May 2001

VA Disability Compensation Claims Processing

The Department of Veterans Affairs fulfills the government's obligation to help those who leave the military injured or ill. In service to their country, military members give up the right to decline dangerous assignments. Their occupations lack conventional workers compensation coverage.

Administered through a network of 58 VA regional offices, disability compensation benefits cover chronic illnesses or injuries incurred during or worsened by military service. It is one of the VA's most extensive benefits and among the most complex, posing a challenge to timely service. About 70 percent of all initial claims from veterans are approved in whole or in part, but the approval process takes about 205 days, or nearly seven months. By comparison, VA's average processing time for a first-time education benefits claim is 23 days.

VA's goal is to bring the seven-month processing time down to 74 days for all claims that require disability ratings. The administration has made the reduction of these waiting times one of the top priorities for VA. VA Secretary Anthony J. Principi signed a charter April 16 to create an 11-member Claims Processing Task Force that is undertaking a top-to-bottom review of the VA claims system. Secretary Principi asked for a final report by mid-August 2001 on ways to improve the system that can be put in place immediately within existing law. The task force, headed by retired Vice Admiral Daniel L. Cooper, is expected to make recommendations to speed decisions by changing VA's organization and administrative procedures.

Basis for VA Disability Ratings

VA disability compensation stems from an official finding that links an illness or disability with the period of a veteran's military service, whether war-related or in peacetime. VA usually does not need to find the exact cause of the illness. The dollar amount of compensation is determined by regulations that give a rating for each illness or injury on a scale of 0 to 100 based on the severity of the medical problem. The philosophy of the compensation program is that these ratings are intended to reflect a loss of earnings capacity.

A veteran with a slight scar that does not interfere with work might be rated at 0 percent while brain cancer would be rated at 100 percent. That percentage is used to determine amounts of tax-free disability compensation that are paid in 10 percent increments and adjusted annually for inflation.

The year 2001 range is $101 per month for a 10 percent rating to $2,107 monthly for a 100 percent disability. Payments are increased for dependents and for veterans with multiple illnesses officially connected with service. A veteran whose condition worsens may see his rating increased after periodic reexamination, or he may drop off the rolls altogether if cured of an illness.

Scope of Disability Compensation Programs

Of the estimated 25.5 million veterans alive today, more than 14 percent have had an illness or injury officially declared "service connected" and 9 percent of all veterans currently receive monthly payments from the VA. Most receive their compensation by direct deposits.

At the beginning of 2001, the number of people on the rolls included:

• 2.3 million veterans receiving service-connected disability compensation;

• 331,615 spouses and children receiving "dependency and indemnity compensation" who are survivors of veterans who died of a service-connected condition.

Pensions are provided to another 356,534 wartime veterans permanently disabled by conditions not officially connected with service and to 261,098 spouses and children who demonstrate financial need and are survivors of wartime veterans.

The fiscal year 2000 cost for direct service-connected disability compensation payments was $14.7 billion and survivor benefits were an additional $3.5 billion.

Increasing Claim Complexity Prompts Quality Controls, Training

Each year, VA receives more than 100,000 new disability compensation claims. With improved benefits information and outreach, veterans today are filing claims for more conditions than at any time in history. By the end of fiscal 2001, VA expects to have 1,000 more employees working on claims than the 5,500 in fiscal 1999.

An example of this increased use is seen in veterans discharged since 1990, the "Gulf War era" group. With 15 percent of those veterans having a VA-rated disability, this rate is higher than that of any other war or peacetime-era veterans groups. Further, the number of disabilities per veteran (3.2) is also the highest for this group of veterans. Meanwhile, claims for undiagnosable illnesses in veterans of the Gulf combat theater push the limits of medical knowledge as researchers study the symptoms reported by veterans who served in the Gulf. At the same time, the policies governing how VA processes all disability compensation claims have become increasingly complex and time-intensive due to court rulings that expand VA procedures.

VA has responded to these trends with more training, new quality controls and improved monitoring programs. One factor contributing to the workload is the "remand rate," or the frequency with which cases in the appeals process are returned to the originating VA regional benefits office for further work. The remand rate declined from 46 percent in 1998 to 29 percent by March 2000, followed by an upturn to 56 percent by the end of the year because of major changes in the laws that govern claims processing.

VA is seeking to reduce this rate with its use of new programs to monitor the accuracy of ratings work at each field station using experts to examine random samplings of decisions to identify patterns and error-prone cases. New systems also assess individual employee performance to guard against fraud and improve oversight of decision-making. These new monitoring programs help focus VA's aggressive training through computer-based curricula, videoconferences, traditional on-site classroom sessions and mentoring training.

About half of VA's claims decision-makers are involved in ongoing training. All new benefits employees attend a two-week orientation about VA and veterans issues at the Veterans Benefits Academy, a facility in Baltimore, Md.

Search for Records Delays Claims Development

When veterans apply for disability compensation, they are asked to provide medical evidence of a current condition and evidence that would relate it to the time of service. VA currently is expanding its role in providing assistance in requesting records and gathering additional evidence to demonstrate the connection with military service as well as current evidence of disability. This includes providing the veteran a medical examination. In addition, VA works closely with private nonprofit veterans organizations that have trained staff members assist veterans with their claims. Under federal law, the burden ultimately is on the veteran to demonstrate a "service connection" for a disability.

As VA evaluates the evidence gathered, it must apply rules from an extensive body of laws, regulations, court rulings and internal policy manuals. There are more than five dozen separate steps in evaluating a veteran's initial disability compensation claim, and VA itself may wait two or three months to receive information requested of other federal agencies and private sources with medical records. One step that generally contributes significantly to processing time is the search for old military records, particularly medical records. Finding evidence that a condition first was noted when someone received care in the military health care system can be important to determining an official connection with his or her service.

In a small percentage of cases, the old military records needed by veterans must be retrieved from the National Archives and Records Administration, an independent federal agency. It holds millions of military personnel and health records of discharged and deceased veterans for the last century at its National Personnel Records Center in St. Louis, Mo. As part of its efforts to expedite claims processing, VA has put some of its own personnel at the St. Louis center to supplement the National Archives staff. On average, VA waits 122 days for the St. Louis center to locate and forward requested records.

Shift from Paper-Intensive System to Automation

VA has made significant gains in automated data processing. It now routinely receives all service members' "discharge papers" electronically from military computers. VA has replaced its claim processors' mainframe terminals with desktop computers running spreadsheets, e-mail and other contemporary software. Regional benefits offices now have access to electronic records from VA health care facilities to cut the time once needed to obtain paper records. Still, claims processing remains a paper-intensive process and a goal of automation is to reduce the number of times information is handled. With an estimated 150 million new documents handled each year, if only one-half of one percent of new paperwork is temporarily misrouted or delayed, that could represent some 750,000 documents.

VA has created a prototype office environment using scanners and electronic networks toward the goal of a paperless office. VA also has launched a Web-based system enabling veterans to fill out their disability compensation, pension and rehabilitation benefits claims forms online. For years, VA has been expanding the use of electronic technology in programs such as educational benefits. For example, some students receiving education benefits under the active-duty version of the Montgomery GI Bill are able to verify their enrollment each month over the Internet or by using a toll free phone system. Use of these systems eliminates the need for the student to sign and return a VA form every month. VA's online applications system may be accessed on the Internet at www.vabenefits.vba.va.gov.

VA Promotes Initiatives to Improve Claims Efficiency

Six Pilot Test Sites. VA is testing new techniques for claims management at six sites. Examples of the "reengineered" processes include new personal computer programs as well as redesigned letters aimed at improving VA's communication with veterans about the claims process, evidence needs and claims status information. The effectiveness of the new management tools and greater attention to communication are being monitored through reviews of timeliness, accuracy, customer satisfaction, employee satisfaction, pending workload and telephone service. Techniques at the pilot sites that demonstrate measurable improvements in such indicators will be considered "best practices" for distribution to other offices.

Pre-Discharge Exams. VA has significantly reduced processing times when it has located personnel at military discharge sites to handle compensation claims near the time of servicemembers' military separation. The average processing time for original compensation claims under this program is about one month compared to the national average of 205 days. By March 2001, this growing program had 41 VA regional offices and 114 military installations actively participating, with new agreements pending. The program ensures that discharge examinations are consistent with VA's standards for rating disabilities while referring new veterans to other VA services, such as vocational rehabilitation. It establishes a complete service medical record so no matter how far in the future a veteran decides to file a claim, VA will not need to request military medical records from outside sources.

Case Managers. VA is introducing a system to give each veteran the name and phone number of a case manager handling the claim to improve communication, speed service and resolve misunderstandings. The new "veterans service representative" combines the traditional job of "benefits counselor," the person who initially accepts the veteran's application and gathers information, with that of "claims examiner," the person who decides a medical problem's official connection with service as well as the nature and severity of the disability and its financial compensation. The veterans service representative personalizes services to meet the needs of each veteran, advising about the evidence needed and when a decision may be expected. As the use of these case managers increases, VA expects them to process a claim from first contact through final decision, reducing the inefficiency in the old assembly line approach.

Improved Communication. Realignment of 58 regional benefits offices into nine networks has provided flexibility for workload shifting. Regional office directors meet regularly to share information on approaches they find effective. Meanwhile, VA benefits officials and attorneys are working to simplify policies, and a Plain Language Regulation Rewrite Team is revising regulations with non-technical language, all aimed at making the claims process faster and easier. Officials also are seeking to simplify the adjudication "due process procedures" manual to allow veterans to provide certain information by telephone or e-mail, such as date of birth and Social Security number or changes in mailing address, income or marital status.

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