CLAIMS PROCESSING AT THE VETERANS BENEFITS ADMINISTRATION, UPDATE ON PROCESSING OF PERSIAN GULF WAR CLAIMS, AND EFFECT OF PUBLIC LAW 103-446, THE VETERANS' BENEFITS IMPROVEMENTS ACT OF 1994

FRIDAY, MAY 12, 1995

House of Representatives,

Subcommittee on Compensation, Pension, Insurance and Memorial Affairs,

Committee on Veterans' Affairs,

Washington, DC.

The subcommittee met, pursuant to call, at 9:30 a.m., in room 334, Cannon House Office Building, Hon. Terry Everett (chairman of the subcommittee) presiding.

Present: Representatives Everett, Weller, Hayworth, Barr, Ney, Evans, Montgomery, and Kennedy.

OPENING STATEMENT OF CHAIRMAN EVERETT

Mr. Everett. Good morning. The subcommittee will now come to order.

Today, we are here to review VA's performance in their area of compensation pension benefits in general, with some additional emphasis on what is being done for the Persian Gulf veterans. We will also look at the appropriate sections of Public Law 103-446, which made several improvements to veterans' benefits delivery.

I would like to welcome all the witnesses who are here to testify today. Without objection, their entire statements will be made a part of the record. I would also ask that they be as brief as possible so that we may use the majority of the time to ask questions of the panels.

The issues of timeliness and quality continue to plague the claims process. There is no doubt--and we all agree--that justice delayed is justice denied. Initial claims that take a half year, and appeals that take several years are not the way to run a railroad; and I know--I am from a railroad family.

There is also no doubt that VA has made strides in decreasing the backlog and the average time to process claims. The question is how VBA has accomplished those improvements: Have they done it through reduced intake and heavy use of overtime or some other method?

We are concerned that we identify the bottlenecks that affect timeliness. For instance, GAO stated that queue time awaiting processing accounted for 94 of 151 days needed to process a claim in 1992. I view queue time as the primeindicator of the long delays in getting a final decision. Therefore, VA's objective must be to dramatically reduce or eliminate queue time. The only way to do that is to reduce the average of 6.5 work hours it now takes to produce a final decision.

I hope to hear some concrete ideas from today's witnesses on how to do that.

Let me further state, if you can reduce the work time per claim, it offers us the opportunity to shift some resources to customer services, another area needing management attention. Such a move would benefit the VA in terms of better customer service because of fewer blocked calls, shorter waits for service and an improved image in the eyes of veterans. Any good businessman knows that a key component of a successful business is maintaining a high level of quality and service when a customer first walks through the door.

I am also concerned about maintaining quality consistency in VA's decision-making process. Veterans currently appeal about 60,000 cases; out of last year's 3.2 million claims, that is a rate of about 2 percent. Obviously, that is not necessarily an indicator of system-wide sloppy work on a massive scale. However, I understand somewhere between a third to a half of those appeals end in at least some change to the original decision, whether granted by the Court, the Board of Appeals or the regional office. Those are a lot of veterans now getting their lawful benefits who would have otherwise been denied.

I am concerned when I see court decisions like Gardner v. Brown and Davenport v. Brown that determine that VA regulation does not conform to law and merely reflect the way VA has been doing business. It makes me wonder how many other inconsistencies are lurking out there and what VA proposes to do about them.

The dilemma confronting us regarding the Persian Gulf veterans is this: As the people's elected representatives, we have fiduciary responsibilities to the American taxpayer and a moral obligation to fulfill the Nation's commitment to the veterans who served those same taxpayers. To that end, I share the concerns of the members of this committee who have long supported getting to the bottom of the Persian Gulf syndrome. We must ensure that those legitimately injured in service are taken care of. But the flip side of the issue is that we cannot give away the taxpayer's hard-earned money on the basis of wishful thinking.

P.L. 103-446 made improvements in compensating Gulf War veterans, but there are still many questions surrounding the problems facing those who served in the Gulf. And while that is not the focus of today's hearing, we will revisit the issue. But for today, let us focus on how well VA is doing under the present law.

Now I would like to recognize the distinguished Ranking Member of this subcommittee, a long-time advocate of veterans, but before I do that, I would like to congratulate him on being awarded the Legislator-of-the-Year Silver Helmet by AMVETS in recognition of his long service on behalf of the veterans.

Mr. Evans.

OPENING STATEMENT OF HON. LANE EVANS

Mr. Evans. Thank you, Mr. Chairman, I appreciate that, and I am pleased that the first hearing you are having is going to focus on the VA's claims adjudication system. This is an issue I have some great interest in. As the former Chairman of the Oversight and Investigations Subcommittee, I heard for many years--in the last 8 years, about the problems facing the VBA.

We have learned from those hearings and suggested changes to improve the timeliness and quality of VBA's adjudication system. Last year, we passed the Veterans' Benefits Improvement Act of 1994, which changed the requirements for proof of relationships and acceptance of income verification. In Public Law 103-271, we revised the income verification requirements in the needs-based pension program.

Realizing these changes were not enough, we also authorized the establishment of a Veterans' Claim Adjudication Commission. The Commission is an expert panel charged with reviewing how the VA processes benefit claims and proposes ways to improve the process.

VBA must get to the point where claims are decided quickly and correctly the first time. I do not want to hear complaints in the future from widows whose spouses died before their claims were adjudicated or veterans whose claims were rejected because the VA failed in its duty to assist by not fully developing their cases.

One of the witnesses today, who I understand has not arrived yet, is Mr. Montgomery Watson, Director of the Illinois regional office. He is a Vietnam veteran with a distinguished record. He has risen from an entry level position as a claims examiner in San Francisco in 1972, and I understand he will be appearing here shortly.

It is our responsibility, however, to ensure that the professionals that are doing the job have the resources they need to make sure they can do their jobs the best that they can. We must fight to protect VA's funding and make certain that VBA's funding request is honored.

Funding for VBA and BVA comes under the category of discretionary spending, which means it is subject to the whims of the Budget and the Appropriations Committees.

Last month the House passed legislation to reduce the amount available to the Appropriations Committee by over $100 billion over the next 5 years. Spending for discretionary programs would decline from $546 billion in 1992 to $522 billion in the year 2000. The size of the decrease is obviously greater ifinflation is taken into account.

Under the budget proposals Chairman Kasich passed earlier this week, support for VA's programs and services would decrease by several hundred million dollars next year because the Chairman wants to freeze funding at this year's level, minus the amount appropriated for major construction, and continues to reduce funding relative to the baseline in the out-years. These will be veterans' programs that will be affected. When compared, CBO's projected baseline discretionary funding for veterans' programs would decrease by almost $5.7 billion a year by the year 2002.

Mr. Chairman, I hope we can reverse this trend and that this Congress will give the veterans the respect that they deserve. I also hope Mr. Vogel will listen carefully to the testimony presented today and take some of the suggestions to heart. All the witnesses here are stakeholders in the quest to make VA's quality second to none.

Again, I salute you for holding this important hearing and look forward to working with you on this particular issue.

[The prepared statement of Congressman Evans appears on p. 37.]

Mr. Everett. Thank you very much, Mr. Evans.

My good friend from Arizona, a fellow sportswriter.

OPENING STATEMENT OF HON. J.D. HAYWORTH

Mr. Hayworth. I thank the Chairman very much. We could sit here and speculate on the changes in our respective positions from journalism now to public office, but I think it is overwhelmingly overshadowed by the accomplishments and the service of this Nation's veterans. And I look across the table to see my good friend from Illinois and my friend from Mississippi, and a few other newcomers in the Congress joining me here, the gentleman from Georgia and Illinois, and Mr. Chairman, I salute you today.

I listened with great interest to the comments of the Ranking Minority Member, and I know that even from time to time, while there may be philosophical questions that come up, I think we all know in this committee the example set by the Ranking Member of the full committee, the gentleman from Mississippi, who from time to time has taken pains to point out that, especially on this committee, we do not view things as Democrats, Republicans or Independents, we view things from the American standpoint; and I welcome that wisdom and counsel.

Yes, there will be changes at every level of government. The challenge for us is to find the best way to utilize resources, realizing that not always is there equation with money spent and funds allocated to the effectiveness of services. That is why I welcome the hearings today as we move to make the programs as effective as possible, even while we face fiscal realities.

I thank the Chairman for the opportunity to give this opening statement.

Mr. Everett. Thank you.

And now this subcommittee is honored to have as one of its members the Ranking Member of the full committee and also a long-time advocate for veterans, Mr. Montgomery.

OPENING STATEMENT OF HON. G.V. (SONNY) MONTGOMERY

Mr. Montgomery. Thank you very much, Mr. Chairman. Congratulations on starting on time. Next time I will be on time myself. I think it is very, very important in this Congress that we start the subcommittee meetings on time.

And I thank Mr. Hayworth for his comments. J.D., it is bipartisan, and the bottom line is to do what we can for veterans and their dependents and widows, and that is what we try to do. I am sure on this side of the aisle that we are working in every way we possibly can to do the best we can for veterans.

I am sure there will be some changes. Funding might be some problems we will have to look into for veterans. I did read a report several days ago--maybe Mr. Vogel can explain a little more; I think we are doing a better job on processing of claims. I certainly hope so. That has really been something that has been of great concern to me, that it takes this long to process a claim. I hope we have worked out some of these problems.

And thank you for giving me this opportunity, Mr. Chairman.

Mr. Everett. Thank you, Mr. Montgomery.

Mr. Weller.

OPENING STATEMENT OF HON. JERRY WELLER

Mr. Weller. Well, thank you, Mr. Chairman; and, of course, I want to commend you for conducting today's hearing and speaking in the spirit of bipartisanship that has been shared.

For the first time, certainly in my memory as an adult, this Congress has made a commitment to live within its means; and I believe there is a real desire in a bipartisan fashion for the Congress to live within its means for the first time in 28 years. That means we have to look for ways of doing a better job. That is why I think today's hearing is so important.

As a State legislator for the 6 years prior to having the privilege of serving in the Congress, I, of course, performed a lot of constituent services for a lot of my constituents, and that included veterans. One of the greatest frustrations I heard from veterans was the delay and the long time it took to process claims, to find out if a veteran was eligible for veterans' benefits.

When it takes up to 6 months for veterans to find out if he is eligible, or for his widow or dependent to find out if they are eligible, that is far too long. We need to find a better way. I also learned if they are turned down it can take another 18 or 24 months to resolve the issue. So I am looking for ideas.

I am anxious to work in a bipartisan fashion, Mr. Chairman, and I want to commend you for conducting today's hearing.

I want to also acknowledge Mr. Watson. He is from my home State. It is good to have a friend here from Illinois.

So thank you, Mr. Chairman.

Mr. Everett. Thank you. Mr. Barr.

OPENING STATEMENT OF HON. BOB BARR

Mr. Barr. Thank you, Mr. Chairman. As I travel back home at every opportunity and meet with citizens and voters, many of whom are veterans in the Seventh District, and from all across the State of Georgia, the claims processing problems that we have been witnessing, that we know exist, are something that I hear about a great deal. So I think it is very timely and very important, certainly to the veterans in Georgia in the Seventh District and really all across this great land, to begin to try to get a handle on that. And the way we do that is to hear from the experts, the folks that know what the problems are and can tell us how to solve them, so we can take that baton and handle it legislatively, through both legislation as well as oversight.

I look forward to being a part of that process, Mr. Chairman.

Mr. Everett. Thank you very much. Mr. Ney, you are up already. Would you like to make an opening statement?

Mr. Ney. Just that it is a pleasure to be here, and I appreciate the hearing on a most important issue. Thank you.

Mr. Everett. Thank you very much.

Our first panel is composed of the directors of several VA regional offices. The panel consists of Mr. Jim Maye--Mr. Maye, please come on up to the table; Mr. Montgomery Watson from Chicago--Mr. Watson, with a name like Montgomery you can pretty much call your own shots around here; Mr. Donald Ramsey from St. Louis, MO; and Mr. Joe Williams from Portland, OR.

Gentlemen, welcome, you are an important part of this hearing. We have not asked you for prepared testimony. What we want to hear from you are your candid views on your operations in particular and system-wide in general. I am sure we can count on that.

STATEMENTS OF JIM MAYE, VARO 314, ROANOKE, VA; JOE THOMPSON, VARO 306, NEW YORK, NY; MONTGOMERY WATSON, VARO 328, CHICAGO, IL; DONALD RAMSEY, VARO 331, ST. LOUIS, MO; AND JOE WILLIAMS, VARO 348, PORTLAND, OR

Mr. Everett. The first question I would like to pose to you, and to all of you, is, what model has VARO adapted to process claims? What is the timetable for completion of this reorganization?

Mr. Maye, we will start with you, please.

Mr. Maye. Good morning, sir. The Under Secretary has given us a great deal of latitude in the models we select and how we go about adapting the change to process claims. The model that the Roanoke regional office is using is similar to the model established by Joe Thompson in the New York regional office.

We began on the 9th of January, with our first team in adjudication, and we expect to have that completed by January of 1996; with all of adjudication converted to full teams.

Conversion of teams in our loan guarantee operations began about 8 months ago. We have successfully converted about 25 percent of that operation into teams. There will be some other conversions in our other elements, including vocational relocation as well as veterans' services.

Mr. Everett. And you have a forecast of your time of completion for this reorganization?

Mr. Maye. The physical plant changes should be completed this fall with people in place by January of 1996. The process of going to fully selfdirected work teams will probably take several years, as people learn to take on new responsibilities and we provide them with additional authority to act.

Mr. Everett. Mr. Watson.

Mr. Watson. Mr. Chairman, it is my pleasure to be here and to see representatives from the State of Illinois.

Regarding your question, we in Chicago also have moved to teams, and in our adjudication division, which is the lead division that is currently in progress. It involves a tremendous amount of training, and that is currently under way.

The other thing that we have done is to set out the clear expectation that the timeliness issues must be met. So all of the employees in the Chicago regional office are aware of that and are on board.

Because we have not been able to hire any new employees, due to our FTE ceiling, what we have done is to move folks from our loan guaranty divisions and so forth to help in the adjudication division in fairly specific areas. We also currently have under way a plan to consolidate our finance, human resources, and administrative divisions into a support services division, and that plan is out of the office this week and once approved should be start being implemented within about 30 days.

Mr. Everett. Thank you very much. Mr. Ramsey.

Mr. Ramsey. The St. Louis regional office, unlike the other regional offices is a regional processing office for the Montgomery GI bill, and we have just completed the consolidation of our RPO area into St. Louis, and that has a lot of bearing on how we go on organizationally and on teams.

We are setting up teams in our veterans services division to handle the public contact and to handle our inquiries from other States on education. We hope that with the procurement of stage 2 imaging equipment, that we can then better organize around the technology that would be available to us.

The Chapter 30 Montgomery GI bill, education benefits currently are being handled on an imaging system that is totally outdated, but we are able to, with that system, control the education process; and we take enrollment information electronically from an education institution and convert that to our data system without printing any paper and can make the awards without any paper whatsoever.

If the stage 2 procurement goes through, as we hope it will, that will then have a lot to do with the way we organize the regional processing office in St. Louis. The technology will have a lot of bearing on that. We now are having only one hand off, from the educational institution to an award of benefits for education. And we would hope that some day we could do the same thing for compensation and pension.

But currently our workloads are under control. We are meeting or exceeding the goals for fiscal year 1995, and we are below the goals set for 1998 for all C&P end products, except three, and we believe those will be below that in the near future.

Mr. Everett. Mr. Williams.

Mr. Williams. Mr. Chairman, members of the subcommittee, it is a pleasure to be here this morning. Thank you for inviting me.

The Portland regional office instituted its first team about 2\1/2\ years ago. Joe Thompson in our New York office kind of arrived at the same model through a different route, so we both have been in this business a little bit longer than some of the other people.

We completely reorganized in that we merged the adjudication and veterans services divisions last month. Our veterans claims representatives, as we now call them, deal with the full range of duties both of the former adjudicators and the former VBCs. We have reorganized our Administrative and Human Resources divisions so they are now one division. In that process, we have eliminated one division chief.

At every step of the way, especially with adjudication and veterans services, we have made the decision to continue on with the self-directed work teams based on demonstrated improvement. Over the past 2\1/2\ years we have seen substantial improvement in terms of timeliness, production and quality.

Thank you.

Mr. Everett. Thank you. Mr. Thompson.

Mr. Thompson. Thank you, Mr. Chairman. It is a pleasure and honor to be here today.

As Joe mentioned, about 3 years ago, we looked at what we were doing in the regional office, took a hard look at our claims process. We saw about a 25-step process that could involve as many as a dozen employees, three different divisions in the regional office, seven separate chains of command. And probably the most frustrating thing for veterans was that they could not talk to the people handling their claims. We actually had a separate organization for that.

We held focus groups with veterans. We did surveys. We asked them how we could do a better job for them. And while they all stressed the fact we were too slow and that time was important to them, even more important to them was the fact that they often were reduced to a number when dealing with the VA. They felt we did not know much about them when they called. They never spoke to the same person twice, and had to reexplain themselves many times.

We looked at the process for a year, and studied what we would do. We studied--actually used private sector organizations as models: AT&T, IBM, Metropolitan Life. After a year of study, we changed the organization. We reduced from six divisions down to three. We reduced those seven chains of command down to a single chain of command, a self-managed team. Twenty-five steps were reduced down to eight. We had 47 supervisors when we began; reduced that to 28 and expect the number to continue to decline _significantly.

And probably, most importantly, the veteran has one place he or she can go to and speak to someone who is knowledgeable about him or her as an individual. The only analogy I can draw to what we have seen done is trying to rebuild your house while you are still living in it. The plaster dust swirling around sometimes makes you question the effort. But last August we completed the transition to the 16 self-managing teams.

We are learning and growing every day. There have been some mistakes, some setbacks, but it has been wonderfully positive for our employees and, I think, for the veterans that deal with them as well.

Mr. Everett. I have one last question for each of you.

How many hours of processing time per claim do you spend in your organization?

Mr. Maye. Hours of processing time per claim?

Mr. Everett. Yes, Mr. Maye, we will begin with you.

Mr. Maye. The 110s, initial claims, currently run about 122 days from the time we receive the claim until we have made a final decision. Actual hours of processing probably range from 8 to 10 hours per claim. There is a lot of time where we are in search of documents, service medical records, additional evidence to support the individual's claim.

Mr. Everett. Trying to gather all the material in one spot?

Mr. Maye. Yes, sir, we spend a great deal of time in search of information and waiting for information to arrive.

Mr. Everett. Mr. Watson.

Mr. Watson. Mr. Chairman, I would have a similar answer. It really depends on the type of claim, whether or not it is an original compensation claim, or whether or not it is reopened or some other claim.

We are, though, tracking all of them for timeliness, and I have and can furnish you specific data on each individual claim.

Mr. Everett. Thank you. Mr. Ramsey.

Mr. Ramsey. Currently, we are running about 106 days on our original compensation claims. As Mr. Maye stated, it varies. The timeliness that the veteran responds or the time it takes us to get a hospital exam completed or obtain information from a private physician varies from case to case. But in house, we probably do not do more than 8 hours on one claim. That would be max.

Mr. Everett. Mr. Williams.

Mr. Williams. Mr. Chairman, I believe our answers are similar to our colleagues. It takes about 6 to 8 hours actual in-house processing time. As a result of our going to self-directed teams, to give you an idea of what they are capable of, from October of 1994 through March of 1995, we have reduced the processing time for original compensation claims to 140 days from 275 days. We expect further improvement.

As a matter of fact, as a result of the unique configuration in the Portland office, we are now undergoing time motion studies, to see exactly how much in-house time it does take us to process claims. Both Joe Thompson and myself are somewhat unique in that we have two divisions blended together.

Mr. Everett. Thank you. Mr. Thompson.

Mr. Thompson. Mr. Chairman, I don't know how many hours are spent handling the claim. My guess would be, as mentioned, in the range of 6 hours in the regional office. The processing times vary, depending on how long the team has been in operation. Our most mature teams are in the low 100s. Our newest teams are probably around 200 days-plus today. We have found that as the teams mature, they get faster and better at what they are doing.

Mr. Everett. Thank you very much. Mr. Evans.

Mr. Evans. Thank you, Mr. Chairman.

Mr. Watson, before you arrived, I was also singing your praises. We appreciate, as I know Congressman Weller does, the work you and your staff do.

Today, Mr. Chairman, we are really dealing with some of the best regional offices in the country, so we appreciate your all coming across the continent to join us here today.

Are you encouraged to develop and try new initiatives which might improve the processing of veterans' claims? And how do regional offices share information concerning successful initiatives? Could you answer briefly?

Mr. Maye. Yes, we do. We are encouraged to experiment and to share information. As we started the development of teams, one of the first things we did was send people to New York, to Portland, to Muskogee, and to Jackson, MS to look at their operations.

We spent, as the others did, about a year in examining what they were doing, learning from them, before we began actual implementation.

Mr. Evans. Mr. Watson.

Mr. Watson. Likewise, we have sent folks from the Chicago regional offices to the other offices that have been down the road that we are going on. In Chicago, we are following the directions that were given by the Under Secretary for benefits listing specific issues that we within VBA must accomplish.

Within the central area, which is where I am, we have developed a very detailed plan to go after all of those initiatives, and I have mirrored that within the Chicago regional office. Basically, what I have told people within the office is that if I, as a Director, do not achieve the results that we are charged to accomplish, that I should not expect to remain in the Chicago regional office.

So it is really a no compromise kind of situation. We have our goals and we must meet them and we will.

Mr. Evans. Mr. Ramsey.

Mr. Ramsey. We, in St. Louis, are still working at reorganization. We have been studying it. The technology we hope will come on line in the near future, will have a lot to do with the outcome of the organization at St. Louis, because of our involvement with the education program.

Mr. Evans. Mr. Williams.

Mr. Williams. Congressman Evans, the Portland regional office has had a great deal of latitude in trying a number of things, some of which now have been implemented nationwide. The C&P Service granted us authority to experiment with single-signature award authority some time ago. We provided data to them which they used as a basis to export this to the rest of the offices in the country.

We were allowed to engage in a project which we call "Conditional Approvals." That is when a claimant calls in, and maybe has a dependent or has income changes. Our people are able to modify the award over the telephone, having the claimant submit hard copy data within the next 30 days. We tested this for about a year and during that time period we experienced no overpayments.

I feel that we have had a great deal of latitude, and C&P Service and Veterans Assistance Service have been very supportive in our efforts to consolidate the two divisions into one division.

So as far as sharing data, we have hosted many visitors, including some from New York. We visited New York and other offices. As a matter of fact, we are hosting the Western Area Directors' Conference in about 2 weeks, the primary theme of which is to take a look at team concepts to see how we are doing. This will allow the rest of the directors in the Western Area to get a sense of reality of what it takes to go into self-directed work teams. We have had a great deal of Central Office support.

Mr. Thompson. Congressman Evans, we have been given wide latitude in implementing change in New York. A couple of years ago we were selected to be a reinvention lab under the National Performance Review. We were also selected to be a pilot site for the Government Performance and Results Act.

As such, when we first began this process and we met with both the Compensation and Pension Service, and the Veterans Assistance Service, they basically told us we could do what we wanted to do as long as we did not break the law in the process; that they would set the manual aside and allow us to experiment.

I am proud to say that, as a result of that redesign, we were the recipient of the first Hammer Award given out by the Vice President last year, and we have also made great strides in redesigning the system's measures on how we evaluate performance in the regional office. We have incorporated measures that include customer satisfaction, cost for producing work, and measures of employee development. Our next major venture is to look at how we compensate employees, to make that consistent with delivering high-quality performance to veterans.

Mr. Evans. All right.

Mr. Chairman, I will probably submit some other questions for the record for these witnesses.

Thank you all very much for testifying today.

(See p. 87.)

Mr. Everett. Mr. Weller.

Mr. Weller. Well, thank you, Mr. Chairman.

As a new Member of the committee, I will probably be asking some pretty basic questions, and I will probably direct mine particularly to Mr. Watson and Mr. Ramsey, who, of course, serve in the Illinois area.

You have indicated in your testimony that the Central Office has given you quite a bit of latitude in your ability to come up with better ways and quicker ways of processing claims.

I was wondering if you can share with me how you have been developing them, reviewing what has been done in the past, and what procedures that have been followed? Who do you consult with, who do you talk with? Is it an internal group or do you seek outside ideas and help?

Mr. Watson. In 1990, I was with VBA, and then left for a period of about 4 years, then went to VHA and then came back in 1994 as Director of the Chicago regional office. One of the first things I did was have a transitional meeting involving all the key staff so we could look at the issues that affected the Chicago regional office. From that we developed a series of issues then that we started to track. We have continued that process.

I meet regularly with all employees. Matter of fact, I just recently had several all-employee meetings, and the reason for that is to communicate to them directly on the issues that we face.

So in answer to your question, sir, what we do is to use all of the tools that are available to get ideas, to get people involved, and to make sure that everyone understands where we are going and why we must get there.

Mr. Weller. Does that include conversations and interviewing recipients, veterans themselves; asking for their ideas in how the processing can be improved?

Mr. Watson. Yes, sir, it does. Within Veterans Services Division, we have started a survey of veterans who come in and we ask them about the service we provide. Our Vocational Rehabilitation Division recently conducted focus group surveys to see how veterans view the service and what they would like to see changed.

Mr. Weller. What about outside organizations? For example, I know 2 or 3 years ago, when I refinanced my home, I was able to get a decision within a matter of days or even less by going to my local bank and going through the processing of the application that they have.

I was wondering, have you looked to the private sector for ideas on how you can improve and expedite the processing of claims?

Mr. Watson. Well, absolutely. If you look at our Loan Guaranty Division, the practices that they currently employ really are geared to mirror the practices within the mortgage banking community. Now, for example, we currently have under way a test to look at how we service loans, and the issue there is to see whether or not, if we were to service from a central location, that would be better in terms of how veterans are helped.

So in answer to your question, yes, we are very aware of private practices and, yes, we want, to the extent that we can and should, mirror those practices.

Mr. Weller. Speaking of veterans' housing, what is the average turnaround time in an application today for a veteran coming in seeking assistance through the Housing program?

Mr. Watson. Those veterans who walk in and want Certificate of Eligibility, if we have the information readily available, are serviced on the spot. They are able to walk away with the information that they want.

Mr. Weller. Same-day service?

Mr. Watson. Yes, sir.

Mr. Weller. Thank you.

Okay, Mr. Chairman, that is all.

Thank you.

Mr. Everett. Thank you. Mr. Montgomery.

Mr. Montgomery. Thank you also, Mr. Chairman.

I would like to welcome this panel. I know some of you. Mr. Maye was in Mississippi for several years, and I welcome the other members of the panel.

Mr. Ramsey mentioned about the education benefits, the Montgomery GI Bill that are processed in St. Louis. I guess I worry about if you need better equipment to do the job of processing these educational benefits, it would really make it easy on members here, because when these young men and women do not get their checks, they get in touch with us, and I do not get that many complaints, so I want to commend you. It must be working pretty well.

I do want to be careful that you do not take people out of that Educational Department and put them in other areas, Compensation and Pension, to speed that up. I guess that is a balancing act that needs to be done.

Have you had to shift any people out of Education into the Compensation and Pension Offices?

Mr. Ramsey. No, sir, we have not, in St. Louis. As a matter of fact, we have probably added more to Education than to any other function. Our Adjudication Division now is over 200 employees, mainly because of the increase in Education.

We do not intend to shift resources from Education to C&P. We will use some of our C&P resources and other resources to assist us this fall with the fall enrollment. The equipment is the big _question.

We have an imaging system that was initially bought to run a test for 2 to 3 years, and it was to be reviewed. It has been. It is a success, and we have been trying for 3 years to buy the replacement equipment for this outdated imaging system.

We have had oversights from, I think, everyone in the world to question the authority and need for the equipment that is desperately needed for the Chapter 30 part of the Montgomery GI Bill.

Mr. Montgomery. Is the money there?

Mr. Ramsey. Yes, sir, it has been there for 3 years.

Mr. Montgomery. What is the problem, again?

Mr. Ramsey. Well, we have the General Services Administration, Congressional oversight committees, and we have our own supply people, and our own attorneys who seem to be more concerned about delaying than in expediting the purchase of this equipment so that we can get veterans paid timely.

Mr. Montgomery. Mr. Chairman, this bill belongs--and Lane Evans also, the GI Bill, he was coauthor and made the motion that gave it its name, and I appreciate it--but certainly if the money is there, we ought to be able to move it along and to process quicker.

I have introduced a bill, H.R. 1611, that would improve the quality of housing for our active forces. Now, this idea is not original with me. Mr. Vogel saw in the paper where the military was getting ready to spend several billion dollars of building housing on our bases for better quality of life for our military that Secretary Perry is pushing. He made the suggestion, and we followed up on it.

And we have a chance. The bill went to the Armed Services Committee. The Defense Department, for the first 3 years, would pick up part of the interest rates when an active-duty service person at Fort Benning, GA, that is an E-4, could buy a piece of property, a home off the base, and the Defense Department, the first 3 years, would pick up part of that interest. We think it has a lot of merit to it.

The reason why I am telling you, it would probably come under some of your areas of work. It would save the taxpayers a lot of money if you did not have to build all this housing on bases and you could get a young service person, married, with a family, in a home. And when that individual was shifted off to Korea, to Europe, he could keep his family in the home that he would own, financed by the Veterans Department. He could rent it or he or she could even sell it, I assume.

But that bill is introduced. I think it will come out of the House Armed Services Committee, and it will help alleviate some of the problems on housing on these bases.

So I just wanted to let you know, as well as you, Mr. Chairman, and other members of the committee, that that is another option for young military persons to own their homes, and it would go through the Veterans Department, who would finance them. And Mr. Vogel gave us that idea and I wanted to pass it on.

Mr. Everett. Thank you very much, Mr. Montgomery.

Mr. Barr.

Mr. Barr. Thank you, Mr. Chairman.

In response to one of the questions that the Chairman posed about the number of days that it takes on claims, there is almost a 40 percent difference in some of the offices, ranging from 140 days to just over 100 days. We have represented here very much a cross-section of the country, stretching from coast to coast.

Do you all have any ideas you could share with us as to why there is such a difference in the time that it takes?

Mr. Thompson. I would suggest----

Mr. Barr. There may be some ideas here.

Mr. Thompson. The number of original compensation claims are relatively low in comparison with the total amount of work they do. So the numbers could move fairly dramatically in a short period of time.

It is contingent on a few things: How many folks you have that are trained in doing disability evaluation--what we call rating specialists. If you are just short a little bit, it could have a dramatic impact on that. Also, your success with gathering information, particularly service medical records can dramatically change.

Some of these claims can take well over a year in an attempt to secure records, as mentioned. The amount of time in handling the claim is just a few hours in the regional office. Most of the time is spent gathering evidence. Most of the difficulty that we have is in gathering evidence.

I would suggest that the variances, at least in New York, depend on the amount of experience of the people handling it; sometimes the difficulty of the claims themselves.

Mr. Barr. Would any of the rest of the gentlemen like to respond to that? It seems like there is a tremendous difference in the amount of time that we are talking about from one area of the country to the other.

Mr. Watson. One of the things we are doing within the central area is to look at workload within the various regional offices. At our last meeting we discussed setting a ceiling, where if that number is hit, we would automatically look at transferring cases within the area to get the work done.

And again, as Mr. Thompson was saying, there are various reasons within the regional offices why the caseload is the way that it is. It depends on the level of employees and also the level of training.

Mr. Barr. I am not at all trying to be critical. Because I know you are all operating under some tremendous monetary constraints and a lot of the bureaucracy and getting lawyers involved, and so forth, but is the Department itself engaged in any sort of study to see why we have such discrepancies?

Mr. Maye. Yes, sir. Probably a question better answered by Mr. Vogel; but several years ago the Central Office started a very concentrated effort working with DOD to make it easier and quicker to access service medical records. That is one of the primary problems we face, gathering service medical records to support the individual's claims.

I do know that that effort is still ongoing, and it is anticipated that the process should improve.

Mr. Barr. So you are saying there may be a problem in getting the information through DOD?

Mr. Maye. Yes, sir. It has been an historically difficult situation for us to obtain service medical records.

We have practiced a number of other options. When I was in California, working with a couple of the other regional offices, we started what is now known as the TAP and the DTAP programs. We were asking that individuals who were coming for these out-briefings to bring copies of their medical records, and with the assistance of veterans' organizations who were also there, we were making copies of their medical records so they would have duplicates. Then when they filed actions, they would come with the necessary evidence. And in those cases, the processing time was greatly reduced.

Mr. Ramsey. Starting in 1992, the VA established the Service Medical Records Center in St. Louis, and the Army, at that point, began shipping service medical records to St. Louis. Those are available to be shipped immediately after a veteran goes into a regional office and files a claim. The records are shipped within a couple of days to that regional office.

In fact, prior to that, it would be 6 to 8 months from the time the serviceman was separated, before his records were available at the Army Reserve components command for us to access. That is gradually going to help in our obtaining service medical records on subsequent claims. All branches of service now are sending their service medical records to the records center in St. Louis.

Mr. Barr. Is there anything specifically or explicitly that we can do here in helping that process? Is there additional funding; is there some restructuring somewhere along the line?

Mr. Watson. In the military we had two missions, one was to get the job done, whatever that was and the second was to take care of your troops. I am pleased to see DOD involved with VA to have exams that are ready for rating done prior to the person being separated.

I think that, plus the service medical records issue Mr. Ramsey talked about, will greatly speed our ability to take care of those original compensation claims.

Mr. Barr. I know the red light is on, Mr. Chairman, but if any of you all have additional material that can help me or certainly help the committee, I would appreciate receiving it in writing.

Thank you, Mr. Chairman.

Mr. Everett. Certainly. Mr. Kennedy.

Mr. Kennedy. Thank you, very much, Mr. Chairman.

I appreciate the hearing you are having this morning.

I was just talking to Mr. Montgomery about the nature of the claims, the former Chairman was saying that in years passed, these claims have taken up to a year or more to process.

I was just wondering if you could give us just a kind of a description of what kinds of claims would come in? When I see, as I understand, you know, there are literally hundreds of thousands of these claims that come in.

Can you give us a little description of the types of claims that you are seeing made at this point, that you are having to make decisions on?

Mr. Williams. Well, one thing that has happened over the past few years is that, as a result of military downsizing and the success of TAP, DTAP, some of the decisions by the Court of Veterans Appeals, and due process, the cases are becoming more complex in terms of the number of issues initially that have to be decided and the amount of discussion or verbiage in the individual rating decisions and adjudication decisions.

For example, 20 years ago, a rating specialist----

Mr. Kennedy. Can you pull the mike a little closer?

Mr. Williams. Is that better?

Mr. Kennedy. Even closer would be better. Just pull it right up. It won't bite.

Mr. Williams. How is that?

Mr. Kennedy. Thank you.

Mr. Williams. A good rating specialist could rate about 25 cases a day. Now, some of our best rating specialists, can rate between 15 and 16 a day, primarily because of the amount of discussion and verbiage and the amount of information that has to be transmitted to the claimant. I am not saying that is bad, it just takes more resources.

Mr. Kennedy. Is there any difference in terms of the kinds of injuries, the income levels of the people that are applying? Is there any sort of demographic--sort of description of differences that might take place between what is in existence today versus 10 or 20 years ago?

Mr. Williams. Twenty years ago, our office was dealing primarily with combat-related injuries, and today we are seeing, at least in our office, fewer combat-related injuries, but we are also seeing more service--or at least more claims for service connection in terms of the numbers and types of injuries. The income limits and the decisions regarding income are pretty much the same. We have ceilings that above which qualification for pension is denied and below which the person is qualified.

Mr. Kennedy. Let me just ask this; I am trying to talk and reason in plain English here about whether or not you are seeing people that are coming in with nonservice-connected disabilities; that might have a back injury or an injury that they might feel was related to some kind of injury that they might have sustained in Vietnam or Korea, or something like that, many, many years ago, that has not acted up in a long time. Are these poor veterans that are coming in with these kinds of claims? I am trying to understand what is going on out there.

Mr. Williams. We certainly see those kinds of claims.

Mr. Kennedy. But is that the average? I am trying to find out what you are dealing with.

Mr. Williams. The average claim? The average initial claim now in our office is from a veteran getting out of the service as a result of downsizing, with anywhere from 8 to 10 years of service. Veterans are coming out looking for a new career and wanting to have service connection established for injuries that occurred while they were in service.

We see indigent or low-income veterans coming in for pension. Some from World War II but more and more from Vietnam.

We see some of the World War II and Korea folks coming back in for reevaluation of their service-connected disabilities. Some are initial service connection; where as you said, they feel they have had injuries or diseases that occurred while they were in service.

We are continuing to get PTSD and Agent Orange claims, and, most recently, we are getting Persian Gulf claims. I don't think the mix----

Mr. Kennedy. Are you suggesting that because of all of these--the length of--you talked about verbosity of something. Is there just a greater amount of sophistication because people are getting some kind of legal representation; is that what you are suggesting?

Mr. Williams. I think the veterans are more sophisticated and more demanding, as they should be. I think they are better informed than when I got out of the service. I think the programs we have instituted, TAP/DTAP, are doing an excellent job. The claimants are much more aware of what their benefits are and that they ought to apply for benefits.

Mr. Kennedy. Do any of the rest of you have any comments you want to make about the characteristic of the claims?

Mr. Maye. I think Mr. Williams pretty much covered it. For people leaving the military now, the initial claims are much more complex. Basically, we used to see two, three, four issues in a claim. Now, I think the average is seven and eight issues, and once in a great while you will see as many as 100 issues where a claimant may be requesting a review. Those are large and complex claims and take quite a while to process.

For the pension claims, the economy has a tremendous impact on what you see. In some States, it is less of an issue than in others. But any State that is going through economic difficulty, you will automatically see increases in applicants for pension. In States that have no other economic support system for their citizens, the number of applicants even higher.

Mr. Kennedy. Well, I guess, you know, I would point to the--it would be interesting to see whether or not we were fulfilling the needs more clearly when the process might have been a little simpler than once we have had sort of the more--it sounds to me as though we are doing more work per claimant than has occurred in the past.

I wonder whether or not we could not look to the Department to see whether or not there are some suggestions you might have towards reducing not only your paperwork and the difficulties that veterans are having and maybe try to streamline this process a little bit?

If you have some ideas along those lines, I would be very interested in hearing them.

If the chairman wouldn't mind just an additional----

Mr. Everett. Please proceed.

Mr. Kennedy (continuing). 30 seconds here.

I am concerned about the fact that, as I understand, out of 1,900 cases, and with regard to Persian Gulf, only 97 veterans have actually been processed. It just indicates to me that there are some problems here in terms of how these claims are going through the system.

I would be very interested in hearing from you, if you have some specific notions, as to how--in some of these cases, I would suggest there may be a way to cut down on your paperwork, process claims a heck of a lot faster and more cleanly, and probably look after veterans' true needs in a more efficient and effective manner; would you agree with that?

Mr. Williams. Yes, I would agree with it. I think the Department is taking some steps. Most recently, we have been informed that we have the option of requesting certified copies or photocopies of marital and dependency documentation.

I think this will help us put less of a burden on the claimant, and we can process claims faster. We will not have to send out letters back and forth to the claimant requesting essentially the same documentation over and over again.

Mr. Kennedy. Thank you very much.

Thank you, Mr. Chairman.

Mr. Everett. Gentleman from Ohio.

Mr. Ney. Thank you, Mr. Chairman.

I want to ask a question about the 48 or 49 percent of the cases that were sent back, were remanded back, by the BVA, as a result of erroneous decisions. More badly prepared cases.

I again would echo what my colleague, Mr. Barr, said. This is difficult in the amount of cases that come in. But in three different sheets of testimony, it just says that about 49 percent were remanded back due to erroneous decisions or incomplete work.

Do you want to comment on that?

Mr. Watson. Regarding the cases that we sent to the Board of Veterans' Appeals, I had the good fortune, when I was in Indiana, to take a course with Mr. Demming, and he talked about quality issues, and so forth. I think, and this is my very personal opinion, that we should have been able to see when judicial review was passed, the impact that it would have had on claims processing.

And by that I mean that before that there was no body above DVA who looked at cases in a very strict legal kind of way. And that review, I think, has changed the way that VBA looks at cases and has also impacted the way that we in the regional offices must prepare those cases.

Mr. Ney. So, in other words, it has driven backwards in a sense; you had very little ability to anticipate would be expected until it got to that point?

Mr. Watson. Yes, sir.

Mr. Ney. Did that make sense, what I said?

Mr. Watson. I think that is the case. Because the decisions by the Court of Veterans Appeal does set precedent and we then in the field must react to that.

Additionally, what has happened is that in reacting to that, we--and it goes to one of the questions that was asked earlier, I think by Mr. Kennedy--we now, in the field, must prepare cases that are much more legalistic. We must go out and get all of the evidence before we can make a decision.

Mr. Ney. Mr. Chairman, that would bring me to another _question.

Once you know how the system has changed and how you have to now prepare, and in possibly a different way, how do you bring that back and make that transcend across all the offices? In other words, to tell the people preparing these cases this is what you now have to do differently? Has that part of the process been implemented?

Mr. Thompson. Mr. Congressman, the VA headquarters holds monthly conference calls with all the regional offices, and we assemble all of the people involved in the disability evaluations as well as veteran service organization members in a room. Right now our biggest problem is getting a room large enough to hold all the folks for the conference calls.

To show you how it is, not that it has just changed, but it continues to change, we had a rating specialist leave 6 months ago and come back to the regional office. She said her knowledge had become dated in that 6 months hiatus significantly, that things had moved that much, so it continues to evolve and getting the information out is a critical issue for VA, and it continues to be, and I would imagine it will continue to be for some time.

Mr. Ney. The other question I had just centers around--I think Mr. Montgomery mentioned automation. How satisfied are you that with the way we use this system and the information we collect; are we up on the information highway?

Mr. Thompson. We are on the information dirt road right now I think. Our system is relatively old, the main system for processing claims, the target system. We are undergoing a modernization effort that will take some time.

VA began in the computer business in 1959 and has built on that for a number of years. It probably would be easier to build a new one than what we really have to do, which is to change that whole old system, millions of lines of code at the same time paying claims to veterans and not letting any of that slip. So we are in the middle of that modernization effort now in the regional offices. We have started to see pieces of it coming into place. Our stage I equipment, giving us local area networks and PCs, is just the beginning of that process.

Mr. Ney. Because, and don't worry, we just got on line January the 4th for the first time in the history of Congress, the Internet, so we have been on a dirt road, too, and still are in a certain sense. I assume it would help the backlog greatly; the ability to correct if this came up to super automation.

Mr. Thompson. Absolutely.

Mr. Ney. Is there any time frame on that? Has anybody told you when that can be done?

Mr. Thompson. Well, I think probably the entire system is a number of years down the road, the conversion, but I think significant pieces of it will be delivered in the next few years, enough to make a difference in the regional office to make it easier to do the job, expert systems and better letters packages and things just to help us gather evidence and information. We have started to see that already, and I think we will continue to do that.

Mr. Ney. In looking through some of the testimonies I did note a comment that someone made that we may be advancing too fast, that we are having difficulty dealing with automation. That is probably true, we are having difficulty, but I believe very strongly that we have got to move rapidly ahead. It may be painful and we will make mistakes, but if we do not, the people who are going to suffer most are going to be the veterans, and I think we have just got to press on.

Mr. Everett. Thank you. I want to thank this panel for appearing here today and traveling to visit with us and sharing your thoughts with us. Thank you very much.

Mr. Everett. I now call the next panel composed of representatives of several service organizations. The panel is composed of Mr. Brian Campbell, Vietnam Veterans of America; Mr. Bob Manhan, Veterans of Foreign Wars; and Mr. Rick Surratt of the Disabled American Veterans.

Good morning. To allow time for your questions, I would appreciate it if you could limit your opening statements to three or four specific suggestions on how to improve VBA operations. Your full statement will be placed in the record, of course. Gentlemen, you will please proceed. We will start with you, Mr. Campbell.

STATEMENTS OF BRIAN CAMPBELL, CHAIR, VETERANS ADVOCACY COMMITTEE, VIETNAM VETERANS OF AMERICA; BOB MANHAN, ASSISTANT DIRECTOR, LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS; RICK SURRATT, ASSOCIATE NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS

STATEMENT OF BRIAN CAMPBELL

Mr. Campbell. Good morning, Mr. Chairman, members of the subcommittee. Vietnam Veterans of America appreciates the opportunity to discuss VA's processing of compensation claims in general and Gulf War claims in particular. The numbers are at least moving in the right direction. It is not very quickly. This is due in large part to three factors. One, heavy use of overtime has allowed BVA staff to grind away at the caseload, but at a personal cost that cannot be maintained long enough to solve the problem; two, the recommendations of the BVA Select Panel on Productivity Improvement which have been implemented to date have enabled the board to work a bit more effectively; three, the complementary recommendations of the Blue Ribbon Panel on Claims Processing are also being implemented and VVA expects them to help with the source of the backlog, the beleaguered ROs.

We are glad to see the subcommittee monitor the effectiveness of compensation benefits for Persian Gulf War veterans. It is still early for a thorough evaluation, though it is clear that VA's outreach efforts are succeeding. Some Gulf War veterans with mysterious health problems face the legendary catch-22. hey applied for compensation, were turned down because they had undiagnosed ailments. Now these veterans, still disabled by these same health problems, have received diagnosis for chronic fatigue syndrome or some other equally hard to document condition.

Upon refiling their claims, they are turned down again because their ailments are no longer undiagnosed illnesses that became manifest during or after the Gulf War and no absolute proof exists even now as to what caused the problems.

In my work as a benefits representative, I have had only 2 of 15 Gulf War syndrome cases where benefits were granted. The clear intent of Congress was to provide compensation for these veterans, disabled by something that has a strong statistical association with service in the Gulf War. Congress worked long and hard with representatives of VSOs to craft a bill that would allow these veterans to receive the same kind of financial help that any disabled veteran is entitled to receive. It was also VA Secretary Brown's clear intent to provide that aid. We need to know why VA is having a problem with this. The problem, whatever it is, must be corrected immediately if VBA's credibility is to escape damage.

The Veterans Benefits Improvements Act of 1994 made several improvements in the process of claims with adjudication. Title II was intended to stop the flow of experienced board members leaving for social security administrative law judge positions by restoring historical pay equity and eliminating arbitrary term limits for reappointment without any clear standard. Since the enactment of this law, we understand that no board members have left the board to become ALJs.

VVA maintains its support for Title II. Reports from VVA service representatives in the field have been extremely positive regarding the VA's acceptance of uncertified documents. This helps to speed up the claims development time, especially for claimants not represented by a service representative or an organization.

VBA is not up to speed, however, in the new mandate allowing medical exams by private physicians without the need for duplicate examinations by VA physicians. The idea behind this position was to reduce the caseload for VA doctors, while allowing veterans to use private physicians familiar with their medical records. A usable report from a private physician is not a note that says Johnny isn't feeling well, please give him some money. It must spell out in the same kind of detail required of a VA doctor the symptoms, the diagnosis, and the extent of the disability. VA ratings specialists must accept such reports as valid when they meet the test of completeness or this provision was enacted for nothing.

So far we see little sign of such acceptance. Where the government's doctor and a private physician disagree, the report of the private physician must not be discounted. It is a second medical opinion which would be valid standing alone if it were uncontroverted. The ratings specialist must not be permitted to seize upon a report of an overworked government doctor to deny or minimize a valid claim from a veteran disabled in the service of its Nation.

The expedited remands or prescreening of claims authorized by Public Law 103-446 show great promise. We believe that the VA is making important improvements in its benefits services to the whole range of men and women who are today disabled for their service to their country. There is clearly a great deal more to be done. VVA applauds the progress that has been made and stands ready to assist in any way possible with finding solutions to the remaining problems.

Mr. Chairman, this concludes our testimony.

[The prepared statement of Mr. Campbell appears on p. 40.]

Mr. Everett. Thank you very much.

Please proceed, Mr. Manhan.

STATEMENT OF BOB MANHAN

Mr. Manhan. Thank you, Mr. Chairman. It is my pleasure to represent the Veterans of Foreign Wars this morning.

First off, we recognize that VBA is big business. They take care of approximately 2,200,000 customers or veterans every year, and they disperse about $18.2 billion. We would like to think that is done in a timely andequitable manner. We have heard a lot about timeliness. We notice that almost a year ago it took about 7 months for the VBA to process a case. At the end of March this year, less than 60 days ago, it has dropped down to 5 months, and Secretary of the Veterans' Affairs, Mr. Jesse Brown, testified 2 weeks ago before the Senate Veterans' Affairs Committee that his goal is to bring original claim time down to 3 months by 1998. VFW certainly recognizesthat this is a trend in the right direction.

On the other hand, we have the issue of quality. Mr. Ney has already touched on the fact that the trend on remanded or returned cases to VBA is going up. Last year, fiscal year 1994, it is a matter of record, 48 percent of all cases were returned for various reasons. The first six months of this fiscal year, 49 percent has been returned. That does represent a problem area.

You have asked us to comment on a couple of portions of Public Law 103-446, the long title being "Veterans' Benefits Improvement Act of 1994." Title I isthe Persian Gulf veterans portion. We agree with everything that has been said. VFW is on record when that was a bill to support ensuring the Persian Gulf veterans got expedited treatment and that they would be compensated for injuries or illnesses that were not yet medically documented.

The other thing about allowing veterans to provide written documentation for marital status speeds up administration, and we were very satisfied with that, along with, as my colleague has already stated, to allow veterans to bring in a decent piece of medical documentation from a private physician discussing his illnesses or disabilities and as far as I know VBA is accepting that.

Title III deals with adjudication improvements. There was nothing that I could add today after listening to the panel that preceded me. You had five expert directors of various regional offices tell you what they are doing. VFW is satisfied that about a year from now there will be reports submitted to this committee on all the improvements that they have in fact made.

The last title is IV, and it deals with the Veterans' Claims Adjudication Commission. Again, that body will owe you a report next year. In the VFW's considered opinion, that is the key to the entire claims processing problem because that commission will address the Board of Veterans' Appeals and the Court of Veterans Appeals. These two agencies are the other two sides of the entire triangle that makes up the claims adjudication process system.

In closing, I would like you to consider four actions that the VFW would like to have in the way of expanding or improving upon compensation claims for the entire veteran population. The first is to ensure that the Internal Revenue Service does not include the compensation monies that veterans get as part of the veteran's gross income. We know that Mr. Montgomery has already introduced bill H.R. 972 to preclude that from happening.

The second action that we would like you to consider is to repeal the 1-year limitation on payments of accrued benefits that a veteran would have received had he not died while his claim was being processed. That is significant, and right now that would require a change to section 5121 of Title 38.

Our third improvement would be to correct the inequity that presently exists in the requirement that military retirement pay be reduced by an equal amount to any disability compensation that the military retiree may receive. Congressman Bilirakis of this committee has introduced two bills to address this long-standing problem. One is H.R. 65, the other one is H.R. 303. Bill 65is addressed to the House National Security Committee, and Bill 303 is addressed to the House Veterans' Affairs Committee.

Last would be your consideration to remove the 3-year time limitation for amending Federal income tax returns when a veteran finally receives his disability compensation that in time goes back more than 3 years. Again, Congressman Montgomery has introduced bill H.R. 973 as early as February 16 of this year to recognize and correct this problem.

Mr. Chairman, this concludes the overview of our statement today. Thank you.

[The prepared statement of Mr. Manhan appears on p. 45.]

Mr. Everett. Thank you.

Mr. Surratt.

STATEMENT OF RICK SURRATT

Mr. Surratt. Good morning, Mr. Chairman, and members of the subcommittee. You have the DAV's written statement, and in the interest of time I am not going to summarize it here, I would just say that the DAV is concerned about the quality of decisions on compensation claims. We believe the VA needs to focus more on this area.

As we and others have said before, VA should strive to get it right the first time. Timeliness and quality are not mutually exclusive. Indeed, they are interdependent. In our written remarks we have cited some troubling statistics which demonstrate an unacceptable error rate in regional office decisions. I believe, as my colleague mentioned here, that is running about 50 percent on the remands and fairly high on the reversals also.

We are also concerned about the extremely low allowance rate of claims for service connection of undiagnosed illnesses of Persian Gulf veterans. Last year Congress, VA, and the veterans community gave this issue top priority because of the urgent need to get these veterans compensated, yet VA has only allowed a little over a hundred of these cases. One reason for a large portion of the denials is the 2-year limitation on when the disability must be manifested. We urge that this be removed, and we urge that VA compensation and pension service take all necessary steps to ensure that these cases are being properly decided, taking into account the difficult nature of the issue that they are presented with there.

That is all I have. I would be happy to answer any questions you may have.

[The prepared statement of Mr. Surratt appears on p. 48.]

Mr. Everett. Thank you very much.

I have a question for each of you, if you don't mind answering it. The VSOs have put a lot of effort into assisting veterans with their claims. Do you know how much each of your organizations spend or devote to paying for service officers who assist veterans with their claims?

Mr. Campbell. Our program, Mr. Chairman, is just starting to get off the ground for Vietnam Veterans of America, but our budgetary process right now for just the VSO program is a little over a half million dollars.

Mr. Manhan. Mr. Chairman, I have no figures for you from the VFW, but I will have the answer, and I will send it over immediately.

Mr. Everett. Thank you.

(See p. 133.)

Mr. Surratt. Mr. Chairman, I don't have the exact numbers. Of course, the DAV is a service organization, that is our primary goal. We have service officers in nearly all the regional offices, I believe. We commit a great deal of resources to that effort. My guess is somewhere in the neighborhood of $40 or $50 million a year for providing services to veterans.

Mr. Everett. Should VA make more space available for your service officers at the Benefit Training Academy?

Mr. Surratt. More space available for what, Mr. Chairman?

Mr. Everett. More space available at the Benefit Training Academy in Baltimore?

Mr. Surratt. The Benefit Training Academy.

Mr. Everett. In Baltimore.

Mr. Surratt. I am not sure we are having any problems in that area. Again, I would be happy to submit a supplemental statement for the record.

Mr. Manhan. Mr. Chairman, the VFW also is unaware of having any problems with that, but I will provide an answer from the people who do our claims work.

Mr. Campbell. Mr. Chairman, VVA has sent people to the training there, and I think it is an excellent idea. Our organization feels that it is good training for our people who are out in the field to learn from the Veterans' Administration or from the Department of Veterans Affairs, excuse me.

Mr. Everett. Thank you. That is all of my questions. Mr. Barr?

Mr. Barr. Thank you, Mr. Chairman.

As you all were testifying I was reviewing the written material, and I appreciate you all submitting that. I found the legislative recommendations particularly informative, and I have just written some notes for our legislative staff to see how we can assist in several of those that I think are very, very important.

The one thing, and you all have already covered this and we are going to go back and study this, is just the tremendous number of errors that seem to be prevalent, and it seems to be increasing. That is a real concern to me. We heard from the previous panel, some of their reasons why in response to some questions that my colleague from Ohio, Mr. Ney, mentioned, but that is something that really is a concern to me. As we are trying to streamline government and make it more efficient, it is going to present some real problems if we keep seeing this sort of trend continue. So this is very valuable material, and I appreciate you all bringing some specific information to our attention because I intend to look into that, and I know this subcommittee will. Thank you.

Thank you, Mr. Chairman.

Mr. Everett. Thank you. I will recognize Mr. Ryan for a _question.

Mr. Ryan. Gentlemen, I don't know if you have had a chance yet to analyze the budget resolutions that have been reported in both Houses. Our analysis suggests that funding for the Department of Veterans Affairs, for its discretionary programs, will be either a freeze at the 1995 level or some decrement from that. That is through the year 2002. There will not be anyadditional funding for the Veterans Benefits Administration. There won't be funding for pay raises. It is my understanding there just won't be any additional funding.

Could you just talk for a minute about what impact you think that would have on timeliness and quality in VBA decision _making?

Mr. Manhan. Thank you, Mr. Ryan. I will speak for the VFW. I think it will have an extremely adverse impact on VBA. In fact, I don't understand how they will be able to do their job. Right now the compensation, the money that is disbursed is mandatory, as you and I know, that is mandatory spending, but the monies for VBA's employees are discretionary, and the VFW has long been on record to have the employment money for VBA also be mandated because if you do not provide the people to perform the job, you are doing almost nothing twice. In summary, the VFW is very concerned about that, and we would like to think that this committee, along with the help of all the veterans service organizations, would try to ensure that any reduction in either mandatory or discretionary monies does not happen.

Mr. Surratt. For the DAV, I would say probably the effect of that is obvious. The VA is struggling with the resources that it has now. It is using those resources effectively; we don't see much fat there. This just appears to be a recipe for disaster. That would be 7 years on the Senate budget that they would go without any increased funding. You have cost-of-living raises for employees, you have need to upgrade your physical plants, just all kinds of things coming into play here that would be frozen, and I don't see how that budget is compatible with the VA's mission.

Mr. Campbell. On behalf of VVA, I would like to say that our organization would be against any attempt to try to freeze any type of salaries or monies. The salaries would affect the morale of the agency, which the trickle down effect would affect the veterans who are applying and the wives and children and widows. That would not be fair.

Under Secretary Kizer and Under Secretary Vogel have come up with new and good ideas which are going to help, considering years past, and I think if we strap the FTEEs, especially with the rating specialists and adjudication and under VHA's side, I think what will happen there is again veterans are really going to suffer.

Mr. Ryan. Thank you, Mr. Chairman.

Mr. Everett. As you heard the bell go off, we have got a situation where we are going to have a vote in probably about 10 minutes. It may be followed by a 5-minute vote, but before we leave, Mr. Surratt, let me ask you, considering that all the claims decisions appealed to the Board of Veterans' Appeals represent only about 1 percent of the total claims processed by VA, can the remand and reversal rate by the Board of Veterans' Appeals be deemed representative of the quality of VA claims adjudication overall?

Mr. Surratt. I don't believe we can confidently say that the error rate in those decisions not appealed is necessarily the same as the error rate in the decisions reviewed by the Board of Veterans' Appeals. On the other hand, neither can we conveniently assume that the cases not appealed are error free as a way to trivialize this large error rate we see at the Board of Veterans' _Appeals.

VA's laws and regulations are fairly complex. I don't believe many veterans understand or are familiar with these laws and regulations, and in my experience not many veterans familiarize themselves with the evidence in their case. What that means is that they really don't have much of an idea of the legal merits of their claim. They may have a feeling that they are entitled to more or something like that. So, just like some veterans appeal when they shouldn't, I think we can assume that some veterans don't appeal when they should, and the bottom line is, again, while it may not, the error rate in those appeal cases, may not correlate exactly, I think what we see at the board is certainly representative of a larger problem.

Mr. Everett. Thank you. Let me ask this quick question for all of you. Do your organizations agree with the VA's goal of 106 days for completion of a claim?

Mr. Manhan. VFW notes that it is moving in the right direction, and we remember several years in the past, Mr. Chairman, we thought 120 days was reasonable or good. In summary, yes, provided that once that decision is made, it is a good decision.

We are concerned right now that perhaps in order to meet timeliness in some areas the VBA is cranking out slipshod work--that is a strong word--not a completely developed case is better, and therefore what good does it do to process a case in 102 days or 98 days if it is going to come back later on because it was not completely documented and a wrong decision was made? The only way you know it was a wrong decision, is if it is subsequently approved at the Board of Veterans' Appeals. The challenge is to balance timeliness with quality of initial decisions made.

Mr. Everett. Any other comments?

Mr. Surratt. I believe in a survey, customer service survey the VA did, veterans thought that 7 to 9 weeks was an adequate time in which, the ideal time, to respond, but I agree with the VFW that certainly we have to make sure that there is adequate time to get quality first, because if you don't do that, these cases just keep going through the process over and over again, and the effect of that is to overload the system, to delay the decision in that one claim and all other claims as well.

Mr. Campbell. Vietnam Veterans of America also agrees that the VA is on the right track; we may not necessarily agree with the 106 days. Again, you want quality, not quantity.

Mr. Everett. Thank you, gentlemen. I appreciate your testimony. It is always, as you know, good to hear from you.

Mr. Everett. Our next panel is also composed of veterans service organizations, Mr. Phil Wilkerson, representing The American Legion; Mr. Larry Rhea, Non Commissioned Officers Association; and Mr. Russell Mank, from the Paralyzed Veterans of America.

Gentlemen, I would ask you to proceed in the same manner as the last. I will break and let you relax at this point. Hopefully, I will be back in the next 10 or 15 minutes and we will hear your testimony.

[Brief Recess.]

Mr. Everett. Ladies and gentlemen, I will point out that the House is now operating under the 5-minute rule. I hope we are not interrupted quite as often but there is a possibility that we might be, and I will ask the panel to proceed.

Mr. Mank, we will start with you, if you don't mind.

STATEMENTS OF RUSSELL MANK, NATIONAL LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA; LARRY RHEA, DEPUTY LEGISLATIVE DIRECTOR, NON COMMISSIONED OFFICERS ASSOCIATION; PHIL WILKERSON, DEPUTY LEGISLATIVE DIRECTOR, THE AMERICAN LEGION

STATEMENT OF RUSSELL MANK

Mr. Mank. Mr. Chairman, on behalf of the Paralyzed Veterans of America, I appreciate the opportunity to testify this morning.

On May 24, 1993, six veterans' service organizations submitted a 10-page paper to this subcommittee, very explicitly suggesting ways that we could move forward in decreasing the numbers of days that it would take to process an original claim. I think we made some progress, but that was 2 years ago, and many of the suggestions that we made at that point are still relevant today.

PVA would like to commend Secretary Brown and the Veterans' Benefit Administration for their work in decreasing the average time that it takes to process an original claim from 213 days to 166, which is the number of days that the Secretary indicated to Senator Mikulski 2 weeks ago that it was still taking. I did not hear that number morning. Everybody on panel one said their average was 166 days, so other VAROs are taking several hundred days to process claims.

What is a proper number? We don't know what a proper number is, but 166 days are excessive.

PVA is playing a role with Mr. S.W. Melidosian, the Chairman of the Veterans' Claims Adjudication Commission, that Public Law 103-446 addresses, and I would like to read a couple of paragraphs from the letter we submitted to that commission.

In our view--we are talking about the claims processing--we said the VARO adjudication process is fundamentally flawed. An adequate, written explanation and justification for denial of a claim are not required until after the claim has been denied, and a notice of disagreement filed by the claimant. Such a process facilitates decisions that are based on incomplete information or poorly developed cases, especially in a system driven by end products.

Also, extrapolating from what a leader of our organization sent to the commission and said, "Two further facts compound this fundamental problem with the VARO. First, initial case development is done by those with the least training and experience. Second, there is no reward for doing case development work properly, and no accountability for doing case development work improperly. Accordingly, we feel the focus on the commission's efforts should be on changing and improving the initial adjudication process employed by the VAROs. The process needs to reward getting it done correctly the first time and penalizing it when one gets it wrong. VA cannot continue to do business the way it always has."

Mr. Chairman, I am not sure whether we will be here 5 years from now talking about this same topic, but I think it needs to be changed, and it needs to be done rapidly.

Thank you for giving us the opportunity to speak with you.

[The prepared statement of Mr. Mank appears on p. 56.]

Mr. Everett. Mr. Mank, I couldn't agree with you more. I have been here 3 years, and we are talking about basically the same problem.

Mr. Rhea.

STATEMENT OF LARRY RHEA

Mr. Rhea. Thank you very much, Mr. Chairman, and good morning again to you. The Non Commissioned Officers Association is indeed pleased to be here, and we thank you for your invitation soliciting our thoughts on VA claims processing. Since this particular issue ranks second, ranks a very close second behind health care in importance to our members, we consider it not only important to discuss this subject but also very timely to do so.

As my friend and cohort Mr. Mank just mentioned, approximately a year ago several of us, including several of the members that were here earlier, were talking about this very same issue. At that time a year or so ago in several hearings even the most optimistic outlook did not give veterans cause to celebrate, and you know the problem that we were talking about at that time. So we are here again today to discuss the issue, and I don't believe anyone would suggest that we are where we should be today by any reasonable standard of accuracy and timeliness in claims processing, but our association believes, Mr. Chairman, that a measure of honesty and fairness is also required on behalf of Secretary Brown and Mr. Vogel.

Their critics have been in no short supply over the last couple of years, and NCOA was among those critics, so in honesty and fairness, we consider it important to dispense credit where credit is due, and therefore wish to publicly state the association's appreciation to these two gentlemen for their efforts over these past several months.

As you are aware, while we may not agree that a backlog of some 450,000 to 470,000 claims is satisfactory, it is a marked improvement from the 575,000 or so that we were sitting here talking about just a year ago. The average response times, although probably not acceptable to what we would like to see, we note that they are down. But honesty and fairness also require, Mr. Chairman, that we have to remember that the dilemma that we have today didn't occur overnight and it is probably not going to be solved in a day's time or in a year's time. The fact that progress is being made is, in NCOA's view, testimony to the resolute determined efforts by both Secretary Brown and Mr. Vogel.

That having been said, there are two central points that we would like to make in our testimony today, and that we believe will require the continued attention of the subcommittee. The first, Mr. Chairman, is an absolutely critical issue, and that is the subject of sufficient full-time employees. The 1995 full-time employee level of 13,220 for the VBA was decreased for 1996 by 188 positions.

The 1995 appropriations specifically addressed the staffing needs of VBA to help resolve the backlog of the claims in VA regional offices, and it is NCOA's hope this morning that that demonstration last year was not a one-time gesture. We believe that if the subcommittee, and indeed the full committee, is seriously committed to solving the claims problem that is confronting VA and veterans, that the action taken last year concerning the full-time employee level must necessarily extend for several years. We would request that you would seriously look at that again this year because precisely at a time when we are seeing progress, although small, we believe that the reduction of 188 positions has the potential to snatch defeat from the jaws of potential victory.

We would urge you to consider, Mr. Chairman, the recommendation on the employee level that was made in the independent budget for Veterans' Affairs, of which NCOA is an endorser, and, in short, that recommendation says that VA should realistically assess its employment levels based on reasonable timeliness standards and Congress should authorize the required staffing levels. The second area, and I will be brief in saying that, the entire future in NCOA's estimation is going to hinge upon VA's ability to modernize their technology. We could discuss whether the approach they are taking is the proper approach, and I am not smart enough to tell you, Mr. Chairman, whether that is or not, but I have enough common sense as an old noncom and an old master chief to tell you that is the direction they are going to have to go. We would urge the subcommittee to devote some attention to that, because in our opinion we believe that the future viability of the entire system hinges on VA's ability to modernize their technology in a correct fashion.

In closing, we are encouraged by the progress they have made. We look forward to seeing more positive results as the recommendations of the Blue Ribbon Panel are further implemented, and also, as the Veterans' Claims Commission pursues and finishes its work, we are hopeful that we will get some more positive recommendations out of that.

We thank you, Mr. Chairman.

[The prepared statement of Mr. Rhea appears on p. 59.]

Mr. Everett. Thank you. Mr. Wilkerson.

STATEMENT OF PHIL WILKERSON

Mr. Wilkerson. Thank you, Mr. Chairman. We wish to commend you for holding this timely hearing to examine the status and effect of various changes under way in the regional offices. VBA has made considerable progress over the last several years, and we are encouraged. However, there is still a long way to go towards improving the level of service that is provided to our Nation's veterans, particularly in comparison to where we stood just a few short years ago.

There are a number of factors which directly affect the work load at the 58 VA regional offices and constrain VBA's ability to improve the level of service provided. Current staffing of the CP&E service currently stands at 4,558. No increase has been requested for fiscal year 1996. Benefitinformation provided to discharged veterans through the TAP and DTAP programs is resulting in more claims being filed. In general, claims are becoming more medically and legally complex and thus require more time to adjudicate. Cases remanded by the Board of Veterans' Appeals will require further development and adjudication by the regional offices. As of the second quarter of fiscal year 1995, the board has remanded some 7,000 cases, and that number is projected to further rise as BVA increases its level of production. According to the last report on the implementation of the VA's Blue Ribbon Panel recommendations, that indicated that progress was continuing, and these changes have been accompanied by new computer hardware and software under stage I of VA's long-term computer modernization _program.

Mr. Chairman, from a recent article in publication called Government Computer News, it appears that the General Services Administration has some concerns with regard to VBA's timetable for stage 2 computer modernization in view of an apparent lack of improvement in claims processing associated with stage I initiatives.

There was a GSA-sponsored study that concluded VA is trying to accommodate a rate of change that its operational management infrastructure cannot handle effectively. It indicated that VBA has acknowledged it is reexamining its stage 2 projects.

Because of the importance of the modernization program and the need to ensure its success, we would like to see, at this point in time, that VBA perhaps undertake a full assessment of stage I and compare the performance with expected goals in order that any needed changes or corrections be made before committing to the full scale purchase of equipment and technology under stage 2.

With respect to Persian Gulf claims, Public Law 103-446 has only been in effect for about 6 months, and in our opinion it may be too soon to make any definitive judgments concerning the efficacy of this legislation. It was apparent that the prior law and regulations in effect were not adequately addressing the issue of unexplained illnesses being reported by so many Persian Gulf veterans. The result was Public Law 103-446 which provides compensation to be paid to Persian Gulf veterans for undiagnosed illnesses.

We are especially concerned by the fact that out of the total of 1,905 Persian Gulf claims recently completed, service connection has been granted in only 97 cases. We have found that while many of these claims were in fact considered under the new law, they had been filed under the criteria previously in effect. These veterans have not had an opportunity to more adequately prepare their claim based on the current criteria. We believe this is unfair. We recommend that veterans whose claims were received by VA prior to the enactment of Public Law 103-446 be contacted and advised what additional evidence should be submitted. We also recommend that the original date of claim be maintained in these cases to ensure that Persian Gulf veterans' claims are properly developed and adjudicated in a manner consistent with the letter and the intent of this legislation.

That concludes our statement, Mr. Chairman.

[The prepared statement of Mr. Wilkerson appears on p. 65.]

Mr. Everett. Thank you very much for your testimony. Appreciate you being with us today.

Mr. Vogel. We now have the pleasure of hearing from the Honorable John Vogel, the Under Secretary for Veterans' Benefits. Mr. Vogel comes here as a long time VA employee, former chief benefits director, former regional office director, and former VA medical center director.

John, I don't know if we welcome you from exile or into exile, but it is probably one or the other. We have heard a lot today, and I want to thank you very much for listening. I am going to ask you also to introduce your associates that you have brought with you, and we will be glad to hear your statement.

STATEMENT OF HON. R. JOHN VOGEL, UNDER SECRETARY FOR BENEFITS, DEPARTMENT OF VETERANS AFFAIRS ACCOMPANIED BY RAYMOND AVENT, DEPUTY UNDER SECRETARY FOR BENEFITS AND GARY HICKMAN, DIRECTOR, COMPENSATION AND PENSION SERVICE

Mr. Vogel. Thank you, Mr. Chairman. With me on my left is Mr. Raymond Avent, the Deputy Under Secretary for Benefits and to my right, Mr. Gary Hickman, the Director of the Compensation and Pension Service.

Mr. Everett. Thank you very much for being here, and of course we will enter your full statement into the record.

Mr. Vogel. Thank you, Mr. Chairman. I am pleased to be with you to discuss the processing of compensation claims by the Veterans Benefits Administration.

In February 1994, I testified it was taking 215 days to work an original compensation claim. We were estimating that it would take 226 days by the end of fiscal 1994. The pending work load was 536,000 cases, and we wereanticipating it would be 710,000 by the end of fiscal 1994.

Today, we are seeing significant improvements in these areas. By the end of April the work load was 438,000 claims. We believe it will be around 400,000 by the end of the year. Original compensation claims now take about 165 days to work. We believe we will be down to 106 days or so by the end of fiscal 1998. We attribute the improvements to the combined effect of severaldifferent initiatives. Regional offices were able to share resources by helping those offices each other with heavy rating backlogs.

By the end of calendar 1995, we will have consolidated education claims processing into four regional offices. VA's Service Medical Records Center in St. Louis now stores and distributes service medical records of recent dischargees. We have updated the physician's guide and made it available in a computerized version. We may now accept some examinations performed by clinical psychologists and nurse practitioners. We may now accept private physicians' statements for rating all types of claims.

We have increased the number of rating specialists nationwide from 530 in September of 1992 to 775 in December of 1994. Many offices, as you have heard,have created rating technicians and rating analysts to help review and develop claims. We have installed word processing programs that make rating decisions easier to prepare. We have authorized preparation of single signature ratings and undertaken a full revision of the ratings schedule. We are distributing development checklists to ensure that all evidence is requested as early as possible.

We published a rule eliminating the requirement for certified copies of dependency documents and are preparing a rule to allow the acceptance of a claimant's signed statement of dependency.

We are now using overtime to process C&P claims. Our centralized training programs provide a standardized and consistent interpretation of laws, regulations, and procedures. We will feel the influence of other initiatives in the near future.

Under authority granted by recent legislation, we will reduce eligibility verification report processing by 65 percent. In 1993 and 1994, we installed stage I computer hardware at all regional offices as the foundation for future modernization efforts. We have installed new computer software packages to improve our correspondence and allow easy access to VA laws, regulations, and directives. Reengineering initiatives are being tested throughout the system.

I would now like to discuss briefly section 106 of Public Law 103-446 which authorizes compensation for Persian Gulf veterans with undiagnosed illnesses. We published a regulation to implement section 106 in February, and issued instructions for adjudicating claims immediately thereafter.

We centralized these claims to four regional offices. They are currently reviewing previously denied environmental hazards claims. As of the first week of May they had reviewed 2,059 cases and granted compensation to 108 veterans. We have denied 299 claims because the illness didn't meet eligibility criteria under Public Law 103-446. There were also 1,652 claims disallowed because therecord showed no evidence of a disability.

Although the number we have granted is small, we are still in the early stages of the review. We can expect more grants in the future. Nonetheless, the compensation and pension service is reviewing certain disallowances. When that review is complete, we will address all areas where improvement may be needed.

Mr. Chairman, that concludes my summary statement. Mr. Avent, Mr. Hickman, and I will be happy to answer any questions you or the members of the subcommittee may have.

[The prepared statement of Mr. Vogel appears on p. 70.]

Mr. Everett. Thank you very much.

Mr. Secretary, how are you going to judge the results of the regional offices reorganization? How are you going to measure that, the effectiveness?

Mr. Vogel. Excellent question. One of the basic admonitions, and virtually the only one I put out, was that in going through a reengineering and changing of the way they do business, they must know where they are today by getting a fix on the number of resources they now have employed in processing claims. And when they install variations on the current system, to do so in a planned way so that they will know, as they are moving down the road, whether they are achieving their goals.

We measure things comparatively well. We measure the amount of resources per claim. We measure corporate resource utilization. And we can measure the satisfaction of the veterans, at least through focus groups and similar media. Customer satisfaction is a significant measurement. But timeliness and quality must also be measured. We have the mechanisms in place to make assessments as we go.

We are prepared, too, to try things, to fail, to learn from failure, and to get up and try something differently. We think that gives the regional offices latitude to be creative so that Central Office does not wind up providing heavy-duty prescriptions about how they should conduct their business. What we want is results.

Mr. Everett. As you analyze this, have you gotten any surprises or discovered some things you didn't know?

Mr. Vogel. One of the things we learned fairly early on was, as Mr. Thompson was describing the number of steps in the process. The number was around 30. We talked to our employees and talked to others about redundantsteps and we learned that if you ask people how to add value to a process, or how to change a process, they can tell you. It may be the file clerk, it may be the person who does the development work on a claim or anybody else throughout the system.

So, one of the things we have learned is to listen to the employees that do the work.

Mr. Hickman may want to add something to that.

Mr. Hickman. Mr. Chairman, I would say a couple of things. Certainly we have learned that you must convince the employees to buy in to what you are going to change. Essentially, you must talk with them and give them a basic understanding of what you would like. You certainly have to give them some training in how to work as a team--personal dynamics. Each office is having to go through that process.

As the Directors mentioned, you will have to look at where you are at a given time and start measuring from that point in order to determine whether improvements are occurring or not.

Mr. Everett. We all know where we have to go and we all want to get there. As a result of analyzing this, have you rechanged any thinking on any particular issues or the way we are doing certain things?

Mr. Vogel. Probably our greatest accomplishment has been the introduction of technological applications to allow our people to do the substantive work necessary rather than the hand work _necessary.

As we go through this, the learning curve becomes smaller and smaller. Technology is the answer. Mr. Rhea from the Noncommissioned Officers Association said it well: That is a great deal of the answer. Reasonably, we do not expect additional human resources. If we get them, you would hear a cheer from me, but we do not expect to see them. We do, however, want to work smarter, and we are on the road to accomplishing that.

There was some discussion earlier, if I might interject something, Mr. Chairman, about ADP technology and why we have not installed it if the money is there. Essentially, we entered into an agreement with OMB to meet certain performance requirements before the installation of some computer applications. When we failed to meet the performance requirements, they called a time out on us and put us on hold for a while. We are back on track now.

Nonetheless we have to demonstrate everything through pilots first. That has been the recent history, and we certainly have had a lot of people looking over our shoulders. We have had 21 various management consulting groups either assess or reassess our computer modernization, and we think we have had enough.

Mr. Everett. I see the yellow light is on, and I have imposed a 5-minute limit on everybody, including the Chairman, but I think I am going to call it a second round.

Let me ask you another question here. A recent GAO report titled "Better Assessments needed to Guide Claims Processing Improvements" noted that efforts to reorganize regional offices have resulted in, one, information about the effectiveness of individual initiative is inconclusive; two, RO's are reluctant to make changes or face difficulties in making certain changes; and three, VA does not have a formal mechanism to get the information out about the content and the effectiveness of regional initiatives.

Can you give us a little detail on the organization of the VBA regional offices in addressing these particular issues?

Mr. Vogel. We can, indeed, Mr. Chairman. I think some of the commentary of the directors from the five regional offices that were here shoots some holes in some of those GAO conclusions about how they are learning from each other, and experimenting with things at regional offices. I think that one can get wrapped up in measuring things, and impede creativity in doing so.

Our managers are entitlements managers. We want consistent outcomes in our decision-making, whether we are underwriting loans or adjudicating compensation or pension claims. The law rather well prescribes what those outcomes ought to be. We want to be able to manage in a way that leads to those outcomes consistently without Central Office prescriptions throughout. For years, we lived on manuals which prescribed how things ought to be done. We are now rewriting them. Some of the times, if we get the outcome, a legal outcome, which is a correct and just legal outcome for the veteran, that is all we want. We want to free them up. Mr. Avent may have more to add. He is essentially the Chief Operating Officer of the Veterans Benefits Administration.

Mr. Avent. I think you heard from the Directors this morning where they stand on implementing models. They are all in different stages of implementation. I think one of the burdens that we have, as we get into this, is keeping the work moving as we try to go through change. It is very important that there is a buy-in from the employees, as Gary mentioned, and that we provide them with training. But we must also continue processing claims as we move through change.

Our regional offices are at different stages. Despite the heavy workload, they are still making changes. The word you heard from them is, they are moving forward, as I think we are throughout the entire organization.

Mr. Everett. Mr. Hickman, did you have something?

Mr. Hickman. I want to add one comment. Earlier this week I was at the Eastern Area Directors Conference at which 16 Directors explained where they were and where they were going to be regarding reorganization. Through that forum, the other Directors were learning by listening and were gathering ideas to consider for adoption within their own reorganization models.

So there is a network within the organization in which ideas are passed back and forth. People learn about the ideas that work them and try to implement them in their own organization.

Mr. Everett. Gentlemen, thank you very much, and we have learned a lot today and we have had some good testimony. I think, though, that we have also heard the information highway described as a dirt road--I think by Mr. Thompson.

In closing, I would like to thank all the panelists for being here today. As I said, we have heard some interesting ideas and some facts--there are some facts out there that still cause us concern.

Obviously, in my opinion, additional oversight will be required. So today I am announcing a series of oversight hearings devoted to VBA's computer modernization program. The staff will notify the appropriate agencies soon to set the dates and the agenda, and we certainly look forward to hearing from many witnesses on the subject so we can improve the services that we jointly want to offer the veterans, and they also deserve.

This hearing is adjourned.

Mr. Vogel. Thank you, Mr. Chairman.

[Whereupon, at 12:10 p.m., the subcommittee was adjourned.]