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September 11, 2010

VARO Error Rate 1997, VAOIG REPORT NO. 8D2-B01-001

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SUMMARY REPORT ON VA CLAIMS PROCESSING ISSUES Actions, both ongoing and under consideration, can improve the timeliness and quality of claims processing for VA’s disability compensation and pension programs. REPORT NO. 8D2-B01-001 DATE: December 9, 1997 Office of Inspector General Washington DC 20420

“The most frequently cited evidence that the quality of claims adjudication is inadequate is the high rate at which appealed cases (90 percent of which are compensation cases) are remanded (sent back) by the Board of Veterans’ Appeals (BVA) to the originating VA Regional Offices (RO) for additional information or reconsideration. Currently, about half of all appealed cases are remanded – which can add an additional 2 years to the veterans wait for a decision of their benefits claim. The high remand rate, combined with BVA ruling in favor of veterans in 20 percent of the appealed cases, plus another 10 percent of appealed cases reversed by the ROs themselves on remand, is interpreted by VSO’s (which represent veterans before BVA) as proof that the ROs are not properly adjudicating veterans claims . (See chart on page 41 for an analysis of appeals workload).

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SUMMARY REPORT ON VA CLAIMS PROCESSING ISSUES Summary Report on VA Claims Processing Issues
SUMMARY REPORT ON VA CLAIMS PROCESSING ISSUES Actions, both ongoing and under consideration, can improve the timeliness and quality of claims processing for VA’s disability compensation and pension programs. REPORT NO. 8D2-B01-001 DATE: December 9, 1997 Office of Inspector General Washington DC 20420
Memorandum to the Under Secretary for Benefits (20) Summary Report on VA Claims Processing Issues 1. Over the past several years, numerous studies, reviews, and audits have addressed timeliness and quality issues within the Veterans Benefits Administration’s (VBA) Compensation and Pension (C&P) claims processing system. The C&P system, which currently encompasses the adjudication and overall administration of $18.5 billion per year in disability and pension payments to veterans, has existed in essentially the same form since World War II. In recent years, the system has become backlogged due to outdated claims processing methods which are unable to cope with increasingly complicated adjudication and appellate rules. 2. This report summarizes and consolidates recommendations made for improvement in the claims processing system by the Department of Veterans Affairs (VA) Office of Inspector General (OIG), the General Accounting Office (GAO), Congressional commissions, and several task forces established by VA which have addressed various issues affecting VBA claims processing. We reviewed the Department’s responses to the major recommendations as well as to more general issues which have been raised in the course of these reviews. In addition, we examined the current status of proposed reforms to VBA’s claims adjudication and appeals processes and offer our observations and perspectives on several of the proposed changes and on what we believe are the highest priority issues facing the C&P claims processing system. 3. The reviews have resulted in more than 200 recommendations, suggestions, and discussion points for improving C&P claims processing. We categorized these recommendations into 84 groups as having the potential for major impact on claims processing timeliness and quality. Of these, VA fully or partially agreed with 71 and rejected 13. We believe that the timeliness and quality of claims processing can be greatly improved by implementing those recommendations which the Department has agreed to. Further, if the recommendations which were agreed to are properly implemented, many of the potential benefits intended by the recommendations which VA rejected may still be realized while at the same time offering VA beneficiaries C&P programs which are more equitable and responsive to their needs.
ii 4. From our perspective, the highest priority issue facing VBA in its administration of the C&P programs is the delivery of benefits to veterans in a manner consistent with the intent of public law and meeting the needs of veterans themselves. In order to do this, we believe it is essential that three goals be vigorously pursued: (1) development of a “corporate” level database which would provide the basis for making informed decisions on the nature of any proposed program changes, (2) development and coordination of a VBA staffing and re-organization plan in conjunction with VBA’s ongoing efforts to reengineer its claims processing methods, and (3) reform and simplification of the statutes and regulations governing the pension program. 5. In addition to the long-term priority issues cited above, specific near-term actions have been recommended which we believe, if emphasized, can provide more immediate improvement to the timeliness and quality of claims processing and increase veterans overall satisfaction with VA claims services. These include: (1) improving the timeliness of medical examinations for veterans applying for C&P benefits, (2) consolidating authority and responsibility so that a single individual is accountable for the timely and complete adjudication of any particular C&P claim, (3) expanding the opportunity for veterans to choose their appeals hearings to be held locally, and (4) routinely and frequently informing veterans of the status of their claims. VA management has, for the most part, agreed to take action to address these areas and has either already initiated specific actions or is in the process of developing implementation plans. 6. The report includes recommendations which can provide opportunities for improvement in the timeliness and quality of claims processing and increase veterans overall satisfaction with VA claims services. 7. The Acting Under Secretary for Benefits indicated a general agreement with the report recommendations and provided positive comments and a status of VBA’s actions/intentions concerning each recommendation area. However, the Acting Under Secretary advised that, at this time, he will defer on providing a final concurrence and implementation plan for each recommendation. The Acting Under Secretary noted that the Department is in the process of preparing a comprehensive response to the final National Academy of Public Administration (NAPA) report which also includes key recommendations and key issue areas that are summarized in this report. The Acting Under Secretary also stated that “the Department is in a state of transition as we await a new Secretary and a new Under Secretary for Benefits. The two individuals appointed to these positions will rightfully have much to say about the issues contained in the four key recommendations and the final response of VA and VBA. For this reason as well, I defer on providing a final concurrence and a final implementation plan with targeted completion dates.”
iii 8. We accept the Acting Under Secretary’s decision to defer action on providing a final concurrence and implementation plan for each recommendation contained in the report. We recognize the importance for the Department to address the final NAPA report findings and recommendations which are highlighted in this report. We also recognize that a new Secretary and Under Secretary for Benefits should have the opportunity to consider these important veterans’ claims processing issues before a final Department implementation strategy is undertaken. We consider the report resolved, but the recommendations are unimplemented. We will follow up on VBA’s future actions to address the report recommendations including preparation of appropriate implementation plans until they are completed. Original signed by MICHAEL G. SULLIVAN Assistant Inspector General for Auditing
TABLE OF CONTENTS Page Memorandum to the Under Secretary for Benefits (20) ………………………….. i INTRODUCTION A. Background…………………………………………………………………………………. 1 B. Claims Processing Timeliness……………………………………………………….. 1 C. Quality of Claims Adjudication Decisions………………………………………. 2 D. Corrective Actions……………………………………………………………………….. 3 RESULTS AND RECOMMENDATIONS Actions, Both Ongoing and Under Consideration, Can Improve Claims Processing Timeliness and Quality………………………………………………………………………………….. 5 A. Priority Recommendations and Issues…………………………………………….. 6 I. Evaluating the Effects of Programs on Veterans…………………………. 6 Recommendation 1…………………………………………………………….. 7 II. Coordinating Claims Processing Reengineering With Reorganization……………………………………………………………………….. 7 Recommendation 2…………………………………………………………….. 8 III. Pension Reform………………………………………………………………………. 8 Recommendation 3…………………………………………………………….. 9 B. Other Significant Recommendations and Issues………………………………. 9 Recommendation 4…………………………………………………………… 10 DETAILS OF REVIEW A. Summary of Reviews Which Have Identified the Need for Enhancements in Program Operations……………………………………. 13 B. Claims Processing Timeliness……………………………………………………… 15 I. Strengthening the Process and Mechanism for Policymaking and Strategic Management……………………………….. 15 Findings and Discussion……………………………………………………. 15 Major Recommendations and Implementation Actions…………. 17 II. Improving Planning, Direction, and Coordination Efforts…………… 20 Findings and Discussion……………………………………………………. 20 Major Recommendations and Implementation Actions…………. 22 III. Streamlining and Strengthening Procedures for Claims Processing 28 Findings and Discussion……………………………………………………. 28 1. Claims Establishment…………………………………………………… 29 Major Recommendation and Implementation Actions………………………………………………………………… 30
2. Claims Development………………………………………………. 30 Major Recommendations and Implementation Actions………………………………………………………………… 31 3. Rating Activity……………………………………………………………. 36 Major Recommendations and Implementation Actions………………………………………………………………… 37 4. Authorization Activity…………………………………………………. 40 5. Appeals Process………………………………………………………….. 40 Major Recommendations and Implementation Actions………………………………………………………………… 43 C. Quality of Claims Adjudication Decisions…………………………………….. 49 I. Measures of Claims Adjudication Quality………………………………… 49 Findings and Discussion……………………………………………………. 49 Major Recommendations and Implementation Actions…………. 51 II. Changing Adjudication Standards……………………………………………. 55 Findings and Discussion……………………………………………………. 55 1. Judicial Review…………………………………………………………… 55 Major Recommendations and Implementation Actions………………………………………………………………… 56 2. The Rating Schedule……………………………………………………. 57 Major Recommendations and Implementation Actions………………………………………………………………… 59 3. Compensation and Pension Reforms……………………………… 60 Major Recommendations and Implementation Actions………………………………………………………………… 61 D. Redesigning the C&P System………………………………………………………. 64 I. Background………………………………………………………………………….. 64 II. Goals and Costs of VBA’s Business Process Reengineering………. 65 III. Core Problems and Corrective Actions…………………………………….. 65 IV.VBA’s Strategic Vision of Claims Processing…………………………… 67 a. Core Processes……………………………………………………………. 67 b. Human Resources Infrastructure……………………………………. 70 c. Information Technology Infrastructure…………………………… 70 d. Survey and Outreach to Veterans and VSOs…………………… 75 e. Pension and Rules Simplification………………………………….. 76
APPENDICES I. OBJECTIVES, SCOPE, AND METHODOLOGY…………………………………… 79 II. BIBLIOGRAPHY………………………………………………………………………………… 81 III. SUMMARY OF MAJOR RECOMMENDATIONS AND IMPLEMENTATION STATUS………………………………………………….. 85 IV. FLOW CHART OF CLAIMS ADJUDICATION/APPROVAL PROCESS… 93 V. DIAGRAM OF CLAIMS ADJUDICATION/APPROVAL PROCESS BEFORE AND AFTER BUSINESS PROCESS REENGINEERING………. 95 VI. TIMELINE FOR BUSINESS PROCESS REENGINEERING IMPLEMENTATION…………………………………………… 97 VII. ACTING UNDER SECRETARY FOR BENEFITS COMMENTS……………. 99 VIII. FINAL REPORT DISTRIBUTION……………………………………………………… 103
1 INTRODUCTION A. Background Since the early 1990’s, members of Congress, Veterans Service Organizations (VSO), and Department of Veterans Affairs (VA) managers have expressed concerns about the timeliness and quality of the Compensation and Pension (C&P) claims adjudication system. The C&P system, which currently encompasses the adjudication and overall administration of $18.5 billion per year in disability compensation and pension payments to 3.3 million veterans, widows, children, and parents has existed in essentially the same form since World War II. However, in recent years, the C&P system has become backlogged due to claims processing methods which are unable to cope with increasingly complicated adjudication and appellate rules. In response to the increasing backlog of casework, numerous studies, reviews, and audits have been conducted with the goal of identifying the causes and solutions to timeliness and quality problems. Several studies have pointed to the 1989 establishment and subsequent decisions of the Court of Veterans Appeals (“the Court” or “CVA”) as the precipitating event leading to the problems experienced by the claims processing system. These include: (1) claims that take too long to process, and (2) claims that are not adequately adjudicated. The consequences of VA’s inability to meet the timeliness and quality expectations of Congress, veterans, and the public has been a loss of confidence in the fairness by which veterans claims are decided and how resources are expended. If VA is unable to correct these problems, it risks losing support for important programs which compensate veterans for their service and sacrifice. B. Claims Processing Timeliness The length of time required for VA to process claims (and in particular, compensation claims) needs to be reduced. Veterans applying for their first (i.e., original) claim for monthly compensation based on an injury or illness resulting from their military service can expect to wait over 5 months for VA to approve or disapprove the claim – about twice as long as the Veterans Benefits Administration’s (VBA) goal and about three times longer than veterans expect. Further, veterans applying for an increase in an already approved, or existing claim (85 percent of all compensation applications) will wait a similar length of time (4 months). In both cases, an appeal by the veteran of VA’s decision will extend the wait on average to 36 months – compared to an average of 6 months as recently as 1990. Although these time frames would suggest that compensation claims are extremely complex, the average original claim for compensation requires only 7 hours of actual hands-on work by VA employees, with the remaining time spent waiting
2 for information. (A flow chart of the claims adjudication/approval process is in Appendix IV, on page 93.) In response, VBA’s Adjudication Division staffing increased from 3,700 in Fiscal Year (FY) 1990 to 4,200 in FY 1993 and the worsening trend in timeliness and backlogs was reversed by FY 1996. However, since VBA staffing is projected to decline significantly over the next several years (by about 1,500 by FY 2002) and workload will likely remain static or at best only slightly reduce, timeliness can be expected to become an even bigger problem unless changes in organizational and business processes occur. VBA recognizes this and has begun redesigning its claims processing procedures, with complete implementation (and the anticipated improvements) several years away. (A diagram of the claims adjudication process before and after Business Process Reengineering (BPR) is in Appendix V, on page 95.) A significant factor that could increase VA’s compensation workload beyond today’s level is the potential for awarding service connection to veterans who began smoking during military service. While the potential increase in claims workload is unknown, it is not unreasonable to assume a significant increase in claims processing workload. ( The timeline for BPR implementation is in Appendix VI, on page 97.) C. Quality of Claims Adjudication Decisions The most frequently cited evidence that the quality of claims adjudication is inadequate is the high rate at which appealed cases (90 percent of which are compensation cases) are remanded (sent back) by the Board of Veterans’ Appeals (BVA) to the originating VA Regional Offices (RO) for additional information or reconsideration. Currently, about half of all appealed cases are remanded – which can add an additional 2 years to the veterans wait for a decision of their benefits claim. The high remand rate, combined with BVA ruling in favor of veterans in 20 percent of the appealed cases, plus another 10 percent of appealed cases reversed by the ROs themselves on remand, is interpreted by VSO’s (which represent veterans before BVA) as proof that the ROs are not properly adjudicating veterans claims . (See chart on page 41 for an analysis of appeals workload.) However, a different perspective can be taken from several studies which have concluded that the high remand rate is a result of CVA rulings which have required VA to more fully elaborate its decisions and to expand its efforts to assist veterans in their claims development. Thus, while CVA decisions have significantly slowed the process down, the result has been an emphasis on more consistent and detailed VA decisions. The effect is clearly shown in the average time required for BVA to render decisions – which grew from 240 days in 1992 to a high of 781 days in 1994. Although BVA has recently implemented several initiatives to reduce its response time (to just under 600
3 days for FY 1996) and has established a goal of 504 days for FY 1997, this will still be over twice as long as was achieved before CVA was created. D. Corrective Actions Although VA managers were unprepared for the effect that CVA would have on claims processing and appeals operations, some deterioration in productivity and response time was, in our opinion, unavoidable given the fundamental changes imposed by some of the Court’s initial and precedent setting decisions. However, the lack of prompt and effective corrective action by the Department, in spite of several internal reviews and audits, has caused increasing concern. As a result, several efforts were initiated by Congress and GAO to independently examine the claims processing system. Each review group examined the claims processing system from a somewhat different perspective. For example: (1) the committees and task forces convened by Congress and by the Department focused on global and strategic policy issues, (2) GAO focused on weaknesses in the Department’s planning and coordinating activities which affect claims processing, and (3) OIG focused on improving and streamlining administrative processes. The various perspectives offered by these reviews have resulted in numerous recommendations and many of these recommendations have caused contentious debates among VSOs, VA executives, Congress, and the reviewers themselves. The focus of most of these debates has been the global and strategic issues affecting the nature and scope of C&P benefits themselves. For example, suggestions that parts of the system of benefits itself are an underlying cause of processing timeliness and quality problems have been met with opposition by VSOs as attempts to cut veterans benefits. Similarly, recommendations intended to speed up overall processing, by eliminating what are seen by some as unnecessary administrative steps, are seen by VA managers and VSOs as attempts to restrict veterans rights. For example, in his May 1997 testimony to Congress, the Deputy Secretary explained that the Secretary staunchly opposed recommendations that would bring about changes which in any way could adversely affect veterans. This was the result of the Secretary’s belief, expressed in a speech at a VSO convention earlier in the year, that a threat existed to (at least parts of) the system of benefits itself. In keeping with this perception, VA has, as a matter of policy, rejected or resisted all recommendations and suggestions which have the potential to adversely affect any veteran’s level of benefits or the process by which claims are decided. As a consequence, some reviewers and Congressmen have come to view VA leadership as “obstructionist”. For example, in the most recent review of the C&P system, the National Academy of Public Administration (NAPA) concluded that VBA’s leadership had failed
4 to develop essential planning, implementing, and reviewing capacities, and that its management lacked the capacity for strategic management. Solutions must be found, veterans expect their claims to be decided in a timely and fair manner, and taxpayers expect effective programs which accomplish appropriate goals. In the following sections of this report we have categorized the most significant findings and recommendations of prior reviews in an effort to provide a consolidated and clear picture of the various corrective actions which have been offered. (A summary of the recommendations and their implementation status is in Appendix III, on page 85.)
5 RESULTS AND RECOMMENDATIONS Actions, Both Ongoing and Under Consideration, Can Improve Claims Processing Timeliness and Quality During the past several years more than a half dozen separate groups have offered over 200 recommendations, suggestions, and discussion points for improving C&P claims processing. We categorized these recommendations into 84 groups as having the potential for major impact on claims processing timeliness and quality. Of these, VA fully or partially agreed with 71 and rejected 13. (A summary of the recommendations and their implementation status is in Appendix III on page 85.) We believe that the timeliness and quality of claims processing can be greatly improved by implementing those recommendations which the Department has agreed to. Further, if certain recommendations which were agreed to are properly implemented, many of the potential benefits intended by the recommendations which were rejected may be realized while at the same time offering VA beneficiaries C&P programs which are equitable and responsive to their needs. For the most part, the reasons for VA rejecting recommendations intended to improve the timeliness and qulaity of claims processing were based on the former Secretary of Veterans’ Affairs position that these recommendations would reduce veterans’ existing rights and prerogatives. In addition, several recommendations regarding the goals and objectives of the C&P programs were rejected because of concern that resulting public debate would only serve to subject all veterans benefits programs to possibly unfavorable scrutiny. We believe that, with the exception of recommendations intended to stop efforts to replace the current computerized C&P payment system with a more efficient and capable system, the rejected recommendations could be implemented in a manner beneficial to all veterans without jeopardizing their existing rights if appropriate methods are developed to monitor the effect that any changes to the C&P programs have on veterans. For example, when the Veterans Claims Adjudication Commission (VCAC) concluded that the intent of VA’s compensation program was unclear because the law was silent on the purpose of the program, VA responded that the intent was clear and the program was performing as Congress intended. As a consequence, a recommendation to clarify the program’s purpose was rejected as unnecessary. In a related conclusion, the VCAC also found that, because the concept of “disability” was undefined for the purposes of monetary benefits, the fundamental purpose of the program was vague.
6 VA’s opposition to these recommendations (as well as with most of the recommendations which were rejected) is based on a fundamental disagreement about the purpose of the compensation program. For example, GAO concluded that the rating schedule’s focus on loss in functional capacity did not assure that veterans were compensated commensurate with their economic losses and, as a consequence, compensation funds were not distributed equitably among veterans. VA rejected this conclusion based on the Department’s position that the program was working as intended. Additional evidence of the Department’s sensitivity to the possibility of different interpretations of program intent include the rejection of a recommendation to establish a disability compensation advisory board to provide independent evaluations and allow for the introduction of a variety of perspectives to general areas of concern and to specific issues which are facing VA’s disability compensation program. A. Priority Recommendations and Issues From our perspective, the highest priority issue facing VBA in its administration of the C&P programs is the delivery of benefits to veterans in a manner consistent with the intent of public law and which meets the needs of veterans themselves. In order to do this, we believe it is essential that three goals be vigorously pursued: (1) development of a “corporate” level database which would provide the basis for making informed decisions on the nature of any proposed program changes, (2) development and coordination of a VBA staffing and re-organization plan in conjunction with VBA’s ongoing efforts to reengineer its claims processing methods, and (3) reform and simplification of the statutes and regulations governing the pension program. I. Evaluating the Effects of Programs on Veterans. The one recommendation which is essential to the implementation of all policy and strategy related recommendations is the development of a corporate database populated with the necessary demographic and economic information for making informed decisions on the nature of any program related decisions. Without this information, we believe that little constructive dialogue will result from any attempts to reform the C&P system. In addition, if properly implemented the database would help VBA overcome current internal system restrictions on sharing information between other VA programs (loan guaranty, education, health care, etc.) and would contribute significantly to the effective implementation of the Government Performance and Results Act’s (GPRA) requirement for objective program performance measures. The Department has already begun to develop a corporate level database as part of the Veterans Service Network (VETSNET) program. However, NAPA recommended that the Department should stop development of VETSNET. VBA rejected this recommendation
7 because of VETSNET’s key role in supporting the VBA corporate model and database (there are no existing alternatives), and the C&P reengineering effort. (Details on the VETSNET system initiative are discussed on pages 71 to 73.) We believe that VETSNET development and implementation needs to continue so that VA can have access to the type of information necessary to evaluate the effect of C&P program reforms on veterans. In addition, VETSNET is the sole means by which the Department is addressing two material weaknesses identified under the Federal Manager’s Financial Integrity Act (FMFIA): (1) Aging, Antiquated, Obsolete, and Proprietary Hardware Systems, and (2) C&P Systems – Lack of Adaptability and Documentation. Recommendation 1 The Under Secretary for Benefits should continue development of VETSNET. II. Coordinating Claims Processing Reengineering With Reorganization. When VBA recognized the need to reengineer its claims processing procedures several years ago it embarked on a wide ranging effort to identify and eliminate obstacles to the timely and efficient adjudication of C&P claims. That effort has resulted in a comprehensive redesign plan which is scheduled to be implemented system-wide during the next 4-5 years. The plan itself, and the changes in claims adjudication processes which it describes, addresses many of the deficiencies cited in the various internal and external reviews; however, this Business Process Reengineering (BPR) effort is, at its core, a redesign of work flow only. (Details of the redesign of the C&P system are discussed on pages 64 to 78.) It does not address the fundamental restructuring of VBA field operations which will result from the implementation of BPR as well as planned budget/staffing reductions. NAPA, in its recommendation for VBA to begin the analysis and planning which will be necessary for this restructuring, noted that VBA had attempted to initiate this process in 1996. However, it had been rebuffed by the VSOs which were concerned that geographic reorganizations and consolidations would eliminate their ability to be co-located with VBA staff which in turn would reduce their effectiveness in representing veterans. Since the BPR’s Human Resources Team has also recognized the need for extensive additional planning in order to be prepared for staffing reductions, transfers, and realignments which will occur as BPR is implemented, there is general consensus that reengineering and reorganization should be more closely coordinated than is currently
8 evident. However, VBA’s response to the recommendation was to point out that since previous attempts at reorganization had not been effective, no further attempts would be made until the reengineering process had been implemented. Recommendation 2 The Under Secretary for Benefits should develop plans addressing regional office restructuring. III. Pension Reform. Although VA’s pension program represents 17 percent of the annual costs and 25 percent of the combined number of C&P program participants, it requires approximately 43 percent of VBA’s C&P field office staff to administer. If VBA is to address the large backlogs and timeliness problems which exist within the compensation program and avoid a future of even worse performance, the disproportionate amount of resources currently devoted to the pension program will need to be redirected. However, before this can be done, legislative and regulatory changes are needed in order to free up these resources. (Deatils on pension and rules simplification are discussed on pages 76 to 78.) For several years, the Department has known about the need to reform and simplify the pension program. Several reviews have offered suggestions on the nature of these reforms including: (1) the possibility of eliminating the requirement for total and permanent disability when a veteran reaches a certain age, (2) more closely aligning Social Security Administration (SSA) and VA disability criteria, (3) eliminating the requirement that pensions be reduced on a dollar for dollar basis for income earned by a pensioner, and (4) eliminating medical expense deductions in favor of a flat rate reimbursement for all pensioners. In response, formal proposals developed by a special VBA task force (the Rules and Pension Simplification Team working under the auspices of the BPR effort) are under consideration. These include variations on the above suggestions as well as process changes in the way the income of dependents is considered, and the elimination of predetermination notices to speed up adjustments. Although the final design of the reformed pension program will not be made until early 1998, the goals of simplification and reduced administrative costs remain the primary focus.
9 Recommendation 3 The Under Secretary for Benefits should implement the recommendations of the BPR Rules and Pension Simplification Team report. B. Other Significant Recommendations and Issues In addition to the above long-term issues, specific near-term actions have been recommended which we believe, if emphasized, can provide more immediate improvement to the timeliness and quality of claims processing and increase veterans overall satisfaction with VA claims services. These include the following: (1) Improving the timeliness of medical examinations for veterans applying for C&P benefits offers the single most important opportunity for improving the overall timeliness of claims processing. Although most medical exams are completed within 30 days of the initial request, almost 1/4 take significantly longer (up to 2 to 3 months with rescheduling). Although the Veterans Health Administration’s (VHA) and VBA’s goals are to reduce this waiting time (and a recent audit by OIG found the overall average timeliness for completing C&P exams has improved slightly), little improvement in the exam completion rate has been achieved during the past 3 years. (Details on exam completion improvement opportunities are discussed on page 26.) (2) Consolidating authority and responsibility so that a single individual is accountable for the timely and complete adjudication of any particular C&P claim will eliminate the delays caused by the numerous claims folder “handoffs” and “refilings” which are part of the current assembly-line processing methods. VBA recognizes that this effort is critical to reducing delays and increasing accountability and, in response, has developed plans to accomplish this goal. However, success depends on establishing and maintaining momentum and providing encouragement to employees and managers who may be unwilling or unable to change. (Details on redesigning the C&P system work process are discussed on pages 64 to 78.) (3) Expanding the opportunity for veterans to choose their appeals hearings to be held locally could reduce the overall time it takes to process some appeals. VBA recognizes that the current appeals process is complicated and time consuming, and is developing plans as part of BPR to reorganize
10 the process to include an expanded role for local hearing officers. However, the revised process, referred to as post decision review, will require regulatory changes since, to be effective, several processes must be changed – such as the current practice of not allowing initial claims decisions to be changed even in the veteran’s favor unless the initial decision was based on a clear and unmistakable error. (Details on appeals process issues are discussed on pages 40 to 48.) (4) Routinely and frequently informing veterans of the status of their claims would reduce the frustration which causes many veterans to conclude that quality service is not a VA priority. Although VBA is addressing the need to establish a VBA-wide process to keep claimants informed of the status of their claims, it is based on veterans initiating the inquiry. Rather than waiting for the inquiry to be made, at which point the claimant may already be dissatisfied, efforts should also include routine notifications at predetermined stages of a claims progress throughout the system. (Details on planned improvements in veteran communication and outreach are discussed on page 75.) VA management has, for the most part, agreed to take action to address these areas. Some implementation actions are in process. We believe that top management’s emphasis of the above areas will improve the likelihood of full implementation. Recommendation 4 The Under Secretary for Benefits should emphasize the need to implement the recommended actions described above. Acting Under Secretary for Benefits Comments The Acting Under Secretary for Benefits indicated a general agreement with the report recommendations and provided positive comments and a status of VBA’s actions/intentions concerning each recommendation area. The Acting Under Secretary’s comments noted that “VBA fully intends to complete the development of VETSNET for all the sound business reasons cited in the Inspector General’s report.” The comments also discuss the fact that “VA is pursuing a long-term strategy of consolidation of our field functions. VBA remains fully committed to, and recognizes the potential value of, the consolidation of benefits servicing activities. This is evident in our work over the past few years in the education, insurance, and loan guaranty business lines.” The Acting Under Secretary also advised that a proposal has been developed and is under review by the Department to address the recommendations of the Business Process Reengineering
11 Rules and Pension Simplification Report discussed in our report. The Acting Under Secretary’s comments also discussed the efforts in process to address some near term actions discussed in the report that can improve claims processing timeliness and quality. These actions include improvement in the timeliness of medical examinations, consolidating authority and responsibility for processing claims, expanded opportunity for veterans to have appeals held locally, and informing veterans of the status of their claims. While the Acting Under Secretary’s comments provide a status of VBA’s actions/intentions concerning each recommendation area, he advised that, at this time, he would defer on providing a final concurrence and implementation plan for each recommendation. Before any implementation strategy can be completed, the Department will need to complete its response to the final National Academy of Public Administration (NAPA) report that includes key claims processing issue areas that have been summarized in our report. Also, these issue areas will need to be considered by a new Secretary of Veterans Affairs and Under Secretary for Benefits before a final Department implementation strategy is undertaken. (See Appendix VII on page 99 for the Acting Under Secretary’s comments.) Office of Inspector General Comments We accept the Acting Under Secretary’s decision to defer action on providing a final concurrence and implementation plan for each recommendation contained in the report. We recognize the importance for the Department to address the final NAPA report findings and recommendations, which are also highlighted in this report. We also recognize that a new Secretary of Veterans Affairs and Under Secretary for Benefits should have the opportunity to consider these important veterans’ claims processing issues before a final Department implementation strategy is undertaken. We consider the report resolved, but the report recommendations are unimplemented. We will follow up on VBA’s future actions to address the report recommendations including preparation of

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