Veterans' Benefits: Better Assessments Needed to Guide Claims Processing Improvements (Letter Report, 01/13/95, GAO/HEHS-95-25). Slow claims processing and poor customer service has long been recognized as serious problems for the Department of Veterans Affairs (VA). As early as 1990, VA began encouraging its regional offices to improve their claims processing system, but processing times and backlogs have increased rather than decreased. At the end of fiscal year 1994, nearly 500,000 claims awaited a VA decision. About 65,000 of these were initial disability compensation claims. On average during fiscal year 1994, veterans waited more than seven months for their initial disability claims to be decided and, if approved, payments to begin; some waited much longer. This report discusses VA's current plans to change regional office claims processing and assesses VA's plans to determine the effectiveness of those changes. --------------------------- Indexing Terms ----------------------------- REPORTNUM: HEHS-95-25 TITLE: Veterans' Benefits: Better Assessments Needed to Guide Claims Processing Improvements DATE: 01/13/95 SUBJECT: Veterans benefits Claims processing Veterans disability compensation Productivity Operations analysis Information processing operations Claims settlement Accounting procedures Work measurement standards Cost effectiveness analysis ************************************************************************** * This file contains an ASCII representation of the text of a GAO * * report. Delineations within the text indicating chapter titles, * * headings, and bullets are preserved. Major divisions and subdivisions * * of the text, such as Chapters, Sections, and Appendixes, are * * identified by double and single lines. 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We are unable to accept electronic orders * * for printed documents at this time. * ************************************************************************** Cover ================================================================ COVER Report to the Ranking Minority Member, Committee on Veterans' Affairs, U.S. Senate January 1995 VETERANS' BENEFITS - BETTER ASSESSMENTS NEEDED TO GUIDE CLAIMS PROCESSING IMPROVEMENTS GAO/HEHS-95-25 Veterans' Claims Processing Abbreviations =============================================================== ABBREV AMIE - automated medical information exchange OMB - Office of Management and Budget SSA - Social Security Administration VA - Department of Veterans Affairs VBA - Veterans Benefits Administration VHA - Veterans Health Administration VARO - VA Regional Office Letter =============================================================== LETTER B-255638 January 13, 1995 The Honorable John D. Rockefeller IV Ranking Minority Member Committee on Veterans' Affairs United States Senate Dear Senator Rockefeller: Slow claims processing and poor service to customers have long been recognized as critical concerns for the Department of Veterans Affairs (VA). As early as 1990, VA began encouraging regional offices (VARO) to develop and implement improvements in their claims processing systems; but instead of decreasing, processing times and backlogs have increased. At the end of fiscal year 1994, almost 500,000 claims were waiting for a VA decision. About 65,000 of these claims were initial disability compensation claims. On average during fiscal year 1994, veterans waited over 7 months for their initial disability claims to be decided and, if approved, payments to begin; many waited much longer. At your request, we examined VA's efforts to address these problems. Specifically, we obtained information about VA's current plans to implement changes in VARO claims processing structures and procedures and assessed VA's plans to determine the effectiveness of those changes. RESULTS IN BRIEF ------------------------------------------------------------ Letter :1 VA is taking steps it hopes will ensure all that VAROs implement changes that will improve claims processing timeliness and overall service to veterans. A key effort focuses on implementing the recommendations of a Blue Ribbon Panel established to identify ways to improve processing timeliness in disability claims, generally considered the most difficult and time consuming in VA. To guide VAROs in implementing those recommendations, VA is developing several model claims processing structures designed to, among other things, reorganize staff so that fewer resources are devoted to clerical functions and more to making decisions about veterans' claims. The models will also serve as a framework for implementing other improvement initiatives such as improving management of claims folders to reduce the number of lost files and using evidence received over the telephone or by facsimile machine. VA is also developing regulations and training materials to facilitate and encourage VAROs to adopt initiatives. VAROs are being allowed significant flexibility to implement initiatives they believe are appropriate for their individual circumstances. VA has not developed adequate evaluation plans, however, to allow it to judge the relative merit of various initiatives or the circumstances under which they work best. Without such information, VA will not have a sound basis for determining what additional changes, if any, should be made and guiding future improvement efforts. This is of special concern given that (1) information available to date about the effectiveness of individual initiatives is inconclusive and (2) some VAROs we visited were reluctant to make, or faced difficulties in making, certain changes. Additionally, VA does not have a formal mechanism to disseminate information about the content and effectiveness of regional initiatives to allow other VAROs to fully understand changes they could make and learn from other VAROs' experience. BACKGROUND ------------------------------------------------------------ Letter :2 VA's Veterans Benefits Administration (VBA) is responsible for administering benefit programs, such as disability compensation and pension. Veterans and their families can apply for benefits at any of VA's 58 VAROs. Significant differences exist among VAROs; for example, as of September 30, 1994, their claims processing staffs ranged in size from 11 to 219. Likewise, performance varies considerably; for example, the time needed to process initial disability claims ranged from 86 to 367 days in 1994. VA's ability to process claims for benefits in a timely way has been a major topic of concern for many years.\1 In 1990, VA took steps to fundamentally change the way services are provided to veterans. A key element of those changes is modernization of VBA's automated information systems, projected to be completed in 1998. Progress on this effort has been slow, and we have raised significant concerns about the adequacy of planning and implementation.\2 In response to our initial work, VA agreed with the Director of the Office of Management and Budget (OMB) to, among other things, increase project oversight, establish outcome-oriented performance measures and document the system's effect on service, and update the project's economic analysis. The OMB agreement included timeliness goals to be met by the end of fiscal year 1998--as well as interim goals--for selected types of claims, including initial disability compensation and initial pension claims. In 1990 the Secretary of VA also asked all VAROs to identify and implement innovative changes aimed at speeding up claims processing and reducing the growing backlog. In response, some VAROs undertook major restructuring initiatives,\3 but most continued using the traditional "assembly-line" approach to processing. Under this approach, each claim passes through several individuals, each of whom performs a specific task. One person enters the claim into the computerized system and opens the claims file. Another then determines what information is needed and develops requests for that information. Another communicates with VA hospital staff if a physical examination is needed. These steps continue until an "authorizer" approves the decision. Often, files are centrally located and are sent back and forth from the central files to various claims processors many times before a claim is decided. The claims backlog and processing times did not decrease but grew from 1990 to 1993. The backlog of compensation and pension claims grew from about 378,000 to about 528,000 during that period. Table 1 shows that, during the same period, average processing time increased for the four types of claims specifically included in VA's agreement with OMB.\4 Table 1 Average Processing Days for Four Major Types of Initial Claims (Fiscal Years 1990 and 1993) -------------------- \1 See for example, Veterans' Benefits: Improvements Needed in Processing Disability Claims (GAO/HRD-89-24, June 22, 1989) and Veterans' Benefits: Lack of Timeliness, Poor Communication Cause Customer Dissatisfaction (GAO/HEHS-94-179, Sept. 20, 1994). \2 Veterans' Benefits: Acquisition of Information Resources for Modernization Is Premature (GAO/IMTEC-93-6, Nov. 4, 1992) and Veterans' Benefits: Redirected Modernization Shows Promise (GAO/AIMD-94-26, Dec. 9, 1993). \3 In this report an initiative is defined as any type of change that VA makes to claims processing structures and procedures designed to improve timeliness and service. The goal of such changes could be to reduce processing time, reduce backlog, increase productivity, improve customer service, and so on. \4 The Secretary has agreed with the Director of OMB to meet stated processing time goals for these four types of claims by the end of fiscal year 1998.