Veterans' Benefits: Claims Processing Timeliness Performance	 
Measures Could Be Improved (19-DEC-02, GAO-03-282).		 
                                                                 
The Chairman and Ranking Minority Member, Senate Committee on	 
Veterans' Affairs, asked GAO to assist the Committee in its	 
oversight of the Veterans Benefits Administration's (VBA) efforts
to improve compensation and pension claims processing. As part of
this effort, GAO assessed (1) whether VBA's key timeliness	 
measure clearly reflects its performance and (2) whether it has  
adequate data to measure the timeliness of its newly created	 
specialized claims processing teams.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-282 					        
    ACCNO:   A05733						        
  TITLE:     Veterans' Benefits: Claims Processing Timeliness	      
Performance Measures Could Be Improved				 
     DATE:   12/19/2002 
  SUBJECT:   Claims processing					 
	     Performance measures				 
	     Veterans benefits					 
	     VA Claims Automated Processing System		 

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GAO-03-282

Report to the Chairman and Ranking Minority Member, Committee on Veterans*
Affairs, U. S. Senate

United States General Accounting Office

GAO

December 2002 VETERANS* BENEFITS

Claims Processing Timeliness Performance Measures Could Be Improved

GAO- 03- 282

VBA*s key claims processing timeliness measure does not clearly reflect
how quickly it decides claims by veterans and their families for
disability compensation, pension, and dependency and indemnity
compensation benefits. Although each program has its own purpose and
eligibility requirements, VBA does not set a separate timeliness goal for
each in its annual performance plan. This obscures the significant
differences in the time required to complete decisions under each program.
Fiscal year 2002 timeliness, using VBA*s measure, was 223 days; however,
disability compensation decisions took significantly longer than decisions
under the other two programs. A disability compensation decision requires
more evidence, in part because VBA must determine that each claimed
disability is related to the veteran*s military service.

Time to Complete VBA Compensation and Pension Claims, Fiscal Year 2002, by
Program

VBA does not yet have adequate data to measure the timeliness of its new
specialized regional office claims processing teams but is working to
improve its data. VBA*s inventory management system, which allows it to
report and analyze teams* timeliness, relies on an existing information
system that does not provide timeliness data on all cases. VBA is acting
to improve the completeness of the data in the existing system. Meanwhile,
VBA is deploying new software that it expects should enable it to capture
more complete and accurate data. VBA expects to deploy this new software
at all regional offices by October 2003.

VETERANS* BENEFITS

Claims Processing Timeliness Performance Measures Could Be Improved

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 282. To view the full report,
including the scope and methodology, click on the link above. For more
information, contact Cynthia Bascetta at (202) 512- 7101 or bascettac@
gao. gov. Highlights of GAO- 03- 282, a report to the

Chairman and Ranking Minority Member, Committee on Veterans* Affairs,
United States Senate

December 2002

The Chairman and Ranking Minority Member, Senate Committee on Veterans*
Affairs, asked GAO to assist the Committee in its oversight of the
Veterans Benefits Administration*s (VBA) efforts to improve compensation
and pension claims processing. As part of this effort, GAO assessed (1)
whether VBA*s key timeliness measure clearly reflects its performance and
(2) whether it has adequate data to measure the timeliness of its newly
created specialized claims processing teams.

GAO recommends that the Veterans Benefits Administration establish claims
processing timeliness goals for its three main disability programs,
incorporate these goals into VA*s strategic plan and annual performance
plan, and report its progress in meeting these goals in its annual
performance report.

VA concurred in principle with GAO*s recommendation. VA provided
additional information to clarify the possible timeframe for implementing
timeliness measures and goals by program.

Page i GAO- 03- 282 VBA Performance Measurement Letter 1

Results in Brief 2 Background 3 VBA*s Key Timeliness Measure Does Not
Clearly Reflect Its

Performance 4 VBA Does Not Have Adequate Data to Measure Timeliness of

Claims Processing Teams, but Is Making Progress 6 Conclusions 8
Recommendation 9 Agency Comments and Our Response 9

Appendix I Comments from the Department of Veterans Affairs 11

Table

Table 1: Claims Processing Teams and Related Timeliness Measures 7

Figure

Figure 1: Average Days to Complete Rating- Related Cases, Fiscal Year
2002, by Program 5

Abbreviations

CAPS Claims Automated Processing System CPI claims process improvement IMS
inventory management system MAP- D Modern Award Processing* Development VA
Department of Veterans Affairs VBA Veterans Benefits Administration VSA
veterans service representative VSC Veterans Service Centers VSR veterans
service representatives Contents

Page 1 GAO- 03- 282 VBA Performance Measurement

December 19, 2002 The Honorable John D. Rockefeller IV Chairman The
Honorable Arlen Specter Ranking Minority Member Committee on Veterans*
Affairs United States Senate

Timely compensation and pension claims processing has been a longstanding
problem for the Veterans Benefits Administration (VBA). In fiscal year
2002, VBA took an average of more than 7 months to complete veterans*
claims for disability compensation and pension benefits. In order to
ensure that veterans and their families receive more timely decisions, the
Secretary of Veterans Affairs (VA) tasked VBA to reduce claims processing
time to an average of 100 days by the end of fiscal year 2003. As part of
this effort, the Secretary created the VA Claims Processing Task Force to
recommend ways to improve the claims process. In October 2001, the task
force recommended actions to improve claims processing. VBA is in the
process of implementing these recommendations.

You asked that we assist the Committee in its oversight of VBA*s efforts
to improve its compensation and pension claims processing. As part of this
request, you asked that we examine VBA*s timeliness performance measures.
Specifically, we assessed (1) whether VBA*s key timeliness measure clearly
reflects its performance and (2) whether VBA has adequate data to measure
the timeliness of its newly created specialized claims processing teams.
We analyzed VBA*s claims processing timeliness data. We reviewed VA*s
strategic plan, most recent performance plan, and report and VBA*s
implementation plan for its claims process improvement (CPI) initiative.
We also talked with VBA officials about the quality of its existing
timeliness data and its efforts to improve data quality. In addition, we
observed how performance data are collected and used and how the
reorganization of claims processing was being implemented at the
Milwaukee, Wisconsin, and San Diego, California, regional offices. These
were two of the four pilot sites for VBA*s CPI initiative, which is
implementing task force recommendations to organize claims processing
around specialized teams to handle specific stages of the claims process
at

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 282 VBA Performance Measurement

all 57 regional offices. 1 We focused our work on VBA*s compensation and
pension programs, since they account for most VBA benefit claims and were
the subject of the task force*s report. We conducted our review from
August through November 2002 in accordance with generally accepted
government auditing standards.

VBA*s key timeliness measure does not clearly reflect its speed in claims
processing in that it is a composite figure for three distinct disability
benefit programs* disability compensation, pension, and dependency and
indemnity compensation. While the aggregate timeliness for deciding
rating- related claims in fiscal year 2002 was 223 days, it was 241 days
for disability compensation claims, 126 days for pension claims, and 172
days for dependency and indemnity compensation claims. Thus, using one
measure obscures VBA*s timeliness in completing claims under each of the
three different programs. Similarly, VBA has not set separate timeliness
goals for these programs even though each program has its own purpose,
beneficiaries, eligibility criteria, and evidence requirements. For
example, disability compensation is provided to veterans with service-
connected disabilities, while pensions are for low- income veterans with
disabilities that are not related to their military service.

VBA does not yet have adequate data to measure the timeliness of its new
specialized regional office claims processing teams. VBA is developing new
timeliness measures appropriate to the work of these specialized teams.
However, the current data are not as complete and accurate as they could
be, because the agency currently relies on an information system that was
not used to capture data on all cases. VBA instructed its regional offices
to report on how fully they use the system and to provide estimated
timeframes for full compliance with data entry requirements. Meanwhile,
VBA is deploying new software applications that are expected to enable it
to routinely capture information on all cases. VBA anticipates being able
to better quantify its performance, determine baselines for future
comparisons, and identify problems for corrective actions when these
applications are deployed at all regional offices by October 2003.

This report contains a recommendation to the Secretary of Veterans Affairs
to direct VBA to establish separate claims processing timeliness goals for
each of its three main disability programs, incorporate these

1 The other pilot sites were the Reno, Nevada, and Roanoke, Virginia,
regional offices. Results in Brief

Page 3 GAO- 03- 282 VBA Performance Measurement

goals into VA*s strategic plan and its annual performance plans, and
report its progress in meeting these goals in its annual performance
reports.

VBA*s compensation program pays monthly benefits to veterans with service-
connected disabilities (injuries or diseases incurred or aggravated while
on active military duty), according to the severity of the disability.
VBA*s pension program pays monthly benefits to wartime veterans who have
low incomes and are permanently and totally disabled for reasons not
service- connected. 2 In addition, VBA pays dependency and indemnity
compensation to some deceased veterans* spouses, children, and parents. In
fiscal year 2001, VBA paid over $20 billion in disability compensation to
about 2.3 million veterans and over 300,000 survivors. VBA also paid over
$3 billion in pensions to over 600,000 veterans and survivors.

Veterans may submit their disability claims to any of VBA*s 57 regional
offices, which process these claims in accordance with VBA regulations,
policies, procedures, and guidance. Regional offices assist veterans in
obtaining evidence to support their claims. This assistance includes
helping veterans obtain the following documents: records of service to
identify when the veteran served, records of medical treatment provided
while the veteran was in military service, records of treatment and
examinations provided at VA health- care facilities, and records of
treatment of the veteran by nonfederal providers. Also, if necessary for
decision on a claim, the regional office arranges for the veteran to
receive a medical examination or opinion. Once this evidence is collected,
VBA makes a rating decision on the claim. Veterans with multiple
disabilities receive a single composite rating. 3 For pension claims, VBA
determines whether the veteran meets certain criteria. 4 The regional
office then notifies the veteran of its decision.

2 VBA also pays pensions to surviving spouses and unmarried children of
deceased wartime veterans. 3 VA*s ratings are in 10- percent increments,
from 0 to 100 percent. Generally, VA does not pay disability compensation
for disabilities rated at 0 percent. Basic monthly payments range from
$103 for 10 percent disability to $2,163 for 100 percent disability.

4 Veterans are eligible for pensions if they meet the following criteria:
(1) served in a period of war, (2) are permanently and totally disabled
for reasons not related to military service, and (3) have incomes below
VA*s thresholds. Background

Page 4 GAO- 03- 282 VBA Performance Measurement

In May 2001, the Secretary created the VA Claims Processing Task Force to
develop recommendations to improve the compensation and pension claims
process and to help VBA improve claims processing timeliness and
productivity. The task force observed that the work management system in
many VBA regional offices contributed to inefficiency and an increased
number of errors. The task force attributed these problems primarily to
the broad scope of duties performed by regional office staff* in
particular, veterans service representatives (VSR). For example, VSRs were
responsible for both collecting evidence to support claims and answering
claimants* inquiries. In October 2001, the task force made short- and
medium- term recommendations for improving the claims process and
reorganizing regional office operations. In particular, the task force
recommended that VBA change its claims processing system to one that
utilizes specialized teams. VBA is in the process of implementing many of
these recommendations and has established a new claims processing
structure that is organized by specific steps in the claims process. For
example, regional offices will have teams devoted specifically to claims
development, that is, obtaining evidence needed to evaluate claims.

VBA*s key timeliness measure does not clearly reflect its timeliness in
completing claims because it fails to distinguish among its three
disability programs* disability compensation, pension, and dependence and
indemnity compensation. The programs* processing times differ, in part
because they have different purposes, beneficiaries, eligibility criteria,
and evidence requirements to decide each type of claim. Despite these
differences, VBA sets an annual performance goal that is an average of all
three programs.

For the purposes of reporting its performance to the Congress and other
stakeholders, VBA adopted one key timeliness measure* the average time to
complete decisions on rating- related cases. 5 This measure includes
original and reopened disability compensation, pension, and dependency and
indemnity compensation claims* in other words, claims for three VBA
compensation and pension programs. 6 VBA sets an annual goal for average
days to complete rating- related cases in VA*s annual performance

5 VBA also reports the average number of days that rating- related actions
are pending. In fiscal year 2002, VBA*s actual pending timeliness was 174
days. 6 Reopened claims are filed by a veteran who is already receiving
benefits, for example, a claim to increase a veteran*s disability rating.
Reopened dependency and indemnity compensation claims are counted with
reopened disability compensation claims. VBA*s Key Timeliness

Measure Does Not Clearly Reflect Its Performance

Page 5 GAO- 03- 282 VBA Performance Measurement

plans and subsequently reports its actual timeliness* and whether it met
its goal* in VA*s annual performance reports to the Congress.

This one measure does not reflect the differences in the timeliness for
the three programs. In general, the disability compensation program
requires the most evidence and thus these claims generally take longer to
complete, as shown in figure 1. While VBA*s average fiscal year 2002
timeliness was 223 days, disability compensation decisions (which
represented about 83 percent of total decisions) took almost twice as long
to complete as pension decisions. The aggregate measure understated the
time required to decide disability compensation claims by 18 days and
overstated the time to decide pension claims by 97 days and dependency and
indemnity compensation claims by 51 days.

Figure 1: Average Days to Complete Rating- Related Cases, Fiscal Year
2002, by Program

Note: Compensation includes some reopened dependency and indemnity
compensation claims and VBA actions that can lead to adjustments in
disability compensation ratings.

Average days to complete 0 50

100 150

200 250

compensation Pension

Dependency andindemnitycompensation Program

Source: Veterans Benefits Administration. 241

126 172

Disability

Page 6 GAO- 03- 282 VBA Performance Measurement

Each program has a different claims processing time frame because each has
different evidence requirements resulting from their different purposes
and eligibility requirements. For example, a major reason why disability
compensation claims take longer is that VBA must not only establish that
each claimed disability exists, but that each was caused or aggravated by
the veteran*s military service. This process requires substantial evidence
gathering, with VBA actively assisting the claimant. To prove
serviceconnection, VBA obtains the veteran*s service medical records and
may request medical examinations and treatment records from VA medical
facilities. In contrast, pension claims do not require evidence that the
claimed disabilities were service- connected. Also, veterans aged 65 and
older do not have to prove that they are disabled to receive pension
benefits as long as they meet the income and military service
requirements.

VBA does not yet have adequate data to measure timeliness or set goals for
its specialized regional office teams but is making progress in obtaining
complete and accurate data. While VBA is in the process of developing
performance measures and goals for these teams and has developed a system
to report timeliness data, it acknowledges that the quality of its
existing timeliness data needs to be improved.

Implementation of the task force recommendations to reorganize claims
processing requires that VBA measure its performance for its teams. Where
teams were once responsible for processing claims from receipt to
completion, teams are now responsible for specific phases of the process.
With complete and accurate data, VBA will be able to measure the
timeliness of the individual teams and, therefore, will be able to hold
them accountable for their performance as well as identify processing
delays and take corrective actions. VBA expects to be able to obtain more
complete and accurate data to measure team performance once it deploys new
software applications that should enable it to consistently capture data
for all cases and will rely less on manual data entry. VBA expects these
applications to be fully deployed by October 2003.

The task force recommended that regional office Veterans Service Centers
(VSC), which process compensation and pension claims, be reorganized into
specialized teams. The task force identified six types of teams* triage,
pre- determination, rating, post- determination, appeals, and public
contact* based on different phases of the claims process. From February
through April 2002, VBA piloted its CPI initiative, which included
reorganizing regional offices* VSCs into specialized teams at four
regional VBA Does Not Have

Adequate Data to Measure Timeliness of Claims Processing Teams, but Is
Making Progress

Page 7 GAO- 03- 282 VBA Performance Measurement

offices. The CPI task team noted that processing teams needed clearly
defined and reasonable performance expectations and recommended timeliness
measures for each team, as shown in table 1. VBA began to implement the
CPI model at its other regional offices in July 2002.

Table 1: Claims Processing Teams and Related Timeliness Measures Team
Description Measures

Triage Reviews, controls, processes, and routes all incoming mail. If
claim can be resolved at once without a claims folder, the triage team
does so.

Average control time* time from date claim received to date claim is
established in VBA*s claims processing information system. Pre-
determination Develops claims. Tasks include

requesting and obtaining all evidence needed to support a claim.

Average days to initiate development. Average days to complete
development. Rating Makes decisions on ratingrelated claims. Days from the
date the claim is

certified ready to rate to the date the rating is prepared. Post-
determination Approves the establishment of

benefits, authorizes payments to beneficiaries, and notifies claimants of
VBA*s decisions.

Days from completion of the rating decision to the authorization of
benefits.

Appeals Processes appeals and remands of regional office decisions. Number
of appeals correctly

certified to the Board of Veterans Appeals. Public contact Answers
telephone and inperson inquiries and refers

claims to triage and informs veterans of the status of their claims.

Days to complete routine correspondence. Days to complete special
correspondence (e. g., responses to congressional inquiries).

Source: Veterans Benefits Administration.

VBA has implemented an inventory management system (IMS) that allows it to
measure and report team timeliness, nationally and at the regional office
level. This system should provide VBA with the necessary data to develop
annual performance goals, which can be used to hold itself and its
regional offices accountable for improving timeliness. IMS should also
provide useful data to assist VBA management with identifying problems in
specific regional offices and allowing regional office management to
identify problems with specific teams for further analysis and corrective
actions.

However, VBA acknowledges that its IMS reports are not as useful as they
can be, because IMS receives incomplete data from an existing VBA

Page 8 GAO- 03- 282 VBA Performance Measurement

system* the Claims Automated Processing System (CAPS). Not all regional
offices are fully using CAPS; thus, CAPS data that are sent to IMS are
incomplete. CAPS was not being used to collect timeliness data for all
cases; rather, it was used to provide regional office staff with
information on the status of cases expected to take more than 30 days to
process. In order to provide a short- term improvement in the completeness
of IMS data, in May 2001 VBA instructed regional offices to ensure that
certain data were consistently entered into CAPS; for example, dates when
evidence was requested and received. In May 2002, VBA instructed regional
offices to report on how fully they use CAPS and to provide estimated
timeframes for complete compliance with CAPS data entry requirements. As
of August 2002, VBA reported that about 81 percent of its pending cases
had records in CAPS. 7

According to VBA officials, as the regional offices implement new software
applications, the ability of IMS to provide complete and accurate
timeliness reports is expected to improve. For example, Share, the new
claims establishment application, will automatically input data on a case
into other applications, including CAPS. This will help ensure more
complete and consistent data in the short term, because there will be a
CAPS record for each case. Eventually, the Modern Award Processing*
Development (MAP- D) application will replace CAPS as a source of
timeliness data for IMS. MAP- D will, according to VBA officials, contain
records for all cases and will reduce the amount of manual data entry
required, thus reducing the potential for data input errors. VBA plans to
have all regional offices using Share and MAP- D by October 2003.

VBA has chosen to use one aggregate performance measure for timeliness for
its disability compensation, pension, and dependency and indemnity
compensation programs. Such a measure does not reflect VBA*s performance
for programs with different purposes, beneficiaries, and claims processing
requirements. In particular, VBA*s timeliness in deciding disability
compensation claims is assessed under a measure that also covers pension
and dependency and indemnity compensation claims, which take much less
time. Consequently, the aggregate measure can make the processing time for
VBA*s largest and most time- consuming

7 Some regional offices reported more than 100 percent of pending cases in
CAPS. According to VBA officials, this is because the CAPS record was not
properly closed in every case. Conclusions

Page 9 GAO- 03- 282 VBA Performance Measurement

workload look better than it really is. As long as VBA uses an aggregate
timeliness measure, it will not be able to clearly demonstrate to the
Congress, top VA management, and claimants how well it is meeting its
objectives to serve disabled veterans and their families.

VBA*s reorganization of its regional office compensation and pension
claims processing operations into specialized teams underscores the need
for complete and accurate data on the timeliness of the phases of the
claims process. VBA does not yet have adequate data for timeliness
measurement purposes but is making progress in ensuring that it does. Once
VBA has deployed its new claims processing software applications at all of
its regional offices, it expects to be able to better measure the
timeliness of its specialized teams, provide baselines for future
comparisons, quantify team performance goals, and identify problems
needing corrective action. In this way, local and team- specific
information can be used to hold regional offices and their specialized
teams accountable for improving timeliness.

We recommend that the Secretary of Veterans Affairs direct the Under
Secretary for Benefits to establish separate claims processing timeliness
goals for its three main disability programs, incorporate these goals into
VA*s strategic plan and annual performance plans, and report its progress
in meeting these goals in its annual performance reports.

In its written comments on a draft of this report (see app. I), VA
concurred in principle with our recommendation. VA noted that VBA plans to
develop performance measures for each of its programs, as part of VA*s
effort to restructure its budget. However, VA believes establishing new
goals by program should be deferred until at least fiscal year 2005,
because establishing new goals at this time risks obscuring its focus on
achieving the Secretary*s 100- day goal by the end of fiscal year 2003. We
believe developing timeliness measures for each program would not obscure
VBA*s focus on performance improvement, but would provide a more accurate
picture of claims processing timeliness, because the new measures would
reflect the differences among the three programs. Because VBA already has
the necessary data, we believe that it should report timeliness by program
for fiscal year 2004 and set goals by program for fiscal year 2005, at the
latest.

VA also suggested that we based our calculations of average days to
complete disability compensation, pension, and dependency and
Recommendation

Agency Comments and Our Response

Page 10 GAO- 03- 282 VBA Performance Measurement

indemnity compensation decisions, as shown in figure 1, on original claims
only. We based our calculations on all eight types of claims (known as end
products) that VBA uses to calculate rating- related timeliness. These end
products include both original and reopened claims.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 1 day after
its issue date. At that time, we will send copies of this report to the
Secretary of the Department of Veterans Affairs, appropriate congressional
committees, and other interested parties. We will also make copies of this
report available to others on request. The report will also be available
at no charge on GAO*s Web site at http:// www. gao. gov.

If you or your staff have any questions regarding this report, please call
me at (202) 512- 7101 or Irene Chu, Assistant Director, at (202) 512-
7102. In addition to those named, Susan Bernstein, Martin Scire, and Greg
Whitney made key contributions to this report.

Cynthia A. Bascetta Director, Education, Workforce,

and Income Security Issues

Appendix I: Comments from the Department of Veterans Affairs

Page 11 GAO- 03- 282 VBA Performance Measurement

Appendix I: Comments from the Department of Veterans Affairs

Appendix I: Comments from the Department of Veterans Affairs

Page 12 GAO- 03- 282 VBA Performance Measurement (130180)

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