Mr. Chairman and Members of the Subcommittee, thank you for providing me the opportunity to appear before you today to discuss the Veterans Benefits Administration’s (VBA) work credit and work management systems as they relate to quality, accountability, and accuracy in compensation and pension claims processing. I am happy to be accompanied by Jason McClellan, Director of the Veterans Benefit Administration's (VBA) Central Area Office. VBA acknowledges the concerns of our Veterans, stakeholders, and the general public regarding our current work credit system and the perceived emphasis of quantity rather than quality; however, VBA does not and never has emphasized the quantity of claims completed over the quality of our decisions.

Under the leadership of Secretary Shinseki, the vision of VBA and that of the entire Department is to be an advocate for Veterans, not an adversary. Secretary Shinseki’s guidance to VBA and all of VA is clear: to transform VA into a 21st Century organization and to ensure that we provide timely access to benefits and high quality care to our Veterans over their lifetimes, from the day they take their oaths of allegiance until the day they are laid to rest. One of the Secretary’s key objectives is to eliminate the disability claims backlog by 2015 while creating a new claims processing system that is more timely and accurate. The Secretary set a goal for VBA to process disability claims at a rate sufficient to avoid any Veteran waiting more than 125 days for a quality review and decision. It will take all of VA, as well as the help of Congress, Veterans Service Organizations, and other stakeholders to achieve this goal. A crucial component of achieving this goal is a well-trained, well-managed, and well-resourced workforce that has the tools and systems in place to tackle the complex work of disability claims processing. The President’s 2011 budget fully supports our progress with a 27 percent increase in VBA funding over the current year.

As the Subcommittee is well aware, under Section 226 of Public Law 110-389, Congress required the Secretary to initiate a study of the effectiveness of the VBA’s employee work credit and work management systems to evaluate more effective means of improving disability claims processing performance. A report to Congress on that study was due on October 31, 2009. I want to apologize to the Subcommittee for this late report, which we expect to deliver in the near future.

Under a contract with the VBA, the Center for Naval Analyses (CNA) conducted this study and produced the report titled, Qualitative Analysis of VBA Employee Work Credit and Work Management Systems. The CNA report was primarily a qualitative analysis of employee interviews, and the recommendations provided focus on improving the employee work credit system by establishing specific standards with clearly defined actions and time allotments that support quality work. The CNA recommendations closely align with VBA’s current initiatives to better link performance with the completion of decisions for Veterans and lessen emphasis on discrete work actions within the claims processing lifecycle.

I want to emphasize that VBA strives to ensure that compensation and pension benefits are provided in a timely, accurate, and consistent manner. As our workload continues to grow, we are committed to increasing the consistency and accuracy of our decisions while completing an anticipated record 1,000,000 claims in fiscal year 2010.

Regional Office (RO) performance varies as the result of several factors including workforce experience, local economic and employment environment, and staff turnover. VBA aggressively monitors RO performance and develops specific action plans to address areas for improvement. Leadership within the Compensation and Pension Service as well as Area Directors oversee RO performance through monitoring and site visits. Lessons learned and specific examples of "best practices" from these visits are provided to assist ROs in enhancing their performance.

As VBA’s workload continues to increase, maintaining balance between the quality and quantity of claims completed remains a priority. VBA experienced a 14.1 percent increase in annual claims received in 2009, and we project increases of 13.1 percent and 11.3 percent in 2010 and 2011, respectively. In addition, on October 13, 2009, Secretary Shinseki announced his decision to establish presumptions of service-connection for Vietnam Veterans with three specific illnesses based on the latest evidence of an association with exposure to herbicides including Agent Orange. To respond to this expected growth in claims receipts, Secretary Shinseki announced an aggressive new initiative in March, 2010 to solicit private-sector input on a proposed “fast track” Veterans’ claims process for these new claims related to Agent Orange exposure during the Vietnam War. We are seeking automated solutions for the parts of the claims process that take the longest amount of time but do not involve actual adjudication or award of benefits. VA believes these parts of the process can be collected in a more streamlined and accurate way. With this new approach, VA expects to shorten the time it takes to gather evidence, which now takes on average over 90 days. Once the claim is fully developed and all pertinent information is gathered, VA will be able to more quickly decide the claim.

VBA has both short-term and long-term strategies underway to reduce the backlog of disability claims while improving the quality of our output, even as those claims increase in number and complexity. VBA continues to aggressively hire claims processing staff across the nation. Recognizing that it takes approximately two years for a new employee to become fully trained in claims processing, ROs are encouraged to implement mentoring programs and provide new claims processing employees with timely feedback from trainers, reviewers, and supervisors. Area offices are increasing their oversight of ROs whose national rating-related claims quality is below 85 percent. In addition, quality factors heavily into VBA’s three-tiered incentive compensation program which provides meaningful incentives to ROs that achieve a 90 percent or higher accuracy rate for the fiscal year. As mentioned earlier, an expanded workforce, improved training and leadership are a part of the toolkit we are bringing together with new technology and business systems solutions to tackle the disability claims backlog. No single part of this approach can solve the disability claims backlog alone. It must be a concerted approach, throughout the entire VA, to bring every tool to bear on this important priority.

Completing an independent VBA effort begun in 2009, we recently revised the Veterans Service Representative (VSR) performance standards in ways that address recommendations since made by CNA. VBA performance standards have always included a quality element for claims processors to ensure correct information is disseminated and accurate decisions are provided on all claims administered by the VA.

The newly revised VSR performance standards further align individual employee performance targets with national targets and require local quality reviews to be based on the same criteria as the national quality assurance reviews. In developing these new standards, VBA formed a workgroup of subject matter experts from all levels of the organization, including RO Directors, Veterans Service Center managers, and first-line supervisors, as well as employees from the Compensation and Pension Service and the Office of Field Operations in VBA Headquarters. A VSR also participated in the workgroup as the representative for VBA’s labor partner, the American Federation of Government Employees.

VBA implemented the revised performance plan for VSRs nationwide on April 12, 2010. The revised plan aligns the specific quality and production elements with the national targets, allowing performance credit only for those actions that advance a claim to the next stage of a claim’s life cycle. A similar initiative is currently underway for the Rating Veterans Service Representative and Decision Review Officer performance plans.

VBA is actively pursuing additional initiatives to reach our strategic goals of eliminating the backlog of disability claims while achieving a 98 percent quality level. We established pilot initiatives to improve claims processing and services to Veterans at the Little Rock, Providence, and Pittsburgh ROs. These pilots are actively exploring process and policy simplification and technology improvements to enable VBA to reach our goal of providing world-class service to our Veterans. The CNA study also looked at the current VA work management system, referred to as the Claims Process Improvement Model, which emphasized employee task specialization. In support of the pilot in the Little Rock RO, VA has engaged Booz, Allen, and Hamilton to assist with evaluating the current claims process using lean six sigma analysis techniques.

This past fall, VA employees and co-located Veterans Service Organizations submitted more than 3,000 ideas as part of a VA Innovation Initiative competition with the stated purpose of finding the best ideas to improve the claims process. Ten winners were announced; after further analysis, eight were determined to be viable solutions. We are working with the ROs that submitted these initiatives to refine costs, timelines, and resource requirements for implementation.

In addition, VBA Leadership met for a week in March to begin to develop a comprehensive plan that will focus on eight lines of action for change in VBA in order to achieve the Secretary’s goal of eliminating the disability claims backlog by 2015. These lines of action include: leadership and culture, performance management, resource capacity and footprint, process design, claims segmentation, Veteran partnership, legislative and regulatory framework, and technology.

Developing and implementing these technological and procedural initiatives will reduce the time required to obtain information from outside sources, simplify the claims adjudication process, and increase accountability for claims decisions. These changes will help us achieve our goals of eliminating the disability claims backlog, reducing the pending inventory, fielding a sustainable processing system where significant inventories do not develop, and most importantly, providing all Veterans with accurate, timely, and consistent decisions on their disability claims.

Mr. Chairman, this concludes my statement. I would be happy to respond to any questions from you or other Members of the Subcommittee.