Mr. Chairman and Members of the Subcommittee, I am pleased to come before you today to discuss IDA’s Assessment of Claims Adjudication Personnel Requirements, a study we performed for the Veterans Benefits Administration (VBA) in 2009.

In November 2008, as a result of the Veterans Benefits Improvement Act of 2008, the VA asked IDA to conduct an assessment of the current personnel requirements of the VBA. The study is described in Section 104.b.2 of the Act as follows:

An assessment of the current personnel requirements of the Veterans Benefits Administration, including an assessment of the adequacy of the number of personnel assigned to each regional office of the Administration for each type of claim adjudication position.

Given the topic of today’s hearing, it is important to note that the focus of our study was personnel requirements for VBA claims adjudication positions. IDA was not asked to analyze the adequacy of training requirements, nor did it do so.  We did not make any recommendations regarding training.  We did find that requirements for training are an important factor in determining the VBA claims processing capacity, however, as the balance of my testimony will discuss.

My testimony today will describe the relevant results of the study, with particular attention to the effect of the training requirements on the VBA claims processing capacity. The results of our study, in entirety, have been documented in IDA paper P-4471.

Our study considers the inventory of pending claims in the rating bundle. (The “rating bundle” is composed of all disability compensation and pension claims, and other claims that involve a rating decision.) The future pending inventory will primarily be driven by two top-level considerations:

• The VBA’s claims processing capacity; and
• The number of new claims received each year.

Of these, the number of claims adjudication personnel will affect only the VBA’s capacity to process claims.

The three types of employees directly involved in claims adjudication are:

• Veterans Service Representatives (VSR),
• Rating Veterans Service Representatives (RVSR), and
• Decision Review Officers (DRO).

VSRs assemble the documentation submitted in support of claims in the rating bundle and process claims that do not require a rating decision; RVSRs evaluate and issue decisions on rating claims; and DROs process veterans’ appeals of VBA decisions, among other responsibilities.

Figure 1 shows levels of VBA claims adjudication personnel by type from FY 2000 to FY 2008. As the chart indicates, VBA personnel levels have grown since FY 2006, after remaining essentially flat from the end of FY 2002 to FY 2006.

Figure 1. VBA Claims Adjudication Personnel by Type, FY 2000–FY 2008

The graph shows that VSR levels started to increase at the end of FY 2005, while RVSR levels started to increase during FY 2007. DRO levels increased only slightly over this time period.

Claims in the rating bundle typically require actions from both VSRs and RVSRs. DROs are primarily responsible for appeals. Our analysis shows that there are sufficient VSR resources available, and that, for the rating bundle, VBA claims processing capacity currently is and for the next several years will be limited by the number of RVSRs.

We developed a model of the VBA’s claims processing capacity. We took into account, among other factors, the number and experience level of claims adjudication personnel, particularly RVSRs.

Newly hired RVSRs are not as effective as fully trained RVSRs. They spend a significant portion of their time in the classroom and engaged in on-the-job training, and they are generally less proficient in the performance of their tasks. Based on typical production goals used at the regional offices, we calculated effectiveness levels for less than fully trained RVSRs. Nationally, the minimum daily quota for fully effective RVSRs is 3.5 weighted claims, although some regional offices have set higher production quotas. (A “weighted claim” is a metric created by the VA to account for varying difficulty levels among claims.)

Table 1 shows our estimates for employee effectiveness by experience level. We used these values to calculate the number of fully trained equivalent personnel, which we called Effective RVSRs.

Table 1. RVSR Training Factors

The results provided in our report were based on actual VBA employment figures through April 2009 and used the VBA FY 2009 hiring plan for May 2009 through September 2009. We note that the VBA added over 600 RVSRs from the beginning of FY 2008 through April 2009, the last month for which we had actual employment levels.

Our study forecasts future levels of fully trained equivalent personnel under various hiring policies. The case presented in Figure 2 is a no-growth case, with future hiring limited to replacing attrition starting in October 2009.

As this figure shows, even with no additional growth in the total number of employees after September 2009, the number of Effective RVSRs continues to grow in the near term due to the increasing productivity of the recently hired personnel as they gain experience over time. We estimated that the number of Effective RVSRs would grow by 29 percent from September 2009 levels without any additional hiring.

Figure 2. Total and Effective RVSRs

There is a direct relationship between the number of adjudication personnel and the number of completed claims.   Increases in completed claims do not necessarily translate into a decline in the pending inventory, however, because pending inventory is influenced by both completed and received claims. This point is not just of hypothetical importance.

Figure 3 presents historical data on received, completed, and pending claims. In FY 2008, completed rating claims exceeded received rating claims for the first time since FY 2003. The result was that the number of pending rating claims, which had increased during the preceding several years, decreased slightly in FY 2008.

Figure 3. Received, Completed, and Pending Rating Claims, FY 2000–FY 2008

Unfortunately, this trend in pending claims did not continue. Our study accurately forecasted that completed claims would increase further in FY 2009 and FY 2010 as the RVSRs hired in FY 2007 and FY 2008 became fully effective. Claims received, however, increased even more rapidly, and hence pending claims increased even while VBA capacity increased.

The number of received claims is difficult to predict and can change drastically from year to year due to changes both in statute and in veterans’ propensity to file claims. Any substantive changes from historically observed behavior will naturally have direct effects on the requirements for VBA claims adjudication personnel.

Mr. Chairman and Members of the Subcommittee, that concludes my remarks. I would be happy to answer any questions.