue 
an order requiring VA to show cause why it should not be held in 
contempt.
    Things changed under Secretary Shinseki. The Secretary ensured that 
the 150,000 past claims for ischemic heart disease, Parkinson's 
disease, and chronic B-cell leukemia were decided speedily and 
accurately. He accomplished this result through two key management 
decisions. First, he wisely assigned decisionmaking on these 150,000 
past claims to a large group of VA adjudicators whose primary task was 
devoted to these claims. Second, he assembled a competent management 
team to train these adjudicators thoroughly through use of a more than 
130-page training guide and a training video.
    The end result was speedy and quality decisionmaking. On 
October 30, 2010, two months after Secretary Shinseki's issued the VA 
rule adding the three diseases as Agent Orange-related, VA began to 
issue decisions on these past claims. The VA adjudicated over 146,000 
of these claims by August 1, 2012.
    Not all of these adjudications were correct. As class counsel, 
NVLSP has a team of attorneys and paralegals devoted to ensuring that 
VA meets its obligations under the Nehmer consent decree. VA provides 
NVLSP with a copy of all of its decisions under the Nehmer consent 
decree. NVLSP's attorneys work with the Vietnam veterans and survivors 
on these cases to ensure that the VA assigns them the correct effective 
date for their award of benefits for these three diseases and pays them 
the proper amount of retroactive compensation. NVLSP and VA have 
developed an effective system for quickly rectifying mistakes in 
decisionmaking, and thus far nearly 1,000 mistakes have been corrected. 
But the mistakes have been relatively rare, and a far cry from the low 
quality of decisionmaking that occurred during prior administrations.
    NVLSP has also identified a group of more than 60,000 past 
claimants whom VA did not previously identify as needing review under 
the Nehmer consent decree. But to VA's credit, it has agreed that these 
cases need to be reviewed, and the parties are currently working 
together to ensure that they are reviewed in a timely fashion.
    While VA has been subject to much criticism over the past few years 
about the timeliness and accuracy of its decisionmaking in general, the 
bottom line is that on Nehmer claims, VA deserves a great deal of 
credit.
va's other transformation efforts for improving timeliness and accuracy
    NVLSP has three observations about other VA's transformation 
efforts aimed at improving the timeliness and accuracy of claims 
decisions. First, we commend VA management's development of the new 
Fully Developed Claim (FDC) process. While it needs to be clarified and 
modified for it to produce significant improvement in timeliness and 
accuracy, it is a welcome innovation.
    In its present formulation, it is not applicable to many claims 
because VA prohibits use of FDC process if the claimant has any other 
claims pending that are not subject to the FDC process. This is unwise. 
For example, claimants and their representatives are being deterred 
from using the FDC process because it requires that they withhold the 
filing of other claims--and risk loss of months of benefits--simply to 
obtain a quick decision on one claim filed under the FDC process.
    Second, there has long been an unfortunate obsession by both VA and 
Congress with one statistic: how long it takes VA to decide an initial 
claim for benefits, regardless of the quality of the decision on that 
claim. When VA reports to Congress that the average time it takes to 
decide an initial claim is now down to 164 (or whatever number of) 
days, it is not representing to Congress that this is the number of 
days it takes on average to decide an initial claim correctly. Rather, 
VA is merely reporting the average time it takes to reach a correct or 
incorrect decision. The long-standing obsession with this skewed 
statistic has long produced a significant deleterious effect: VA 
regional office adjudicators prematurely decide claims--without taking 
the time to obtain and assemble the evidence necessary to properly 
decide a claim--in an effort to ensure that the average time for 
deciding an initial claim that is reported to VA managers and Congress 
is a low number of days. This obsession is counter-productive because 
it produces unjust premature denials, which, in turn, result either in 
the veteran giving up on a potentially valid claim or in appeals filed 
by veterans which create the existing backlog of claims.
    Finally, on cases in which an appeal is filed, there is another 
longstanding adjudicatory phenomenon which both frustrates the 
interests of justice and adds to the backlog. NVLSP and others have 
long observed that after a veteran files an appeal (i.e., a notice of 
disagreement) with an initial decision, there is an unfortunate 
tendency of many VA adjudicators to overdevelop the claim. That is, 
there is a tendency by many VA regional office and Board of Veterans' 
Appeals adjudicators to delay a decision on a claim where the evidence 
in the current record supports a grant of the claim, in order to obtain 
additional evidence--typically in the form of another VA medical 
examination--in the apparent hope that evidence will be developed to 
support a denial of the claim. This longstanding phenomenon certainly 
works to protect the public fisc. But it is contrary to the pro-
claimant process embodied in statutes and regulations and is a major 
contributor to the large VA backlog of claims.

    I would be pleased to answer any questions that Members of the 
Committee may have.

    Chairman Sanders. Thank you very much.
    Mr. Violante.

 STATEMENT OF JOSEPH VIOLANTE, NATIONAL LEGISLATIVE DIRECTOR, 
                   DISABLED AMERICAN VETERANS

    Mr. Violante. Mr. Chairman and Members of the Committee, 
thank you for inviting Disabled American Veterans to testify 
about the Veterans Benefits Administration's claims processing 
transformation.
    Congratulations, Chairman Sanders, for being selected to 
lead this Committee, and welcome back Ranking Member Burr. I 
look forward to working with both of you and all the Members of 
this Committee.
    Mr. Chairman, the timely and accurate award of a disability 
rating does more than provide compensation. It provides an 
array of benefits that support the recovery and transition of 
veterans and families and survivors.
    But when benefits are delayed or denied, the consequences 
can be devastating. Today, the number of claims pending is far 
too high. The time veterans wait is too long, and the accuracy 
of decisions is too low.
    But while there is a tendency to focus only on reducing the 
backlog, DAV continues to urge VBA and Congress to concentrate 
their efforts on the underlying problems that created and 
continue to fuel the backlog.
    Three years ago, VBA set out on an ambitious path to 
completely transform its IT systems, business processes, and 
corporate culture while simultaneously continuing to process 
more than one million claims annually.
    In the midst of this transformation, it is hard to get the 
proper perspective to measure whether the final design will 
ultimately be successful.
    For anyone who has lived through a home renovation, that 
experience would have many parallels. It is hard to judge 
whether the renovation will be successful when you are 
surrounded by open walls, exposed wires and pipes, as 
unexpected problems pop up adding time and cost to the project.
    In a similar way, observations of VBA's transformation 
efforts logically focus on the exposed errors and unfinished 
initiatives but it is still too soon to judge whether the 
transformation will be successful. Of course, it would be 
equally premature to simply trust that they will succeed.
    DAV believes that VBA is on the right path with the right 
goals and that they have leadership committed to transforming 
and institutionalizing a new claims system that will better 
serve veterans.
    Ultimately, the question of whether they will be successful 
remains to be determined, but one point we are certain of, 
there is no turning back. VBA is currently rolling out the 
Veterans Benefits Management System, its new IT program for 
processing claims.
    Although not yet fully developed or deployed, there has 
been some extremely important milestones. One of the most 
critical was the decision and commitment to scan all legacy 
paper files for new or reopened claims requiring rating-related 
actions. The creation of the digital eFolders allows 
instantaneous transmission and simultaneous review of files, 
saving both time and resources.
    The most important process achievement is the 
implementation of VBA's new transformation organizational model 
which creates cross-functional teams working in segmented lanes 
to more efficiently processing claims.
    Another key reform was the creation of local Quality Review 
Teams that monitor claims processing in real time to catch and 
correct errors before the decision is finalized.
    Finally, one of the most encouraging aspects has been the 
open, transparent, and collaborative manner in which they work 
with DAV and other VSOs. Under Secretary Hickey has 
demonstrated her commitment to expanding the partnership with 
VSOs and we believe that veterans are better served thanks to 
her strong and principled leadership.
    Mr. Chairman, DAV believes significant progress has been 
made but important work remains. DAV offers numerous 
recommendations in our testimony, but let me highlight just a 
few.
    First, while aggressive oversight of VBA claims 
transformation efforts is essential, Congress must support and 
fully fund the completion of VBMS and all document scanning. We 
also recommend an independent review of VBMS by outside IT 
experts.
    Second, VBA must develop a new corporate culture based on 
quality, accuracy, and accountability throughout every regional 
office.
    Finally, Congress should enact legislation to mandate that 
VBA shall accept private medical evidence when it is competent, 
credible, and adequate for rating purposes.
    In addition, private physicians should be allowed access to 
DBQs for medical opinions of service connection and for PTSD 
diagnosis.
    Mr. Chairman, that concludes my testimony. I will be happy 
to answer any questions.
    [The prepared statement of Mr. Violante follows:]
          Prepared Statement of Joseph A. Violante, Director, 
                        DAV National Legislative
    Mr. Chairman and Members of the Committee: Thank you for inviting 
DAV (Disabled American Veterans) to testify about the status of the 
Veterans Benefits Administration's (VBA's) claims processing 
transformation efforts.
    Mr. Chairman, the timely delivery of earned benefits to the 
millions of men and women who have served in our Armed Forces is one of 
the most sacred obligations of the Federal Government. The award of a 
service-connected disability rating does more than provide compensation 
payments; it is the gateway to an array of benefits that support the 
recovery and transition of veterans, their families and survivors. 
However, when these benefits are delayed or unjustly denied, the 
consequences to veterans and their families can be devastating. For 
those wounded heroes who file claims for disability compensation, the 
wait to receive an accurate rating decision and award can take anywhere 
from a few months to several years; longer if they have to appeal 
incorrect decisions. For that reason, we are grateful that this 
Committee's first regular hearing of the 113th Congress focuses on one 
of DAV's highest priorities: completing the reform of the veterans 
benefits claims processing system.
    As the Nation's leading veterans service organization (VSO) 
assisting veterans seeking disability compensation and other benefits, 
DAV has tremendous experience and expertise relating to the processing 
of claims. With a corps of 260 full-time professional National Service 
Officers (NSOs) and 35 Transition Service Officers, DAV assists almost 
a quarter of all veterans who file claims for disability compensation 
each year. Last year, DAV NSOs reviewed more than 326,000 claims files, 
filed 234,500 new claims for benefits, and participated in more than 
287,000 rating board actions. In this capacity, we assist VBA in its 
work by helping veterans file more complete and accurate claims. From 
our decades of experience working on veterans claims, we fully 
understand both the magnitude and complexity of the challenges VBA 
faces in trying to accurately adjudicate more than a million claims 
each year in a timely manner, and we remain committed to doing all we 
can to help develop and implement solutions.
    Mr. Chairman, there will be much discussion today about the size of 
the pending backlog of claims, nationally as well as in individual 
states and cities, and understandably so. Today there are about 900,000 
claims for compensation and pension awaiting decisions at VBA, more 
than double the number pending four years ago. Of those claims, fully 
70 percent have been waiting more than 125 days, VBA's official target 
for measuring the backlog, which is double the number of just two years 
ago. Moreover, the length of time it takes to process veterans' claims 
also continues to rise, with the average processing time now almost 280 
days, far from VBA's target of 80 days. Several Regional Offices (ROs) 
are averaging more than a year to process claims. New York takes almost 
450 days on average and the Los Angeles RO averages over 500 days. 
Looking at these numbers, it is clear that the challenges facing VBA 
are enormous.
    But while there can be a tendency in the media to talk only about 
reducing the backlog, we continue to argue that VBA and Congress must 
instead concentrate their efforts on addressing the underlying problems 
that created and continue to fuel the backlog. After all, VBA could 
eliminate the backlog quite easily by simply denying all pending 
claims, or granting every claim, but neither approach would be correct 
and neither would help to resolve the systemic problems that created 
the backlog in the first place.
    As we have said many times in the past, and it bears repeating 
today, the backlog is a symptom, not the cause of VBA's claims 
processing problems. It is similar to a person suffering from a cold, 
virus or flu who may have severe and painful symptoms, such as a high 
temperature or body aches. Treating those symptoms alone will do little 
to rid the body of the underlying illness or to prevent those same 
symptoms from recurring in the future. Similarly, VBA could direct all 
existing and new resources to processing claims using old technologies 
and processes, and perhaps that would more quickly reduce the existing 
backlog in the short term. But such an approach would do little to 
build the modern, paperless system necessary for timely and accurate 
processing of veterans claims in the future, and as certain as the 
tide, the backlog would roll back in and rise again.
    Mr. Chairman, in many ways, VBA today faces the same core problems 
that have plagued them for decades: too many claims being processed and 
adjudicated inaccurately without sufficient accountability for the 
results, rather than a system designed to decide each claim right the 
first time. The solution to these problems will require new 
technologies and business processes, and most importantly, a cultural 
transformation built upon the foundations of quality, accuracy and 
accountability. From our vantage point as participants in and observers 
of the VBA claims system, as well as active collaborators in the 
current transformation process, we believe today's VBA leadership 
shares our vision.
    In early 2010, Secretary Shinseki laid out an extremely ambitious 
goal for VBA to achieve by 2015: process 100 percent of claims in less 
than 125 days, and do so with 98 percent accuracy. However, if the only 
information available was the latest metrics from VBA's ASPIRE 
Dashboard, one would be hard pressed to find any signs of progress 
toward achieving the Secretary's goals. But numbers alone do not tell 
the whole story.
    As you know, VBA set out on a path three years ago to completely 
transform their IT systems, business processes and corporate culture, 
while simultaneously continuing to process more than a million claims 
each year. Today, VBA is actively rolling out new organizational models 
and practices, and continuing to develop and deploy new technologies 
almost daily. In the midst of this massive transformation, it is hard 
to get the proper perspective to measure whether their final design 
will be successful. But for anyone who has ever lived through a major 
home renovation, or seen a home makeover show on television, that 
experience would have many parallels to what VBA is experiencing during 
its transformation. During the renovation, the homeowner would have to 
live through the mess and chaos of contractors demolishing walls, 
ripping out pipes and tearing up floors, making living there much more 
difficult during this process. And even though the homeowner knows what 
the finished renovation is supposed to look like and how it will 
improve their home, it is hard to judge whether the renovation will be 
successful when they can observe nothing but open walls, exposed wires, 
and unexpected problems arising that add time and cost to the 
renovation.
    In a similar way, current observations of VBA's transformation 
efforts logically focus on the openly exposed flaws, problems and 
unfinished initiatives, but it would be premature to conclude that this 
imperfect and uncompleted transformation process is a precursor to a 
flawed final outcome. It would be equally premature to sit back and 
simply trust that the final result will be successful based on nothing 
more than plans and promises. Instead we must all remain actively 
engaged in overseeing and supporting VBA to achieve the results we all 
desire.
                         milestones of progress
    Mr. Chairman, taking all of the above into consideration, DAV 
believes that VBA is on the right path, that they have set the right 
goals and that they have leadership committed to transforming and 
institutionalizing a new claims processing system to better serve 
veterans. How successful the current transformation efforts will 
ultimately be remains an open question to be answered at a later time, 
and on that point there can and will be differing opinions. However, we 
hope that following today's hearing there is no disagreement on one 
point: there can be no turning back. VBA must complete this essential 
transformation from its outdated, paper-based claims system to a 
modern, paperless, automated claims system. The stakes for veterans and 
the investment by VA are high, so failure is not an option.
    Recognizing that its old system was irretrievably broken, in 2009 
VBA launched dozens of new ideas, initiatives and pilots grouped in 
three categories: people, processes and technology. Having thoroughly 
tested, validated and synthesized the best practices culled from all of 
this experimentation, VBA is currently rolling out many of these new 
programs nationally. The biggest and most important amongst these is 
the Veterans Benefits Management System (VBMS), the new IT 
infrastructure for claims processing. Over the past year, VBMS has been 
rolled out to 20 Regional Offices, and will be fully deployed to all 
remaining ROs before the end of the year, possibly as soon as June. It 
is important to remember that VBMS is not yet a finished product; 
rather it continues to be developed and perfected as it is deployed so 
it is hard to judge whether the final system will deliver all of the 
functionality and efficiency required to meet VBA's future claims 
processing needs. However, there have been a number of extremely 
important milestones that are themselves significant signs of progress.
    In our view, probably the most crucial milestone was VBA's decision 
to scan all paper claims files for every new or reopened claim 
requiring a rating-related action. This decision embodied VBA's total 
commitment to creating a fully digital, paperless, automated claims 
processing system, which DAV and other VSOs had strongly encouraged for 
years. Although this will require significant upfront investment to 
cover the costs of scanning tens of millions of paper records, in the 
long run it will pay dividends for both VBA and veterans.
    Another important milestone is the creation of digital e-folders, 
which serve as the cornerstone of the new VBMS system. E-folders 
facilitate instantaneous transmission and simultaneous reviewing of 
claims files. Every new or reopened rating-related claim made at an RO 
that has adopted VBMS will now have an e-folder created and all 
supporting documentation will be scanned and reside in that e-folder. 
For claims that were already in process at the time of conversion to 
VBMS, those claims will be developed using legacy systems, but will be 
rated inside VBMS with an e-folder, but supporting documentation will 
continue to reside inside a traditional paper claims folder. At 
present, there are an estimated 200,000 e-folders and that number will 
continue to grow as the remaining ROs convert to VBMS this year. In 
addition, the Appeals Management Center (AMC) is now working in VBMS 
and able to review e-folders. The Board of Veterans Appeals (BVA) will 
also begin receiving appeals in VBMS on a pilot basis this month.
    DAV has been closely involved in advising the VBMS team throughout 
its development and has confidence in their strategic plan; however, it 
would be a mistake to simply trust that the finished product will do 
the job as intended. Similar to a home renovation, there is a need to 
have qualified, independent experts review plans and inspect progress 
at regular intervals. Although a homeowner may know where they want 
electrical outlets located, it is unlikely that they would be qualified 
to judge whether the electrical wiring schematic and supplies are safe 
or sufficient to handle the intended load. In a similar manner, while 
we believe VBA's plans for VBMS contain the necessary features and 
functions, we do not have the technical expertise to determine whether 
the enterprise architecture and iterative development process will 
ultimately result in a successful IT system. For this reason, DAV 
continues to recommend that VBA bring in an independent panel of IT 
experts to review the plans and progress of VBMS. Such a team could be 
composed of leading IT experts from companies such as Google, Apple, 
and Amazon, who would volunteer a day or two to help evaluate whether 
VBMS is likely to achieve its intended purpose, or whether there are 
significant concerns that merit further scrutiny or corrective actions.
    Other key technological developments supporting paperless claims 
processing include e-Benefits and the Stakeholder Enterprise Portal 
(SEP), which allow veterans and their representatives to file claims, 
upload supporting evidence and check on the status of pending claims. 
More than 2,000 claims have been initiated via e-Benefits through its 
VONAPPS Direct Connect (VDC) application and just last month, DAV was 
able to file the first SEP claim on behalf of a veteran for whom we 
hold power-of-attorney (POA), which is now being processed inside VBMS 
for a truly end-to-end digital claim.
    In terms of business processes milestones, VBA has fully rolled out 
its new transformation organizational model (TOM) to every Regional 
Office. Based on the best practices from their pilots and initiatives, 
this new organizational model is centered on two major changes in how 
ROs manage their work. The traditional triage function is now done 
through an Intake Processing Center (IPC) at every RO, which places 
more experienced employees at the front end of the process in order to 
better direct claims along several new segmented processing lanes. The 
smaller, less complex claims will be processed in the ``express lane,'' 
the most complex claims will be done in the ``special ops'' lane, and 
the bulk of the claims will be done in the ``core'' lanes. In each of 
these segmented lanes, cross-functional teams of Veterans Service 
Representatives (VSRs) and Rating Veterans Service Representatives 
(RVSRs) work together on claims, allowing greater interaction 
throughout the process, and are expected to yield greater accuracy and 
timeliness. This new organizational model also allows each RO to better 
align its workforce according to experience and expertise levels. Other 
key process improvements that DAV strongly supports include the Fully 
Developed Claims (FDC) program, which expedites ready-to-rate claims, 
and Disability Benefits Questionnaires (DBQs), which standardize and 
encourage the collection of private medical evidence to aid in rating 
decisions.
    On the people side of its transformation efforts, VBA has also 
initiated vitally important changes that should yield positive long-
term improvements. DAV was especially pleased that VBA fulfilled one of 
our longstanding recommendations through the creation of local Quality 
Review Teams (QRTs), whose primary function is to monitor claims 
processing in real time to catch and correct errors before rating 
decisions are finalized. The QRTs have been trained by the national 
STAR (Systematic Technical Accuracy Review) quality assurance staff to 
provide consistent application of VBA rules and regulations. QRTs are 
also helping to develop and implement training and mentoring programs 
in many ROs, providing a much-needed emphasis on quality and accuracy, 
rather than just speed and production. The decision to move 600 VSRs 
and RVSRs out of day-to-day production and into QRT positions is a 
powerful sign of VBA's commitment to creating a culture of quality.
    Finally, one of the most important and encouraging aspects of VBA's 
transformation efforts has been the open, transparent and collaborative 
manner in which they have worked with stakeholders, particularly with 
VSOs. From the outset of this transformation, VBA leaders reached out 
to DAV and other VSOs seeking our ideas and support to help fix the 
broken claims system. Throughout the development of VBMS, SEP, TOM, 
FDC, DBQs and many other small and large initiatives, VSOs have been 
regularly invited to share our perspectives and ideas. Since being 
confirmed, Under Secretary Allison Hickey has repeatedly demonstrated 
her passionate commitment to expanding the partnership between VBA and 
VSOs, and we believe that veterans will be better served thanks to her 
strong and principled leadership.
                            recommendations
    Mr. Chairman, DAV believes that significant progress has been made, 
but that vitally important work remains. In order to support VBA's 
transformation efforts and further improve the delivery of benefits to 
veterans, DAV makes the following recommendations.
First, Congress must continue to perform aggressive oversight of VBA's 
        ongoing claims transformation efforts, particularly new IT 
        programs, while actively supporting the completion and full 
        implementation of these vital initiatives.
    In order for VBA's current transformation plans to have any 
reasonable chance of success, VBA must be allowed to complete and fully 
implement them. It is imperative that Congress continue to support this 
goal, even while continuing to perform aggressive oversight. In 
particular, we recommend that Congress encourage an independent, expert 
review of VBMS. At the same time, Congress must continue to fully fund 
the completion of VBMS, including providing sufficient funding for 
digital scanning and conversion of legacy paper files, as well as the 
development of new automation components for VBMS. As stated earlier, 
it is too late to turn back from paperless processing and we urge 
Congress to both oversee and support full funding for this and other 
vital IT initiatives throughout the final development and 
implementation phases.
Second, Congress must encourage and support VBA's efforts to develop a 
        new corporate culture based on quality, accuracy and 
        accountability, as well as strengthen the transmission and 
        adoption of these values and appropriate supportive policies 
        throughout all VBA Regional Offices.
    The long-term success of all of VBA's transformation efforts will 
depend on the degree to which these changes are institutionalized and 
disseminated from the national level to the local level. In addition to 
training, testing and quality control, the best means of transforming 
and transmitting cultural change is to properly align measuring and 
reporting functions with desired goals and outcomes for both VBA 
leadership and employees. For example, as long as the most widely 
reported metric of VBA's success is the Monday Morning Workload 
Reports, particularly the weekly update on the size of the backlog, 
there will remain tremendous pressure throughout VBA to place 
production gains ahead of quality and accuracy. Similarly, if 
individual employee performance standards set unrealistic production 
goals, or fail to properly credit ancillary activity that contributes 
to quality but not production, those employees will be incentivized to 
focus on activities that maximize production. VBA must develop more and 
better measures of work performance that focus on quality and accuracy, 
both for the agency as a whole and for individual employees. 
Furthermore, VBA must ensure that employee performance standards are 
based on accurate measures of the time it takes to properly perform 
their jobs.
    Finally, Congress must ensure that VBA does not change its 
reporting or metrics for the sole purpose of achieving statistical 
gains, commonly referred to as ``gaming the system,'' in the absence of 
actual improvements to the system. For example, VBA recently changed 
how processing errors are scored for multi-issue claims. Previously, a 
claim would be considered to have an error if one mistake on at least 
one issue in the claim was detected during a STAR review. Under the new 
error policy, if there are 10 issues in the claim and a single error is 
found on one of the issues, that would now be scored as only 0.1 error 
for that claim. While this may be a more valid way of measuring 
technical accuracy, it also has the effect of lowering the error rate, 
thereby implying an improvement in quality, even though the same number 
of errors was detected.
Third, Congress and VBA should enact and adopt new legislation and 
        policies that maximize the use of private medical evidence to 
        conserve VBA resources and enable quicker, more accurate rating 
        decisions for veterans.
    DAV and other VSOs have long encouraged VBA to make greater use of 
private medical evidence when making claims decisions, which would save 
veterans time and VBA the cost of unnecessary examinations. DBQs, many 
of which were developed in consultation with DAV and other VSO experts, 
have been designed to allow private physicians to submit medical 
evidence on behalf of veterans they treat in a format that aids rating 
specialists. However, we continue to receive credible reports from 
across the country that many VSRs and RVSRs do not accept the adequacy 
of DBQs submitted by private physicians, resulting in redundant VA 
medical examinations being ordered and valid evidence supporting 
veterans' claims being rejected.
    Although there are currently 81 approved DBQs, VBA has only 
released 71 of them to the public for use by private physicians. In 
particular, VBA should allow private treating physicians to complete 
DBQs for medical opinions about whether injuries and disabilities are 
service-connected, as well as DBQs for PTSD, which current VBA rules do 
not allow; only VA physicians can make PTSD diagnoses for compensation 
claims. Congress should work with VBA to make both of these DBQs 
available to private physicians.
    To further encourage the use of private medical evidence, Congress 
should amend title 38, United States Code, section 5103A(d)(1) to 
provide that, when a claimant submits private medical evidence, 
including a private medical opinion, that is competent, credible, 
probative, and otherwise adequate for rating purposes, the Secretary 
shall not request a VA medical examination. This legislative change 
would require VSRs and RVSRs to first document that private medical 
evidence was inadequate for rating purposes before ordering 
examinations, which are often unnecessary.
    In addition, VBA should accelerate the development of software that 
seamlessly translates relevant information from VHA medical 
examinations performed by treating physicians into appropriate DBQs for 
VBA rating specialists. This free flow of electronic health data would 
save veterans time and VBA resources by further eliminating unnecessary 
VBA compensation exams.
Fourth, Congress and VBA should expand and create new authorities to 
        rapidly award partial or temporary benefits to disabled 
        veterans when the evidence of record clearly supports such 
        awards.
    VBA currently has the authority under 38 CFR 4.28 to issue 
prestabilization ratings for veterans who are discharged from active 
duty due to severe injuries or illnesses that are not yet fully 
stabilized or healed, and which cause significant limitations in their 
ability to be employed. VBA also has rules to award intermediate rating 
decisions with deferred issues as discussed in M21-1MR, Part II, 
Subpart iv, Chapter 6, Section A. Intermediate rating decisions for 
multi-issue claims can be made when the record contains sufficient 
evidence to decide some of the claimed issues, including service 
connection, even though remaining issues require further development, 
and will be deferred. Although VBA has had these authorities for a 
number of years, VBA rarely takes advantage of them to provide at least 
partial or minimum benefits to veterans on an expedited basis. Concerns 
about ``double work'' and performance standards that fail to properly 
credit these two ratings actions have discouraged the widespread use of 
these valuable rating authorities.
    DAV believes that both prestabilization and intermediate ratings 
should be encouraged and expanded to apply to additional circumstances. 
Currently, prestabilization ratings can only be awarded at two rating 
levels--50 percent and 100 percent--thereby limiting the number of 
veterans who could benefit from this authority. DAV recommends that a 
third level--30 percent--be added in order to rapidly award at least 
some minimum level of benefits to veterans who need support in their 
recoveries. The 30 percent rating would also open the door for veterans 
to receive other important benefits, such as vocational rehabilitation, 
more quickly to support their transition. In addition, we would 
encourage Congress and VBA to expand the use of intermediate ratings by 
creating a category of ``interim'' or ``temporary minimum'' ratings for 
claims in which the evidence of record is already sufficient to support 
at least a minimum service-connected disability rating. Similar to 
intermediate ratings, these ``interim'' or ``temporary minimum'' 
ratings should not slow or impede the regular development and 
processing of the rest of the claim. With the adoption of paperless e-
folders and smart processing, all of these temporary rating authorities 
could be more easily accomplished without the risk of ``double work'' 
by VBA.
    Although these temporary rating authorities would not directly 
reduce VBA's workload or the backlog, providing a rapid award of at 
least some benefits, based on the available records, to disabled 
veterans would increase overall confidence in the claims process, and 
likely help to reduce the number of appeals filed by claimants. Most 
importantly, these changes would expedite much-needed assistance into 
the hands of veterans and their families during difficult transitions 
and recoveries.
Fifth, Congress should enact new legislation to provide a presumption 
        of service connection for tinnitus and hearing loss for 
        veterans who served in combat or whose military occupation 
        specialty (MOS) exposed them to high levels of noise.
    During their military service, many veterans were exposed to 
significant acoustic trauma from very high levels of noise caused by 
heavy machinery, aircraft, explosive devices or numerous other causes. 
As a result, many of them later in life develop hearing loss and 
tinnitus, but often have a hard time proving it was due to their 
service because of inadequate testing and record keeping while in 
service. Tinnitus is the number one service-connected disability from 
all periods of service, with more than 800,000 veterans receiving 
disability compensation, and that number has steadily grown each year. 
Over 700,000 veterans have been rated for hearing loss, making that the 
second highest total for service-connected disabilities. By creating a 
reasonable presumption, not only would thousands of veterans receive 
compensation to which they are entitled, but VBA would be able to 
redirect resources from unnecessary development of these claims to 
address its other needs. Both the affected veterans and VBA would 
benefit from this limited and reasonable presumption.
Sixth, Congress should enact legislation to create a new Veterans 
        Economic Opportunities Administration inside VA, which would be 
        comprised of the Vocational Rehabilitation and Employment 
        Service, Education Service, the Department of Labor's Veterans 
        Employment and Training Service, and other related offices and 
        functions, in order to allow greater focus by VBA on 
        successfully fixing the claims processing system.
    DAV and our partners in the Independent Budget recommend the 
creation of a new Veterans Economic Opportunities Administration (VEOA) 
which would not only help to support veterans seeking new employment 
and economic opportunities, but would also indirectly support VBA's 
transformation efforts. By removing responsibility for managing both 
the Vocational Rehabilitation and Employment (VR&E) and Education 
Services, this change would allow VBA leadership to concentrate more 
exclusively on claims processing reform. Given the dismal record of the 
Department of Labor's Veterans Employment and Training Service (VETS) 
over the past two decades, this reorganization would also allow greater 
focus and synergy with VA on employment issues, a critical priority for 
veterans, particularly younger veterans. Moving VETS to VA would also 
help to protect funding for veterans employment programs since all VA 
funding is currently exempt from sequestration cuts, while DOL programs 
are not.

    Mr. Chairman, that concludes my testimony and I would be happy to 
answer any questions that you or other Committee members may have.

    Chairman Sanders. Mr. Violante, thank you very much not 
only for the work that the DAV does but for your excellent 
testimony.
    Every Member of this Committee and all of these service 
organizations are deeply, deeply concerned about the backlog 
and we want to move that process forward as rapidly as we can.
    I think the testimony that we have heard today from General 
Hickey and others is that, among other things, the VA is now 
processing more claims than they ever have before. And, they 
took a detour in appropriately dealing with the Agent Orange 
issue.
    Mr. Stichman, what I heard you say is, in fact, that the VA 
did exactly the right thing in terms of responding to the 
illnesses suffered by our soldiers who served in Vietnam, and 
they did so in a prompt and accurate way.
    Would you elaborate on that?
    Mr. Stichman. Yes. Your statement is accurate. They re-
decided 150,000 past claims and 60,000 new claims in a speedy 
way using good management techniques by giving the cases to a 
group of adjudicators whose time was focused on that task alone 
at the same time that the agency was dealing with the backlog.
    Chairman Sanders. So, in the midst of a lot of criticism 
being leveled at the VA, some of that being appropriate, on 
this issue you think they actually did a pretty good job.
    Mr. Stichman. Yes, and I know that because as class counsel 
we are given copies of all the decisions the VA makes; and we 
have been spending the last couple of years communicating with 
the class members and we do find some mistakes. People make 
mistakes on claims adjudications. That will always be true, but 
the percentage of correct decisions is much higher than in 
prior administrations in implementing the Nehmer consent 
decree.
    Chairman Sanders. Thank you very much, Mr. Stichman.
    Mr. Violante, you have indicated in your view, DAV's view, 
that the VA is, ``on the right path.'' I think we all 
understand that the year 2013 in the 21st century there is no 
choice but to go forward into a paperless system. The paper 
system can no longer be used.
    Talk a little bit about what you see them doing right and 
then give me some suggestions, which you did make one. If you 
were sitting up here, what would you do; is it the same 
question asked General Hickey, what legislatively can we do to 
improve the situation? And say a few words, if you might, on 
this 60-day requirement, what some of your concerns might be 
about that.
    Mr. Violante. Thank you, Mr. Chairman. Let me say that I 
have been in DC now for 30 years. I have been involved in 
veterans issues for most of that time and I have never seen 
such openness with the leadership at the VA central office.
    They brought us in. They talked to us. They listen to us 
when we talk. So, that is helping VBA go down the right path. 
We believe that what they are doing with VBMS is the right 
thing to do to get into a paperless situation.
    I think what we must understand is this is not being done 
in a vacuum. At the same time, they are processing over a 
million claims annually which, in my mind, is something 
phenomenal. I think their Quality Review Teams are what we have 
asked for for a long time. It will help ensure that their 
accuracy is improved.
    Their training program is better now than it was years ago. 
So, in those areas that is where we are seeing improvements.
    Chairman Sanders. Let me just interrupt you, Mr. Violante. 
My understanding is the DAV helps more veterans than perhaps 
any other organization in the country move their claims 
forward, is that correct?
    Mr. Violante. That is correct.
    Chairman Sanders. So, you have today and have had in the 
past some experience in this whole process.
    Mr. Violante. That is correct. Yes. We represent roughly 
about 300,000 veterans, about a quarter of those veterans 
filing claims.
    With regard to the 60 days, we would not like to see that 
shortened only because 50 percent of the veterans are 
unrepresented. We certainly encourage veterans that we work 
with or claimants that we work with, if there is no additional 
evidence or they can get their evidence filed early, to do so. 
So, we would not like to see changes there.
    A couple of things legislatively we would like to see would 
be with regard to the recommendations I made about requiring 
the VA to consider credible, competent medical evidence that is 
adequate for rating purposes.
    Right now, we hear from the field, from our people, that in 
some cases where the medical evidence is sufficient to be 
rated, the fact that it comes in from a private physician 
triggers an unnecessary examination.
    I think also there should be more emphasis put on partial 
claims. In other words, I walk in the door. VA looks at my 
records. They see I was involved in an IED explosion. They see 
I have a through-and-through wound from the shrapnel. I have 
ringing in my ears. You know, those can be adjudicated quickly.
    The other claims for PTSD, for Post Traumatic Brain Injury, 
they can continue to develop those but I should walk out of 
there with a check immediately because in the record is 
evidence establishing, you know, those injuries.
    So, we would like to see more done with regard to 
intermediate or partial claims.
    Chairman Sanders. OK. Thank you very much, Mr. Violante. 
Thanks again for what the DAV does.
    Mr. Thompson, you have a unique perspective on this issue, 
given the fact that you were doing exactly what General Hickey 
is doing today. We look at so many numbers to try to measure 
the VA's progress. It is kind of difficult to deal with all 
those numbers.
    VA, Congress, and stakeholders examine mountains of data in 
an attempt to gauge where progress is being made and which 
efforts are producing results.
    What measurements or data do you think are the most vital 
for this Committee, VA leadership, and, most importantly, 
veterans to use to measure VA's performance as well as the 
success or failure of their transformation efforts?
    Mr. Thompson. Mr. Chairman, I think the single most 
important measure is the quality and accuracy of the decisions 
made. You can do everything else but if you get that wrong it 
is a major problem.
    I would say the second issue has to do with both the cycle 
times, or, the average days to complete as VA refers to it. 
This is a measure that is looking at the past. And then, they 
have the measurement of the age of cases in the inventory, 
average days pending. That is a look at the future.
    So, if those average days pending are in decline, as I 
understand they are now, that is giving you some insight as to 
where the workload is headed.
    If I might take my hat off as a representative of the 
National Academy and speak as a private citizen who has some 
familiarity with this issue, I think that until transformation 
is done, until they actually have these tools available to 
them, this still will remain overwhelmingly a people process 
inside regional offices.
    It will require a large number of people handling the work, 
and it is my belief that they need more people than they have 
today. I believe they need thousands more employees considering 
the volumes, not just pending claims but looking at how much 
appeals work is sitting out there, and all of the things they 
are trying to do simultaneously.
    I commend them for what they are trying to do but that is 
the heaviest lift I can imagine. In my personal perspective, I 
think they need more people.
    Chairman Sanders. I appreciate that thought. Would you want 
to add any other advice in terms of what this Committee could 
do legislatively based on your years of experience?
    Mr. Thompson. Well, I have heard numerous discussions about 
DOD and I would offer this: 15 years ago I sat with my 
counterpart in DOD, the Under Secretary, when we thought we had 
a deal about securing the transmission of records from them to 
us. The fact that it is still an issue suggests to me that they 
may not fully be on board. If I were to spend time in terms of 
trying to craft legislation, I think I would look down that 
road.
    Chairman Sanders. Well, let me thank all of you for your 
valuable and interesting testimony, and we look forward to 
working with you in the future. Thanks again.
    This hearing is now adjourned.
    [Whereupon, at 12:21 p.m., the Committee was adjourned.]
      

                                  
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