    Veterans' Benefits: Further Changes in VBA's Field Office
    Structure Could Help Improve Disability Claims Processing
    (09-DEC-05, GAO-06-149).

    The Chairman, former Chairman, and Ranking Minority Member,
    Senate Committee on Veterans' Affairs asked GAO to review the
    Veterans Benefits Administration's (VBA) efforts to realign its
    compensation and pension claims processing field structure to
    improve performance. This report (1) identifies the actions VBA
    has taken to realign its compensation and pension claims
    processing field structure to improve performance, and (2)
    examines whether further changes to its field structure could
    improve performance.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-149
        ACCNO:   A42917
      TITLE:     Veterans' Benefits: Further Changes in VBA's Field Office
    Structure Could Help Improve Disability Claims Processing
         DATE:   12/09/2005
      SUBJECT:   Claims processing
    	     Compensation claims
    	     Internal controls
    	     Pension claims
    	     Performance measures
    	     Veterans benefits
    	     Veterans disability compensation
    	     Veterans pensions
    	     Timeliness

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    GAO-06-149

    Report to Congressional Requesters

    United States Government Accountability Office

    GAO

    December 2005

    VETERANS'BENEFITS

    Further Changes in VBA's Field Office Structure Could Help Improve
    Disability Claims Processing

    Veterans' Benefits Veterans' Benefits Veterans' Benefits Veterans'
    Benefits Veterans' Benefits Veterans' Benefits Veterans' Benefits
    Veterans' Benefits Veterans' Benefits Veterans' Benefits Veterans'
    Benefits Veterans' Benefits Veterans' Benefits Veterans' Benefits
    Veterans' Benefits Veterans' Benefits Veterans' Benefits Veterans'
    Benefits Veterans' Benefits

    GAO-06-149

    Contents

    Letter 1

    Results in Brief 2
    Background 3
    VBA Has Used Limited Field Restructuring and Staff Redeployment to Improve
    Compensation and Pension Performance 5
    VBA Continues to Face Challenges as It Realigns Its Compensation and
    Pension Field Structure 8
    Conclusions 12
    Recommendation for Executive Action 12
    Agency Comments and Our Response 12
    Appendix I Scope and Methodology 14
    Appendix II Comments from the Department of Veterans Affairs 17

    Abbreviations

    BDD Benefits Delivery at Discharge

    DOOR Distribution of Operational Resources

    FTE full-time equivalent

    NPRC National Personnel Records Center

    PA&I Office of Performance Analysis and Integrity

    STAR Systematic Technical Accuracy Review

    VA Department of Veterans Affairs

    VBA Veterans Benefits Administration

    VSR veterans service representative

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
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    separately.

    United States Government Accountability Office

    Washington, DC 20548

    December 9, 2005

    The Honorable Larry E. Craig Chairman The Honorable Daniel K. Akaka
    Ranking Minority Member Committee on Veterans' Affairs U.S. Senate

    The Honorable Arlen Specter United States Senate

    Providing veterans and their survivors with timely, accurate, and
    consistent decisions on their claims for disability compensation and
    pension benefits has been a long-standing challenge for the Department of
    Veterans Affairs (VA). Veterans continue to experience lengthy waits for
    decisions, and VA's Veterans Benefits Administration (VBA) continues to
    experience excessive claims inventories and problems with decision
    accuracy. These performance problems are one reason why we designated VA
    and other federal disability programs as a High-Risk area in January
    2003.1 We have noted that to enable it to handle an increasing claims
    workload without significant increases in staffing resources, VBA needs to
    improve claims processing productivity.2 Also, we have reported that VBA
    needs to improve its ability to provide veterans with consistent
    decisions-that is, comparable decisions on benefit entitlement and rating
    percentage for comparable disabilities regardless of the regional offices
    making the decisions.3 Improving VBA claims processing performance, and
    positioning the agency to deal with future workload changes, depends in
    part on VBA's ability to maintain a highly qualified and productive claims
    processing workforce deployed where it can be utilized most effectively.

    1GAO, High-Risk Series: An Update, GAO-03-119 (Washington, D.C.: January
    2003).

    2For example, see GAO, Veterans' Disability Benefits: Claims Processing
    Problems Persist and Major Performance Improvements May Be Difficult,
    GAO-05-749T (Washington, D.C.: May 26, 2005).

    3For example, see GAO, VA Disability Benefits: Board of Veterans' Appeals
    Has Made Improvements in Quality Assurance, but Challenges Remain for VA
    in Assuring Consistency, GAO-05-655T (Washington, D.C.: May 5, 2005).

    At your request, we reviewed VBA's efforts to realign its compensation and
    pension claims processing field structure to improve productivity,
    timeliness, accuracy, and consistency, and to allow VBA to deal with
    significant workload changes. Specifically, we (1) identified the actions
    VBA has taken to realign its compensation and pension claims processing
    field structure to improve performance and (2) examined whether further
    changes to its field structure could improve performance.

    To develop the information for this report, we reviewed VBA's model for
    allocating staff to its regional offices and discussed the allocation
    model with VBA officials. We also analyzed VBA staffing data from fiscal
    years 2001 through 2004 for VBA's regional offices. To determine the range
    in workload and performance of VBA's regional offices, we reviewed VBA
    workload, timeliness, and accuracy data. We assessed the reliability of
    VBA's timeliness and workload data and found the data sufficiently
    reliable for the purposes of this report. We also assessed the reliability
    of VBA's fiscal year 2004 accuracy data and found that the accuracy data
    were sufficiently reliable to show the differences between VBA's most and
    least accurate offices (see app. I). To discuss VBA initiatives and the
    impacts of changes in staffing levels, we visited the VBA regional offices
    in Washington, D.C.; Boston, Massachusetts; Newark, New Jersey;
    Philadelphia, Pennsylvania; and Salt Lake City, Utah. Also, while visiting
    the Salt Lake City regional office, we interviewed by videoconference
    officials of the Anchorage, Alaska, and Fort Harrison, Montana, regional
    offices, which are operated by the Salt Lake City regional office. We
    conducted our review from November 2004 through October 2005 in accordance
    with generally accepted government auditing standards.

                                    Results in Brief

    Since 2001, VBA has made several targeted changes to its field structure
    and staff deployment in an effort to improve compensation and pension
    claims processing performance, in particular to improve claims processing
    timeliness and reduce rating-related claims inventories. VBA established a
    Tiger Team in October 2001, including experienced rating specialists, to
    complete very old claims and claims from elderly veterans. At the same
    time, VBA established nine resource centers, where teams of rating
    specialists decided claims developed at the regional offices of
    jurisdiction. Further, VBA consolidated specific types of work, including
    pension maintenance work (such as annual means testing for VA pension
    beneficiaries) at three regional offices in January 2002 in an effort to
    free up staff at other offices to concentrate on rating-related claims.
    VBA also consolidated in-service dependency and indemnity compensation
    claims at one office in August 2002, and appeals remanded from VA's Board
    of Veterans Appeals at one office in July 2003. Finally, VBA is in the
    process of consolidating decision-making on Benefits Delivery at Discharge
    (BDD) claims at two regional offices.

    While VBA has taken these steps to improve its claims processing
    performance through limited realignments of its field structure and
    workload, VBA has not changed the basic field structure for processing its
    key workload-claims for disability compensation and pension benefits-and
    it still faces performance challenges such as improving disability
    compensation and pension claims processing timeliness, decision-making
    accuracy and consistency, and productivity. VBA continues to process these
    claims at 57 regional offices, where large performance variations and
    questions about decision consistency persist. For example, in fiscal year
    2004, the average time to decide a rating-related claim ranged from 99
    days at one office to 237 days at another, while the accuracy of
    rating-related decisions ranged from 76 to 96 percent. In addition, we
    have noted that VBA faces continuing questions about its ability to ensure
    that veterans receive consistent decisions, regardless of which regional
    offices decide their claims. Furthermore, our prior work found that
    productivity improvements are necessary to maintain performance in the
    face of greater workloads and relatively constant staffing resources. VBA
    and others who have studied claims processing have identified various
    options for changing the basic field structure in order to improve claims
    processing efficiency, reduce overhead costs, and improve decision
    accuracy and consistency, including consolidating claims processing into
    fewer than 57 regional offices. No matter which alternative VBA chooses to
    pursue, a broad array of human capital and real property issues would need
    to be addressed.

    This report contains a recommendation to the Secretary of Veterans Affairs
    to have VBA extend its improvement efforts by undertaking a comprehensive
    reexamination of its compensation and pension claims processing field
    structure, including staff deployment, opportunities to consolidate claims
    processing operations, and related human capital and real property
    management issues. VA concurred fundamentally with our recommendation and
    noted that field restructuring is a complex process. It stated it will
    establish a task force to thoroughly explore potential areas for
    consolidation.

                                       Background

    VBA's disability compensation and pension claims processing is done in its
    57 regional offices. Each state, except Wyoming, has at least 1 regional
    office; California has 3, and New York, Pennsylvania, and Texas have 2
    each. VBA also has regional offices in Washington, D.C.; San Juan, Puerto
    Rico; and Manila, the Philippines. Also, VBA has 142 Benefits Delivery at
    Discharge sites, where VBA staff process claims from newly separated
    service members. In fiscal year 2004, VBA spent about $926 million to
    administer its disability compensation and pension programs. This included
    support for about 9,100 full-time equivalent (FTE) employees.

    In fiscal year 2004, VBA received about 771,000 rating-related claims from
    veterans and their families for disability benefits. This included about
    195,000 original claims for compensation of service-connected disabilities
    (injuries or diseases incurred or aggravated while on active military
    duty), and about 438,000 reopened compensation claims.4 In addition, about
    87,000 original and reopened claims were filed for pensions for wartime
    veterans who have low incomes and are permanently and totally disabled for
    reasons not service-connected, and their survivors.5 In addition, VBA
    received about 29,000 original claims for dependency and indemnity
    compensation from deceased veterans' spouses, children, and parents and to
    survivors of service members who died on active duty.

    When a veteran or other claimant submits a claim for disability
    compensation, pension, or dependency and indemnity compensation to a VBA
    regional office, veterans service center staff process the claim in
    accordance with VBA regulations, policies, procedures, and guidance. A
    veterans service representative (VSR) in a predetermination team develops
    the claim, that is, assists the claimant in obtaining sufficient evidence
    to decide the claim. For rating-related claims, a decision is made in a
    rating team by rating veterans service representatives (also known as
    rating specialists). VSRs also perform a number of other duties, including
    establishing claims files, authorizing payments to beneficiaries and
    generating notification letters to claimants, conducting in-person and
    telephone contacts with veterans and other claimants, and assisting in the
    processing of appeals of claims decisions.

    4A reopened compensation claim could be filed by a veteran seeking an
    increase in disability rating based on the worsening of a
    service-connected disability, or by a veteran seeking compensation for a
    previously unclaimed disability.

    5Veterans age 65 and older do not have to be permanently and totally
    disabled to become eligible for pension benefits, as long as they meet the
    other requirements for income and military service. VBA also pays pensions
    to surviving spouses and unmarried children of deceased wartime veterans.

    For a number of years, VBA's regional offices have experienced problems
    processing veterans' disability compensation and pension claims. As we
    reported in May 2000, VBA's regional offices still experience problems
    such as large backlogs of pending claims, lengthy processing times, and
    questions about the consistency of its regional office decisions.6 VBA has
    acknowledged the need to improve the timeliness and accuracy of claims
    processing.

    VBA Has Used Limited Field Restructuring and Staff Redeployment to Improve
                          Compensation and Pension Performance

    Since 2001, VBA has made a number of changes to its field structure and
    staff deployment in an effort to provide veterans with faster decisions
    and reduce its rating-related claims inventory. In October 2001, VBA
    established a Tiger Team, including experienced rating specialists, to
    complete very old claims and claims from elderly veterans. Also, to
    supplement regional offices' claims processing capacity, VBA established
    nine resource centers, where teams of rating specialists decided claims
    developed at the regional offices of jurisdiction. Further, VBA has
    consolidated specific types of work, including pension maintenance work
    (such as annual means testing for VA pension beneficiaries) at three
    regional offices, in an effort to free up staff at other offices to
    concentrate on rating-related claims. VBA also consolidated in-service
    dependency and indemnity compensation claims at its Philadelphia regional
    office; created an Appeals Management Center in Washington, D.C., to
    process appeals remanded from VA's Board of Veterans Appeals; and is
    consolidating the rating of Benefits Delivery at Discharge claims at the
    Salt Lake City and Winston-Salem, North Carolina, regional offices.
    Further, VBA reduced the jurisdictions of two regional offices with
    inadequate performance-Washington, D.C., and Newark-to reduce their claims
    workloads.

    In fiscal year 2002, VBA established special units to supplement regional
    offices' claims processing capacity, as part of its effort to achieve
    rating-related decision timeliness improvement and reduce its pending
    claims inventory. The Tiger Team at the Cleveland, Ohio, regional office
    was tasked to process very old claims (pending 1 year or more), and claims
    by elderly veterans (aged 70 and older). The Tiger Team was staffed with
    experienced rating specialists and with veterans service representatives,
    primarily from the Cleveland office's staff, to perform whatever
    additional development work was needed on the claims they receive and to
    make rating decisions on these claims. To help expedite development work,
    VBA obtained priority access for the Tiger Team to obtain evidence from VA
    and other federal agencies. For example, VA and the National Archives and
    Records Administration completed a memorandum of understanding in October
    2001 to expedite Tiger Team requests for service records at the National
    Personnel Records Center (NPRC) in St. Louis, Missouri. Also, VBA
    established procedures and time frames for expediting Tiger Team requests
    for medical evidence and examinations from the Veterans Health
    Administration. In fiscal year 2004, the Tiger Team completed over 14,000
    decisions. Since its creation in fiscal year 2002, the average age of
    VBA's inventory of rating-related claims has declined from 182 days at the
    end of September 2001 to about 118 days at the end of September 2004.

    6GAO, Veterans Benefits Administration: Problems and Challenges Facing
    Disability Claims Processing, GAO/T-HEHS/AIMD-00-146 (Washington, D.C.:
    May 18, 2000).

    In addition, VBA supplemented regional offices' capacity to make claims
    decisions by establishing resource centers at nine regional offices.7 The
    resource centers, staffed with rating specialists who were less
    experienced than the Tiger Team's, were to decide "ready to rate" claims.
    These are claims where veterans service representatives at the regional
    offices of jurisdiction had developed the evidence needed to support
    decisions on the claims. In fiscal year 2004, the nine resource centers
    completed about 69,000 decisions. Since their creation, the inventory of
    rating-related claims has declined from about 421,000 to about 321,000
    claims at the end of fiscal year 2004.

    VBA has also consolidated some specific types of compensation and pension
    work into specialized units. In January 2002, VBA consolidated pension
    maintenance work at three regional offices-St. Paul, Minnesota;
    Philadelphia; and Milwaukee, Wisconsin. This work involves, for VBA's
    means-tested pension programs, conducting periodic income and eligibility
    verifications for beneficiaries. In fiscal year 2004, the Pension
    Maintenance Centers completed over 200,000 pension maintenance actions. In
    addition to consolidating pension maintenance, VBA plans to consolidate
    all pension claims processing at the three Pension Maintenance Centers.

    VBA also consolidated in-service dependency and indemnity compensation
    claims at the Philadelphia regional office. These claims are filed by
    survivors of service members who die while in military service.8 VBA
    consolidated these claims as part of its efforts to provide expedited
    service to these survivors, including service members who died in
    Operations Enduring Freedom and Iraqi Freedom.

    7The resource centers are located at the regional offices in San Diego,
    California; St. Petersburg, Florida; Togus, Maine; St. Louis, Missouri;
    Muskogee, Oklahoma; Philadelphia, Pennsylvania; Columbia, South Carolina;
    Seattle, Washington; and Huntington, West Virginia.

    VBA has also consolidated the processing of decisions remanded on appeal
    by VA's Board of Veterans Appeals. Effective February 2002, VA issued a
    new regulation to streamline and expedite the appeals process. The new
    regulation allowed the board to process remanded decisions without having
    to send them back to VBA regional offices. To implement this regulation,
    the board established a unit to process remanded appeals. However, in May
    2003, the U.S. Court of Appeals for the Federal Circuit held that the
    board could not, except in certain statutorily authorized exceptions,
    decide appeals in cases in which the board had developed evidence. As a
    result, VBA regained responsibility for evidence development and
    adjudication work on remands, and chose to establish a centralized Appeals
    Management Center at its Washington regional office. According to VBA
    officials, remand processing was consolidated because a consolidated unit,
    focusing only on remands, could process them faster and more consistently,
    and with better accountability, than the individual regional offices.
    VBA's Washington regional office was chosen because of its proximity to
    the board's headquarters. The Appeals Management Center was established in
    July 2003, and was, according to VBA officials, fully operational by
    February 2004. According to a VBA official, it was staffed largely through
    transfers from regional offices and with staff from the board's former
    remand processing unit.

    VBA continues to consolidate specific types of claims processing work. VBA
    is in the process of consolidating decision making on Benefits Delivery at
    Discharge claims, which are generally original claims for disability
    compensation, at the Salt Lake City and Winston-Salem regional offices.
    VBA established this program to expedite decisions on disability
    compensation claims from newly separated service members. A service member
    can file a BDD claim up to 180 days before separation; VBA staff performs
    some development work on the claim before separation. VBA actually decides
    the claim after the service member is separated, and the official
    discharge form (DD Form 214) is received. Under the consolidation,
    regional offices and BDD sites will accept and develop claims, but will
    send the developed claims to Salt Lake City or Winston-Salem for decision.
    VBA expects this consolidation to help improve decision efficiency and
    consistency. Consolidation began in December 2004 and is expected to be
    completed by March 2006. According to VBA officials, claims processing
    performance was one reason for selecting these two regional offices. In
    the case of Salt Lake City, the availability of space and the ability to
    recruit new claims processing staff were also factors. The Salt Lake City
    office is in a relatively new building on the campus of the Salt Lake City
    VA Medical Center.

    8VBA also provides dependency and indemnity compensation to survivors of
    certain deceased disability compensation beneficiaries.

    VBA has also made changes in the jurisdictions of some regional offices.
    The Washington regional office has lost most of its jurisdiction. Claims
    from veterans residing in Washington's Maryland and Virginia suburbs were
    transferred to the Baltimore, Maryland, and Roanoke, Virginia, regional
    offices, respectively. The Washington regional office's staff declined by
    about 37 percent between fiscal year 2001 and 2004. Also, jurisdiction
    over claims from veterans residing outside the United States was
    transferred from Washington to the Pittsburgh, Pennsylvania, regional
    office.9 Meanwhile, the Newark regional office lost jurisdiction over
    claims from veterans in seven southern New Jersey counties to the
    Philadelphia regional office. The Newark regional office lost about 16
    percent of its staff between fiscal year 2001 and 2004. These shifts in
    jurisdiction were, according to VBA officials, in response to poor
    performance by the Washington and Newark regional offices, such as
    inadequate timeliness and accuracy.

      VBA Continues to Face Challenges as It Realigns Its Compensation and Pension
                                    Field Structure

    While VBA has done limited field restructuring and claims processing staff
    reallocation, it has not changed the basic field structure for processing
    claims for disability compensation and pension benefits and still faces
    challenges in improving performance. VBA continues to process claims at 57
    regional offices, which experience large performance variations and
    questions about the consistency of their decisions. In addition, we have
    reported that in order to improve long-term performance in the face of
    increased workloads and without significant staffing increases, VBA needs
    to improve its productivity. Several studies by VA and outside groups have
    suggested that VBA could improve claims processing efficiency and
    consistency by consolidating claims processing into fewer offices as well
    as other strategic changes. In taking on these broader changes, however,
    VBA would need to consider an array of human capital and real property
    challenges, such as optimizing its ability to recruit and retain staff and
    minimizing the cost of office space.

    9Other regional offices have jurisdiction for claims from veterans
    residing outside the United States. Veterans residing in Canada can file
    claims with VBA's White River Junction, Vermont, regional office; veterans
    residing in Mexico, Central and South America, and the Caribbean can file
    claims at the Houston, Texas, regional office.

    VBA continues to struggle to improve nationwide performance, and
    significant performance differences exist among its regional offices. For
    example, in fiscal year 2004 the average time to complete rating-related
    claims VBA-wide was 166 days, far from VBA's strategic goal of 125 days.
    Average completion times ranged from 99 days at the Salt Lake City
    regional office to 237 days at the Honolulu, Hawaii, regional office. To
    help struggling offices reduce their inventories of pending claims, VBA
    has been brokering (that is, having a regional office send a claim to
    another office to be decided) tens of thousands of rating-related claims.
    In fiscal year 2004, regional offices brokered out about 92,000
    claims-about 90 percent to the Tiger Team and resource centers. This
    action enabled some individual offices reduce the size and age of their
    pending inventories. For example, the Providence, Rhode Island regional
    office brokered out about two-thirds of its rating-related decisions in
    fiscal year 2004. This helped Providence to reduce its rating-related
    inventory by almost 30 percent, while the nationwide inventory of pending
    claims grew by more than 25 percent. Also, Providence was able to reduce
    its inventory's average age by about 7 weeks, while the nationwide
    inventory's average age increased by about 1 week.

    VBA also experiences problems ensuring the accuracy and consistency of its
    rating decisions. As measured by VBA's Systematic Technical Accuracy
    Review (STAR) data for fiscal year 2004, the accuracy of regional office
    decisions varied from a low of 76 percent at its Boston regional office to
    96 percent at its Fort Harrison regional office. Moreover, as we recently
    testified and reported, VA still needs to develop a plan for assessing
    variations in disability claims decisions and whether they are within the
    bounds of reasonableness.10 While some variation is inherent in the claims
    decision-making process, we have reported in the past on wide variations
    in the state-to-state average compensation payments per disabled veteran,
    and more recently, VA's inspector general has found that inconsistency
    remains a problem.

    10GAO-05-655T and GAO, Veterans Benefits: VA Needs Plan for Assessing
    Consistency of Decisions, GAO-05-99 (Washington, D.C.: Nov. 19, 2004).

    In addition to the challenges VBA faces in improving claims processing
    timeliness and consistency, VBA also faces productivity challenges. In
    November 2004, we reported that to achieve its claims processing
    performance goals in the face of increasing workloads and decreased
    staffing levels, VBA would have to rely on productivity improvements.
    VBA's fiscal year 2006 budget justification provided information on actual
    and planned productivity, in terms of rating-related claims decided per
    direct full-time equivalent employee, and identified a number of
    initiatives that could improve claims processing performance. These
    initiatives included technology initiatives such as Virtual VA, involving
    the creation of electronic claims folders; consolidation of the processing
    of Benefits Delivery at Discharge claims at 2 regional offices; and
    collaboration with the Department of Defense to improve VBA's ability to
    obtain evidence, such as evidence of in-service stressors for veterans
    claiming service-connected post-traumatic stress disorder. VBA's fiscal
    year 2006 budget justification assumed that it would increase the number
    of rating-related claims completed per FTE from 94 in fiscal year 2004 to
    109 in fiscal year 2005 and 2006, a 16 percent increase. For fiscal year
    2005, this level of productivity translates into VBA completing almost
    826,000 rating-related decisions. VBA completed about 763,000 decisions in
    fiscal year 2005. It is not clear whether these measures will enable VBA
    to achieve its planned improvements in productivity.

    Organizations studying these challenges have suggested that they could be
    addressed by more strategic, comprehensive restructuring than has been
    done to date. For example, in a 1997 report, the National Academy of
    Public Administration found that VA could achieve significant savings in
    administrative overhead costs by closing a large number of regional
    offices.11 Similarly, in its January 1999 report, the Congressional
    Commission on Servicemembers and Veterans Transition Assistance found that
    some regional offices are so small that their disproportionately large
    supervisory overhead may unnecessarily consume personnel resources.12 The
    commission highlighted a need to consolidate disability claims processing
    into fewer locations. VBA has consolidated its education assistance and
    housing loan guaranty programs into fewer than 10 locations, and the
    commission encouraged VBA to take similar action in the disability
    programs.

    11National Academy of Public Administration, Management of Compensation
    and Pension Benefits Claims Processes for Veterans (Washington, D.C.:
    August 1997).

    12Report of the Congressional Commission on Servicemembers and Veterans
    Transition Assistance (Washington, D.C.: Jan. 14, 1999).

    In its own 1995 study of field restructuring, VBA enumerated several
    potential benefits of consolidating processing into fewer than 57 regional
    offices.13 These included allowing VBA to assign the most experienced and
    productive adjudication officers and directors to the consolidated
    offices; facilitating increased specialization and as-needed expert
    consultation in deciding complex cases; improving the completeness of
    claims development, the accuracy and consistency of rating decisions, and
    the clarity of decision explanations; improving overall adjudicative
    quality by increasing the pool of experience and expertise in critical
    technical areas; and facilitating consistency in decision making through
    fewer consolidated claims processing centers.

    Consolidating compensation and pension claims processing into fewer
    offices would not necessarily mean that regional offices would be closed.
    As the VA Claims Processing Task Force suggested, regional offices that
    lose claims processing functions could still provide public contact and
    outreach services. Also, VBA officials suggested that these offices could
    continue to provide vocational rehabilitation and employment services.

    No matter which alternative VBA chooses to pursue in making further
    changes to its field office structure, it will need to address an array of
    human capital and real property issues. These include, for example, (1)
    assessing what mix of incentives-such as buyouts, early retirements, or
    retention bonuses-would be needed to accommodate downsizing at some
    offices and workload increases at others, (2) what additional training
    would be needed to ensure staff could take on new responsibilities, and
    (3) how office space could be disposed of or acquired as needed to
    accommodate workload shifts. At the same time, given potential resistance
    to changes in field structure, VA would need to find effective ways of
    communicating its plans while enhancing staff morale and productivity.

    13Veterans Benefits Administration, Field Restructuring: Progress Report
    and Transition Year Recommendations (Washington, D.C.: December 1995).

                                      Conclusions

    VBA has taken limited actions to realign its field structure and redeploy
    staff resources as part of its effort to improve overall claims processing
    performance. While targeted at specific types of work and specific
    regional offices, these actions have not been in the context of a
    comprehensive restructuring strategy. Rather, VBA has made piecemeal
    changes, many in the context of short-term performance improvements,
    particularly in claims processing efficiency. Unless more comprehensive
    and strategic changes are made to its field structure, VBA is likely to
    continue to miss opportunities to substantially improve productivity,
    accuracy, and consistency in its disability claims processing, especially
    in the face of future workload increases.

                          Recommendation for Executive Action

    To help ensure more timely, accurate, and consistent decisions in a
    cost-effective manner, we recommend that the Secretary of Veterans Affairs
    direct the Under Secretary for Benefits to undertake a comprehensive
    review of VBA's field structure for processing disability compensation and
    pension claims. This review would address staff deployment, opportunities
    for consolidating disability compensation and pension claims processing,
    and human capital and real property issues.

                            Agency Comments and Our Response

    In its written comments on a draft of this report (see app. II), VA agreed
    with our conclusions and concurred fundamentally with our recommendation
    that it undertake a comprehensive review of VBA's field structure for
    processing disability compensation and pension claims. VA stated that it
    will establish a task force to thoroughly explore potential areas for
    further consolidation. VA also noted that field restructuring is a complex
    process that involves, among other things, obtaining input and support
    from service organizations, members of Congress, and labor partners. We
    agree that field restructuring is a complex process but urge VA to
    establish its task force expeditiously to ensure that VA can achieve the
    potential benefits of field restructuring as soon as possible. As VA noted
    in its comments, these could include improved proficiency, greater
    accuracy, and consistency in operations.

    We will send copies of this report to the Secretary of Veterans Affairs,
    appropriate congressional committees, and other interested parties. The
    report will also be available at 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) 512-7215. Carl Barden, Irene Chu, Martin Scire, Greg Whitney,
    Vanessa Taylor, and Walter Vance also made key contributions to this
    report.

    Cynthia A. Bascetta Director, Education, Workforce, and Income Security
    Issues

    Appendix I: Scope and Methodology  Appendix I: Scope and Methodology

    To develop the information for this report, we reviewed prior studies on
    Veterans Benefits Administration (VBA) claims processing, including the
    1995 report of VBA's Field Restructuring Task Force, the National Academy
    of Public Administration's 1997 report on management of compensation and
    pension benefits claim processes for veterans, the 1999 report of the
    Congressional Commission on Servicemembers and Veterans Transition
    Assistance, and the 2001 Department of Veterans Affairs (VA) Claims
    Processing Task Force report. We reviewed VBA's model for allocating staff
    to its regional offices and discussed the allocation model with VBA
    officials. We also analyzed VBA staffing data from fiscal years 2001
    through 2004 for VBA's regional offices. To determine the range in
    workload and performance of VBA's regional offices, we reviewed VBA
    workload, timeliness, and accuracy data.

    To discuss VBA initiatives and the impacts of changes in staffing levels,
    we visited the VBA regional offices in Washington, D.C.; Boston,
    Massachusetts; Newark, New Jersey; Philadelphia, Pennsylvania; and Salt
    Lake City, Utah. Also, while visiting the Salt Lake City regional office,
    we interviewed by videoconference officials of the Anchorage, Alaska, and
    Fort Harrison, Montana, regional offices-which are operated by the Salt
    Lake City regional office. We selected the Philadelphia and Salt Lake City
    offices because they have added, or are in the process of adding, workload
    through consolidations. The Philadelphia regional office hosts one of the
    three Pension Maintenance Centers; processes in-service dependency and
    indemnity claims; and has taken jurisdiction for southern New Jersey from
    the Newark regional office. The Salt Lake City regional office was in the
    process of expanding its staffing as part of VBA's plan to consolidate
    Benefits Delivery at Discharge (BDD) claims decision making, and in fiscal
    year 2004, it made almost 90 percent of the Anchorage regional office's
    rating-related decisions. The Boston, Newark, and Washington regional
    offices were chosen because they had lost a large percentage of their
    staff since fiscal year 2001. Also, the Newark and Washington offices had
    lost jurisdiction to other regional offices in recent years. Finally, we
    visited the Washington office because it is the site of VBA's Appeals
    Management Center.

    We assessed the reliability of VBA's timeliness and workload data and
    found that the data were sufficiently reliable for the purposes of this
    report. For data at the VBA-wide level we relied on the assessment we
    performed for our November 2004 report on VBA's fiscal year 2005 budget
    request.1 For data on workload and timeliness at the regional office
    level, we used data from VBA's Distribution of Operational Resources
    (DOOR) reports. We were unable to directly assess the reliability of the
    data contained in these reports because VBA officials responsible for
    putting together the DOOR reports do not receive claims-level data. For
    this reason, to corroborate the data in the DOOR reports, we obtained
    claims-level data that had been archived by VBA's Office of Performance
    Analysis and Integrity (PA&I). We utilized PA&I's methodology and
    calculated workload and timeliness numbers for September 2004 with minimal
    differences from those contained in the DOOR reports. This gave us
    reasonable assurance that the DOOR numbers accurately reflect VBA's
    workload and timeliness.

    We assessed the reliability of VBA's claims brokering data and found the
    data sufficiently reliable for the purposes of this report. We discussed
    VBA's brokering data with VBA officials and reviewed guidance on reporting
    brokering data. According to VBA, regional offices work with VBA's area
    offices to ensure that brokered cases are properly counted. The area
    offices, in turn, provide the data to VBA headquarters. These data are
    updated monthly. According to VBA, the Office of Performance Analysis and
    Integrity reviews and validates brokering data.

    We also assessed the reliability of VBA's fiscal year 2004 benefit
    entitlement accuracy data and found that the data were sufficiently
    reliable to show the range in accuracy between VBA's most and least
    accurate offices, but not to make further distinctions in accuracy among
    regional offices. We interviewed officials responsible for VBA's
    Systematic Technical Accuracy Review (STAR) program and discussed their
    procedures for requesting cases for review. We obtained data by regional
    office on the number of cases requested and reviewed. We found that VBA's
    STAR unit had requested, but never received or reviewed, hundreds of
    sampled cases from its regional offices. This could have affected regional
    office accuracy scores for fiscal year 2004. For example, the Washington
    regional office's score was reported as 77 percent.2 However, because a
    large number of cases were never received by the STAR unit, Washington's
    accuracy score could have been as high as 87 percent or as low as 42
    percent. According to VBA officials, VBA is now tracking cases that it
    requests as part of its STAR accuracy review sample and charges offices
    with errors if cases are not sent in for review.

    1GAO, Veterans' Benefits: More Transparency Needed to Improve Oversight of
    VBA's Compensation and Pension Staffing Levels, GAO-05-47 (Washington,
    D.C.: Nov. 15, 2004).

    2Since the STAR rating accuracy scores are estimates for each office based
    on a sample of cases, these scores have margins of error associated with
    them. The Washington regional office's accuracy figure of 77 percent has a
    margin of error of no more than 7.6 percent at the 95 percent level of
    confidence.

    Appendix II: Comments from the Department of Veterans Affairs  Appendix
    II: Comments from the Department of Veterans Affairs

    (130422)

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    www.gao.gov/cgi-bin/getrpt?GAO-06-149.

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact Cynthia A. Bascetta at (202) 512-7215 or
    bascettac@gao.gov..

    Highlights of GAO-06-149, a report to congressional requesters

    December 2005

    VETERANS' BENEFITS

    Further Changes in VBA's Field Office Structure Could Help Improve
    Disability Claims Processing

    The Chairman, former Chairman, and Ranking Minority Member, Senate
    Committee on Veterans' Affairs asked GAO to review the Veterans Benefits
    Administration's (VBA) efforts to realign its compensation and pension
    claims processing field structure to improve performance. This report (1)
    identifies the actions VBA has taken to realign its compensation and
    pension claims processing field structure to improve performance, and (2)
    examines whether further changes to its field structure could improve
    performance.

    What GAO Recommends

    To help ensure more timely, accurate, and consistent decisions in a
    cost-effective manner, we recommend that the Secretary of Veterans Affairs
    (VA) direct the Under Secretary for Benefits to undertake a comprehensive
    review of VBA's field structure for processing disability compensation and
    pension claims. This review would address staff deployment, opportunities
    for consolidating disability compensation and pension claims processing,
    and human capital and real property issues.

    VA concurred fundamentally with GAO's recommendation and noted that field
    restructuring is a complex process. It stated it will establish a task
    force to thoroughly explore potential areas for consolidation.

    Since 2001, VBA has made a number of changes to its field structure and
    staff deployment in an effort to improve compensation and pension claims
    processing performance, in particular, to improve the timeliness of claims
    decisions and reduce inventories. VBA

               o  created a Tiger Team to complete very old claims, and claims
               from elderly veterans,
               o  created nine resource centers to decide claims developed at the
               regional offices of jurisdiction,
               o  consolidated pension maintenance work at three regional offices
               to free up staff at other offices to concentrate on other work,
               o  consolidated in-service dependency and indemnity compensation
               claims at one office,
               o  consolidated processing of appeals remanded from VA's Board of
               Veterans Appeals at one office, and
               o  is consolidating decision making on Benefits Delivery at
               Discharge (BDD) claims at two regional offices.

    While VBA has taken these steps to improve its claims processing
    performance through targeted realignments of its field structure and
    workload, VBA has not changed the basic field structure for processing
    claims for disability compensation and pension benefits, and it still
    faces performance challenges. VBA continues to process these claims at 57
    regional offices, where large performance variations and questions about
    decision consistency persist. For example, in fiscal year 2004 the average
    time to decide a rating-related claim ranged from 99 days at one office to
    237 days at another, and accuracy varied across regional offices.
    Furthermore, productivity improvements are necessary to maintain
    performance in the face of greater workloads and relatively constant
    staffing resources. VBA and others who have studied claims processing have
    suggested that consolidating claims processing into fewer regional offices
    could help improve claims processing efficiency, save overhead costs, and
    improve decision accuracy and consistency.

    VBA's 57 Regional Offices Process Disability Claims
    *** End of document. ***