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Witness Testimony of Michael Walcoff, Acting Under Secretary for Benefits, Veterans Benefits Administration, U.S. Department of Veterans Affairs

Chairman Runyan, Ranking Member McNerney, Distinguished Members of the Subcommittee:

Thank you for the opportunity to appear before you to discuss the Department of Veterans Affairs (VA) Veterans Benefits Administration (VBA) FY 2012 budget request for compensation and pension programs.  I am accompanied today by Mr. Jamie Manker, VBA’s Chief Financial Officer, and Ms. Diana Rubens, Deputy Under Secretary for Field Operations.  We look forward to continuing our strong collaboration and partnership with this Subcommittee, the Committee as a whole, and the entire Congress as we work together to continue to enhance the delivery of benefits and services to our Nation’s Veterans.   

VBA’s budget request for 2012 continues our focus on three key priorities established by Secretary Shinseki to transform VA into a 21st Century organization that is people-centric, results-driven, and forward-looking:  expanding access to benefits and services; reducing, and ultimately eliminating the claims backlog; and ending Veteran homelessness by 2015.  

Under Secretary Shinseki’s leadership, we have disciplined ourselves to understand that successful execution of our mission at VA, especially one for a Department as large as ours, requires good stewardship of resources entrusted to us by the Congress.  Every dollar counts, both in the current constrained fiscal environment and during less stressful times.  Accountability and efficiency are behaviors consistent with our philosophy of leadership and management.  The responsibility of caring for America’s Veterans on behalf of the American people demands unwavering commitment to effectiveness, accountability, and in the process, efficiency.

VBA provides an integrated program of benefits and services to Veterans, their families and survivors.  These benefit programs are administered through a nationwide network of 57 regional offices, including offices in Puerto Rico and the Philippines.  The benefits provided include compensation for Veterans with service-connected disabilities; pension for aged, needy, and totally disabled Veterans and Veterans' survivors; vocational rehabilitation and employment services; educational and training assistance; home buying assistance; estate protection services for Veterans under legal disability; information and assistance through personalized contacts and outreach programs to separating Servicemembers and other special groups of Veterans; and life insurance programs.  Of the total Department budget request for FY 2012 of $132.2 billion, 53 percent or $70.3 billion is designated for mandatory funding for VBA to pay benefits to our Nation’s Veterans, their families and survivors.

Compensation and Pension

Seventy-five percent of the total mandatory funding supports monthly disability compensation and ancillary benefit payments to Veterans.  In 2012, funding for compensation is estimated at nearly $52.9 billion.  The compensation program also provides monthly payments to surviving spouses, dependent children, and dependent parents of Servicemembers and Veterans who die as a result of injuries or illnesses related to their military service.  An estimated 4 million Veterans and survivors will receive compensation benefits in FY 2012.

Additionally, VBA will provide an estimated $3.3 billion in income-based pension benefits to wartime Veterans who are permanently and totally disabled due to nonservice-connected causes or age 65 or older.  Pension benefits to income-eligible surviving spouses and dependent children of deceased wartime Veterans who die as a result of a disability unrelated to military service are projected to total $1.6 billion.  More than 507,000 Veterans and survivors will receive pension benefits in 2012. 

Incoming Disability Claims Workload

VBA’s workload continues to dramatically increase due to the unprecedented volume of disability claims being filed.  In 2009, for the first time, we received over one million disability claims during the course of a single year.  In 2010, we received approximately 1.2 million disability claims, a 17.6% increase over the previous year.  This growth is driven by a number of factors, including our successful outreach efforts; improved access to benefits through the joint VA and DoD pre-discharge programs; Agent Orange presumptive disabilities for Veterans who served in the Republic of Vietnam; increased demand as a result of ten years at war; the aging of our Veteran population; new regulations for processing certain claims related to Gulf War service, traumatic brain injuries, and posttraumatic stress disorder; and the impact of a difficult economy, prompting America's Veterans to pursue access to the benefits they earned during their military service.  With the increase in claims receipts, we are also providing historic numbers of Veterans with decisions on their claims. In fiscal year 2010, VBA completed nearly 1.1 million rating claims.

Claim receipts are expected to approach 1.5 million in 2011.  This includes nearly 230,000 additional claims expected as a result of the approval of three new Agent Orange presumptive conditions.  In October 2009, Secretary Shinseki announced his decision to establish presumptions of service-connection for Veterans exposed in service to certain herbicides, including Agent Orange, for three illnesses (B-cell leukemia, Parkinson’s disease and Ischemic heart disease) based on the latest evidence of an association between those illnesses and exposure to herbicides.  This was an important decision for our Vietnam Veterans.  The majority of the Agent Orange-related claims will be received in 2011, so receipts in 2012 are projected to be less than receipts in 2011 (1.3 million in 2012). 

Of the over 200,000 Agent Orange claims we plan to process this year, approximately 93,000 are covered by the Nehmer settlement, in that they were previously denied.  These claims are very complex and take more than twice the resource levels and time to complete, which is significantly slowing production in 2011.  However, the impact is only in the near term as we work through the Agent Orange-related claims.  New business processes and technologies will enable us to increase production beginning in 2012, and we project decision output to outpace claims receipts beginning in 2013, allowing us to stay on track for achieving our 2015 goals.  These new processes and technologies are the result of our aggressive efforts to transform VBA.   

The funding request in the President’s budget for VBA is essential to meet the increasing workload and put VA on a path to achieve our ultimate goal of having no Veteran wait longer than 125 days to receive a quality decision on a claim.  The budget supports ongoing and new initiatives to reduce disability claims processing time, including development and implementation of further redesigned business processes, and funds 14,320 direct FTE to assist in reducing the benefits claims backlog.  We increased our workforce in 2010 by converting 2,400 temporary employees funded through the American Recovery and Reinvestment Act to full-time employees and hiring an additional 600 new employees.  VBA continues to aggressively train claims processing staff across the nation, and we currently employ over 11,000 full-time claims processors.  However, we recognize that continuing to increase our FTE levels is not a sufficient solution.  The need to better serve our Veterans requires bold and comprehensive business process changes to transform VBA into a high-performing 21st century organization that provides the best services available to our Nation’s Veterans, survivors, and their families.  That is exactly the effort currently underway in VBA.

VBA Claims Transformation Plan

VBA’s transformation is demanded by a new era, emerging technologies, the latest demographic realities, and our renewed commitment to today’s Veterans.  VA must deliver first-rate and timely benefits and services to our Nation’s Veterans, their families and survivors.  VBA is vigorously pursuing its Claims Transformation Plan, a series of business process and technology-centered improvements designed to “break the back of the claims backlog” and achieve our goal of processing all claims within 125 days with 98 percent accuracy by 2015.  The success of the plan is essential to better serving Veterans, improving claims processing time and eliminating the backlog. 

VBA is changing our culture to one that is centered on accountability to, and advocacy for, our Veterans.  We’re reviewing and reengineering our business processes in collaboration with both internal and external stakeholders, including the Veterans Service Organizations and Congressional partners, to constantly improve our claims process using best practices and ideas.  We’re relying heavily on technology and infrastructure by deploying leading-edge, powerful 21st Century IT solutions to create a smart, paperless claims system which simplifies and improves claims processing for timely and accurate decisions the first time.

In August 2009, President Obama challenged VBA employees to be more innovative and to come up with the best ways of doing business and cutting red tape in VA’s disability compensation system.  Responding to this call, VA received more than 3,000 proposals from our employees.  The most promising proposals have been refined, resourced, and closely monitored.  As I will discuss in more detail, nearly three dozen nationally supported initiatives are testing better ways to do business, and regional offices are encouraged to explore innovations locally.   Our initiatives span the entire claims review process, from simplifying medical evidence collection to realigning internal resources to better address more complex claims.

VBA is working to simplify processes and reduce the burden of paperwork for our Veterans.  Improvements in efficiency and customer service include new policies to promote the use of simple telephone contacts with Veterans to clear up evidence questions and add dependents; relaxing the schedule for routine future examinations for most Veterans to a 5-year interval instead of a 2-year interval; and reducing requirements for second signatures in medical reports where appropriately trained practitioners are capable of providing health evaluations.

On October 6, 2010, VA published the first set of streamlined forms specifically designed to capture medical information essential to a quick and accurate evaluation of disability compensation and pension claims.  Dozens more of these forms are in development for various disabilities.  The content of these disability benefits questionnaires is being built into VA’s own medical information system to guide in-house examinations.  Veterans can provide them to private doctors as an evidence guide that will speed their claims decisions.  The result will be more timely rating decisions, fewer duplicated examinations, a reduced need for VA examinations, less time needed to evaluate examination results by claims processors, and a potential to improve rating accuracy. 

Another initiative to reduce the time needed to obtain private medical records utilizes a private contractor to retrieve the records from the provider, scan them into a digital format, and send them to VA through a secure transmission.  This contract frees VA staff to focus on processing claims and improve productivity. 

VBA is integrating rules-based processing and other calculator tools to significantly improve the accuracy of VA’s compensation and pension decisions.  We are working on more than a dozen such logic-based calculators with the Office of Information and Technology to equip VA decision-makers with rules-based, online tools that automatically calculate evaluations and certain award actions, enabling VA to issue faster and more accurate decisions.  VA recently completed and deployed tools for working cases of hearing loss and special monthly compensation.  These types of calculators can free employees working on simple claims to concentrate on more complex claims requiring detailed review and analysis by claims professionals.

VBA’s pilot initiatives are being tested in focused offices, enabling us to determine which concepts are suitable for nationwide deployment.  A second-generation pilot is an Integration Lab in Indianapolis that is examining the effect of combining previously fielded initiatives simultaneously in one office, testing for synergies and conflicts.

Veterans Benefits Management System

The Veterans Benefits Management System (VBMS) initiative is the cornerstone of VA’s claims transformation strategy.  VBMS is a holistic solution that integrates a business transformation strategy (BTS) and a web-based, 21st Century paperless claims processing system, which will significantly reduce our reliance on the receipt, movement, and storage of paper.  By eliminating the dependence on paper, VBA will be better positioned to make use of available resources, regardless of geographic location. 

In 2011, VBA is conducting two of three phased development programs to test VBMS.  Each phase will expand on the success of the first phase by adding additional software components.  VBMS Phase 1 is now being field-tested at the Providence Regional Office.  This test comes after completion of a Virtual Regional Office project and marks a major milestone as the first of three six-month program phases.  Feedback from field-testing and live claims processing will be used to drive enhancements to VBMS and business practices in preparation for subsequent phases.  Phases 2 and 3 of VBMS will be undertaken at two additional regional offices and deployment of the system to all regional offices begins in 2012. 

VBA recognizes that technology is not the sole solution for our claims-processing challenges; however, it is the hallmark of a forward-looking organization.  Combined with a renewed commitment and focus toward increasing advocacy for Veterans, the VBMS strategy combines a business transformation and re-engineering effort with enhanced technologies, giving an overarching vision for improving service delivery to our nation’s Veterans.  In the 2012 budget request for information technology, we will invest $148 million to complete VBMS phased development and testing and initiate a national rollout.

Veterans Relationship Management

As we work to implement a paperless system to transform the way we process disability claims, we are also focusing on improving our customer service and interaction with Veterans.  The Veterans Relationship Management (VRM) initiative will provide Veterans, their families, and survivors with direct, easy, and secure access to the full range of VA programs through an efficient and responsive multi-channel program, including phone and Web services.  VRM will provide VA employees with up-to-date tools to better serve VA clients, and empower clients through enhanced self-service capabilities. 

Expanding the self-service capabilities of the eBenefits on-line portal is one of the early successes of the VRM program in 2010.  VA and DoD jointly developed the eBenefits portal, with VA serving as the designated lead agent for this project.  Since initial inception, eBenefits has expanded beyond its original scope and is now intended to be an interactive web portal for all Veterans, servicemembers, and their families. It can be accessed via https://www.ebenefits.va.gov.

With quarterly releases, the eBenefits portal is a one-stop shop that provides information about military and Veterans benefits and allows users to access online tools to perform multiple self-service functions such as:

  • Apply for benefits;
  • Download the DD Form 214, Certificate of Release or Discharge from Active Duty;
  • See the status of their disability compensation claim and/or appeal online;
  • View their record of payments issued;
  • Self generate letters to verify eligibility for civil service preference, VA benefits, and military service;
  • Update direct deposit information for certain benefits; and
  • Obtain a VA guaranteed home loan Certificate of Eligibility

Over 200,000 Servicemembers and Veterans are registered in eBenefits, with over 1.5 million eBenefits visits to the portal since inception.

Pension and Fiduciary Programs

VA’s non-service connected disability and death pension programs provide monthly payments to over 500,000 elderly and disabled Veterans and Veterans’ survivors with limited financial resources.  To improve the timeliness of service delivery in this program and to assure accurate claims processing, VA administers the pension programs through three Pension Management Centers (PMCs) in Philadelphia, Milwaukee, and St. Paul, with a workforce of 1,093 employees.  Consolidation of the pension programs has enabled VA to achieve a 96 percent accuracy level in 2010.  In 2010, VBA completed the consolidation of all compensation survivor claims to the PMCs to focus expertise on this vital area and achieve similar performance improvements.

VA conducts a comprehensive fiduciary program for our most vulnerable beneficiaries who are incapable of managing their own funds.  VA’s fiduciary program supervises more than 110,000 beneficiaries with combined estate value in excess of $3.2 billion.  Our fiduciary responsibilities include prevention, identification, and investigation of misuse of benefits.  The workload in the fiduciary program continues to grow as the age of our Veterans increases.  The number of Veterans who are enrolled in C&P programs and who are 85 or older is projected to increase by 32 percent between now and 2018.

We have taken a number of steps to improve the program, including hiring new management staff to spearhead reform efforts; clarifying existing procedural guidance; and deploying standardized training.  We consolidated fiduciary activities for the Western Area regional offices, establishing a Fiduciary Hub in the Salt Lake City Regional Office as a pilot initiative.  Our analysis of the pilot program documented increased efficiencies and service improvements.  We are therefore this year expanding the hub concept to the Southern Area.

VBA Headquarters Reorganization

A new organizational structure for VBA Headquarters was approved by the Secretary on January 19, 2011.  The new organization is in line with the Secretary’s goal of transforming VA into a high-performing 21st Century organization.  The VBA Office of Strategic Planning was created to direct our transformation and strategic planning efforts, including leadership of the three major departmental initiatives for which VBA has program management responsibility. 

The new structure realigns the responsibilities for VBA’s major benefit programs, currently assigned to the Associate Deputy Under Secretary for Policy and Program Management, under two distinct positions: Deputy Under Secretary for Economic Opportunity and Deputy Under Secretary for Disability Assistance.  The alignment of our primary business lines under these new positions correlates to the responsibilities of HVAC Subcommittees on Economic Opportunity and Disability Assistance and Memorial Affairs. 

Under this new structure, we are also separating the fiduciary and pension program functions from the compensation program in our VBA Headquarters organization, creating a separate Pension and Fiduciary Service.  This will allow us to increase oversight and management attention in our fiduciary and pension programs, while also allowing us to give greater focus to the complex and challenging workload and policy issues in our compensation program.  The reorganization is being accomplished within existing resource levels.  VBA Headquarters staff currently working in the pension and fiduciary programs will be reassigned to the new service.  This change in VBA Headquarters structure does not result in any change to the VBA field structure, nor is there any direct impact on VBA’s FY 2012 budget request. 

Concluding Remarks

Mr. Chairman, members of the Subcommittee, this concludes my remarks. Thank you again for the opportunity to testify.  I will be happy to respond to any questions from you or other Members of the Subcommittee.