Chairman Hall, Ranking Member Lamborn, Members of the Committee, I am pleased to appear before you today on behalf of the Chairman of the Veterans’ Disability Benefits, General Terry Scott, to discuss the findings, conclusions, and recommendations of the Commission related to revising the VA Rating Schedule.

The Commission was created by Public Law 108-136 and Commissioners were appointed by the President and the four leaders of Congress to study the benefits and services that are provided to compensate and assist veterans and their survivors for disabilities and deaths attributable to military service.  Specifically, the Commission was tasked to examine and make recommendations concerning:

• The appropriateness of such benefits;

• The appropriateness of the level of such benefits; and

• The appropriate standards for determining whether a disability or death of a veteran should be compensated.

The Commission completed its work and submitted its report on October 3, 2007.

My statements today are my own and do not necessarily represent the views of the Commission.

For almost two and one half years, the Commission conducted an extensive and comprehensive examination of issues relating to veterans’ disability benefits.  This was the first time that the subject has been studied in depth by an independent body since the Bradley Commission in 1956.  We identified 31 key issues for study.  We made every effort to ensure that our analysis was evidence based and data driven, and we engaged two well-known organizations to provide medical expertise and analysis:

• the Institute of Medicine (IOM) of the National Academies, and

• the CNA Corporation (CNAC). 

Both of those organizations are represented today at this hearing.

Of the many issues the Commission examined, one of the most important was determining the effectiveness of the VA Rating Schedule.  You will be hearing from four panels today including Drs. Bristow, Kilpatrick, and Samet representing their IOM committees, Dr. McMahon from CNAC, independent experts, veteran service organizations, and Admiral Cooper and Mr. Mayes representing the Department of Veterans Affairs.  I will keep my remarks brief and focus on the conclusions and recommendations of our Commission relative to the Rating Schedule.

Our Commission is most appreciative of the outstanding work of the IOM committees and CNAC.  Our intent was to complete a data-driven and evidenced-based analysis of disability benefits and IOM and CNAC enabled us to do exactly that.  We believe that their efforts were exceptionally complimentary of each other and that their results were remarkably consistent with each other.  The Commission’s report summarizes the analysis and recommendations of CNAC and the IOM committees in some detail, however, the reports to the Commission are rich in detail, with extensive analysis, and each should be carefully reviewed.

I would like to highlight a few of their key findings that the Commission found especially helpful.  For example, Dr Bristow’s Committee emphasized that the Rating Schedule should achieve horizontal and vertical equity.  Vertical equity means that VA ratings of severity of disability, assigned in 10 percent increments from 0 to 100 percent, should be accurately assigned so that those assigned more severe ratings should be those veterans whose disabilities impact their earnings more than those assigned less severe ratings.  CNAC’s comparison of the earnings of veterans who are not service disabled with service disabled veterans demonstrated that disability causes lower earnings and employment at all levels of severity and types of disabilities and that the earnings loss of the disabled increases as the percent rating increases.  Thus VA ratings, using the Rating Schedule, are generally achieving vertical equity.  Horizontal equity means that assigned ratings of severity should reflect average loss of earnings among the nearly 800 diagnostic codes and across the 16 body systems.  CNAC’s analysis generally confirmed horizontal equity as well.  Overall, CNAC’s analysis confirmed that the VA Rating Schedule, and VA’s assignment of ratings using the Rating Schedule, results in compensation paid to veterans that is generally adequate to offset average impairment of earnings.  Taken as a whole, the Rating Schedule is doing its job reasonably well.  The detailed and comprehensive analysis demonstrated that even veterans with less severe ratings do, in fact, have loss of earnings.

However, the key word here is generally.  CNAC’s analysis also identified very pronounced disparities for some veteran cohorts in which vertical and horizontal equity are not being achieved.  The amount of compensation is not sufficient to offset loss of earnings for three groups of veterans:

• those whose primary disability is posttraumatic stress disorder (PTSD) or other mental disorders,

• those who are severely disabled at a young age, and

• those who are granted maximum benefits because their disabilities make them unemployable. 

For these veterans, horizontal and vertical equity is not being achieved. 

Those severely disabled at a young age have greater loss of earnings, especially over their remaining lives, since they did not have established civilian careers or transferable job skills and have more of their normal working years ahead of them.  The analysis also clearly demonstrates that veterans with PTSD and other mental disorders experience much greater loss of employment and earnings than those with physical disabilities, particularly those more severely disabled.  These disparities should be addressed by a careful but prompt revision to the Rating Schedule, leading to a more equitable level payment to disabled veterans in this severely disabled category.

Concerning PTSD and mental disorders, the reasons for insufficient compensation may lie partly in the criteria in the Rating Schedule itself, and partly in how the VA raters interpret or apply the criteria.  The Rating Schedule was revised a few years ago to eliminate separate criteria for diagnoses such as PTSD and in order to have a single set of criteria for all 67 diagnoses contained in the body system known as mental disorders.  The Commission asked the IOM to provide advice as to whether a single set of criteria is effective.  IOM recommended that separate criteria should be established for PTSD and CNAC’s survey of VA raters and VSO service officers found agreement with that advice.

Concerning the interpretation of the criteria by raters, the Commission learned that almost one half of 223,000 veterans granted Individual Unemployability (IU) as being unable to work due to their service-connected disabilities had primary diagnoses of PTSD (31 percent) or other mental disorders (16 percent.)  To be granted IU, the veteran must be rated 60 to 90 percent disabled and also be found unable to work due to the service-connected disability.  The criteria for all mental disorders require that the veteran be unable to work due to the disorder in order to be rated 100 percent.  Yet, these veterans are not rated 100 percent.  They are rated 70 percent and assigned IU status and paid at the 100 percent rate.  The Commission did not understand why these veterans were not rated 100 percent according to the Rating Schedule.  Our Commission recommended that as the Rating Schedule is revised, every effort should be made to reduce the need to rely on the IU category. That said, we agreed that in some cases, there will continue to be some need for the IU category.

The IOM reports on PTSD Diagnosis, PTSD Compensation, and PTSD Treatment together provide a solid analysis of this disability and the problems associated with diagnosis, examination, treatment, and compensation.  The report on PTSD Treatment was completed after our report and, therefore, could not be reflected in our report.  Our Commission considered the diagnosis and compensation committee reports and they weighed heavily in our deliberations.  Ultimately, we recommended a course of action for PTSD somewhat different from the IOM: a holistic approach that couples treatment, compensation, and vocational assessment along with reevaluation every 2-3 years to gauge treatment effectiveness and encourage wellness.  We felt that veterans with PTSD would not be well served by simply providing compensation without continuing follow up and incentives to seek treatment.

Our Commission concluded that there has been an implied but unstated Congressional intent to compensate disabled veterans for impairment to quality of life due to their service-connected disabilities.  Our conclusion was reflected in our consideration of question 2 of our 31 research questions.  The Commission addressed this quality of life question in two ways.  First, we asked the IOM to suggest specific measures for assessing the impact of disability on quality of life.  Second, we requested that CNAC conduct an extensive survey of a representative sample of disabled veterans to ascertain the extent of the impact.  IOM concluded that limiting veterans’ compensation to only address work disability or earnings loss would be too restrictive and inconsistent with current models of disability.  IOM recommended compensating veterans for the loss of some ability to engage in usual life activities, other than work, and for loss in overall quality of life.  The results of the extensive CNAC survey of disabled veterans and their families demonstrated that disabilities diminish quality of life at all levels of ratings and, further, that the impact is greater for those with mental rather than physical disabilities.  Together, the IOM and CNAC findings provide a sound philosophical and research based justification for compensating veterans for the impact of their service-connected disabilities on quality of life. That is what the Commission’s considerable deliberations about loss of quality of life reflect. 

In addition, CNAC’s survey analysis demonstrated that current compensation payments do not provide payment above that required to offset earnings loss. Therefore, there is currently no compensation for the impact of disability on quality of life for most veterans.  As a result, our Commission recommended that current compensation payments should be increased up to 25 percent, with priority to the more seriously disabled, while permanent quality of life measures are developed and implemented. We understand that VA has contracted for an additional study to address how to properly compensate for the impact of disability on quality of life.

Regarding the current determination of presumptive conditions, when there is considerable evidence that a condition is experienced by a sufficient cohort of veterans, a “presumption” is established that the condition is the likely result of military service.  This has been done for radiation exposure, Agent Orange defoliant in Vietnam, and other conditions.  The Commission asked the IOM to review the existing process for making these decisions and IOM recommended a detailed, comprehensive, and transparent framework based on better and consistent use of scientific principles. Dr. Samet will address this subject in greater depth.  Our Commission believes that his presumption determination framework will significantly improve the process and result in better outcomes for both the veterans and the VA. Moving forward, there is some concern over the “causal effect” standard that Dr. Samet’s IOM committee recommended be implemented.  The committee proposed that this standard be used instead of the existing standard based on “association”.  In our report, the Committee cautions that Congress should weigh this aspect of the IOM recommendations carefully.

Despite the evidence that the Rating Schedule generally results in veterans being compensated adequately for average loss of earnings except for PTSD and other mental disorders, those severely disabled at younger ages, and those currently compensated as IU, there are significant problems with the Rating Schedule that need to be addressed in an urgent manner.  Dr. Bristow and Dr. Kilpatrick will address these problems in much greater detail but let me summarize the Commission’s thoughts. 

The Commission concluded that the current VA Rating Schedule has not been adequately revised.  IOM found that 47 percent of the 798 disability codes organized in 16 body systems have been revised since 1990, but 35 percent have not been revised since 1945 and only 18 percent were revised between 1945 and 1989.  We recommended that the Rating Schedule be updated as soon as possible but certainly within the next five years.  We disagreed somewhat with IOM’s recommendation in that we felt that priority should be placed on specific criteria for the evaluation and rating of traumatic brain injury (TBI) and all mental disorders, especially PTSD.  IOM recommended beginning with those diagnostic codes that have been the longest without update.  We both agree that the revision should be accomplished as quickly as possible.

By any reasonable standard, VA has not paid sufficient attention to keeping the Rating Schedule up to date.  Dr. Bristow will, I’m sure, address the medical aspects of the criteria.  I noted that his committee compared the VA resources and staffing levels to those that the Social Security Administration has devoted to keeping their equivalent of the rating schedule current.  VA’s staffing does not compare well.  It is very clear that VA must devote increased staff to this important task.  As Dr. Bristow’s committee recommended, VA should create an ongoing process for keeping the Rating Schedule up to date, including publishing a timetable, and creating an advisory committee for revising the medical criteria for each body system.

As I understand the current status of revisions, VA published a notice revising the Rating Schedule criteria for TBI and the comment period ended February 4, 2008.  I further understand that a draft revision for PTSD rating criteria is nearing completion.  While these actions are welcome, I would point out that Dr. Bristow’s committee report was released in June of 2007.  Revisions to 2 of 798 diagnostic codes in 8 months is not a satisfactory pace for review.  This may indicate that VA still needs a stronger sense of urgency and the application of adequate resources to conduct the Rating Schedule revision at a faster pace.

In summary, the Veterans’ Disability Benefits Commission found that although the Rating Schedule generally enables service-disabled veterans to receive adequate compensation for average loss of earnings capacity, the Schedule falls short for those with PTSD and other mental disorders, those severely disabled at younger ages, and those needing IU.  It does not provide any compensation for loss of quality of life. 

It is somewhat ironic and certainly relevant to today’s deliberations, that the Bradley Commission in 1956, only eleven years after the major revision of the Rating Schedule in 1945, found that the schedule had not been updated sufficiently.  Now, fifty years later, our Commission and the IOM arrived at the same conclusion.  This situation needs to be corrected expeditiously.

The Bradley report also recommended extensive analysis on an ongoing basis to assess the adequacy of payments and the effectiveness of the Rating Schedule.  Until our Commission was constituted in 2004, only one attempt to review the Rating Schedule was made in the 1970s and the results of that analysis were discarded.  Our Commission recommended that Congress should grant statutory authority to VA and DoD to obtain and analyze data from the Social Security Administration in order to periodically assess program outcomes at the diagnostic code level and adjust compensation levels accordingly. 

As I have reflected in the foregoing statement, only by keeping the Rating Schedule current with the best, up-to-date, medical knowledge and by adjusting the payment levels to offset both loss of earnings and quality of life can we be assured that disabled veterans and their families are adequately compensated. These conclusions were the clear consensus of our Commission. The specific recommendations in our report should be used to guide needed legislative actions by Congress as well as the policy and resource allocations by the Departments and Agencies needed to update and improve disabled veterans’ benefits.