    [Senate Hearing 114-609]
    [From the U.S. Government Publishing Office]

         MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2016

                                  ----------

                            THURSDAY, MARCH 19, 2015

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

        The subcommittee met at 10:30 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Mark Kirk (chairman) presiding.
        Present: Senators Kirk, Boozman, Capito, Cassidy, Tester,
    Udall, and Schatz.

                         DEPARTMENT OF VETERANS AFFAIRS

                        Veterans Benefits Administration

    STATEMENT OF HON. ALLISON A. HICKEY, UNDER SECRETARY
                FOR BENEFITS
    ACCOMPANIED BY:
            JAMES E. MANKER, JR., CHIEF FINANCIAL OFFICER
            THOMAS MURPHY, DIRECTOR, COMPENSATION SERVICE

                     OPENING STATEMENT OF SENATOR MARK KIRK

        Senator Kirk. The subcommittee will come to order. We are
    very happy today to have Under Secretary Allison Hickey, who
    led a long and distinguished career in the wrong service, the
    Air Force.
        I was joking with you why you did not join the Navy, which
    you should have. I would just advise you of that. Let me say
    that we have now Allison Hickey, the Under Secretary of the
    Veterans Benefits Administration (VBA), and Jamie Manker, the
    CFO for VBA. And I am very happy to have you here.
        With that, let me recognize my good friend, Jon Tester.

                        STATEMENT OF SENATOR JON TESTER

        Senator Tester. Well, thank you, Mr. Chairman, and thank
    you for being generous with your time. Thank you very much.
    And, Secretary Hickey, Mr. Manker, Mr. Murphy, thank you all
    for being here today in front of this subcommittee.
        VA compensation and pension benefits provide a lifeline of
    support for millions of Americans who have worn the uniform of
    this Nation, especially disability compensation for those who
    have been injured in the line of duty. And, Secretary Hickey, I
    appreciate your aggressive efforts that you and your colleagues
    have made to reduce the disability claims backlog, streamlining
    the claims process, and transforming the way VBA does business.
        These efforts have reduced the backlog from 611,000 in
    March 2013 to 215,000 claims as of today. But I think we all
    recognize that there is much more work that has to be done not
    just to eliminate the backlog, but also to position the VBA so
    that we do not see a future backlog, particularly given the
    continuing rise in filings and the complexity of the claims.
        Secretary Hickey, you are facing a tough challenge, and I
    look forward to hearing the details of your budget request and
    the reforms that you are recommending to bring the VBA into the
    21st century. With that, once again, thank you all for being
    here, and I will turn it back to you, Mr. Chairman.
        Senator Kirk. Thank you. Let us go with--sure, I will do my
    opening statement here. Secretary Hickey, you have aggressively
    tackled the veterans' claims backlog. We have talked a lot
    about this with my obvious interest in the Chicago regional
    office, to make sure--the general question that I would have
    for you, the issue I would put before you, now I think it is an
    average of 172 days in Chicago.
        The point that I would like to make, you know, for normal
    Americans, for a veteran who has suffered a catastrophic
    injury, like amputation, there should be a way within 24 hours
    of adjudicating the disability of that person. Most Americans
    would say if there is a missing leg, boom, we should just
    adjudicate that within a day. I would just highlight that
    point. That concludes my statement.
        I wanted to recognize you for helping. You may give your
    opening statement.

                  SUMMARY STATEMENT OF HON. ALLISON A. HICKEY

        Secretary Hickey. Thank you very much, chairman. Chairman
    Kirk, Ranking Member Tester, members of the subcommittee, thank
    you for the opportunity to present VBA's 2016 budget request.
    In addition to Jamie Manker to my left, I also have with me
    today Tom Murphy, who is the director of compensation service.
        Our 2016 budget request includes $2.7 billion in
    discretionary funds and $95.3 billion in mandatory funds,
    reflecting the ever-growing demand for VA benefits and
    services. Our obligation to veterans continues to grow because
    demand for benefits continues to increase long after war's end.
        The percent of the veteran population receiving
    compensation was nearly constant for 40 years at 8.5 percent.
    Over the last 15 years, it has increased to 19 percent. The
    average disability rating has also increased. After 45 years
    with a consistent average rating of 30 percent, the average has
    risen to 48 percent since 2000. In addition, the number of
    veterans filing claims and the number of medical issues within
    those claims has soared. GWOT veterans separating through our
    Benefits Delivery at Discharge Program claim an average of 16
    medical issues compared to only four issues that were claimed
    by our World War II veterans and six issues by Vietnam era
    veterans.
        Despite these challenges, VBA's workforce, 53 percent of
    whom are veterans themselves, are making major strides in
    increasing productivity and reducing the claims backlog. The
    number of claims completed per full-time equivalent (FTE)
    increased 25 percent from 2012 to 2014. A more accurate
    representation is the 67 percent increase in productivity at
    the issue level from 2009 to 2014.
        As a direct result of our transformation, we have reduced
    the pending disability claims inventory by 46 percent and the
    claims backlog by 66 percent. Progress made has not come at the
    expense of quality. We have increased claim-based accuracy from
    83 percent in June 2011 when I arrived to nearly 92 percent
    today, and issue-based accuracy has improved to 96 percent.
    Veterans are waiting less time for decisions and benefits. The
    average time to decide a claim has improved by 170 days, and
    the average age of pending claim has improved by 144 days.
        In 2014, we completed a record breaking 1.32 million
    claims, a 35-percent increase over the 980,000 claims completed
    in 2009. But there has even been more dramatic growth in the
    number of issues completed, 2.7 million in 2009 to 5.5 million
    in 2014. That is a 101 percent increase over just 5 years. We
    expect it to grow to 115 percent increase by 2017. With
    investments provided by the President and this Congress in
    recent years, we are on track to eliminate the claims backlog
    by the end of 2015.
        Our budget request includes critical investments in
    transformation initiatives and IT support. Previous IT
    investments helped VBA to now process over 6,500 education
    claims per day without any human intervention, while increasing
    accuracy to 99.6 percent. Our request also includes funding to
    right size our workforce. As VBA continues to receive and
    complete more rating claims, the volume of appeals, non-rating
    claims, and fiduciary exams correspondingly increases.
        In July 2014, VBA notified Congress of a need to hire
    nearly 1,700 FTEs to address this increase in workload. We are
    grateful for funding in 2015 to hire 250 of those who are
    asking for funding in 2016 to hire another 770. The hiring
    would include 200 appeals processors.
        The 11 to 12 percent appeals rate has not changed for over
    20 years. However, as we complete record breaking numbers of
    claims, the volume of appeals continues to grow. We need your
    support. Our only options are for Congress to either change the
    complex laws around appeals or provide additional resources to
    address this workload. Our 2016 request would also fund hiring
    320 non-rating claims processors and 85 field examiners for
    fiduciary.
        We appreciate the opportunity to discuss our budget request
    and look forward to working with you to identify and prioritize
    spending to best serve the interests of our Nation's veterans,
    their family members, and their survivors. And I am prepared to
    take your questions.
        [The statement follows:]
                  Prepared Statement of Hon. Allison A. Hickey
        Chairman Kirk, Ranking Member Tester, Distinguished Members of the
    Senate Appropriations Committee, Subcommittee on Military Construction,
    Veterans Affairs, and Related Agencies: Thank you for the opportunity
    to present the President's 2016 budget and 2017 advance appropriations
    requests for the Veterans Benefits Administration (VBA). I am
    accompanied today by Mr. Jamie Manker, VBA's Chief Financial Officer,
    and Mr. Thomas Murphy, VBA's Compensation Service Director.
        VBA has the incredibly important mission of effectively delivering
    the benefits our Nation's veterans and their families have earned and
    deserve. In carrying out its mission, VBA employees have adopted and
    embraced the Department's core values of Integrity, Commitment,
    Advocacy, Respect, and Excellence--appropriately captured in the phrase
    ``ICARE.'' Our workforce includes over 21,000 employees, 53 percent of
    whom are veterans themselves, and 34 percent of whom have service-
    connected disabilities.
                         summary of 2016 budget request
        The President's 2016 budget for the Department of Veterans Affairs
    (VA) will allow VBA to manage integrated benefits and services,
    administered through a nationwide network of 56 regional offices (RO).
    The 2016 budget requests $2.7 billion in discretionary funds and $95.3
    billion in mandatory funds for VBA. The budget also requests a first
    time advance appropriation of $104.0 billion for 2017 for VBA's three
    mandatory appropriations, including Disability Compensation and
    Pensions, Readjustment Benefits, and Insurance and Indemnities. Funding
    for VBA is critical to continue providing the following benefits:

      --Disability compensation for 3.9 million veterans with service-
            connected disabilities;
      --Dependency and indemnity compensation for 369,000 veterans'
            survivors;
      --Pension for 308,000 wartime veterans and 209,000 of their
            survivors,
      --Vocational rehabilitation and employment benefits paid for over
            99,000 veterans and servicemembers;
      --Education and training assistance for 1.2 million veteran students
            and their families;
      --Home-loan assistance for 2.1 million veterans with active VA loans;
      --Fiduciary activities providing estate protection services for
            173,000 VA beneficiaries unable to manage their own funds; and
      --Life insurance programs for 6.5 million servicemembers, veterans,
            and their families.

        The President's 2016 budget request includes critical information
    technology investments supporting VBA's claims processing
    transformation and other essential initiatives to continue improving
    benefits delivery. For example, the Veterans Claims Intake Program
    makes investments in the conversion of paper claims to digital images,
    and the Veterans Benefits Management System facilitates electronic
    claims processing. In addition, the request includes funding to right-
    size our workforce. As VBA continues to receive and complete more
    disability rating claims, the volumes of appeals, non- rating claims
    (claims that in most cases do not require a rating decision but
    directly impact benefits, such as survivors pension, burial claims,
    dependency claims, income adjustments, and drill pay adjustments), and
    fiduciary field examinations correspondingly increase. We anticipate
    that demand for benefits will continue to grow in fiscal year 2016.
    VBA's request for 770 additional FTE is necessary to meet veterans'
    expectations for more timely actions on non-rating claims and appeals
    and ensure strong fiduciary oversight.

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                    increased demand for disability benefits
        Our obligation to veterans grows over time because veterans' demand
    for benefits continues to increase long after wars end. Even as we are
    becoming more productive through our Transformation, the demand for
    benefits and services from veterans of all eras continues to increase.
    For example, the population of Vietnam Era Veterans receiving
    disability compensation has not yet peaked--40 years after the Vietnam
    War ended. VBA anticipates a similar trend for Gulf War Era Veterans,
    26 percent of whom have already been awarded disability compensation.
    The total number of service-connected disabilities for veterans
    receiving compensation has grown from 11.8 million in 2009 to 17.8
    million in 2014--an increase of over 50 percent in just 5 years. This
    dramatic growth portends even greater growth in claims for increased
    benefits as veterans age and their disabilities worsen. It is also
    significant to note that VA is still providing benefits to the child of
    a Civil War Veteran 150 years after the Civil War ended.

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        Fueled by more than a decade of war, Agent Orange-related
    disability claims, a disjointed claim appeal process, demographic
    shifts, increased medical issues claimed, and other factors, veterans'
    demand for benefits has exceeded VBA's ability to timely meet it. VBA
    must build the capacity now to meet current demand and ensure we are
    prepared to meet future demand. We look forward to working with you to
    identify and prioritize spending to best serve the interests of
    veterans and our Nation.
        While the percent of the veteran population receiving compensation
    was nearly constant for over 40 years at 8.5 percent, over the past 15
    years there has been a striking increase to 19 percent.

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        The increase in veterans receiving disability compensation is
    accompanied by the significant rise in the average degree of disability
    compensation granted to veterans. For 45 years, from 1950 to 1995, the
    average degree of disability held steady at 30 percent. But, since
    2000, the average degree of disability has risen to 47.7 percent. VBA's
    mandatory spending is projected to reach $106 billion in fiscal year
    2017, twice the amount spent in fiscal year 2009.

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                             transformation results
        In order to meet this ever growing demand for benefits, VBA is
    undergoing the largest transformation in its history--bringing the
    delivery of VA benefits and services into the 21st Century. VBA is
    aggressively implementing its transformation plan--a set of actions
    targeted to reorganize and retrain its people, streamline its
    processes, and deploy technology designed to achieve VA's goal of
    processing all claims within 125 days with improved accuracy by the end
    of 2015. VBA has achieved the following transformation results:

      --VBA is reducing the pending disability claims inventory.
        --Peak: 884,000 claims in July 2012.
        --Now: 477,000 claims--Improvement: 46 percent.
      --The number of claims pending over 125 days and considered part of
            the claims backlog has decreased.
        --Peak: 611,000 claims in March 2013.
        --Now: 215,000 claims--Improvement: 65 percent.
      --Rating accuracy has improved.
        --3-month claim-based accuracy increased from 83 persent in 2011 to
                92 percent, an improvement of 9 percentage points.
        --3-month issue-based accuracy improved to 96 percent.
      --Veterans are waiting less time for decisions and benefits.
        --The average time to decide a veteran's disability claim:
          -- Peak: 348 days as of September 2013.
          --Now: 186 days--Improvement: 162 days.
        --The average age of pending disability claims:
          --Peak: 282 days in February 2013.
          --Now: 142 days--Improvement: 140 days.

        Improving quality and reducing the length of time it takes to
    process disability claims are integral to our mission of providing the
    care and benefits that veterans have earned and deserve in a timely,
    accurate, and compassionate manner. The disability rating claims
    workload continues to increase, due to the reduction in military
    forces, servicemembers returning from wars, and the aging of the
    veteran population. Also, the complexity of the workload continues to
    grow because veterans are claiming greater numbers of disabilities and
    the nature of disabilities--such as posttraumatic stress disorder
    (PTSD), combat injuries, diabetes and related conditions, and
    environmental diseases--is becoming increasingly complex.
        The number of separating servicemembers filing disability claims--
    and the number of medical issues within those claims--have soared in
    recent years. The chart below highlights this growth, with Global War
    on Terror Veterans separating through our Benefits Delivery at
    Discharge program now claiming an average of 16 medical disabilities as
    a result of their military service--compared to only 3.9 issues for
    WWII Veterans and 6.4 issues for Vietnam Era Veterans.

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        In 2009, VBA completed almost 980,000 claims. In fiscal year 2014,
    we completed over 1.3 million--a 35 percent increase. But there has
    been even more dramatic growth in the number of medical issues in
    claims--2.7 million in 2009 to 5.5 million in 2014, a 101 percent
    increase over just 5 years.

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        Despite these challenges, VBA has made major strides in increasing
    its productivity and thereby reducing the claims backlog by 65 percent
    since its peak in March 2013 (from 611,000 to 215,000). Through VBA's
    claims transformation initiatives, the number of claims completed per
    FTE increased 25 percent from 2012 to 2014. An even more accurate
    representation of VBA's increase in productivity is seen at the medical
    issue-level rather than the claim-level. From 2009 to 2014, VBA's
    issue-level productivity increased by 67 percent. VBA greatly
    appreciates the investments provided by the President and Congress over
    the past 6 years, and we are on track to meet the President's goal to
    eliminate the disability claims backlog and processing all claims
    within 125 days by the end of 2015.

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             transformation initiatives in the 2016 budget request
        VBA's transformation progress is the result of an integrated series
    of initiatives designed to eliminate the backlog. The President's 2016
    budget will allow VBA to continue building on the success of the
    following initiatives:

      --Veterans Claims Intake Program (VCIP): VCIP streamlines processes
            for receiving digital records and data into the Veterans
            Benefits Management System (VBMS) and other VBA systems,
            transitioning VBA from a paper-based claims environment to a
            digital operating environment. It scans paper claims, converts
            them into digital format, and extracts important data for input
            into electronic folders. VCIP has converted and uploaded more
            than 1.2 billion images from paper. In addition to supporting
            scanning operations for incoming claims, VBA's 2016 request of
            $140.8 million will allow the digital intake of military,
            income, and employment records from other Federal agencies and
            private providers. This will broaden electronic evidence
            exchange for processing all types of claims more accurately and
            more rapidly by building additional interfaces for Official
            Military Personnel Folders (OMPF) from DOD and interfaces with
            health networks, hospitals, and private clinicians.

      --Centralized Mail: Centralized mail consolidates inbound paper mail
            from VA's ROs to a centralized intake site. This initiative
            expands VBA's capabilities for scanning and conversion of
            claims evidence, increases electronic processing capabilities,
            and assists in converting 100 percent of received source
            materials to electronic format. VBA has deployed centralized
            inbound mail for all ROs. The 2016 budget request of $18.3
            million provides resources to sustain operations at all 56 ROs
            and positions VBA to expand centralized mail operations to
            other lines of business and centralize outbound correspondence
            to veterans.

      --Veterans Benefits Management System: VBMS, as VBA's key business
            transformation initiative, provides a paperless claims-
            processing environment and improved business processes to
            provide veterans and their dependents with timely, high-quality
            decisions. National deployment of VBMS was completed June 2013
            and provides access to over 28,000 end users. VBMS allows VBA
            to centrally manage the claims workload at the national level
            and direct cases electronically across its network of ROs to
            more efficiently match claims demand with available processing
            capacity. VBA went from touching 5,000 tons of paper annually
            to now processing 95 percent of the claims inventory
            electronically in VBMS. VBA has now completed over 1.32 million
            claims in VBMS. In 2015, VBMS is focused on delivering the
            National Work Queue (NWQ) and reducing reliance on legacy
            systems. In 2016, VBMS enhancements will focus on the
            Integrated Disability Evaluation System, appeals, and pension.

      --National Work Queue: VBA will distribute claims electronically from
            a centralized queue based on RO capacity using the electronic
            NWQ, a national workload management strategy. With all claims
            placed in the electronic NWQ, veterans' claims will be
            automatically directed across all ROs to efficiently match
            claim demand with available expertise and processing capacity
            regardless of RO jurisdiction, delivering benefits to veterans
            more quickly and accurately. The electronic inventory provides
            real-time updates, no matter where the claim is assigned for
            processing. Veterans are still able to receive assistance with
            their claims by visiting their RO for personal assistance at
            the public contact sites, going on-line through eBenefits from
            anywhere, and utilizing VBA's National Call Centers across the
            Nation. In 2016, VBA is requesting $3.2 million to provide the
            requisite funding to resource and support 13 employees to
            manage the NWQ across the VBA enterprise.

      --Veterans Relationship Management: The VRM initiative continues to
            facilitate an increasingly more veteran-centric digital
            operating environment. VRM is delivering a scalable,
            enterprise-wide, services-based technology environment that
            will be the foundation for how veterans are served and how
            benefits and services are delivered. This new model will
            provide VA an integrated services delivery platform with the
            approach of placing the veteran at the center of the service
            with all business requirements and design being driven from the
            veteran perspective.
              Components of VRM include eBenefits, the Stakeholder
            Enterprise Portal (SEP), Customer Relationship Management
            solutions, Digits-to-Digits, Knowledge Management, and Veterans
            Online Application Direct Connect. Through the eBenefits
            portal, veterans can submit claims for benefits, administer
            their accounts, and receive status updates. The eBenefits Web
            portal standardizes claim intake and enables collaboration with
            VSOs to assist veterans with all interactions with VA. VA
            continues to expand the capabilities available through the
            eBenefits portal as more veterans use the site. Today eBenefits
            has 4.4 million registered users and over 48 million visits
            annually. VBA's 2016 request for $13.8 million, in addition to
            the $67 million requested for VRM in the Office of Information
            Technology, will support ongoing operations and continued
            efforts to pilot and deploy new solutions for VBA mobile
            applications that expand access to self-service tools and
            benefits/services information in VBA portal environments;
            develop new service features in SEP for medical providers, loan
            officers, fiduciaries, and funeral directors; and integrate
            VetSuccess with Career Center for Veterans, enabling searches
            for jobs posted by unique employers targeting veterans.
                          right-sizing vba's workforce
        VBA's success in reducing the disability claims backlog is also
    due, in part, to its strong reliance on mandatory overtime by claims
    processors. Staff at all ROs worked mandatory overtime for 8 months in
    2014 and resumed mandatory overtime on January 12, 2015, to accelerate
    the reduction in the backlog following the heavy leave usage period
    during the holiday season, and to mitigate the impact of any additional
    weather-related office closures during the winter months. Employees
    processing disability compensation claims are working 20 hours of
    mandatory overtime per month. However, this strategy is not sustainable
    from a human capital management perspective, and VBA is investing in
    other initiatives, like right-sizing our workforce and training, to
    improve performance. We are also taking the lessons learned in
    eliminating the disability claims backlog and applying them to
    transform business processes supporting the fiduciary program, the
    delivery of non-rating benefits, and the appellate workload.
        For 2016, VBA requests $2.7 billion for general operating expenses,
    an increase of $165.8 million (6.6 percent) over the 2015 enacted
    level. These resources will support 21,871 Full-Time Equivalent (FTE)
    employees and allow VBA to administer compensation and pension benefits
    totaling $83.1 billion to over 5.2 million veterans and survivors;
    education benefits and vocational rehabilitation and employment
    benefits and services to nearly 1.3 million participants; guarantee of
    more than 431,000 new home loans; and provide life insurance coverage
    to 1.1 million veterans, 2.3 million servicemembers, and 3.1 million
    family members.
        As highlighted earlier in this testimony, VBA continues to receive
    and complete more disability rating claims, resulting in corresponding
    increases in the volumes of appeals, non-rating claims, and fiduciary
    field examinations.

      --Appeals. Over the last 20 years, appeal rates have continued to
            hold steady at between 11 and 12 percent of completed claims.
            As VBA continues to receive and complete record-breaking
            numbers of disability rating claims in recent years (1.3
            million claims completed in 2014), the volume of appeals
            increases concomitantly. The number of statements of the case
            and other appellate actions completed by VBA on veterans'
            appeals has increased 31 percent since 2011, from 135,000
            actions to 177,000 actions. VBA currently has approximately
            290,000 pending appeals.

      --Non-rating claims. VBA's success in completing rating decisions has
            driven an increase in non-rating claims. Despite completing a
            20-year record number of non- rating claims in 2014, this work
            continues to grow. In 2015, VBA expects to receive 2.9 million
            non-rating claims and review actions, an increase of 7.4
            percent over 2014 (2.7 million) and 20.8 percent over 2013 (2.4
            million).

      --Fiduciary program. In 2014, VBA's fiduciary program protected more
            than 173,000 beneficiaries, which is a 42 percent increase in
            the number of beneficiaries from 2011 (122,000). Primary
            drivers of the growth in this program are the increase in the
            total number of beneficiaries receiving VA benefits and an
            aging beneficiary population. In 2014, fiduciary personnel
            conducted over 86,000 field examinations, and VBA anticipates
            field examination requirements to exceed 117,000 in 2016.

        To ensure all aspects of the claims process are improved for
    veterans, VBA is requesting additional claims processors and field
    examiners. VBA is requesting $85 million to fund 200 appeals
    processors, 320 non-rating claims processors, 85 fiduciary field
    examiners, and 165 support personnel (including 13 FTE for the National
    Work Queue (NWQ)), for a total of 770 additional FTE. VBA employees--53
    percent of whom are veterans--are leading advocates for veterans,
    servicemembers, their families, and survivors and are key to our
    success. With the additional 770 employees, VBA will provide veterans
    with more timely decisions on their appeals and non-rating claims, and
    conduct thousands more vital fiduciary home visits.
        VBA is able to accommodate additional staff without additional
    space requirements by digitalizing veterans folders:

        Winston-Salem RO: Before and After Transformation:

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             high levels of demand continue in all benefit programs
        In addition to benefits provided through VA's compensation and
    pension programs, VBA's fiscal year 2016 budget request supports
    delivery of insurance, education, vocational rehabilitation,
    employment, transition, and home loan guaranty benefits.
        VBA, through its Insurance program, maintains life insurance
    programs that give financial security and peace of mind for
    servicemembers, veterans, and their families. Insurance claims are
    currently paid in an average of 3 days at 99 percent accuracy. The
    Insurance program request is $35.14 million, of which $867,000 is in
    the GOE appropriation and $34.27 million is reimbursable by the
    Insurance funds. This request will support 347 FTE and provides
    servicemembers and their families with universally available life
    insurance, as well as traumatic injury protection insurance for
    servicemembers. In 2016, VA insurance programs will provide $1.3
    trillion of insurance coverage to 2.3 million servicemembers, 1.2
    million veterans, and 3 million spouses and children.
        VA's education programs provide education and training benefits to
    eligible servicemembers, veterans, and dependents. The 2016 budget
    request reflects VBA's commitment to their needs. The request is $207.5
    million and 1,904 FTE to provide veterans, servicemembers, Reservists,
    and qualified family members with educational resources. These programs
    are designed to assist in the readjustment to civilian life, help the
    armed forces both recruit and retain members, and provide the
    opportunity to enhance the Nation's economic competitiveness through
    the development of a more highly educated and productive workforce. The
    most utilized of VA's education programs is the Post-9/11 GI Bill. As
    of February 21, 2015, VA has issued approximately $49.5 billion in
    Post-9/11 GI Bill benefit payments to 1,359,148 individuals and their
    educational institutions since program inception in August 2009. As a
    result of VA's success in automating the processing of Post-9/11 GI
    Bill claims, VBA is now providing benefits to the majority of Post-9/11
    GI Bill beneficiaries in an average of 6 days at 99 percent accuracy.
        The Vocational Rehabilitation and Employment (VR&E) program request
    is $322.8 million and 1,594 FTE. VR&E is a veteran-centric program
    providing the services and assistance to enable veterans with service-
    connected disabilities become employable and obtain and maintain
    suitable employment or, to the maximum extent feasible, achieve
    independence in daily living. Through the VR&E program, VBA provides
    employment and independent living services including career vocational
    counseling, job search assistance, and post-secondary training for
    service-disabled veterans. VBA will also enhance outreach and service
    delivery of educational and vocational counseling services. These
    services will be delivered by Vocational Rehabilitation Counselors,
    Integrated Disability Evaluation System counselors, and contract
    rehabilitation counselors. These counseling services will also be
    provided through the VetSuccess on Campus programs at more than 94
    schools.
        VBA is also investing in the successful transition of
    servicemembers, building pathways to meaningful career opportunities
    for veterans by bringing them together with educators and employers
    across U.S. cities and communities and leveraging unique VA and
    interagency programs and resources to improve economic outcomes for
    veterans. VBA's plan to support these veterans includes the following
    strategic areas:

      --Veterans Employment Center (VEC): Provides transitioning
            servicemembers, veterans, and their families with a single
            authoritative Internet source that connects them with job
            opportunities, and provides tools to translate their military
            skills into plain language and build a profile that can be
            shared--in real time--with employers. Employers have made
            commitments to hire over 390,000 individuals. Over 1.7 million
            private and public-sector jobs are listed on the VEC.

      --Transition Goals, Plans, Success (GPS): The Transition GPS program
            helps separating servicemembers prepare for civilian life by
            providing benefits briefings and other transition activities.
            VBA has provided over 45,000 benefits briefings, career
            technical training courses, and support for capstone events to
            over 550,000 servicemembers and their family members (this
            count does not represent unique servicemembers).

      --MyVA (City) Economic Opportunity Campaign: VBA is collaborating
            with public and private partners in more than 20 communities
            across the country to help connect and amplify available
            resources and support for veterans and their families.

        The VA Home Loan Program ensures veterans can obtain, retain, and
    adapt their home by guaranteeing their loan against foreclosure. The
    Housing program request of $139.4 million and 907 FTE is funded through
    appropriations to credit accounts and helps eligible veterans, Active
    Duty personnel, surviving spouses, and members of the Reserve
    components and National Guard purchase, retain, and adapt homes in
    recognition of their service to the Nation. VA's partial guaranty on
    loans made by private lenders enables our clients to purchase homes
    with little or no down payment. Many of these borrowers would be unable
    to purchase a home without VA's assistance. VBA guaranteed 438,398 home
    loans and helped 80,000 veterans avoid foreclosure in 2014, while
    maintaining the lowest foreclosure rate (1.56 percent) in the industry
    for 25 of the last 27 quarters.
                                  legislation
        In addition to presenting VBA's resource requirements, the 2016
    President's budget proposes legislative actions that will benefit
    veterans. VBA in this budget proposes changes in disability claims
    processes, an area where reform is greatly needed, for the benefit of
    all veterans who are frustrated with the time it takes to resolve
    claims and appeals. We are open to all ideas from the subcommittee and
    from VSO's to modernize this process, and make it work for veterans.
    Our increased manpower and great strides in automation are helping, but
    these cannot replace statutory changes to modernize the process.
                                    closing
        We appreciate the opportunity to provide additional information on
    VBA's 2016 budget request and to share with you the progress we are
    making in transforming the delivery of benefits and services for our
    veterans and their families. The work we do continues and grows for
    decades after the end of America's conflicts. I assure you of our
    commitment to achieving improvements that will expedite the delivery of
    benefits, improve quality, and ensure we are providing timely,
    accurate, and comprehensive information and assistance to all those we
    serve.
        In today's challenging fiscal and economic environment, we must be
    diligent stewards of every dollar and apply them wisely to ensure that
    veterans--our clients-- receive timely access to the highest quality
    benefits and services we can provide and which they earned through
    their sacrifice and service to our Nation.
        This concludes my remarks. I am happy to respond to any questions
    from you or other members of the subommittee.

                  SOCIAL SECURITY ERRONEOUS DEATH NOTIFICATION

        Senator Kirk. Thank you, Under Secretary. I will start the
    questions. Let me ask you, 60 Minutes did a big, long report on
    the deceased Americans that were still getting benefits. Can
    you describe your work to make sure we are not paying people
    who have already passed away?
        Secretary Hickey. Thank you, chairman, for the question.
    And prior to the 60 Minutes show this past weekend, we had been
    working extensively with the Social Security Administration, as
    have we with other agencies, and had done some really good work
    with them to help move us forward on claims.
        One of the conversations I had a week before the 60 Minutes
    show was a note to the current acting Commissioner at the
    Social Security Administration to ask if we could set up
    another team effort like we have done in the past to address
    whether veterans might show up on those lists, and how we can
    avoid sending a veteran a letter who is alive and saying you
    are not alive, you are deceased. And then how we can go about
    being part of the solution for both Social Security and
    preventing any of those letters from showing up to our veterans
    that are in error.
        Senator Kirk. I would say that almost the entire private
    sector does not bother to send mail or sales promotions to
    people who are dead. We want to make sure that we are as good
    as any mass mailer in America with your operation. I would hope
    you would also work with the big list providers in America to
    make sure that we are following the same practices and not
    wasting money by issuing checks to people who are already in
    the great beyond.
        Secretary Hickey. So, chairman, a great question, a great
    comment. Certainly as I have been doing for the last several
    years, I am working with commercial industries that do similar
    work to what VBA does. In fact, I have been repeatedly over the
    last 2 years meeting with their chief claims officers and
    learning about what they do. And this is one I would be happy
    to discuss with them as well.

                            CHICAGO REGIONAL OFFICE

        Senator Kirk. Thank you. Let me drill into the Chicago
    regional office. Right now I am told that we have about a 172-
    day delay in adjudicating a disability claim there. I ask you
    to facilitate my visit there so I could personally go through
    the process there.
        Secretary Hickey. So, chairman, happy to do so. In fact, I
    would love to join you in that process. And I think when you
    get there, what you would find is that we are phenomenally
    different than we were even a couple of years ago.
        Senator Kirk. There may be some deep dish pizza and some
    Italian beef in it for you.
        Secretary Hickey. I will do that. I would love that. I have
    had good food in Chicago before, and I would look forward to
    the opportunity to do so again.

                      VETERANS BENEFITS MANAGEMENT SYSTEM

        Let me just tell you nationally, I mentioned in my opening
    statement we have fundamentally transformed this organization.
    We are now 95 percent of our work is done in a digital
    environment where we have scanned over 1.3 billion images into
    Veterans Benefits Management System (VBMS), and now processing
    just about everything we do in a digital way. That did not
    exist 2 years ago, and it certainly did not exist in Chicago 2
    years ago, and it made us very inefficient. We were touching
    5,000 tons of paper every single year with little rubber
    fingertips on our fingers trying to make a very ineffective and
    inefficient process better.
        We now today have VBMS built. There are 28,000 or more
    users on it, and that has resulted in some very good effects
    for our veterans, their family members, and survivors. By
    example, in Chicago, since they peaked in their backlog in June
    2012, they now have reduced that backlog by 65 percent, and
    they are on target to bring it all the way down. And they did
    not trade speed for quality.
        I think it is worthy to know they have increased their
    quality at the claims level by more than 11 percentage points,
    and at the issue-based level they are now at 92, almost 93
    percent in their quality. So doing better answers and faster
    service to our veterans. And they will be part of our getting
    all the way down in this backlog this year.
        Senator Kirk. Thank you. Mr. Tester.
        Senator Tester. I am going to defer to Senator Schatz.

                ELIGIBILITY DETERMINATION AND CLAIMS PROCESSING

        Senator Schatz. Thank you, Senator. Schatz, yes, you got it
    right. Thank you, Senator Tester. Thank you, Mr. Chairman. Ms.
    Hickey, thank you for your great work, and I know you have been
    making good progress.
        I want to ask--I want to drill down a little bit on where
    the choke points are in terms of eligibility determination and
    claims processing--disability claims processing. The specific
    question I have is obviously you are getting into the modern
    era. You are making the IT investments, the software
    investments that are necessary. But presumably, there is a sort
    of suite of solutions that you have had to apply, and maybe it
    is personnel. You know, obviously you have had shortfalls in
    terms of clinicians. Sometimes it is clerical, and then
    sometimes it is policies and procedures.
        Can you describe to me where the various choke points are
    and how you kind of do real time assessments, because it seems
    to me you could add clinicians, but if you are not processing
    the claims, then you are stuck. You could add clerks or you
    could improve IT, and if you do not have the clinicians, you
    are stuck.
        And so, how do you kind of make those assessments, and then
    how do you report back to the Congress, because presumably
    those are operational questions. But we have a tendency to sort
    of say we did 1,500 additional FTEs; therefore, go do your
    thing. And I am concerned that we are not giving you enough
    flexibility, and there is not enough of a dialogue about where
    the actual choke points are where we fix last year's choke
    point and there may be a new emerging one.
        Secretary Hickey. So, Senator, thanks for the question, and
    what you are describing basically is the transformation plan.
    When I came into this job in June 2011, I had to deliver to the
    Senate within 45 days a transformation plan that we have
    largely executed to today 45 different initiatives. Let me give
    you a sense of some of the big ones--people, process, and
    technology that we did.
        First thing we did is what industry has done, which is we
    looked at how could we segment the work. So we took and
    segmented the work by complexity of the claim. Obviously lower
    numbers of medical issues and claims that have really sort of a
    simple answer go now in our express lane, and we do those much
    faster. Really hard ones, like Parkinson's, and diabetes, and
    even military sexual trauma (MST) that have much--many more
    implications and inferred conditions on them go into our most
    senior people in our special operations lane. And then the rest
    goes into body of work. Simply doing that process and breaking
    up the work gained us about a 10 to 12 percent improvement in
    our productivity.
        The second thing we did was obviously move out of this
    lumbering paper-bound--by the way 5,000 tons of paper,
    touching, looks like 10 Mount Everests stacked end to end, and
    200 Empire State Buildings stacked that we were doing in paper-
    bound ways. So we have looked lots of things. You asked about
    really those big muscle movements of what we really depend on.
    First and foremost, when I came here in June 2011, we did not
    have a particularly effective relationship with DOD. We have
    moved mountains in that respect between us and DOD.
        One of those big muscle movements is getting a hold of the
    complete service treatment record from the day they signed up
    for the MEPs exam to get in the door until the day they leave
    in a separation health exam. That did not exist then and that
    relationship with DOD does now. First in the discussion, DOD
    had the impression they were giving us all those things within
    45 days, and they did not understand why we were sort of not
    feeling good about that.
        We now measure them all, and the first data points that we
    showed them about a year and a half ago that showed them, no,
    in fact, 83 percent of them were late to us, very late to us.
    That woke them up, and they went into high gear to resolve
    that. We now still get about 37, 40 percent late, but they have
    made major movement to reduce the late Service Treatment
    Records (STRs) that we get. That was one big issue.
        Another big issue that we solved for is getting the fully
    developed claims. We were getting claims that were only
    partially ready to be looked at. So we have implemented, with
    the help of our great veterans service organizations out there,
    a fully developed claim process whereby the veteran comes in
    with all the parts and pieces that help us move immediately
    into the adjudication process.

                    REAL TIME VISIBILITY AND ACCOUNTABILITY

        Senator Schatz. So just one final question. How are you in
    terms of visibility into the process in real time? I mean, if
    the analogy is a private healthcare delivery system, you should
    be able to run reports about current claims, about, you know,
    all of your personnel. You should be able to literally press a
    button and kind of know where you are at. I am assuming that
    you are not quite where you need to be eventually in terms of
    having the visibility that gives you the leverage for
    accountability to make sure that--first of all, you are making
    real time adjustments, but second of all, you are able to hold
    people down the chain accountable. Are you there--are you where
    you need to be yet?
        Secretary Hickey. So, Senator, I am probably further than
    you would expect me to be. So let me just describe a VBA that
    might be different than some of the things you have heard about
    relative to data, very quickly. My data is held--our VBA data
    is held at a national level. It is not held at the local level.
    It is turned over every night, so, in fact, if you would allow
    me for at least a 24-hour view, I do see data every single day,
    and I get reports, detailed reports, every single day. I make
    those reports available to you and the free world every Monday
    morning that we put out that data. I do not give it to you
    daily. I think you could not do your job if I was giving the
    amount of data I have daily, but we do it every single Monday
    so you get that.
        I have also a VBA stat that I do and have been doing now
    for 3 years. Eight to 10 regional office directors sitting
    across from me once a month, all the rest on the phone, where
    we dig into in a 6-hour meeting their data in ways that are eye
    opening. And we do it in a lead-up way to make sure I know of
    any anomalies in the system, and they are accountable for
    describing what is going on.
        Senator Schatz. Thank you very much, Madam Secretary. I
    really appreciate the work you have done. It is very
    impressive.
        Secretary Hickey. Thank you, Senator.
        Senator Kirk. Mr. Boozman.

                          APPEALS FTE INCREASE REQUEST

        Senator Boozman. Thank you, Mr. Chairman, and thank you for
    being here, Madam Secretary, you and your staff, and we
    appreciate all of your hard work. In the 2016 budget, you
    requested an additional 200 employees to work on appeals, and I
    know you mentioned that earlier. I guess the question is, how
    many people do we have working on appeals now, and if the 2016
    budget were enacted, how many would--what would be the total
    number of people that we have working on appeals?
        Secretary Hickey. So thank you, Senator. So you are right.
    There is a request for 200. It is not the full requirement. We
    also had a 2015 omnibus add that I really appreciate that gave
    us the ability to hire 250. Some of those--100 of those we put
    into appeals, so that would take us up to 300 in appeals.
        But the real requirement is north of about 750, about 769,
    to get us to the point where we take appeals down to a year-
    long process. Today it is far too long. I know that. I hear it
    every single day because I am getting between 200 and 300
    emails from veterans that I answer myself. But to get that down
    from sort of that 3-year unacceptable level, it would get us
    down to a 1-year level.
        Senator Boozman. So how many employees now?
        Secretary Hickey. Do you have that? I can get that for you,
    Senator, and I am happy to give you the breakout for that.
        [The information follows:]

        Senator Boozman. In the 2016 budget, you requested an additional
    200 employees to work on appeals. How many people do we have working on
    appeals now, and if the 2016 budget were enacted, how many would be the
    total number of people that we have working on appeals.

        VA Response. If VBA's fiscal year 2016 budget request is fully
    funded, VBA would have 1,440 FTE working on appeals. VBA currently has
    approximately 950 employees on board dedicated to working on appeals in
    regional offices and 190 employees at the Appeals Management Center. VA
    is leveraging the funding provided in the 2015 appropriation to
    increase appeals staffing levels by 100 FTE, and the 2016 President's
    budget includes a request for an additional 200 FTE for appeals.

        Senator Boozman. And so, how did you arrive at the 200
    number?
        Secretary Hickey. So we looked at the--there are several
    things that are key indicators for work required in appeals.
    The first is responding to the notice of disagreement, so when
    you get a notice of disagreement, it triggers something called
    an SOC, which is a statement of the case. And that is where
    somebody has to write the statement of a case, and then send
    that out to the veteran, and then have the veteran decide
    whether they wish to go forward with their appeal. So we take
    that number and see in general how many we have there and what
    the requirements for those statements of the cases are.
        Then we also take and look at--once we move past that
    point, there is another trigger called a supplementary
    statement of the case. If after the veteran has moved forward
    in the appeals process, which, by the way, is a really open
    process that is not one that is described anywhere else like
    it. If we get information back that says the veteran now has
    created more evidence post the decision we made, it comes back
    to us to write another statement of the case to see if we can
    resolve that without it having to go through the full Board of
    Veterans Appeals and court process.
        So it is based on all those sort of work requirements built
    into our side of the process, but Senator, that brings us to a
    broader point on appeals. Appeals for us is an issue that I
    need your help on, and at the end of the day, it is so wired in
    law, it looks worse than tax code. I need a solution that
    either changes the law or gives me the people that we need to
    do this. There is no other resolution that I can find that does
    a fundamental shift in it. Fully developed appeals will help
    with the margins, but they will not solve this for the long
    haul without law or people.

                LITTLE ROCK, ARKANSAS AND OLD CLAIMS INITIATIVE

        Senator Boozman. Right. Thank you. We had a situation in
    Little Rock where a number of old claims were found, and there
    was some confusion as to what you do with old claims that were
    found. And some of these were very old, and they were told to
    stamp them as current. I guess the question is, is this a
    problem throughout the country? How do we have these old
    claims? What are we doing with them?
        If you find like an old claim that goes back to 1998, and
    you might comment on maybe the oldest that you are finding,
    okay? How do you--are we going ahead and putting those--are we
    treating those as old claims in the sense that they need to be
    done immediately, or are they just putting in--being put into
    the current day that they are found? And then also if a person
    is in that situation, do you go back and pay them back to the
    time that they made the initial claim, or are we doing it--
    post-dating to the situation where they were found?
        Secretary Hickey. Thank you, Senator, and I am glad you
    asked that question because I would like to get this on the
    record for everyone. Back when we were starting the old claim
    initiative, I asked the staff to bring the 10 oldest claims in
    the inventory, and when they did, here is the backdrop I got on
    most of them. It was a claim that came in----
        Senator Boozman. But these are claims, like I said, that
    were not really in the inventory that have just kind of popped
    up that they are finding behind desks?
        Secretary Hickey. No, sir, not at all. That is why I would
    like to explain it to you very quickly. And I will do it with
    one--and frankly I will do it with one that we have got in
    Little Rock. Here is the claim. It is more than 20 years old,
    but it came in 2 weeks ago. And you would go, that does not
    make any logical sense, and it did not to me either. So I said,
    how do I rationalize a 20-year-old claim that came in 2 weeks
    ago?
        And what happened is when it came in 2 weeks ago, that
    Little Rock employee picked it up and did what a Little Rock
    employee is supposed to do. They go back through the entire
    claims folder looking to scrutinize everything that has
    happened over that veteran's life. When they did, they found
    that 20 years ago someone in the VBA system could have noticed
    there might have been a way to do a claim on something that
    they did not do 20 years ago, but they just got the claim 2
    weeks ago. Then I said this does not make any sense to me. Why
    can we not go ahead in a policy and give the veteran the
    benefit, that gets to your second question, on the effective
    date of 20 years, but not charge that employee who just got
    this claim from the veteran 20 years later that he just started
    working on 2 weeks ago, 20 years against that in the system?
        So what I said is let us be smart about this. Let us take
    the disincentive out of the system to go, well, the veteran did
    not know it is even here, and I found it, and let us instead
    put an incentive in the system for that employee to pick it up,
    do it, and give it to that veteran effective the 20 years ago
    date. So I did a policy that I briefed everyone on. We briefed
    the veteran service organizations (VSOs), we briefed the
    inspector general, we briefed the staffs of the four corners of
    the two veterans committees. We sent it out in a mail message.
    We did a public affairs address on it. We got out there saying
    we were going to do this.
        We put controls on it. You could only have them--if the
    director or the assistant director signed it off, you had to
    write them on a sheet and send them up to Comp Service so they
    could track them. In fact, even the inspector general report on
    this one clearly states the Little Rock regional office did
    nothing wrong. In fact, they exceeded the requirement I had in
    policy for them.
        I have subsequently in the last month met with one of the
    very large VSOs, who looked at me and said we actually think
    that is a good policy. Why did you cancel it? And I said,
    because I had recommendations from my counsel and because we
    did not understand what we were doing. They want me to restart
    it because they think it puts a good incentive in the system
    for the employee to do the right thing by old things they find.
        Senator Boozman. Good. Thank you. That is very helpful.
    Thank you, Mr. Chairman.
        Senator Kirk. Mr. Tester.
        Senator Tester. Udall has a meeting, so I am going to defer
    to Senator Udall.
        Senator Udall. Thank you, Senator Tester, for your
    courtesy. Really appreciate that. Secretary Hickey, thank you
    for your service, and we really appreciate your hard work.
    Hearing some of the things that you have talked about where you
    have moved from a paper system to a computerized system, I
    think in the long run that is really going to make a
    difference. And I know that you are making tremendous progress
    there.
        This subcommittee has taken the lead effort to reduce the
    VBA claims backlog, and this has been a resource and efficiency
    issue since the beginning, as you know. And I am proud to have
    supported the increased appropriations which have led to the
    national decline in the claims backlog. And I am going to show
    you a graph here behind me, and I think you have a copy of that
    up there in case you cannot see all the details here.

                 CLAIMS BACKLOG AND ALBUQUERQUE REGIONAL OFFICE

        This increase in funding also had an initial positive
    impact in New Mexico, and I think you can see right about here
    where the money came in, you saw a dramatic drop. But then what
    happened after that, we had a leveling off in terms of the
    claims process. And I think most veterans would say, you know,
    we made some progress initially, but what happened with that? I
    know we have a new director of the VA in New Mexico dealing
    with some of the problems, but I am wondering if you could
    focus in and see--what is your explanation for why there has
    been a national increase in the claims backlog, but in the case
    of New Mexico we are seeing not only stagnated progress, but an
    uptick in the percentage of backlog claims?
        Secretary Hickey. So, Senator, I would be happy to address
    that. First, I would like to tell you, your regional office run
    by Chris Norton in New Mexico is doing an awesome job. In fact,
    they have reduced the backlog in Albuquerque by almost 53
    percent. And their quality is through the roof, 95 percent at
    the claim-based level and 98.9, almost 99 percent at all those
    medical issues inside of it. So doing an amazing job.
        Here is what I would share with all of you on this issue.
    We have not stagnated on taking the backlog down. In fact, the
    Monday morning workload report this week shared with you that
    the backlog was 209,000. This morning it is 206,000, and it
    will start increasingly cycling faster as we have literally cut
    the inventory in almost half. You will start to see over the
    next several months a really significant bend in the curve.
        Here is a phenomenon I would share with you that happens
    every single year, and it is a--I am sorry, but I am stuck to
    the way the calendar was built. The fall--first quarter of
    every year, which you can sort of see there is when it starts
    to stagnate, has more Federal holidays and more holidays in it
    that affect productivity and production. It is a fact of the
    calendar. You will always see us do better the second, third,
    and fourth quarters routinely. So I have to try not to react to
    a calendar problem in the first quarter, but you will see that
    we have made significant progress second, third, and fourth
    quarters.
        What I will share with you is I have been--we have done
    that increased productivity, that 67 percent increase in
    productivity, largely because we have transformed. So to the
    paper issue, we can simultaneously in parallel operations now
    share the electronic record between the hospital that has got
    to do the exam, the reviewer who is looking at it, and the VSO
    who is helping move it through. All of them can see it at the
    same time. Could not do that before. We are not mailing things
    around. We are taking that out of the system.
        The centralized mail is going to take another 20 days out
    of the process. We are starting to see the effects of going
    into the full centralized mail now. Days are coming down out of
    the system because they are doing and scanning those in in 5
    days rather than 22 days. So we will see, and we will get to,
    functional zero; I will say that. I am going to have people in
    the backlog by their choice or by the really unique
    circumstances of their life. But functional zero, you will
    agree with who is in functional zero and understand and nod
    their heads. And even a veteran in many cases who is in there
    will say that was by my choice. I do not want to do the exam
    yet. I want to add a new contention now.
        I think you are going to be very happy with where
    Albuquerque gets. That is one station I was headed to when I
    got changed up on. I still have to get there, and I am looking
    forward to a visit.
        Senator Udall. Well, we look forward to having you, and we
    look forward to working with you on continued decline in terms
    of those numbers. And we really appreciate, as I said before,
    all of your work. Thank you, Mr. Chairman.
        Senator Kirk. Ms. Capito.
        Senator Capito. Thank you, Mr. Chairman, and I want to
    thank the witnesses for their hard work, and would really like
    to tell the Under Secretary and those who are working for you
    that after our meeting yesterday, really have a full
    appreciation of the volume of what you are doing. But
    appreciate that you are able to, you know, with the data show
    all the improvements that you are making, and certainly
    appreciate that.

                         DOD TUITION ASSISTANCE PROGRAM

        I have a question surrounding the tuition assistance issue.
    On January 1, 2014, the Army issued a policy change to its
    Federal Tuition Assistance Program (TAP), and this change
    requires soldiers for all three components--Army components to
    wait 1 year after they complete advanced individual training or
    a basic officer leadership course before receiving tuition
    assistance. You know, we have talked with our National Guard,
    and there are some questions. This could have some negative--
    the year wait--negative impacts on recruiting and educational
    levels within our Guard.
        In the State of West Virginia, 65 percent of our National
    Guard has either a college education or is working towards
    that, and it is a good recruitment tool. I can vouch for that.
    Could you explain the reasoning and how you plan to address the
    already declining numbers of students that are utilizing this
    benefit?
        Secretary Hickey. So, Senator, thanks for the question. I
    will tell you that tuition assistance is a DOD program. I own
    seven other education programs that we process claims for in
    VBA, the 9/11 GI Bill and other kinds. There are seven other
    chapters----
        Senator Capito. Right.
        Secretary Hickey [continuing]. Seven other chapters that I
    know you are well aware of.
        Senator Capito. Right.
        Secretary Hickey. And I appreciate, by the way, your
    National Guard in the State of West Virginia, having been
    active Guard and Reserve, have a strong heart and family
    feeling for the National Guard.
        Here is what I can tell you. We expect any time there is an
    implication to DOD programs on tuition assistance, there is
    going to be a reciprocal load request to utilize the benefits
    that they may be entitled to on our side. National Guard and
    Reserve has a unique opportunity on the 9/11 GI Bill
    perspective because they are both a still serving member, but
    maybe a qualifying veteran who can access resources while they
    continue to serve. So there are other changes I know that DOD
    has talked about in tuition assistance that could put further
    pressure on the GI Bill. We will have to respond to that if
    that is the case.
        I will tell you that as we are taking military members
    through TAP, 75 percent of them are telling us at the point of
    meeting in TAP that they will plan to leverage their GI Bill.
    So I expect this benefit to continue to have a high demand.
        One last thing I might offer is that I need your help
    across the entire Congress. We appreciate the benefit that came
    out in the Choice Act for Section 702 that gives veterans and
    service members the opportunity to use in-State tuition no
    matter where they have been based. We think it is a tremendous
    benefit. I went out immediately with letters to every governor
    and all the schools asking them to please comply by the
    required 1 July date.
        We do have now--every State now has signaled intent to
    comply, but I only have four that are in compliance with the
    requirements for that in-State tuition that goes on the 1st of
    July. I need help from you all getting the word out across all
    the States to please comply as soon as possible. We are not
    going to let our student veterans suffer, so we will have to be
    prepared for our Secretary to take some kind of authority he
    has been granted to keep those veterans in school. But we
    really need the States to be in full compliance absolutely as
    soon as possible.
        Senator Capito. Do you have those States?
        Secretary Hickey. I do. I will tell you the four that are
    in compliance.
        Senator Capito. The four that are in compliance.
        Secretary Hickey. The four that are in compliance are
    Georgia, Texas, Kentucky, and Wyoming.
        Senator Capito. Thank you.
        Secretary Hickey. All others----

                              WOMEN VETERAN ISSUES

        Senator Capito. Okay, second question. Thank you for that,
    and we will follow up with the DOD on that on the tuition
    assistance. As you know, and I think we might have talked about
    this yesterday slightly, there are 200,000 women who have
    served in Iraq and Afghanistan, and now approximately 20
    percent of the recruits are females, which creates more female
    veterans. I did not know if you were--if there were any
    specific--I know some of the hospitals have created women's
    clinics for the returning women's veterans. I did not know if
    there was anything specific that you are doing to address
    women's issues maybe in the area of sexual assault or any kind
    of mental health coverages along that area.
        Secretary Hickey. We are, and as you might imagine as a
    woman veteran myself, I have a great deal of advocacy for my
    sisters in service. So let me just give you a little bit of a
    drumbeat on that. We have in every single regional office a
    woman veterans coordinator, and that person is--we post it in
    public context so they all know who it is. We also have in
    every single one of our regional offices a military sexual
    trauma coordinator, one woman and one man, for the choice of
    the veteran who would like to speak more privately with them.

                             MILITARY SEXUAL TRAUMA

        Of recent times, and this is a function of my email going
    viral and my willingness to actually answer them all myself
    last sort of May/June timeframe, that somehow I ended up as a
    person that was taking care of MST victims, which I have a
    special place in my heart for them as well. And now I have got
    a lot of requests for ways in which we could put people on very
    high density sites that are specifically addressing that to try
    to get better information out there.
        About 2 months ago, I put an MST coordinator on one of
    those blog sites, and she has been actively helping. And at the
    same time, I released the names in the public domain for every
    single MST coordinator in every single regional office, their
    emails, so that people could reach them, and talk to them, and
    get help from them for this really difficult and sensitive
    topic. When I arrived----
        Senator Capito. If you could just tell us, ``MST?''
        Secretary Hickey. Military sexual trauma or MST.
        Senator Capito. Right, I just wanted to make sure we had it
    out there, yes.
        Secretary Hickey. Right after I arrived, one of my first
    steps to do because I just know far too many people that have
    dealt with this, and it is just--we have got to do something
    about this. I asked, because I had heard that we were rating
    these lower than--granting these lower than we were doing our
    regular PTSD claims for combat, and fear, and terrorism. And,
    in fact, in the review, we determined we were substantially
    about 20 percentage points lower.
        I mandated that we go through an extensive effort to train,
    and we did that in conjunction with the Veterans Health
    Administration (VHA) folks together, the examiners. And as a
    result of that, in very quick fashion we got those levels up to
    par with the normal grants that we do for PTSD, and they remain
    there because I keep watching it. We do a review and I demand a
    review every 6 months, and we have remained on par with those
    claims.
        Senator Capito. Thank you. Thank you very much. Good work.
    Thank you.
        Secretary Hickey. Thank you.
        Senator Kirk. Mr. Tester.

                       AVERAGE DISABILITY RATING AND PTSD

        Senator Tester. Yes, thank you, Mr. Chairman, and once
    again, thank you for being here. I have got a chart here from
    the VA. You mentioned in your opening statement about the
    average disability rating being at 30 percent for basically 45
    years, and now it is at 48 percent. I know we went into war in
    Iraq in 2000, but the question is why the difference. Why when
    it was static for 45 years at 30 percent, why today we have it
    at 48?
        Secretary Hickey. Really good question, Senator Tester, and
    lots of good data to show the following. Today's veteran is 10
    times more likely to survive their wounds of war than World War
    II, Vietnam, and every other conflict, Korea and all the rest.
    So 10 times more likely to survive wounds means you are coming
    back with many more. That jumps you up.
        Also we relaxed the rules for PTSD. We had 47,000 people on
    the PTSD rolls in the 1990s. Today we are breaking 800,000 on
    the rolls for PTSD. That is not just today's veteran. Those are
    World War II veterans who were never able to file before
    because of the threshold level to be able to have to produce
    proof----
        Senator Tester. Gotcha.
        Secretary Hickey [continuing]. Of what you endured at the
    Battle of the Bulge. It is also--we also----
        Senator Tester. So could you just give me an idea what--the
    veterans that served--of the overall veterans that served, the
    numbers that have served since the war in Iraq, how many of
    those veterans have post-traumatic stress disorder (PTSD)
    issues as a percentage?
        Secretary Hickey. I think--I do not know that I can do it
    as----
        Senator Tester. Is it half?
        Secretary Hickey. I do not even know that I could do that.
        Senator Tester. That is all right.
        Secretary Hickey. I do not know if I have it in that way.
        Senator Tester. If it possible and you can get it easily--
    --
        Secretary Hickey. I can get that back to you.
        Senator Tester. It is just for my edification.
        [The information follows:]

        Senator Tester. So could you just give me an idea what of the
    overall veterans that served since the war in Iraq, how many of those
    have post-traumatic stress disorder issues as a percentage?

        VA Response. As of December 2014, 12.7 percent, or 262,904 of
    2,065,944 GWOT veterans were service-connected for PTSD.

                                APPEALS PROCESS

        Senator Tester. So, okay. Let me talk about appeals, and I
    know you want to talk about legislation because I heard it in
    your answer to Senator Boozman, and I will let you get to that
    in a second. But how long does it take for a decision on an
    appeal currently, start to finish?
        Secretary Hickey. Sadly it is upward in the neighborhood of
    800 to 1,000 days depending on the station.
        Senator Tester. Okay. And you talked about the appeal
    process being disjointed. You said in your opening statement
    that it is a complex law.
        Secretary Hickey. It is a complex law.
        Senator Tester. Which indicates you may need some help. Do
    you have a proposal?
        Secretary Hickey. I do. We have put one in front of you,
    and this one has come over before, our proposal frankly to fix
    it once and for all, is the legislation we have in front of you
    that says close the evidentiary record at the time the decision
    is made. And then what you are doing----
        Senator Tester. So the question is, have you put this
    proposal in front of the VSOs also?
        Secretary Hickey. I have.
        Senator Tester. And what has been their response?
        Secretary Hickey. In transparency, they do not favor
    closing the evidentiary record at the time the appeal is made.
    They prefer instead, and I give great credit to Disabled
    American Veterans (DAV), who has taken the charge to do and
    try a fully developed appeal, which also requires a legislative
    fix from the Congress that allows us to move 25 percent of
    those people who will say here is all my stuff, I am not going
    to add anything else to it, move me through the appeals
    process. And the current approach they have is 25 percent of
    those would be allowed to do that. That could help at the
    margins. That is not going to solve anything for the long haul,
    and it is not going to solve anything soon.
        Senator Tester. This is absolutely your subcommittee, Mr.
    Chairman, but this may be something that we could have a
    hearing on to talk about the proposals and the ups and the
    downs. I think it would be very difficult to get legislation
    passed unless you get the VSOs on board. It is just going to be
    tough to do.
        Secretary Hickey. I agree.
        Senator Tester. But if there are ways we can make it work,
    because the VSOs are going to represent the veterans, quite
    frankly, that is who the chairman and I represent, too. Then we
    can try to figure out solutions. There has got to be middle
    ground here. There has to be.
        Secretary Hickey. Senator, I would love to find any
    solution. Right now, I have done everything possible within
    people, process. There is a little technology we need to do on
    the board side to get them more efficient. But I have done
    everything on my side I can do short of changing law or a lot
    more people.

                           MILITARY FAMILY RELIEF ACT

        Senator Tester. Okay, and I am going to be very brief with
    this because I think this is a slam dunk. There is a bill
    called the Military Family Relief Act. What it does is it
    expedites the process for recently widowed spouses of disabled
    veterans to receive their benefits. In other words, a veteran
    dies, their spouse get their benefits. Right now, it could take
    up to a year. It does not make a lot of sense to me, quite
    frankly.
        Is there any reason why we could not just make it
    immediate? I mean, you are given the veteran, they are not
    divorced, they are married, whether it be a man or a woman that
    is the veteran. Is there not an easier way to get this done,
    because I cannot imagine what they are going--I mean, I just
    cannot. Someday it will probably happen to me or my wife, but I
    cannot imagine what they are going through. Is there some way
    to make it more streamlined, and would you support this bill?
        Secretary Hickey. Senator, I am fond of saying in my
    offices with my employees that I have a flat spot on the back
    of my head from banging my head on a wall on this very issue.
    Though it sounds a little bit trite, I could hug you or anyone
    else who would move forward this legislation to do this right
    thing by people who are suffering, and who deserve this, and
    are poverty level veterans and now poverty level survivors.
        Senator Tester. We will do that. I do not want a hug right
    now because I got a cold, but I will take a raincheck. Mr.
    Chairman.
        Senator Kirk. Mr. Cassidy.
        Senator Cassidy. Hello, Secretary Hickey. Thank you again
    for coming by yesterday afternoon. It really helped. Now, one
    thing you mentioned just to follow up, and my staff has done a
    good job subsequent, and this may have been talked about
    earlier. I apologize; I was in another committee hearing. You
    had mentioned the progress you all have made in terms of
    accuracy of claims, expeditious, et cetera. And you had
    mentioned that even though there might be some centers which do
    not perform as well as others, that nonetheless it is constant
    across all centers as regards to percent accuracy, et cetera.

                   GAO REPORT ON REGIONAL OFFICE CLAIMS DATA

        Now, the GAO report, though, seemed to take a little bit of
    issue with that from November of last year. And when they
    ranked the different sites, I cannot help but notice--I always
    take a city that has a pro football team is a big city. So in
    the bottom half we have 15 different, if you include Los
    Angeles, 15 different NFL football cities, which are poorly
    ranked in terms of accuracy of claims. And in the top we have
    seven. And in the bottom we have New York, Los Angeles,
    Baltimore, St. Louis, Houston, some really big cities,
    Philadelphia. And in the north, in the kind of top half we have
    New Orleans, Milwaukee, St. Paul, Twin Cities, so relatively
    small cities.
        Long context to ask. As you look at your--the criticism was
    that you are not weighting according to the number of claims
    processed in each office the percent accuracy, which
    artificially inflates your accuracy. What are your comments on
    that?
        Secretary Hickey. Senator, first of all, the Government
    Accountability Office (GAO) report, if you look back to the
    dates that they pulled the data, are well--a long time ago for
    the range where they pulled the data, not reflective of today's
    quality improvements that we have made across the system.
    Second, there is variance across regional offices, but I will
    tell you there is not one I cannot identify where they have not
    made significant improvements in their accuracy and their
    quality. And that is what has driven up the full nine
    percentage point increase in claims quality.
        The other thing I will tell you about the GAO study that
    was released last year, one of the--they make two points that I
    would say listen to as well. One of the points was they said
    that we were over sampling--first they validated that we had a
    statistically valid sample, but they said you are over
    sampling, you know. You do not have to do that many, and maybe
    if you did not do that many you could take some of those
    auditors and point them towards other things you want to do. I
    actually agree with them. We have done some work with two, now
    three independent parties looking at our quality process. We
    are likely to move forward in that regard.
        The second thing that they said was, well, you are over
    sampling for the small cities or regional offices, under
    sampling for the large ones. So I said, good, let me see what
    happens if I change the--if I look at the data and I weight it
    based on size of what is being done. We did that. It made a 0.6
    percent difference when we did that, so not much moving the
    needle at all on the differences between what we are showing
    you in our quality and our accuracy today.
        But I still will probably likely do that because we could
    always do what we should do to even make it more refined and
    better. But you are right also, New Orleans has done a
    phenomenal job on their quality. Today, by example, their
    quality is 95 percent at the issue--claims-based level and
    97.34 percent at the issue-based level. And they have reduced
    their backlog by a full 65.5 percent.
        Senator Cassidy. Well, let me compliment Fort Harrison,
    Montana, who apparently has been number one for a while. And
    so, whatever they are doing in Fort Harrison we need to export
    across the rest of the country, particularly to Baltimore and
    Los Angeles who are the worst.
        I have no more questions. Again, thank you for coming by
    yesterday, and thank you for you all's good work in addressing
    the issue.
        Secretary Hickey. Thank you, Senator. And if I might just
    add, I do not have Baltimore and--oh, I do have Baltimore in
    front of me and L.A. But I will tell you in both cases,
    significant improvements made, and I thank this subcommittee
    for the additional resources you gave me to apply to the new
    training that we did where we literally stood the offices down
    and retrained everybody top to bottom. So I thank you for those
    resources to do that. And we are seeing improvements as a
    result.
        Senator Cassidy. Thank you. I yield back.
        Senator Kirk. Mr. Tester.

                      FT. HARRISON MONTANA REGIONAL OFFICE

        Senator Tester. Thank you, Mr. Chairman. I have got just a
    couple of questions. And thank you, Senator Cassidy, for
    recognizing Fort Harrison, Montana. The first one is a bit
    parochial. Recently Fort Harrison's VBA facility created 25
    work spaces. Does the VBA intend to fill those spaces with
    people?
        Secretary Hickey. So, Senator Tester, some of that depends
    on what you all do in my budget. I will tell you I have--any of
    the people that you give me up to my full requirement, not even
    my budget, I will have room for because, guess what? I am not
    using paper anymore, and I have got lots of space to be able to
    put people in to effect it. So I know they have space for an
    additional 25. Depending on the budget, we might have the
    opportunity to grow the footprint.
        Senator Tester. So let me ask you, if they hire another 25,
    if we give you the budget authority and the money, and we hire
    another 25 additional folks, we would be up to 100 in Montana.
    Would that mean we would also get a VBA director in Montana
    then, or are there numerics around that kind of a thing?
        Secretary Hickey. Typically, when you are crossing into the
    100 category, we are starting to think of you as a standing RO,
    so we would look at that. You would be considered a small one,
    and those are typically run by GS-15s. That would require a few
    extra--you know, not a lot, but a few extra FTEs because with
    that comes requirements for support services, things of that
    nature. So we are not talking a lot, but it could be upwards of
    a dozen more people.

                           SERVICE TREATMENT RECORDS

        Senator Tester. Okay. One of the most time-consuming pieces
    of the claims process is collecting evidence, and much of that
    evidence is gathered not by you, but by the DOD. Last summer, I
    wrote to Secretary Hagel after the DOD inspector-general-issued
    report revealing that the DOD was taking entirely way too long
    to transmit complete records to the VA. This is an issue that
    not only I have been involved in, but several on the Senate
    side. There have been reforms implemented, and your
    communication and cooperation with the DOD has strengthened
    over the last couple of years, and I commend you for that. Can
    you elaborate on how the transmission is going with the DOD of
    documents?
        Secretary Hickey. So we have--so thanks, Senator, for that,
    and they are doing better, and I am really appreciative of that
    because they are a critical supplier to our process. A year
    ago, about 80 to 83 percent of everything they sent us was
    late. We were getting it in paper. We were not getting it
    digitized. But that has all changed.
        Now, they have built their Health Artifact and Image
    Management (HAIMS) system. Basically they are scanning all of
    their full and complete service treatment records at central
    cells at different places across the country. And then they are
    uploading them into this HAIMS system. Our VBMS system has been
    built and coded such that when we say--when we get a request
    for a claim, it automatically goes into the HAIMS system, no
    human intervention, asks for that record, finds that record,
    pulls it back across, and puts it into VBMS so it is ready to
    be looked at and worked by a VBA employee.
        They have gotten better. They are now down to about 37 to
    40 percent of them are still late, but they are doing better,
    and they are really working hard at it. So we will continue to
    keep pushing so that we get them all the way down only because
    it is so critical to our ability to get and stay at 125. So we
    need them to stay eyes on target as much as we are right now.
        Senator Tester. Yes, and I appreciate that. I would just
    ask you if--I mean, there are many people on this
    subcommittee--I am not one--but they do serve on Armed
    Services. And there can be pressure applied to make sure that
    the DOD is doing their part in this transaction because it is
    an important part. I want to talk about National Guard and
    their records. Are they also as timely?
        Secretary Hickey. No, they are not, Senator, and I need
    more work there in rapid fashion.
        Senator Tester. And what is the pressure point to make that
    happen?
        Secretary Hickey. They have recently stood up a National
    Guard single point of entry cell as well. And as you well know,
    with a State that has a lot of National Guard in it, the
    National Guard has not always served with the same units and in
    various places. And as you well know, chairman, as a naval
    reservist, you often went as an IMA or an individual
    mobilization augmentee, and nobody was keeping track of your
    records anywhere. This is a real problem.
        We actually let a contract to try to go understand better
    how we could figure it out because we were not getting enough
    in-depth understanding of how this could be made better on the
    DOD side. That is literally coming to me here in the next
    couple of weeks to tell me what they have discovered and found.
    As I see that and I look for opportunities to improve, I will
    be taking that to DOD from my perspective.
        We need to do more about this. We have nearly a million in
    the Guard and Reserve who have served this country well and
    faithfully over this last 15 years of war and beyond.
        Senator Tester. Yes. I would just say, and then this will
    just be a side comment, that if you need help, we will help. I
    mean, we are using the Guard in a way that they have never used
    before. And so, I think it is important that we meet their
    needs, too. And if we are falling down, we have just got to
    figure out where to apply the pressure. We will work on it.
        So once again, Secretary Hickey, thank you for your good
    work. I very much appreciate it.
        Secretary Hickey. Thank you, Senator.
        Senator Kirk. Let me conclude with one last question. Is
    there any way we could establish something I would call the
    Hickey process for any amputee where in 1 day we could
    adjudicate that claim?
        Secretary Hickey. Chairman, when we have very seriously
    injured individuals, we put them at the top of the priority
    list along with POWs, Medal of Honor recipients, and terminal
    veterans. It will sometimes take a little bit longer than a day
    to do them, but we do prioritize them well in front of the
    rest.
        I usually will find someone who is a double amputee has
    many more conditions we need to address. Can we take one and do
    it? Yes, we do that to try to get something started for that
    veteran all the time.
        Senator Kirk. All right, thank you.
        Secretary Hickey. Thank you, chairman.
        Senator Kirk. Thank you. Well, I remind members that we
    will keep the record open until close of business, and we will
    meet next week, Thursday. For those members who may want to
    submit additional questions, they can do so for the record.

                              SUBCOMMITTEE RECESS

        Senator Kirk. The subcommittee will be meeting again on
    March 26 at 2:30 p.m. With that, we will close the hearing.
        Secretary Hickey. Thank you, chairman.
        Senator Kirk. Thank you.
        [Whereupon, at 11:26 a.m., Thursday, March 19, the
    subcommittee was recessed, to reconvene Thursday, March 26,
    which was later postponed to Thursday, April 15, at a time
    subject to the call of the Chair.]