GAO Findings and Recommendations Regarding DOD and VA Disability 
Systems (25-MAY-07, GAO-07-906R).				 
                                                                 
As of April 2007, about 26,000 service members had been injured  
as part of Operation Iraqi Freedom (OIF) and Operation Enduring  
Freedom (OEF), according to the Department of Defense (DOD).	 
Those service members injured in the line of duty are eligible	 
for military disability compensation. When they leave the	 
military, they may also be eligible for compensation from the	 
Department of Veterans Affairs (VA). In fiscal year 2005 alone,  
the Army, Navy, and Air Force evaluated over 23,000 military	 
disability retirement cases and, in fiscal year 2004, over $1	 
billion in permanent and temporary military disability retirement
benefits were paid to over 90,000 service members. Through the VA
disability compensation and pension claims programs, about $34.5 
billion in VA cash disability benefits went to more than 3.5	 
million veterans and their survivors in fiscal year 2006. On	 
April 23, 2007, we briefed the Commission on the results of our  
recent studies of DOD and VA disability systems. This report	 
presents the information we provided during that briefing.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-906R					        
    ACCNO:   A69952						        
  TITLE:     GAO Findings and Recommendations Regarding DOD and VA    
Disability Systems						 
     DATE:   05/25/2007 
  SUBJECT:   Aid for the disabled				 
	     Claims processing					 
	     Disability benefits				 
	     Medical examinations				 
	     Military personnel 				 
	     Persons with disabilities				 
	     Program evaluation 				 
	     Veterans						 
	     Veterans benefits					 
	     Veterans disability compensation			 
	     Timeliness 					 
	     DOD Operation Iraqi Freedom			 
	     Operation Enduring Freedom 			 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-07-906R

May 25, 2007

The Honorable Bob Dole
The Honorable Donna Shalala
Co-Chairs
President's Commission on Care for America's Returning Wounded Warriors

Subject: GAO Findings and Recommendations Regarding DOD and VA Disability

Systems

As of April 2007, about 26,000 service members had been injured as part of
Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF),
according to the Department of Defense (DOD). Those service members
injured in the line of duty are eligible for military disability
compensation. When they leave the military, they may also be eligible for
compensation from the Department of Veterans Affairs (VA). In fiscal year
2005 alone, the Army, Navy, and Air Force evaluated over 23,000 military
disability retirement cases and, in fiscal year 2004, over $1 billion in
permanent and temporary military disability retirement benefits were paid
to over 90,000 service members. Through the VA disability compensation and
pension claims programs, about $34.5 billion in VA cash disability
benefits went to more than 3.5 million veterans and their survivors in
fiscal year 2006.

On April 23, 2007, we briefed the Commission on the results of our recent
studies of DOD and VA disability systems (see app. I). This report
presents the information we provided during that briefing.

Background

In the DOD military disability retirement system, each of the military
services administers its own disability evaluation process. According to
DOD regulations, the process begins with a medical evaluation board (MEB)
that takes place at a military treatment facility when a physician
identifies a condition that may interfere with a service member's ability
to perform his or her duties. Cases in which service members do not meet
military retention standards according to the MEB are then referred to a
physical evaluation board (PEB), which is responsible for determining if
service members can no longer perform their assigned military duties, and
if the illness or injury that renders them "unfit for duty" is linked to
military service.^1 Depending on the overall disability rating and number
of years of active duty or equivalent service, the service member found
unfit with compensable conditions is entitled to either monthly disability
retirement benefits or a lump sum disability severance payment.^2 In terms
of their rights to appeal military disability decisions, service members
dissatisfied with PEB determinations may request a formal hearing but are
not always guaranteed one and, under certain circumstances, further appeal
to the authority that reviews the PEB.

^1 Service members who do not meet military retention standards but whose
conditions have not stabilized when their cases reach the PEB are placed
on the temporary disability retired list pending a final decision.

In contrast, when a veteran submits a claim for VA disability compensation
for an illness or injury to any of the Veterans Benefits Administration's
(VBA) 57 regional offices, a service representative at that regional
office is responsible for obtaining the relevant evidence to evaluate the
claim. Such evidence includes a veteran's military service records,
medical examinations, and treatment records from VA medical facilities and
private medical service providers. Once a claim has all the necessary
evidence, a rating specialist evaluates it and determines whether the
illness or injury is "service-connected" (incurred or aggravated while on
active military duty). If so, the veteran is eligible for disability
compensation and the rating specialist assigns a percentage severity
rating to the illness or injury based on degree of disability. VA monthly
disability benefit amounts are based primarily on the severity rating
assigned to service-connected injuries and illness and number of
dependents.^3 Veterans who disagree with the regional office's decision
can appeal to VA's Board of Veterans' Appeals and then to the U.S. federal
courts.

DOD Military Disability Retirement: Findings and Open Recommendations

In our 2006 report on the DOD military disability retirement system,^4 we
found the services were not achieving the DOD timeliness goals for
processing disability cases and DOD was not monitoring achievement of
these goals.^5 Our analysis of Army data on military disability benefit
decisions also suggests that outcomes for active duty and reserve
component members of the military may not be consistent. More
specifically, Army reservists judged unfit for duty were somewhat less
likely to receive either permanent disability retirement or a lump sum
disability payment than their active duty counterparts,^6 although we were
unable to take into account all factors that might have legitimately
explained this difference. Despite the potential for inconsistent
disability decisions within and across the services, neither DOD nor the
services systematically evaluated the consistency of these decisions or
compiled the data on the characteristics of service members needed to do
so. Finally, we found that training for MEB and PEB disability evaluation
staff designed to produce timely and consistent decisions was lacking.

^2 DOD disability retirement provides those with at least 20 years of
service and a rating of at least 30 percent with a monthly payment for
life (medical retirement). Those with less than 20 years service and a
rating of less than 30 percent receive a lump sum payment (disability
severance).

^3 VA's pension program also pays monthly benefits based on financial need
to certain wartime veterans or their survivors. Veterans qualify for
pensions if they have low incomes, served in a period of war, and are
permanently and totally disabled for reasons not service-connected (or are
age 65 or older).

^4GAO, Military Disability System: Improved Oversight Needed to Ensure
Consistent and Timely Outcomes for Reserve and Active Duty Service
Members, GAO-06-362 (Washington, D.C.: Mar. 31, 2006).

^5Some of the military officials we spoke with believe the goals
themselves are unrealistic, particularly when addendums to the MEB's
findings are required, such as in orthopedic or psychiatric cases
requiring certain medical tests.

^6It is important to recognize that, due to the part-time nature of
reserve service, some laws governing military disability compensation
result in different experiences with the disability system for reservists,
which may account for this difference. Because reservists are not on duty
at all times, it takes longer for them to accrue the 20 years needed to
qualify for monthly disability retirement benefits when their disability
rating is less than 30 percent. Also, by law, service members determined
to be unfit for duty are automatically eligible for disability
compensation if they have at least 8 years of active duty service, even if
their conditions existed prior to entry into the military or were not
aggravated by their military service. Part-time status makes it more
difficult for reservists with preexisting conditions to be covered by this
"8-year rule" and therefore eligible for disability compensation of any
kind.

At this time there are several open recommendations to DOD to ensure that
military disability retirement decisions are timely and consistent. We
have recommended that DOD

           o evaluate the appropriateness of current timeliness goals;
           o assess the adequacy of training for MEB and PEB staff;
           o require the Army, Navy, and Air Force to take action to ensure
           that data on disability rating and benefit decisions are reliable;
           o require the services to track and regularly report these data;
           and
           o determine, based on these reports, if ratings and benefit
           decisions are consistent and timely across the services.

VA Disability Compensation: Findings and Open Recommendations

In recent years we have completed several reviews on various aspects of VA
disability compensation that have led to a number of recommendations for
improvements in the system. With regard to claims processing between
fiscal years 2003 and 2006, the average number of days these claims were
pending increased by 16 days, to an average of 127 days. At the same time,
appeals resolution remained a lengthy process. In fiscal year 2006, it
took an average of 657 days to resolve appeals. Moreover, the accuracy of
VA compensation decisions was 88 percent in 2006, well short of its goal
of 98 percent.

VA claims processing timeliness and decisional accuracy often are hampered
by its inability to obtain the information it needs in a timely manner.
For example, to obtain information needed to fully develop some
post-traumatic stress disorder (PTSD) claims, VBA must obtain records from
the U.S. Army and Joint Services Records Research Center (JSRRC), whose
average response time to VBA regional office requests is about 1 year.
Moreover, VBA does not evaluate the quality of the information it receives
from service records, which is critical to the accuracy of VA disability
decisions based on this information. In addition, although VBA has had
difficulty obtaining medical information needed to accurately adjudicate
claims involving joint and spine disabilities, it has no performance
measure for the quality of the medical exam requests in these cases.^7

Beyond the issues we have identified with timeliness and accuracy of VA
disability compensation decisions, VBA's fiscal year 2005 budget
justification did not clearly explain how the agency would achieve the
productivity improvements needed to meet its compensation and pension
claims processing performance goals with fewer employees. More transparent
budget justifications were needed to better inform congressional oversight
of VBA by making it easier to evaluate whether the agency's budget
requests reflect the resources, particularly staffing, needed to achieve
expected performance.

There is also a need to consider more fundamental reform of the VA
disability compensation program, particularly with regard to its
disability criteria and field structure. VA eligibility criteria for
disability continue to be based primarily on physicians' and lawyers'
estimates made in 1945 of the effects of service-connected impairments on
the average individual's ability to perform jobs requiring manual or
physical labor. Moreover, the program's eligibility criteria do not
sufficiently account for developments in science, medicine, and
technology, as well as changes in the nature of work that have occurred in
the past 62 years--which potentially affect the extent to which
disabilities limit one's earning capacity.

Finally, VBA continues to process claims for disability compensation and
pension benefits at 57 regional offices, where large performance
variations and questions about the consistency of decisions persist.
Despite these claims processing challenges, VA has no systematic method
for ensuring consistent decision making across all offices. VBA and others
have suggested that consolidating claims processing into fewer regional
offices could help improve claims processing efficiency, save overhead
costs, and improve the accuracy and consistency of decisions.^8

There are currently several open recommendations to VA. To improve
disability claims processing timeliness, accuracy, and consistency, we
have recommended that VA

           o move forward in implementing a systematic quality review program
           that evaluates and measures the accuracy of the VA unit at the
           National Personnel Records Center's responses to all types of
           regional office requests for information from service records;

           o assess whether it could use an electronic library of historical
           military records, to identify veterans whose PTSD claims can be
           granted on the basis of this information, rather than submitting
           all research requests to the Joint Services Records Research
           Center;

           o develop a strategy for improving consistency among its health
           care networks in meeting the criteria for joint and spine exam
           reports. VA could require that its medical centers use the
           automated templates for joint and spine exams;

^7When VA regional offices ask VA medical centers to conduct joint and
spine disability exams, the medical centers are required to prepare exam
reports containing the specific information related to joint and spine
disabilities mandated in what is referred to as the DeLuca court decision.
In 2005, we reported a 22 percent deficiency rate in the quality of the
exam requests regional offices submit to medical centers in these cases,
which indicates that many joint and spine exam reports still did not
contain the required medical information needed to comply with the DeLuca
decision. The percentage of exam reports satisfying the DeLuca criteria
varied widely among the VA's 21 health care networks--from a low of 57
percent to a high of 92 percent.

^8In January 2003, GAO designated modernizing DOD, VA, and other federal
disability programs as a high-risk area, because of these service delivery
challenges and because our work over the past decade has found that these
programs are based on outmoded concepts from the past.

           o develop a performance measure for the quality of exam requests
           that regional offices send to medical centers;

           o prepare the following information and work with the relevant
           appropriations subcommittees on how best to make it available for
           their use:

                        o an explanation of the expected impact of specific
                        initiatives and changes in incoming disability claims
                        workload on requested staffing levels;
                        o information on disability claims processing
                        productivity, including how VBA plans to improve
                        productivity; and
                        o an explanation of how disability claims complexity
                        is expected to change and the impact of these changes
                        on productivity and requested staffing levels;

           o use VA's annual performance plan to delineate strategies for and
           progress in periodically updating its Schedule for Rating
           Disabilities and labor market data used in its disability
           determination process;

           o study and report the effect that a comprehensive consideration
           of medical treatment and assistive technologies would have on the
           VA disability programs' eligibility criteria and benefit package.
           The analysis should estimate the effects on the size, cost, and
           management of the program and other relevant VA programs; and

           o undertake a comprehensive review of its 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.

Conclusions

Decisions affecting eligibility for military disability benefits and VA
disability compensation have a significant impact on the future of service
members dedicated to serving their country. Given the importance of these
decisions and the complexity of evaluation processes and rules governing
eligibility for these benefits, it is essential that DOD and VA take the
necessary steps to ensure that decisions in these cases are accurate,
consistent, and timely.

We will make copies of this report available to other interested parties
upon request. In addition, this report will be available at no charge on
GAO's Web site at [1]www.gao.gov . If you have any questions about this
report, please contact me on 202-512-7215 or [2][email protected] . Contact
points for our Office of Public Affairs may be found on the last page of
this report. Clarita Mrena (Assistant Director), Scott Heacock
(Analyst-in-Charge), and Greg Whitney (Senior Analyst) also made
significant contributions to this report.

Daniel Bertoni
Director, Education, Workforce, and Income Security Issues

Appendix I: Briefing Slides

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

GAO's Mission

The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site ( [3]www.gao.gov ). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site. To
have GAO e-mail you a list of newly posted products every afternoon, go to
[4]www.gao.gov and select "Subscribe to Updates."

Order by Mail or Phone

The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:

U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
D.C. 20548

To order by Phone: Voice: (202) 512-6000
TDD: (202) 512-2537
Fax: (202) 512-6061

To Report Fraud, Waste, and Abuse in Federal Programs

Contact:

Web site: [5]www.gao.gov/fraudnet/fraudnet.htm
E-mail: [6][email protected]
Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional Relations

Gloria Jarmon, Managing Director, [7][email protected] (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125 Washington,
D.C. 20548

Public Affairs

Paul Anderson, Managing Director, [8][email protected] (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548

References

Visible links
1. http://www.gao.gov/
2. mailto:[email protected]
3. http://www.gao.gov/
4. http://www.gao.gov/
5. http://www.gao.gov/fraudnet/fraudnet.htm
6. mailto:[email protected]
7. mailto:[email protected]
8. mailto:[email protected]
*** End of document. ***