Ms. Diana Rubens
Chairman Runyan, Ranking Member McNerney, and members of the Subcommittee: Thank you for the opportunity to discuss the fiscal year (FY) 2013 budget for the Veterans Benefits Administration (VBA). I am accompanied today by Mr. Jamie Manker, VBA’s Chief Financial Officer. We appreciate the strong collaboration and partnership between VBA and this Subcommittee, the full Committee and the entire Congress. We look forward to continuing our joint efforts to enhance the delivery of benefits and services to our Nation’s Veterans.
The employees of the Veterans Benefits Administration are privileged to have the incredibly important mission of helping Americans fulfill the Nation’s commitment to our Servicemembers and Veterans, who so courageously serve and sacrifice on our behalf. In carrying out its responsibilities, VBA has adopted and embraced the Department’s newly established core values of Integrity, Commitment, Advocacy, Respect, and Excellence – appropriately captured in the phrase “I CARE”. Our workforce includes more than 20,000 employees, 50 percent of whom are Veterans themselves, and 30 percent of whom have service-connected disabilities.
VBA manages an integrated program of benefits and services, administered through a nationwide network of 57 regional offices, including offices in Puerto Rico and the Philippines. The benefits include compensation for Veterans with service-connected disabilities; dependency and indemnity compensation for certain Veterans’ survivors; pension for war-time Veterans and their survivors; vocational rehabilitation and employment services; educational and training assistance; home-loan assistance; fiduciary activities providing estate protection services for Veterans unable to manage their own funds; information and assistance through personalized contacts and outreach programs to separating Servicemembers and other special groups of Veterans; and life insurance programs.
Under the leadership of Secretary Shinseki, we are working to transform VA into a 21st Century organization that is people-centric, results-driven, and forward-looking. We have disciplined ourselves to understand that successful execution of our vital mission requires that we continually improve our stewardship of the resources entrusted to us by the Congress. Accountability and efficiency are practices consistent with our philosophy of leadership and management.
Of the Department’s $140.3 billion budget request for 2013, 53 percent, or nearly $75 billion, is designated for mandatory funding of benefits programs administered by VBA. Our request supports these programs and identifies the performance levels expected to be achieved, ensuring that every dollar of the budget is being used wisely and effectively to help improve the lives of Veterans, their families, and their survivors.
Approximately 97 percent of the approximately $77 billion in appropriated funds requested for VBA are for direct payments to Veterans and their dependents and survivors. The remaining three percent is dedicated to administering VBA’s benefits programs. VBA’s budget request also directly supports VA’s three key priorities: improving access to benefits and services; eliminating the claims backlog (defined as claims pending longer than 125 days) and improving decision accuracy to 98 percent in 2015; and ending Veteran homelessness in 2015.
VBA recognizes it must do all it can to simplify and expedite the claims process for our Veterans and beneficiaries. We are committed to – and actively pursuing – comprehensive improvements to the processes and systems Veterans use to access and employees to deliver those benefits and services. We know we must do better – that’s why we are undergoing this large-scale transformation.
The 2013 General Operating Expense budget request of $2.2 billion is vital to the transformation strategy that drives our performance improvements. Technology resources include $92 million to support the Veterans Benefits Management System (VBMS), a comprehensive solution that integrates a business transformation strategy to address people and process with a paperless claims processing system. Technology resources also include $111 million to support the Veterans Relationship Management initiative, including development of self-service and technology-enabled interactions that provide access to information and the ability to execute transactions at the place and time convenient to the Veteran in every aspect of benefits and services we deliver to Veterans.
VBA plans to process a record 1.4 million compensation claims in 2013, and we are pursuing transformational changes that will enable us to meet the emerging needs of Veterans and their families. Through the resources provided in the President’s 2013 Budget, VA is committed to improving the quality of life for our Nation’s Veterans, their dependents, and survivors.
VBA 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. 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 improve Veterans’ access, eliminate the claims backlog, and achieve our goal of processing all claims within 125 days with 98 percent accuracy 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 Subcommittee 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 design, test, further evaluate, and implement these initiatives, VBA is closely tracking current metrics (e.g., number of 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’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.
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. 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. More-easily rated claims move quickly through the system in a designated lane, and the quality of our decisions improves by assigning our more experienced and skilled employees to the more complex claims. 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 1.33 cases per day with 98 percent accuracy, compared to the legacy Challenge curriculum, following which trainees averaged one-half case per day and 60 percent accuracy. Our training and technology skills programs continue to deliver the knowledge and expertise our employees need to succeed in a 21st Century workplace.
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, automated processing tools, and innovative incentives 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, these estimates could change.
Initial process improvements include:
Quality Review Teams: We are transforming our local quality assurance process, establishing dedicated teams of quality review specialists at each regional office. These teams will 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 36 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 Rating Decision and Notice: 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 one simplified notification letter in which the substance of the decision, including a summary of the evidence considered and the reason for the decision, are all rendered in a single document. Design-Team testing of this initiative at the St. Paul Regional Office resulted in productivity increases of 31 percent, while sustaining a 90-percent accuracy rate, 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. Calculators that are currently being used by claims processors include:
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.
Disability Benefits Questionnaires: This month we plan to release 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.
VBA will continue reviewing 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.
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 multichannel approach to improving access that includes online communications, social media, and telecommunications, to ensure Veterans get the information and assistance they need. Our strategy includes active stakeholder participation (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 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 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 800,000 return calls have been made through the Virtual Hold system since November 2011. This represents an acceptance rate for callers of 47 percent, exceeding the industry standard of 30 percent, and our successful re-connect rate is 92 percent.
Since launching Virtual Hold, the National Call Centers have seen a 31 percent reduction in the dropped-call rate. 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 200,000 scheduled callbacks have already been processed. The J.D. Power and Associates client-satisfaction scores for our National Call Centers indicated a nine-point uptick in overall satisfaction for those callers that utilized the Virtual Hold option (from 731 to 740). In addition, there was a 15 percent uptick in the “promptness in speaking to a person” attribute score for the month of December 2011.
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. This will help ensure our Veterans receive comprehensive and accurate responses.
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 begins with the Servicemember’s entry into military service and extends throughout his or her lifetime – and includes access for Veterans’ survivors. The eBenefits portal provides users with self-service options and greater access to VA information at the time and method of their choosing. In September 2011, VA and DoD, in a collaborative partnership, registered its one-millionth user on eBenefits. Current eBenefits enrollment exceeds 1.2 million users, representing a 450-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 CHAMPVA and VetSuccess programs, as well as the Veterans Online Application for enrolling in VA healthcare. eBenefits can be accessed via https://www.ebenefits.va.gov.
Veterans Benefits Management System (VBMS): VBA will implement VBMS – the cornerstone of VA’s claims transformation – beginning in 2012 and plans to complete its nationwide deployment to all regional offices in 2013. It is a comprehensive solution achieved through a business transformation strategy for process and people within a paperless claims processing system. Achieving a paperless claims processing system will result in higher quality, greater consistency, and faster claims decisions. The system will also achieve significant cost savings through the reduction of manual and paper-based processing requirements. VBMS will move VBA’s internal, paper-based process to an automated system that integrates streamlined claims processes, rules-based processing, and Web-based technology. In January 2011, VA began processing some claims using VBMS and a pilot team at the Providence Regional Office. VA expanded VBMS to a team working at the Salt Lake City Regional Office in May 2011, and added functionality to support more claims and more claim types. This expansion also added system users and provided access to local VA Medical Centers and Veterans Service Organizations. This testing clearly demonstrated the value of the paperless VBMS process, reducing claims processing time to an average of 115 days. During 2012, VBA plans to deploy VBMS to additional regional offices. Funding requested in the 2013 budget supports expansion of VBMS to all regional offices and development and deployment of enhanced functionalities.
Homeless Veterans Outreach and Initiatives
VBA is actively contributing to VA’s plan to prevent and end Veterans’ homelessness by 2015. VBA currently has 20 full-time Homeless Veterans Outreach Coordinators (HVOCs). In 2013, VBA will hire 200 additional HVOCs to support this priority goal. The role of the additional HVOCs will be twofold: 1) Provide case-management services to homeless Veterans and assure expedited processing of their claims; and 2) Conduct extensive outreach to at-risk Veterans and their families in a proactive effort to prevent homelessness.
It is projected that the increased staff in 2013 will accelerate services for an estimated 43,000 Veterans and their families by decreasing the frequency and duration of their episodes of homelessness. The resources will also assist Veterans and their family members maintain safe and permanent housing, get connected to employment opportunities, and improve their overall healthcare status.
VBA is also actively engaged in ending Veteran homelessness through its Loan Guaranty Program, which makes VA properties available for permanent housing and shelter for homeless Veterans and Veterans at risk for homelessness. Under the Homeless Shelter Program, we have made over 200 properties available to non-profit and faith-based organizations since inception of the program in 1991 – including four homes sold to shelters in 2011, two of which serve only homeless female Veterans. VBA recently launched two new homeless initiatives. Properties Available to Non-Profits and Veterans allows homeless Veterans and non-profit organizations to purchase VA-acquired properties at a discount (up to 75 percent) for permanent or transitional housing. The Distressed Homes Initiative offers VA properties that require extensive repairs to qualified non-profits at an even steeper discount (up to 90 percent).
Compensation and Pension Programs
Seventy-eight percent of the total mandatory funding supports monthly disability compensation and ancillary benefit payments to Veterans, their families, and their survivors. In addition to providing benefits to compensate Veterans’ for their service-connected disabilities, the compensation program provides monthly payments to surviving spouses, dependent children, and dependent parents of Servicemembers and Veterans who die as a result of injuries or illnesses related to their military service. In 2013, funding for compensation for an estimated 4.0 million Veterans and survivors is projected at nearly $59 billion.
Additionally, VBA will provide an estimated $3.2 billion in income-based pension benefits to wartime Veterans who are permanently and totally disabled due to non-service-connected causes or are age 65 or older. Pension benefits to income-eligible surviving spouses and dependent children of deceased wartime Veterans who die as a result of a disability unrelated to military service are projected to total $1.7 billion. More than 517,000 Veterans and survivors will receive pension benefits in 2013.
Incoming Disability Claims Workload
The disability claims workload from the newest generation of returning war Veterans, as well as from Veterans of earlier periods, continues to increase. VBA’s annual claims receipts increased 48 percent over the last four years, from 888,000 in 2008 to 1.3 million in 2011. Receipts in 2011 include nearly 231,000 claims for new Agent Orange presumptive disabilities. We anticipate total claims receipts will be 1.2 million in 2012 and 1.25 million in 2013.
The growth in disability claims volume is driven by a number of factors, including our successful outreach efforts, increased demand as a result of 10 years at war, and improved access to benefits through the joint VA and DoD Pre-Discharge Programs: Integrated Disability Evaluation System (IDES), Benefits Delivery at Discharge (BDD), and QuickStart. Other major factors include Agent Orange presumptive disabilities for Veterans who served in the Republic of Vietnam; the aging of our Veteran population; new regulations for processing certain claims related to Gulf War service, traumatic brain injuries, and post-traumatic stress disorder (PTSD); and the impact of a difficult economy.
IDES ensures seamless service delivery for our wounded, ill, and injured Servicemembers by addressing the duplicate, time-consuming, and often confusing and overlapping elements of the VA and DoD disability processes. Last year, IDES expanded from 21 sites to 139 sites. VBA currently dedicates 94 Veterans Service Representatives and Military Services Coordinators to full-time IDES processing, and we significantly increased rating resources dedicated to IDES (from 45 Rating Veterans Service Representatives (RVSRs) assigned to IDES at the start of FY 2011 to 126 RVSRs currently assigned). This level of staffing represents four times the FTE devoted to claims that are processed under our traditional model. We made major improvements in service delivery, decreasing processing time in areas of VA responsibility from 186 days to 104 days. We are on track to reach our target of processing IDES claims in 100 days. We are also in the process of integrating vocational rehabilitation and employment (VR&E) counselors into the IDES process to provide enhanced transition services. The 2012 budget supports 110 VR&E counselors to be placed at the busiest IDES sites around the country, and the 2013 budget provides an additional 90 counselors. In 2013, these counselors will serve 22,000 Servicemembers.
In 2011, VBA allocated significant resources to processing the approximately 231,000 Agent Orange presumptive claims received, dedicating our 13 resource centers exclusively to readjudicating over 90,000 previously denied claims for the new presumptive conditions under the stipulations of the Nehmer court decision. The complexity of the Nehmer claims processing significantly reduced employee output, as 1,100 Veterans Service Representatives (VSRs) and nearly 1,200 raters worked these Agent Orange claims in 2011, and their average decision output was reduced from 2.5 cases per day to one case per day. To date, over 114,000 Veterans and survivors received over $3 billion in retroactive benefits for the new Agent Orange presumptives. Although we are nearing completion of the Nehmer workload, we expect a residual impact on claims processing timeliness into 2012. Our focus on processing these complex claims had slowed processing of other claims and contributed to a larger claims backlog, but it remains the right thing to do for our Vietnam Veterans, many of whom have waited a long time for these benefits.
The complexity of the workload also continues to rapidly increase, as Veterans claim greater numbers of disabilities and the nature of the disabilities (such as PTSD, combat injuries, diabetes and related conditions, and environmental diseases) become increasingly complex. Last year, the number of disabilities claimed by Veterans who served in Iraq and Afghanistan averaged 8.5, a dramatic difference from Veterans of earlier eras (e.g., World War II Veterans claimed 2.5 disabilities, Gulf War Veterans claimed 4.3 disabilities). Even with the unprecedented workload increases, VBA has achieved a 15 percent increase in output over the last four years, completing over one million disability claims in each of the past two years. VBA expects production levels to continue to increase each year through transformational process changes and technological advances.
VA’s needs-based pension programs provide economic security to more than 313,000 wartime Veterans who are permanently and totally disabled as a result of disability not related to service or are age 65 or older, and to more than 203,000 survivors. In FY2013, VA expects to pay over $4.9 billion in pension benefits to these beneficiaries.
VA’s consolidation of pension program operations at three Pension Management Centers (PMCs) in Philadelphia, Milwaukee, and St. Paul, with a workforce of nearly 1,200 employees, enables it to provide consistent, high-quality decisions on pension claims. As a result of the consolidation and other initiatives, the quality of pension decisions has steadily increased from 2008 to 2011. During this period, the national accuracy rate for pension entitlement claims improved from 87 percent to 98 percent, while the national accuracy rate for pension maintenance claims improved from 93 percent to 98 percent. In addition to maintaining a high quality rate, the PMCs demonstrate the advantages of moving toward a paperless work environment. In this future work environment, claims will be imaged and stored in an electronic format, eliminating the need for hard copy folders, allowing work to be completed without regard to the physical location of the decision maker, and allowing multiple individuals simultaneous access to the electronic record regardless of location.
VA administers a comprehensive fiduciary program for our most vulnerable beneficiaries who are unable to manage their own funds. VA appoints and provides oversight of fiduciaries to ensure that beneficiaries receive the benefits and services they need.
VA has seen a steady increase in the number of beneficiaries who need fiduciary services. From 2008 to 2011, the number of beneficiaries in the program increased by 20 percent, and from 2010 to 2011 alone, beneficiaries in the program increased by over 10 percent. Today, there are more than 121,000 beneficiaries in the program with a combined estate value of more than $3.3 billion. This growth has resulted in a corresponding increase in VBA’s fiduciary workload. Since 2008, VA experienced a 30 percent increase in field examinations, a 22 percent increase in accounting audits, and a 26 percent increase in the number of miles traveled by field examiners to conduct initial and follow-up fiduciary appointment investigations.
In early 2009, VBA initiated a pilot project, under which it consolidated 14 of its fiduciary activities into the Western Area Fiduciary Hub, which operates in a near paperless environment. VBA found that consolidation had a significant positive impact on the timeliness and quality of fiduciary appointments. Timeliness of initial appointment field examinations increased by 40 percent, while quality increased by 8 percent. The hub concept also allowed VBA to more efficiently allocate resources, resulting in a 6-percent decrease in miles traveled per field examination. Based upon the pilot results, VBA deployed the hub concept nationwide, with further consolidation into a near paperless environment occurring at five new hubs at regional offices. Full consolidation of VBA’s fiduciary activities should be complete in June 2012. VBA’s efforts to convert its fiduciary activities into regional, paperless processing centers demonstrate the potential of its ongoing transformation initiatives, which will build upon these early initiatives.
We continue to identify and develop methods to improve service to this vulnerable population of beneficiaries. These efforts include deploying a standardized field examination application, increasing fiduciary staffing according to a model that ensures that VBA efficiently deploys its field examiner workforce, developing a new information technology system for managing VBA’s fiduciary workload and tracking fiduciary activity, development of standardized training for fiduciary personnel, and development of certification requirements and internet resources for fiduciaries. VBA has also initiated a complete revision of its fiduciary regulations to ensure that it has the rules it needs to meet its oversight obligations.
We appreciate the opportunity to provide additional information on VBA’s 2013 budget request and to share with you the progress we are making in transforming the delivery of benefits and services for our Veterans and their families and survivors. We recognize there is still a tremendous amount of work to be done. I assure you of our commitment to achieving fundamental and dramatic improvements that will expedite the delivery of benefits, improve quality, and ensure we are providing timely, accurate, and comprehensive information and assistance to all those we serve.
We will continue to promote efficient spending practices, and we acknowledge the importance of good stewardship of taxpayer dollars to achieving our mission. We are confident we are on the right path and making the investments necessary to accomplish the aggressive goals set for us by Secretary Shinseki.
This concludes my remarks. I am happy to respond to any questions from you or other Members of the Subcommittee.