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Todd Grams, Executive in Charge for the Office of Management and Chief Financial Officer, VA

Todd Grams, Executive in Charge for the Office of Management and Chief Financial Officer, U.S. Department of Veterans Affairs

Good morning, Chairman Miller, Ranking Democratic Member Filner, and Members of the Committee.  I am accompanied today by Mr. William Schoenhard, FACHE, Deputy Under Secretary for Health for Operations and Management, Veterans Health Administration and Ms. Diana Rubens, Deputy Under Secretary for Benefits for Field Operations, Veterans Benefits Administration. 

I am pleased to be here with my colleagues and to share this forum with representatives of the Department of Veterans Affairs (VA) Office of Inspector General (OIG).  I also want to recognize as our partners and friends, the Veterans Service Organizations (VSO).  They serve as tireless advocates for Veterans and support, in so many ways, VA’s mission to serve Veterans across the array of health care, disability compensation, memorial benefits and other services they have richly earned.  The VSOs also provide VA with useful observations on VA’s performance, from their own professional staff as well as their members.

This hearing is centered on a joint VSO letter sent to you, Mr. Chairman, on April 4, 2011, spurred by your questions at the budget hearings earlier this year.  Their letter states our central challenge very well:  how do we provide the maximum value and excellence of service to Veterans, at the same time we are becoming more efficient, reducing waste, and respecting every dollar entrusted to us by the taxpayer?  The letter also explains why this has to be a careful and studied exercise to avoid taking actions that, while appearing to be fiscally responsible, would “likely result in the loss of accessibility, quality, and safety of the services Veterans depend on” and actually could lead to additional avoidable spending.  It is clear this Committee is - and has been - committed to taking a careful and deliberate path, as we strive to achieve fiscal discipline while improving quality and access for those returning Servicemembers and for Veterans of all eras - as well as their families and survivors.

We set out in this testimony some of our more significant initiatives that are already delivering better services to Veterans and cost savings.  While acknowledging our successes, we must also recognize that in an organization with missions as large, complex, and varied as VA, there are times when these operations and systems need improvement or correction.  In those circumstances we must take action.  The Congress, the VSOs, and our OIG are important contributors in our efforts to always learn and improve, as they provide an outside view of how we are living up to the commitments the Nation makes to Veterans. 

The hearing invitation asked VA to testify on the recommendations made in the VSO letter.  We would like to do so in the context of speaking to the Department’s broader transformational efforts that are central to both improving our benefits and services and using resources wisely.  The Secretary began these efforts after taking over the helm of VA when he focused the Department to be “people-centric, results-driven, and forward-looking.”  It is hard to overstate how important the ‘people-centric’ element is in the work we do.  We live necessarily in the world of systems, processes, organizations, and policies – but they all exist – and we all at VA are here - to serve Veterans.  This personal dedication is exhibited every day in extraordinary ways by our employees.  Being a People-centric organization means having our leadership, management, and systems be as good as our individual employees - to empower that sense of mission, and not frustrate it. 

Being results-driven means that we do more to measure our performance and hold ourselves accountable.  We will be measured by our accomplishments, not by our promises.  VA’s leadership has been developing systems and processes to better measure the results we are securing for Veterans.  And being forward-looking means modernizing VA’s business practices and using technology to its fullest advantage.  We will seek out opportunities to deliver the best services with available resources, continually challenging ourselves to do things smarter and more effectively.

VA Efficiencies and Savings through Transformation–Office of Management

With those principles in mind, I will first highlight those transformation efforts I am responsible for as VA’s Chief Financial Officer (CFO).  These are not issues in the VSO letter, but it is important for the Committee to know that these significant improvements in financial management systems and integrity serve as a foundation in securing efficiencies and savings across the Department.

Shortly after joining VA in November 2009, I led the CFO team in establishing a set of top priorities for VA financial management.  It has been my pleasure to brief this Committee’s staff of the status of these initiatives on a quarterly basis.  Our priorities included fixing long-standing issues in financial management, which have been concerns for VA and this Committee.  These included material weaknesses in our financial systems as well as a lack of adequate internal controls over $14 billion in spending categorized as miscellaneous obligations, VA’s independent auditor certified at the end of fiscal year (FY) 2010, we had remediated our three material weaknesses related to financial management.  In terms of internal controls and financial integrity, this was a major accomplishment.  It has been over a decade since VA had no financial management material weaknesses.  We have also dramatically reduced the number of financial issues the auditors categorize as significant deficiencies.  Since 2008, VA has reduced those significant deficiencies from sixteen to two.

Internal controls related to ‘miscellaneous obligations’ have been a long-standing issue of concern to this Committee, VA’s OIG and the Government Accountability Office (GAO).  About 18 months ago, I made this a top priority for VA financial management.  With a comprehensive plan and the dedication of our VA team, we have increased compliance in this program dramatically from 49 percent in 2009 to nearly 100 percent today.  And we can account and report on how these funds are being spent across the VA system.

There are many other improvements we have been able to make in financial management, including a thorough revision and standardization of VA financial policies, and improved financial management training.  

Today, our Financial Services Center processes over 1 million payments annually to commercial vendors.  Payment timeliness, measured by the amount of interest penalties paid per million dollars disbursed for late payments in accordance with the Prompt Payment Act, dramatically improved from $48 per million in FY 2008 to just $18 per million in FY 2011.  At the same time, VA earned $5.1 million in discounts for prompt payment (nearly 97 percent of the discounts offered by vendors) – savings that we are able to use to provide additional funding for Veterans programs.  This past fiscal year 23 percent of the vendor payments VA processed used data obtained from electronic invoices, which improved both the timeliness and accuracy of our payment process. 

VA continues to aggressively use the Government-wide purchase card program as a cost effective method of acquiring goods and services.  We processed nearly 7 million purchase card transactions valued at $3.6 billion during FY 2011 compared to 4.8 million transactions worth $3.0 billion during FY 2008.  We pay our credit card provider daily for credit card purchases, allowing VA to maximize the bank rebate offered for prompt payment.  As a result, during FY 2011 VA earned $73.8 million in purchase card rebates, a dramatic increase over the $49.4 million earned in FY 2008.  The benefit of those rebates goes directly to Veterans programs.

VA aims to save even more by essentially eliminating all paper check payments to vendors by the end of FY 2012.  We made a significant down payment towards that goal.  Over 97 percent of commercial vendors now receive payment by electronic funds transfer (EFT).  We are reducing check payments to our medical providers supporting the fee basis and Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) programs.  Our outreach to medical providers helped these programs improve EFT usage by 20 percent this year and eliminated 1.5 million checks VA-wide.

We are proud of these achievements in financial management, but realize there is always more we can do to be more effective and efficient across the Department.

The VSO letter raised questions about recent staff increases in some offices.  Many of these increases in staffing are tied to the very transformation efforts to modernize VA, and are items that the VSOs have historically supported.  For example, staff increases enhanced VA’s outreach to Veterans and tribal governments as well as improved VA’s ability to manage costs and programs that deliver services to Veterans, their families and survivors.  Other staff office increases are tied to meeting the needs of Congress for extensive and significantly expanding information requirements to conduct oversight, formulate policy, and serve individual constituents.  Especially now, taxpayers need to be assured that staffing levels are justified as a good return on investment for Veterans. 

I would also like to address the issue of travel and conferences, a subject of Congressional interest that has been in the news for VA as well as other agencies.  For a Department with many different and complex missions, and with facilities throughout the country, travel and conferences provide important opportunities to train and conduct a range of other essential activities to include:  share best practices, maintain critical clinical skills and readiness, conduct oversight and compliance inspections, increase professional certification of our employees, and provide opportunities for our employees to establish and enhance their professional contacts and relationships within the VA and with other federal, state and local agencies as well as private sector stakeholders.   These all are important to activities that enable VA to provide high quality care and services to Veterans.  The role of conferences is too important for us to treat casually - that is why VA requires a very strong business case supporting each conference.  Since FY 2009, the VA has mandated VA Chief of Staff review and approval for all conferences involving 100 or more VA employees.  For FY 2012, the VA Chief of Staff issued guidance requiring his office’s pre-approval of any conference involving 50 or more employees.  His directive calls for maximizing teleconferencing, and for managers to challenge the assumption that an event needs to occur, including making a business case analysis of the benefits of a meeting, and consideration of alternatives that might serve the same purpose.  We would be glad to share with your staff the scrutiny that proposed conferences and travel receive and welcome VSO and Congressional staff analysis of what reductions could be taken without adverse impact to the programs and proficiency we seek in the delivery of care and benefits.

For the past 3 years, spending for Senior Executive Service (SES) bonuses has been reduced, as well as the number of outstanding ratings issued.  VA understands the need for fiscal restraint, and is following the Secretary’s guidance, as well as Office of Personnel Management and Office of Management and Budget limitations.  Mr. Chairman, VA has detailed to you in a letter dated October 14, 2011 what it has done to ensure the integrity of the performance awards process.  We emphasized in that letter the importance of VA being able to attract and retain the most talented leaders and managers from within the Federal workforce and from the private sector.  We are especially wary of restrictions on performance awards that would not be undertaken as a government-wide policy – in that case VA would be specifically disadvantaged with respect to other Federal employers, weakening our ability to compete for and retain the talent we need to best manage VA and serve our Nation’s Veterans.       

VA Efficiencies and Savings Through Transformation – Veterans Health Administration

VHA is undertaking its most significant transformation since the 1990’s by realigning the organization to focus and target resources on delivering clinically appropriate, quality care for eligible Veterans when they want and need it.  These efforts are supporting our goals of improving access and quality of care.  Systems Redesign is one of the key tools we are using to achieve these goals—it involves multiple strategies that address transportation, options for Veterans to improve access, use of advances in medical technology, and local partnerships. 

Complementing the Systems Redesign initiatives, we are instilling a culture throughout our system that pursues continuous improvement and empowers staff members to solve problems at the front line or at any point in the health care system.  As a result of these steps, VHA is improving efficiency and reducing costs by consolidating data, analytic, and reporting systems, and using the power of our electronic health record to collect clinical performance measures using fully automated processes.

VA is using telephone care, telemedicine, secure messaging, My HealtheVet, and traditional postal mail to reduce the need for additional clinic visits concerning relatively simple matters.  Telehealth is a particularly critical area where VHA is identifying significant potential for cost savings.  Home Telehealth provides non-institutional care and chronic care management services.  It is predicated upon proactively intervening when a patient’s symptoms, behavior, or lack of knowledge about his or her conditions places them at a high risk for hospital admission or institutional care.  Home Telehealth helps to reduce unnecessary hospital bed days of care and provides Veterans with additional support at home.

Clinical video telehealth (CVT) provides services through clinical video conferencing between VA medical centers (VAMC) and community-based outpatient clinics (CBOC) or other VAMCs.  VA has established that use of CVT reduced the total number of hospital bed days of care for patients needing mental health by more than 20 percent.  Telehealth not only improves the quality of care available to Veterans but also reduces the cost to VA for providing such care.  For Veterans living in rural areas, expanded telehealth services improve their access to high quality specialty care services previously only offered at major medical centers. 

Moreover, the infrastructure that supports telehealth also supports the training and education needs of our staff; for example, specialists can more easily provide ongoing medical education to primary care staff about the management of Veterans with complex needs.  We are also gaining additional value from this allied infrastructure by using it to deliver training to administrators, analysts, and users of our IT systems through video-conferencing.

Another critical technology to improve care and reduce costs is an integrated electronic health record (iEHR) between VA and DoD.  The two Departments are already in the process of jointly modernizing our respective EHR systems, but an integrated joint system will allow both Departments to achieve economies of scale.  It will enable us to acquire needed functionality and reduce future sustainment costs, increase the amount of patient information shared through the use of national data standards, and improve the delivery of health care and services to more than 15 million VA and DoD patients.   

VA operates a world class pharmacy program that excels in several key areas: clinical pharmacy practice, pharmacy automation, medication safety, drug formulary management and the strategic sourcing of pharmaceuticals.  In several of these areas, VA is an innovator and benchmark within the pharmacy profession.  VA’s pharmacy activities have yielded many billions of dollars in savings over the past 15-plus years.  While aggressively pursuing savings, VA’s customer service performance remained excellent, as evidenced by an independent customer survey conducted by J.D. Powers and Associates.  This survey ranked VA’s Consolidated Mail Outpatient Pharmacy (CMOP) as “Among the Best” in 2009; for 2010 and 2011.  VA’s CMOPs scored higher than any other mail order pharmacy in the country.  Based on customer feedback from 20 industries and 800 brands, in 2011 CMOP was one of only 40 brands designated as Customer Service Champions by J.D. Powers.

Effective earlier this year, VHA adopted the Centers for Medicare and Medicaid Services (CMS) payment methodologies for outpatient services.  This aligned VHA with standard Federal payment methodologies and ensures all payments from VA utilize the same structure.  VA estimates that this change will result in savings of almost $1.5 billion over FYs 2011-2015.  Veteran care will remain uninterrupted, and existing contracts will not be affected.  We are using the savings from this change to reinvest into our health care system and provide more accessible and better quality care to America’s Veterans.

VA’s Consolidated Patient Account Center (CPAC) business model is designed to enhance VHA billing and collection activities by consolidating traditional revenue program functions into seven regionalized centers of excellence.  Four CPACs are already operational, and the final three CPACs will be activated in FY 2012.  By standardizing and improving business processes, VA has improved key revenue metrics from FY 2010 to FY 2011.  The average number of days to bill for the Nation declined by 3.5 (8.3%), while the percentage of accounts receivable greater than 90 days was reduced 3.3 percent.  However, VHA has not seen the same level of collections recently for a variety of reasons - an increase in the number of hardship waivers and copayment exemptions connected to the condition of the economy, a reduction in third party “collections to billings” ratios, and movement of Veterans from lower Priority Group enrollment categories to higher levels.  An aging Veteran population receiving coverage from Medicare, which becomes the primary insurance provider when a Veteran becomes 65 years old, has also significantly reduced the amount of funds VA can collect.  Even with these challenges, VHA’s improved business practices are capturing available collections more efficiently.  Continued improvements are a necessity to maximize this critical piece of our medical care budget. 

The VSO letter raised issues relating to VA’s purchase of fee-basis care.  VA provides care to Veterans directly in a VA medical center, or indirectly, through either fee-basis care or through contracts with local providers.  This strategic mix of in-house and external care provides Veterans the full continuum of health care services covered under our benefits package.  VHA provides Veterans care within VA’s health care system, whenever feasible.  When VA is unable to provide care within the system, the VA medical center director first considers sending patients to another VA medical center.  Contracting for necessary services is considered only if these options are inappropriate or not viable.  If contracting for services is required, VA’s first option is to use a competitive bid.  This step ensures that taxpayer funds are used to the greatest effect. 

VA appreciates Congress’ support of the use of fee-basis care as a complement to VA services; the Department has been able to provide services closer to Veterans’ homes as a result of a number of congressionally mandated programs and directives intended to improve the management and oversight of fee-basis and to expand access to care for Veterans in rural areas.

Earlier this year, VA conducted a pilot program that used standardized templates for purchasing care, ensured more consistent assessment of other VA options, and resulted in better control over and management of the care we purchased.  We have instituted controls to track timeliness of initial approvals for non-VA care, appointments, and return of clinical information.  Pilot results have seen positive improvements in each of these areas.  For example, pilot sites document initial approvals for use of non-VA care at 4 days, appointments made within 8 days and return of clinical information within 20 days. 

VA will realize approximately $200 million in savings for fee basis care in FY 2012 through the use of electronic re-pricing tools, contract and blanket ordering agreements, reduced duplicate payments, and other efforts.  We are also consolidating contracting for multi-facility, Veterans Integrated Service Networks (VISN) or regional contracts, increasing the use of competitive contracts, bringing back contracted functions in house, reutilizing existing VA property, and related measures.

We would also like to address the role of VISNs in ensuring Veterans receive top quality health care in the most efficient way possible.  The VISN structure encourages innovation and has been the basis for many of the significant advances within VHA over the last 15 years.  The responsibilities of VISNs have grown, which has necessitated corresponding staffing adjustment.  This increase in the number of employees is mostly the result of a consolidation of functions previously performed at the facilities within the Network to achieve economies of scale.  For example, some VISNs have created service lines dedicated to either specialty care areas or to administrative functions that provide support to all VHA facilities within the Network.  This approach more effectively utilizes our resources and allows us to achieve efficiencies not otherwise possible.  For example, by consolidating equipment purchasing at the VISN level, some Networks have saved millions of dollars by negotiating high volume contracts with low per unit prices and saved money on maintenance costs while improving the consistency of quality of care through equipment uniformity. 

One of VHA’s most important tools in ensuring the fair distribution of resources is the Veterans Equitable Resource Allocation (VERA) model, which helps VA provide equitable access to care for the Nation’s Veterans.  In short, VERA ensures we put the money where the work is.  VERA has been assessed positively in independent reviews by PricewaterhouseCoopers, the RAND Corporation, and the Government Accountability Office (GAO).

VERA addresses the many complexities of Veterans’ health care by recognizing differences in patients (those who use some health care but are less reliant on VA care exclusively, those who seek routine care from VA, and those with special or complex health care needs), variations in costs of care across the country, movement of Veterans across the country, research and education demands, and the need for investments in non-recurring maintenance.  The system must also account for differences in the types of funds - including general purpose funds, which are allocated based on patients treated, and specific purpose funds, which are allocated to comply with statutory or programmatic requirements. 

After VISN Directors receive the Network’s allocation, they are responsible for making the allocations to their facilities.  In 2011, VA implemented a standard VISN work-performed allocation model to ensure VISNs provided resources to facilities in a consistent, timely, and efficient manner.  This enables the VISN Director to hold a portion of the allocation for such requirements as central equipment purchases, central management of non-recurring maintenance (NRM) projects, and for changing workload requirements among facilities.  VISN Directors have the discretion to make appropriate adjustments to that model to reflect local realities, such as the activation of new CBOCs and changes in patient demand. 

To help ensure the Department achieves its financial and program performance goals, VA conducts monthly reviews that include metrics that measure financial performance, workload, and access.  These reviews provide data for risk analysis and serve as a warning system to highlight potential operational or funding problems.  VHA facility and VISN directors also maintain frequent oversight of their budgets and communicate with VHA Central Office to provide timely information to ensure necessary resources are available.  The Secretary also meets with each VISN Director at least twice during the year to ensure each VISN has sufficient resources to provide services consistent with the needs of Veterans. 

The VSO letter cites reports of local budget shortfalls or “hiring freezes.”  VA will be glad to discuss any of these specific reports with the Committee or with our VSO partners.

VA Efficiencies and Savings through Transformation – Veterans Benefits Administration (VBA)

VBA is committed to achieving the Secretary’s 2015 strategic goals of completing all rating-related compensation and pension claims within 125 days at a 98 percent accuracy level.  VBA has embarked on a wide-scale Transformation Plan to achieve new efficiencies, greater effectiveness, improved quality and consistency, and a workplace that is recognized as an “employer of choice.”  Our transformation strategy builds on VA’s strategic plan, goals, and integrated objectives.  Initiatives that help improve our business processes are encouraged.  Ideas are solicited from employees and other internal and external stakeholders including VSO’s, state and county service officers, industry partners, as well as Veterans themselves.

Our plan incorporates an integrated approach to people, process, and technology solutions, including a strong focus on a career-ready military transition program, national training standards, paperless rules-based systems, case management, and automated capability to process an increased number of claims and a greater number of complex conditions per claim – all at a high quality level for our Veterans, their families, and survivors.  Best practices in claims processing are being tested at regional offices to validate the potential of the initiatives to help us achieve our 2015 strategic goals.  The effective implementation of this transformation plan is driving VBA to achieve standardization among all regional offices and a methodology for governing implementation.  Our implementation strategy includes effective communications and change management, detailed implementation planning, and effective and measurable training, ensuring that new ideas are sustainable for the future.

A primary focus of our plan is managing our relationships with Veterans throughout their lives – from the day they join the military service, and well into their transition to Veteran status and beyond.  Seventy-three percent of our Veterans seek new “on-line” ways of engaging with VA to facilitate their claims and benefits.  In September 2011, VA and DoD, in a collaborative partnership, registered its one-millionth user on eBenefits, the one-stop shop that provides information about military and Veterans benefits and serves as the client-services portal for lifelong engagement. 

Today, the eBenefits portal provides an on-line capability to check the status of a claim, an appeal, the history of VA payments, request and download personnel records, secure a certificate of eligibility for a VA home loan, and numerous other benefit actions.  In the next six months, Veterans will be able to file a claim online in a “Turbo Claim” like approach, where claims data can be entered by prompting software that self-checks for data errors, and upload supporting claims information that feeds our paperless claims process.  Every three months, VA and DoD release additional eBenefits functionality that provides new ways for our Veterans, their families, and survivors – with support if they choose from their representatives – to conduct self-service benefit actions at a time and place of their choosing.

VBA’s organizational transformation will be deliberate, sweeping, and multifaceted.  Specific initiatives incorporated in the transformation plan include:

  • The Veterans Benefits Management System (VBMS), a holistic and integrated technology solution delivering paperless processing capability in 2012 to support our business process transformation.  Combining a paperless processing system with improved business processes is key to providing Veterans with timely and high-quality decisions. 
  • The Veterans Relationship Management (VRM), an initiative to expand eBenefits access and self-service capabilities, improve VBA call center technology, increase initial call resolution, and establish life-long relationships with our Veterans.
  • Rules-based calculators for automated adjudication of basic compensation, pension, and dependency claims.  These calculators will guide decision makers through the process with intelligent algorithms similar to tax-preparation software. 
  • New evidence-gathering tools, known as Disability Benefits Questionnaires, which allows VBA to bring new efficiencies to the collection of medical information needed for claims decisions.
  • An eight-week national Challenge training program for recently hired claims processors, as well as refresher training for more experienced staff, that ensures intense, high-quality and standardized training of the VBA workforce.
  • Simplified rating decisions and notification letters to more effectively communicate with Veterans and streamline the decision-making process.
  • Systemic Technical Accuracy Review STAR-trained local Quality Review Teams to conduct “in-progress” quality checks and regular end-of-month reviews.
  • Cross-functional teams (case management) of cross-trained raters, co-located to increase knowledge transfer, speed, and accuracy.
  • Specialized processing “lanes” based on claims complexity and priorities (“Express Lane” for less complex work; “Core Lane” for the majority of the workload; and “Special Operations Lane” to case manage special missions, such as former prisoners of war and military sexual trauma cases).
  • Intake Processing Centers for quick, accurate triage of claims.

These major transformations will be implemented using multi-year timelines.  Changes in people, processes, and technology will be rolled out in a progressive, intentional sequence that enables efficiency gains while minimizing risks to performance. 

We would like to address the three VBA management issues mentioned in the VSO letter:  records management, cost of brokering of claims work, and use of authorized overtime. 

The VSO letter notes concern that, “too much time and resources are now being devoted to the protection and/or shredding of non-essential paperwork.”  Based on findings from VA’s OIG in 2008, VBA took action to ensure that Veterans’ records are protected, maintained, and disposed in accordance with Federal regulations, statutes and policies.  While VA’s policy was initially based on OIG findings, updates have been made to incorporate lessons learned.  In FY 2011, VBA established the Records Management Technician (RMT) position.  The RMT position has enabled VBA to reduce the supervisory review and approval process to “claims-related material only,” providing the supervisors more time to facilitate increased claims productivity.  The RMT assists the Records Management Officers (RMO) in managing, maintaining, and properly disposing of Veterans’ records and personally identifiable information.  The duties of RMOs and RMTs are absolutely vital in protecting Veteran, employee, and other sensitive information. 

A second VBA area of concern identified in the VSO letter is the cost of brokering claims.  For a number of years, VBA has pursued this strategy to allocate additional resources to regional offices that perform at a higher level.  This strategy is intended to increase VBA organizational performance and capacity by assisting regional offices experiencing workload challenges and performance difficulties.  To do this, claims are brokered for processing to Resource Centers at 13 high-performing offices throughout the country. 

This past fiscal year was challenging because VBA utilized our Resource Center brokering capacity to readjudicate previously denied claims for newly established Agent Orange presumptive conditions (B-cell leukemia, Parkinson’s disease, and Ischemic heart disease).  Due to the complexity of readjudicating these claims, they are all being processed at VBA’s Resource Centers.  Our Resource Centers were therefore temporarily unavailable for brokering work during FY 2011. 

VA recognizes that transporting paper claims is neither ideal nor sustainable.  VBMS will significantly reduce our reliance on the receipt, movement, and storage of paper.  By eliminating the dependence on paper, VBA will be better positioned to make use of available resources, regardless of geographic location. 

The third VBA area of concern noted in the VSO letter is the use of authorized overtime.  While VA works to transform the delivery of benefits and services, overtime funding is essential to manage claims workload and put VA on a path to achieve our ultimate goal of having no Veteran wait longer than 125 days to receive a quality rating decision.  Although VBA has significantly increased the numbers of primary decision makers through internal promotions and external recruitment actions to address the growing workload, the normal training time for these positions is 18 to 24 months.  While in training status, these individuals are not fully productive and often require 100 percent review of their cases by a more experienced employee with greater technical knowledge.  Overtime is a necessary tool to allow VBA to maintain production as we continue to work to increase our productive capacity and ensure thorough training. 

VBA’s workload continues to dramatically increase due to the unprecedented volume of disability claims being filed.  This growth is driven by a number of factors, including our successful outreach efforts, improved access to benefits, the growing number of returning Veterans from ten years at war, the aging Veteran population, economic conditions prompting Veterans to pursue the benefits they earned during military service, and presumptive disabilities for Veterans who were exposed to Agent Orange or other herbicides during military service.

In FY 2011, VBA received nearly 230,000 additional claims as a result of the approval of three new Agent Orange presumptive conditions (B-cell leukemia, Parkinson’s disease, and Ischemic heart disease) based on the latest evidence of an association between those illnesses and exposure to herbicides.  Of the over 180,000 Agent Orange claims processed last year, approximately 93,000 were covered by the Nehmer court settlement requiring readjudication of previously denied claims.  Pursuant to a court order from the U.S. District Court for the Northern District of California in Nehmer v. U.S. Department of Veterans Affairs, C.A. No. C-86-6160 TEH (N.D. Cal.), VA  provides retroactive benefits to certain Nehmer class members (Vietnam Veterans and their survivors) who filed claims for the three new presumptive conditions during the period from September 25, 1985, to the effective date of the VA regulation establishing a presumption of service connection for these diseases.  These claims are very complex and take more than twice the resource levels to complete, which significantly slowed production in 2011.  As we have nearly completed processing Nehmer claims, overtime funding related to claims processing will be reduced.

We continue to devote significant resources, including overtime resources, to processing claims for our wounded, ill, and injured Servicemembers separating from active duty through the Integrated Disability Evaluation System (IDES).  Overtime resources are essential if we are to meet our processing goal of 100 days for IDES claims.  Additionally, overtime allows our regional offices to increase production while VBA’s pilot initiatives are tested, enabling us to determine which concepts are suitable for nationwide deployment.

Overtime funding is also critical to the delivery of education benefits in all of the education programs VA administers.  Because of the fluctuations in workload inherent in the processing cycles associated with school enrollment periods, it is essential that we continue to make effective use of overtime funds to ensure our Veteran-students and their schools timely receive their benefit payments.  With full automation of Post-9/11 GI Bill enrollment processing through the Long Term Solution, we anticipate that our need for overtime funds in the education program will be reduced. 


VA appreciates this opportunity to have this exchange with the Committee, with the participation of the VA OIG and our VSO partners.  As noted at the beginning of the testimony, the key question is an important one:  how does VA provide the maximum value and excellence service to Veterans, at the same time we are becoming more efficient, reducing waste, and respecting every dollar entrusted to us by the taxpayer?  VA is committed to keep this question foremost across every administration and office, in Washington and at medical facilities, regional offices, and national cemeteries in every area of the Nation.