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Gen. Allison Hickey

Gen. Allison Hickey, Under Secretary for Benefits, U.S. Department of Veterans Affairs

Good morning, Chairman Miller, Ranking Member Filner, and Members of the Committee.  I am accompanied today by Mr. Alan Bozeman, Director, Veterans Benefits Management System (VBMS) Program Office. 

My testimony will focus on VBA’s Transformation Plan, with a particular focus on VBMS’s role in improving electronic claims processing capabilities to help meet VA’s goal of eliminating the claims backlog in 2015 to ensure timely and quality delivery of benefits and services to our Veterans, their families, and survivors. 

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, family members, and survivors.  In the face of dramatically increasing workloads, VBA must deliver first-rate and timely benefits and services – and they must be delivered with greater efficiency.  VBA is aggressively pursuing its Transformation Plan, a series of tightly integrated people, process, and technology initiatives designed to eliminate the claims backlog and achieve our goal of processing all claims within 125 days with 98 percent quality in 2015. 

VBA’s Transformation Plan is based on more than 600 ideas solicited from our employees, Veterans Service Organization partners, and other stakeholders, including this Committee and your staffs.  After evaluating a multitude of innovative ideas, we focused on the 40+ most promising, tested, and measured initiatives for inclusion in our Transformation Plan.  As we implement these initiatives, VBA is closely tracking current metrics (the number of claims considered part of the backlog, which VA defines as claims pending over 125 days; claims production; quality of rating decisions; decision timeliness; etc.) to assess results and, if necessary, adjust our efforts.  We are also working to expand what we measure to more clearly show the impact of the Transformation Plan, both at local and national levels.  VBA continues to review the initial 600 ideas for process improvements to ensure all potentially valuable transformation actions are evaluated.  We will also continue our quest for additional new and innovative ideas to further transform our claims processes.

VBA’s Implementation Center, established at VBA headquarters as a program management office, is streamlining the process of transformation by ensuring new ideas are approved through a governance process, and that implementation and training are carefully planned and executed utilizing a comprehensive change management approach.  This allows us to focus on implementing initiatives that will achieve the greatest gains, without degrading current performance. 

People-Focused Initiatives

Our employees are the key to our success.  We are strengthening the expertise of our workforce by changing the way we are organized and trained to do the work.  A new standardized operating model is being implemented in all regional offices beginning this year that incorporates a case-management approach to claims processing.  VBA is deploying the new model in a phased implementation schedule that will be in use at 16 regional offices by the end of fiscal year 2012 and at all regional offices by the end of calendar year 2013.  Distinct processing lanes are being established based on the complexity and priority of the claims and employees are assigned to the lanes based on their experience and skill levels.  Integrated, cross-functional teams work claims from start to finish, facilitating the quick flow of completed claims and allowing for informal clarification of claims processing issues to minimize rework and reduce processing time.  Less complex claims move quickly through the system in a designated “express” lane, and the quality of our decisions improves by assigning more experienced and skilled employees to the more complex claims in our “special operations” lane.  The new operating model also establishes an Intake Processing Center at every regional office, adding a formalized process for triaging claims and enabling more timely and accurate distribution of claims to the production staff in their appropriate lanes.  We predict that our people-focused initiatives will contribute to a 15-20 percent improvement in productivity and 4 percent improvement in quality.   

At VBA we are increasing the productivity of our workforce and the quality of our decisions through national training programs and standards.  Our redesigned and expanded 8-week centralized Challenge Training Program for new claims processors has achieved dramatic results.  On completion of the training, employees work significantly faster and at a higher quality level.  Trainees from the most recent class averaged 1.62 cases per day with 94 percent accuracy at the eight week point, compared to the legacy Challenge curriculum, following which trainees averaged one-half case per day and 60 percent accuracy at the six month point.  Our training and technology skills programs continue to deliver the knowledge and expertise our employees need to succeed in a 21st Century workplace.  We have already seen a four-percent improvement in quality as a result of this new training initiative.

Process-Improvement Initiatives

VBA has established a “Design Team” concept to support the transformation of its business processes.  Using Design Teams, VBA is conducting rapid development and testing of process changes, and automated processing tools in the workplace to assure that changes will be actionable and effective before they are implemented.  The goal of our Design Teams is to implement, execute, and measure an improved facet of our operating model with a mindset toward increasing productivity and improving quality towards our goal of 98 percent accuracy.  We are focusing on streamlining processes and eliminating repetition and rework in the claims process while delivering optimal service.  We expect our process initiatives to contribute to a 15-20 percent increase in productivity and a minimum four percent improvement in claims quality as it relates to current processing initiatives.  As we continue to find new, promising initiatives and scale these initiatives nationally, these estimates could change.

Initial process improvements include:

Quality Review Teams:  We transformed our local quality assurance process by establishing dedicated teams of quality review specialists at each regional office.  These teams evaluate decision accuracy at both the regional office and individual employee levels, and perform in-process reviews to identify and eliminate errors at the earliest possible stage in the claims process.  The quality review teams are comprised of personnel trained by our national quality assurance (Statistical Technical Accuracy Review or “STAR”) staff to assure local reviews are consistently conducted according to national standards.  An initial focus of these teams is to reduce medical examination errors, which currently represent 30 percent of our benefit entitlement quality errors.  In addition to quality improvements, the need for reexaminations will be minimized, thereby reducing claims processing time in 39-day increments for every reexamination avoided.

Simplified Notification Letter:  In January 2012, we implemented a new claims processing initiative developed by our first Design Team that will result in meaningful improvements in the service we provide to our clients.  The new decision notification process will streamline and standardize the communication of claims decisions.  Veterans will receive their simplified notification letter, which contains the substance of the decision, including a summary of the evidence considered and the reason for the decision.  Design-Team testing of this initiative at the Atlanta and St. Paul Regional Office resulted in productivity increases of 15 percent, while sustaining accuracy rates, and reductions of 14 days in average processing time.

Rules-Based Calculators:  This initiative provides a new automated employee job-aid that uses rules-based programming to assist decision makers in assigning an accurate service-connected evaluation.  These new calculators will significantly contribute to improvements in rating quality and consistency.  During testing, the initiative resulted in improved quality, from 83% to 94%.  Sixteen stand-alone calculators are currently being used by claims processors.  Additionally, the following three calculators have already been embedded in VBMS:

1.   Hearing loss calculator: Generates stand-alone paragraphs for use in rating decisions.

2.   Special monthly compensation (SMC) calculator: Determines the total SMC award based on disabilities input by the decision-maker.

3.   Evaluation builder: Helps assign correct evaluations and generates text to explain a disability grant as well as criteria for the next higher rating.

The release of VBMS version 3.0 in July 2012 will embed the rules for the majority of the musculoskeletal system.  Future releases of VBMS will continue to embed the calculator rules allowing for rapid changes to automated rules sets as needed.

Disability Benefits Questionnaires:  In March, we released 68 more Disability Benefits Questionnaires (DBQs) to the public, bringing the total number of DBQs publicly available to 71.  DBQs are templates that solicit the medical information necessary to evaluate the level of disability for a particular medical condition.  Currently used by Veterans Health Administration examiners, the release of these DBQs to the public will allow Veterans to take them to their private physicians, facilitating submission of fully developed claims packages for expedited processing.  The closer we get to fully developed claims the faster we can make decisions.  Currently, claims submitted under the Fully Developed Claims initiative are processed in an average of 120 days.

Technology Initiatives

Key to VBA’s transformation is ending the reliance on the outmoded paper-intensive processes that thwart timely and accurate claims processing.  VBA will deploy technology solutions that improve access, drive automation, reduce variance, and enable faster and more efficient operations.  VBA’s planned digital, paperless environment will also enable greater exchange of information and increased transparency to Veterans, the workforce, and our stakeholders.  We know that 73 percent of our Veterans prefer to interact with VA online.  We are therefore taking a new approach, which includes online claims submission.  Our strategy includes participation of stakeholders such as Veterans Service Officers, State Departments of Veterans Affairs, County Veterans Service Officers, and Department of Defense (DoD)) to provide digitally ready electronic files and claims pre-scanned through online claims submission.  This will be accomplished through electronic data sharing and utilizing a stakeholder portal.

Our Transformation Plan also includes the following major technology initiatives that are expected to improve access and contribute to an additional 15-20 percent increase in productivity and a four to six percent improvement in claims quality:

Veterans Relationship Management Initiative (VRM):  VRM engages, empowers, and serves Veterans and other claimants with seamless, secure, and on-demand access to benefit and service information.  VRM is transforming VBA’s National Call Centers through the introduction of new Veteran-friendly technologies and features.  In October 2011, VA deployed Virtual Hold technology.  During periods of high call volumes, this system enhancement allows callers to leave their name and phone number instead of waiting on hold for the next available operator, and the system automatically calls them back in turn.  Over 2 million return calls have been made through the Virtual Hold system since November 2011.  This represents an acceptance rate for callers of 51 percent, exceeding the industry standard of 30 percent, and our successful re-connect rate is 93 percent. 

In December 2011, VA deployed Scheduled Callback technology, allowing callers to make an appointment with us to call them at a specific time.  Since deployment, over 785,000 scheduled callbacks have already been processed.   The J.D. Power and Associates client-satisfaction scores for our National Call Centers indicated a four-point uptick in overall satisfaction, from 738 to 742, for those callers that utilized the Virtual Hold option from November 2011 to March 2012.

VRM also deployed a pilot of our new “Unified Desktop” technology.  This initiative will provide National Call Center agents with a single, unified view of VA clients’ military, demographic, and contact information and their benefits eligibility and claims status through one integrated application, versus the current process that requires VA agents to access up to 13 different applications.  Agents will benefit from not switching between multiple applications or being timed out.  These new developments provide functionality not previously available, such as real-time analytics and reporting, “smart” scripts, and caller contact history and appeals information, all from one screen.  This will not only help ensure our Veterans receive consistent, comprehensive, and accurate responses, but will increase the speed to answer calls, and provide better “first-call resolution” for our clients.

eBenefits Portal:  eBenefits, the joint VA/DoD client-services portal for life-long engagement with Servicemembers, Veterans, and their families, is a fundamental component of the VRM initiative.  Our life-long engagement now begins with the Servicemember’s entry into military service and extends throughout his or her lifetime – and will include access for Veterans’ survivors.  The eBenefits portal provides users with self-service options and greater access to benefits and health information at the time and method of their choosing and a new single-sign-on exchange with My HealtheVet.  We have reduced the burden on obtaining an eBenefits Premium (Level 2) account by allowing beneficiaries to register online or over the phone.  In September 2011, VA and DoD, in a collaborative partnership, registered its one-millionth user on eBenefits.  Current eBenefits enrollment exceeds 1.5 million users, representing a 500-percent increase since January 2011.  This year, DoD is making enrollment in the eBenefits portal mandatory for all Servicemembers upon entry into military service. 

The eBenefits portal provides an online capability to check the status of a claim or appeal; review the history of VA payments; request and download military personnel records; secure a certificate of eligibility for a VA home loan; generate letters to verify Civil Service employment preference eligibility; and numerous other benefit actions.  We continue to aggressively expand and update on-line self-service and access capabilities.  We are engaging our Veterans Service Organization partners in registering Veterans for eBenefits accounts.  In 2012, Servicemembers will complete their Servicemembers’ Group Life Insurance applications and transactions through eBenefits.  Enhancements scheduled in 2012 will also allow Veterans to view their scheduled VA medical appointments, file benefits claims online in a “Turbo Claim-like” approach and upload supporting claims information that feeds our paperless claims process.  In 2013, funding supports enhanced self-service tools for the Civilian Health and Medical Program of VA (CHAMPVA) and VetSuccess programs, as well as the Veterans Online Application for enrolling in VA healthcare.  eBenefits can be accessed via

VBMS Overview

To improve the efficiency of the claims process, VA is transitioning to a business model that relies less on the acquisition and movement of paper documents.  VBMS is a business transformation initiative supported by technology to improve service delivery.  VA recognizes technology is not the sole solution to improving regional office performance and eliminating the claims backlog; however, it is the critical hallmark of a forward-looking organization.  Without VBMS, we cannot succeed in meeting our goal of processing all claims within 125 days with 98 percent accuracy.  It is the critical component of our Transformation Plan.  VBMS is designed to assist VA in eliminating the claims backlog.  The centerpiece of VBMS is a paperless system, which will be complemented by a new operating model, enhanced tools and training, and improved business processes and workflows.  VBMS will dramatically reduce the amount of paper in the current disability claims process, and will employ rules-based claims development and decision recommendations utilizing rating calculators where possible.  Additionally, by using a service-oriented architecture and commercial off-the-shelf products, VA will be positioned to take advantage of future advances in technology developed in the marketplace to respond to the changing needs of Veterans over time.  The VBMS initiative uses incremental technology releases to modernize the benefits adjudication process.  VBMS is currently in user-acceptance testing with national deployment scheduled to begin in mid-July 2012 and completed by the end of calendar year 2013.  

During fiscal year 2011, VA developed, tested, and began processing a limited number of original claims for disability compensation using VBMS at the Providence and Salt Lake City Regional Offices.  These efforts validated the ability of users to enter and process claims to completion within the new, web-based, electronic claims processing system, while ensuring successful integration with existing databases and legacy applications.

During fiscal year 2012, VA added new system functionality, which was deployed to the Providence and Salt Lake City Regional Offices, and recently expanded VBMS to the entire Wichita and Fort Harrison Regional Offices to align with VBA’s transformation efforts.  VBMS will release additional system functionality in July 2012 prior to national deployment.  VBMS will be deployed to an additional 12 regional offices bringing the total to 16 regional offices by the end of fiscal year 2012. 


VBMS is being developed through a "Service-Oriented Architecture methodology" meaning the system is developed in layers including a data layer that stores image data for VBMS; a service layer that allow VBMS and other systems to put data into and get data out of the system through an interface; a business-logic layer which defines and executes business logic necessary to support claims processing; and a user-interface layer.  This architecture allows one layer to change without forcing the other layers to change.  This allows the VA to take advantage of commercial off-the-shelf products as much as possible, and allows for rapid response to new requirements. 

Under an inter-agency agreement, VA is working with the Department of the Navy’s Space and Naval Warfare Systems Center (SPAWAR) to develop the architecture for VBMS.  SPAWAR is assisting VA by leading VBMS’s system engineering and development efforts, providing user interface and infrastructure support, and managing development and testing efforts.  VA and SPAWAR work together on defining the scope for each VBMS release, which occurs approximately every six months.

The team is using a tailored, agile development approach to create the VBMS application and infrastructure.  An agile framework allows for functionality to be released in a phased approach as software is developed, tested, and released to the field.   Additionally, subject matter experts from regional offices provide requirements for system development every three weeks.   


Once VBMS is fully developed, it will enable end-to-end electronic claims processing for each stage of the claims life cycle.  The current functionality of VBMS 2.0 software includes the ability to establish claims, view and store electronic documents in an electronic folder, and rate electronic or paper claims.  The system also provides the ability to track evidence requested from beneficiaries.  The rating application provides users with web-accessible, rules-based tools, and rating calculators to ensure consistency in rating decisions and improve the overall quality and timeliness of decisions.

In the upcoming software release for VBMS 3.0, scheduled for July 16, 2012, new functionality will include the ability to generate a guided evidence development plan, which will assist users in identifying required evidence supporting Veterans’ claims.  This plan will then automatically generate a Veterans Claims Assistance Act letter and a medical record request to private physicians.  In addition, new functionality will include the ability to broker claims electronically to any VA regional office where VBMS is deployed, allowing fluid movement of pending work and work load balancing.

System Performance

From June through early July 2012, the Office of Information and Technology (OIT) will be conducting a series of end-to-end performance tests to ensure the system and network can perform effectively under the projected user load at national deployment.  The VBMS performance testing strategy will apply a simulation of production workloads in a pre-deployment environment to measure system performance and gauge user experience.  The strategy includes “break testing” – applying a full load of up to 20,000 users to get a quick gauge of system breakpoints and bottlenecks.  The goal is to identify performance problems under expected production loads, allowing the development and infrastructure teams time to analyze and resolve critical issues before production release.


 VA currently has an inter-agency agreement with the National Archives and Records Administration (NARA) to develop and provide a smart scanning solution for VA claims documentation going into the VBMS pilots.  The piloted solution includes recommendations VA can use to revise and/or improve business processes to promote efficiencies of smart scanning and optical character recognition.

NARA has been performing scanning services for production claim documents as part of the pilot since January 2011.  The pilot will end in June 2012, and OIT will continue an inter-agency agreement with NARA for continued development, maintenance, and enhancement of the scanning solution.  VA issued a performance work statement last week to acquire the services of a commercial vendor to support long-term scanning needs. 

In addition to the scanning strategy, VA is developing additional ingest capabilities to enhance the data exchange infrastructure.  The Veterans Relationship Management Initiative (VRM) Program Office is collaborating with state Veterans Service Organizations (VSOs) to provide a direct interface, which will enable direct transfer of data into VA systems.  Additionally, Veterans will be able to file a claim for benefits utilizing Veterans Online Application Direct Connect through eBenefits.  This will facilitate the Veteran’s ability to leverage self-service capabilities when filing a claim for benefits.  Furthermore, the Stakeholder Enterprise Portal will allow third-party personnel, such as VSOs to file and track claims on a Veteran’s behalf.  

Implementation Approach

VBMS is one of several major transformation initiatives currently being implemented across VBA.  In 2011, VBA established a transformation Implementation Center to streamline and coordinate the transformation process.  In preparation for national deployment of VBMS, the VBMS Program Management Office has worked closely with the Implementation Center to align the deployment strategy and schedule for VBMS with larger organizational transformation efforts.  A coordinated approach to implementation was used to successfully expand the use of VBMS from two initial pilot sites in Providence and Salt Lake City to the Fort Harrison and Wichita Regional Offices in March of this year.  All four sites are currently processing claims in VBMS and providing input to improve and refine the system prior to national deployment. 

Workforce and Performance Support During Transition

The VBMS Program Management Office’s deployment approach includes a robust organizational change management component to prepare the VBA workforce for the transition to a new system and associated business process changes.  VBMS conducts numerous pre-deployment activities with local transformation Change Management Agents.  In addition, the VBMS Program Management Office has developed a robust web-based training approach and curriculum to train end-users on the system prior to deployment.  

VA is also leveraging input and feedback from the pilot sites to refine the deployment strategy, inform training development, and identify impacts to the workforce.  Recent focus groups held at the Wichita Regional Office are just one example of activities underway to help prepare the workforce and organization as a whole as it transitions from a paper-based to an electronic claims processing environment. 


From October 1, 2011 through June 12, 2012, approximately 3,100 disability compensation claims have been successfully established through VBMS, and 950 claims have been completed electronically.  In March 2012, original and subsequent rating compensation claims such as re-opened claims, claims for increase, or secondary claims, were being processed in VBMS.  However, there are exclusions such as claims from Veterans living in foreign countries and claims related to radiation or spina bifida.  On average, claims are taking approximately 135 days to complete in VBMS.  Although the number of days to complete is higher than VA’s goal of 125 days, VBMS is still developing business rules and automated decision recommendation support tools to assist claims processors in adjudicating claims faster and more accurately. 

Veterans Health Administration (VHA) and VSOs

The VBMS Program Management Office is working with our VHA partners on multiple levels to develop and deploy the claims processing solution.  Our collaboration with VHA includes the participation of VHA subject matter experts in VBMS requirements gathering sessions, development and delivery of VHA-specific web-based training courses, and ongoing communication with VHA’s Disability Examination Management Office.  To enhance inter-administration communication and collaboration, the VBMS Program Management Office provides periodic updates during VHA’s Network Directors’ conference calls and participates in biweekly meetings with VHA’s Disability Examination Management Office.  This collaborative approach and system access for VHA clinicians will help improve the integration of disability examination processes into the larger claims process. 

VBA is engaged at the design stage with our VSO partners in VBMS development and all transformation initiatives.  In April 2011, a subject matter expert from a VSO participated in early requirements gathering sessions during a 30-day detail with VA.  VBA continues to involve the VSOs in requirements gathering activities as the system evolves.  Additionally, the VBMS Program Management Office is building VSO-specific system training into its web-based training curriculum to meet the needs of VSO end-users.  Representatives from VSOs also participated in recent VBMS training sessions at the Wichita and Fort Harrison Regional Offices as part of the VBMS deployment to those sites.  As committed partners in ensuring the timely and accurate processing of Veterans’ benefits claims, VSO end-users continue to provide valuable insight into system requirements and are helping to identity system issues at the current sites.

Labor Partners

VA has fully engaged our labor partners on all transformation initiatives including VBMS.  We have conducted numerous briefings and demonstrations to our labor forums and mid-term bargaining teams.  Additionally, we have established Memorandums of Understanding on all of our major transformation initiatives.  Based on frequent communication with our labor partners, VA is adopting their feedback into VBMS development and deployment activities.  We remain committed to closely collaborating with our labor partners as we move forward with VBMS.


VBMS, along with over 40 other people, process, and technology claims transformation initiatives, is critical to our success in improving the timeliness and accuracy of the claims process.  We will continue to vigorously pursue business process and technology-centered improvements designed to eliminate the claims backlog and achieve our goal in 2015 of processing all claims within 125 days with 98 percent accuracy. 

Mr. Chairman, this concludes my statement.  I would be pleased to answer any questions you or other Members of the Committee may have.