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Witness Testimony of Michael Walcoff, Veterans Benefits Administration, Associate Deputy Under Secretary for Field Operations, U.S. Department of Veterans Affairs

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) pending claims inventory and claims backlog. 

Today I will discuss the claims backlog and the challenges we face in providing timely decisions on veterans’ claims for disability compensation.  These challenges include the growth of the disability claims workload and the increasingly complex nature of that workload.  I will also discuss some of the actions we are taking to improve claims processing and reduce the time veterans must wait for decisions, to include our efforts to expedite the processing of claims from Operations Iraqi Freedom and Enduring Freedom (OIF/OEF) veterans.  We view these efforts as opportunities to achieve greater processing efficiencies and enhance our service to veterans. 

Growth of Disability Claims Workload

The number of veterans filing initial disability compensation claims and claims for increased benefits has increased every year since FY 2000.  Disability claims from returning Afghanistan and Iraq war veterans as well as from veterans of earlier periods of war increased from 578,773 in FY 2000 to 806,382 in FY 2006, an increase of nearly 38 percent.  For FY 2007, disability claims receipts were up four percent through August compared to the same time last year.  Additionally, VBA received a record high of 80,383 claims for a single month in August 2007.  This high level of claims activity is expected to continue over the next few years. 

The primary factors leading to the sustained high level of claims activity are:  Operation Iraqi Freedom and Operation Enduring Freedom; the addition of type II diabetes as an Agent Orange presumptive disability; more beneficiaries on the rolls with resulting additional claims for increased benefits; improved and expanded outreach to active-duty servicemembers, guard, and reserve personnel, survivors, and veterans of earlier conflicts; and implementation of Combat Related Special Compensation (CRSC) and Concurrent Disability and Retire Pay (CDRP) programs by the Department of Defense. 

Ongoing hostilities in Afghanistan and Iraq are expected to continue to increase VA’s compensation workload.  Veterans of the Gulf War Era, which includes veterans who served in Afghanistan and Iraq, currently comprise the second largest population receiving compensation and pension benefits after Vietnam Era veterans.  In 2001, a change in law added type II diabetes mellitus to the list of presumptive disabilities associated with Agent Orange exposure in Vietnam.  This change prompted a surge of new claim receipts and added to the increase in veterans on VA’s rolls.

The number of veterans receiving disability compensation has increased by almost 400,000 since 2000 – from just over 2.3 million veterans to nearly 2.7 million at the end of FY 2006.  This increased number of compensation recipients, many of whom suffer from chronic progressive disabilities such as diabetes, mental illness, and musculoskeletal and cardiovascular diseases, will continue to stimulate more claims for increased benefits in the coming years as these veterans age and their conditions worsen.  Reopened disability claims, which include claims for an increase in disability percentage, currently comprise nearly 60 percent of VBA’s disability claims receipts. 

VA is committed to increasing outreach efforts to active-duty personnel.  These outreach efforts result in significantly higher claims rates.  Original claims receipts rose from 111,672 in FY 2000 to 217,343 in FY 2006, a 96 percent increase.  We believe this increase is directly related to our aggressive outreach efforts and we believe this trend will continue.  Separating military personnel can receive enhanced services through our Benefits Delivery at Discharge (BDD) Program, which I will discuss in more detail a little later.  On either a permanent or itinerate basis, VBA staff members are now stationed at 140 military discharge points around the nation, as well as in Korea and Germany. 

Combat-Related Special Compensation (CRSC) and Concurrent Retired and Disability Pay (CRDP) further contribute to increased claims activity for VBA.  It is now potentially advantageous for the majority of our military retirees to file claims with VA and to receive VA disability compensation, since their waived retired pay may be restored and not be subject to waiver in the future under these new DoD programs. 

Complexity of Claims Processing

The increase in claims receipts is not the only factor changing VA’s claims processing environment.  The greater number of disabilities veterans now claim, the increasing complexity of the disabilities being claimed, changes in law, and Court decisions affecting VA’s decision making process pose additional challenges to timely processing of our claims workload.  The trend toward increasingly complex and difficult-to-rate claims is expected to continue for the foreseeable future.

A claim becomes more complex as the number of directly claimed conditions, or issues, increases because of the larger number of variables that must be considered and addressed by VA decision-makers.  Multiple regulations, multiple sources of evidence, and multiple potential effective dates and presumptive periods must be considered.  The effect of these factors increases proportionately and sometimes exponentially as the number of claimed conditions increases.  Additionally, as the number of claimed conditions increases, the potential for additional unclaimed but secondary, aggravated, and inferred conditions increases as well. 

VA’s experience since 2000 demonstrates that the trend of increasing numbers of conditions claimed is system-wide rather than just at special intake locations such as BDD sites.  The number of cases with eight or more claimed disabilities increased from 21,814 in FY 2000 to 51,260 in FY 2006, representing a 135 percent increase over seven years. 

Combat operations in Iraq and Afghanistan have generated claims for traumatic brain injuries with complicated residual disabilities and complex combat injuries involving multiple body systems.  Additionally, the deployment of U.S. forces to under-developed regions of the world has resulted in new and complex disability claims based on environmental and infectious risks, concerns about vaccines, and other complicating factors. 

The aging of the veteran population that is service-connected for diabetes also adds to the complexity of rating claims.  VA has already begun seeing increasingly complex medical cases involving neuropathies, vision problems, cardio-vascular problems, and other issues directly related to diabetes.  If secondary conditions are not specifically claimed by a veteran, VA decision-makers must be alert to identify them.  This increasing complexity of disabilities adds to the difficulty of processing claims and the resources required to adequately process pending claims.

In the past decade, the number of veterans submitting claims for post-traumatic stress disorder (PTSD) has grown dramatically and contributed to increased complexity in claims processing.  These cases present unique processing requirements to obtain the evidence needed to substantiate the in-service event causing the post-service post-traumatic stress disorder. 

The Veterans Claims Assistance Act (VCAA) of 2000 significantly increased both the specific requirements and the length of time of claims development.  VCAA requires VA to provide written notice to claimants of the evidence required to substantiate a claim and which party (VA or the claimant) is responsible for acquiring that evidence.  VA’s duty to notify and assist claimants throughout the process increased as a result of VCAA, adding more steps to the claims process and lengthening the amount of time it takes to develop and decide a claim.  For example, VA must assist veterans in perfecting and successfully prosecuting his or her claim by obtaining government records, providing assistance in gathering private records, and obtaining all necessary medical examinations and opinions.  Since VCAA’s enactment, we are required to review claims at additional points in the decision process and provide additional notifications to the veteran. 

BDD

VBA has successfully expedited claims processing through the Benefits Delivery at Discharge (BDD) Program, a jointly sponsored VA and DoD initiative to provide transition assistance to separating servicemembers who have disabilities related to their military service.

Under the BDD program, servicemembers can apply for VA service-connected disability compensation and related benefits prior to separation from service, which allows VA to begin payment of benefits as soon as possible after discharge.  Servicemembers who apply for disability compensation under the BDD program undergo one medical examination instead of both a military separation exam and a VA exam for the disability claim.  Timely decisions on servicemembers’ disability compensation claims also help ensure the continuity of medical care for their service-connected disabilities.  The goal of the program is to deliver benefits within 60 days of military separation.  During FY 2006, VBA completed more than 29,000 claims under the BDD program.

Pending Inventory and Productivity

At the end of August 2007, our pending inventory of rating related claims was 396,664, and our average processing time was 182.6 days.  However, not all of the claims in our inventory should be defined as backlog.  This number includes all claims, whether pending only a few days or a number of months.  Under the very best of circumstances, it takes about four months to fully develop and decide a claim.  This includes the time to notify and assist veterans in obtaining military and private medical records, scheduling necessary medical examinations and receiving results, and ultimately evaluating evidence and making a decision.  Based on our current receipts of approximately 70,000 claims each month and our timeliness performance target of 145 days, our expected level of pending inventory with no backlog would be approximately 318,000 claims.

VBA provided veterans decisions on more than 774,000 disability claims in FY 2006.  Through August 2007, we had completed 749,894 decisions thus far in FY 2007, which represents an increase in productivity of over 7 percent, compared to the same time period in 2006.  Between April and August 2007, VBA processed more claims than in any five-month period on record.  Despite the increase in claims processed, VBA’s pending claims inventory has remained relatively stable for the past six months, which is a result of the increased level of claims received.

Facing the challenges I’ve discussed, VBA is aggressively pursuing measures to decrease the pending inventory of disability claims and shorten the time veterans must wait for decisions on their claims. 

Priority Processing for OIF/OEF Veterans

Since the onset of combat operations in Iraq and Afghanistan, VA has provided expedited and case-managed service for all seriously injured OIF/OEF veterans and their families.  This individualized service begins at the military treatment facilities and continues as these servicemembers are medically separated and enter the VA medical care and benefits system.  We assign special benefits counselors and case managers to work with these servicememebers and their families throughout the transition to VA to ensure expedited delivery of all benefits. 

In February, the Secretary of Veterans Affairs announced a new initiative to provide priority processing of all OIF/OEF veterans’ disability claims.  This initiative covers all active duty, National Guard, and Reserve veterans who were deployed in the OIF/OEF theatres or in support of these combat operations, as identified by DoD.  This allows all OIF/OEF veterans who were not seriously injured in combat, but who nevertheless have a disability incurred or aggravated during their military service, to enter the VA system and begin receiving disability benefits as soon as possible after separation.

Hiring Initiative and Training

We are addressing the increasing workload by adding large numbers of new claims processors nationwide.  We have added more than 1,100 new employees since January 2007 and will add a total of 3,100 by the end of fiscal year 2008.  These employees will be placed in critically needed positions in regional offices throughout the nation.

Along with the multitude of activities involved in a recruitment program of this magnitude, we have begun the critical tasks of training, equipping, and acquiring space to house our new employees.  We have modified our new employee training program to focus initial training on specific claims processing functions.  This will allow new employees to become productive earlier in their training program, and at the same time allow our more experienced employees to focus on the more complex and time-consuming claims.

Rehired Annuitants and Brokering

Recently retired rating specialists and claims processors have been recruited to return to work as rehired annuitants, enabling us to increase FY 2007 decision output by nearly 19,000 claims.  The efforts of our rehired annuitants are focused on processing claims pending more than one year and for veterans over the age of 70.  We expect to double the utilization of rehired annuitants during FY 2008.  In doing so, we expect to complete approximately 4,000 additional claims per month in FY 2008.  We have also significantly increased overtime funding to maximize the contribution of our experienced and trained staff.

One aggressive strategy implemented to balance the inventory of claims across stations has been to send cases from stations with high inventories to other stations with the capacity to take on additional rating work.  This brokering strategy allows us to deliver more expeditious decisions on veterans’ claims by maximizing existing resources and transferring work to more efficient stations. 

Consolidation

About five years ago, VBA centralized pension maintenance operations to three Pension Maintenance Centers (PMCs).  In the coming year we will also centralize original pension claims to the PMCs and consolidate all pension activity to these three offices.  This will allow regional offices to dedicate more resources to compensation claims processing.

We will also gain processing efficiencies this year by centralizing all compensation and general assistance telephone calls to nine Virtual Information Call Centers (VICCs).  Limiting telephone customer service to dedicated call centers will free-up employees to focus on claims processing.  In the past year we have assembled workgroups to evaluate the efficiencies that may be gained in the further consolidation of appellate work and fiduciary activities. 

Though we continue to face challenges, VBA has actions in place to improve claims processing and reduce the time veterans must wait for decisions as we strive to provide benefits in a responsive, timely, and compassionate manner.

Mr. Chairman, this concludes my testimony.  I will be happy to respond to any questions that you or other members of the Subcommittee have.