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
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copyright holder may be necessary if you wish to reproduce this material
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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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. ***