DEPARTMENT OF VETERANS AFFAIRS

    The Department of Veterans Affairs (VA) operates the largest direct health care delivery system in the country; administers veterans’ benefits, including monthly disability payments, education assistance, life insurance, home loans, and vocational rehabilitation; and runs a nationwide system of veterans' cemeteries while awarding other burial benefits.

Overview

    Today, there are 25 million veterans, but in the next 20 years this number will decline by one-third, to 17 million (as shown in the accompanying chart). Although VA is charged with providing services to the entire veteran population, fewer than one in five veterans participate in VA programs. The decline in population ultimately will mean that fewer veterans will seek medical care, monthly disability benefits, and burials at VA cemeteries. However, on the immediate horizon, there will be increased usage of some VA benefits and services, as veterans age and more women draw on them. The imperative of recognizing veterans’ contributions to the nation means that VA's strategy, business plan, and infrastructure will need to adapt to ensure top-quality services and be flexible enough to handle changing dynamics and waning population.

Status Report on Select Programs

    The Administration is reviewing the management of programs throughout the government. Poor performing programs that are not mission critical will be eliminated, cut back, or reconfigured so that their funding can be redirected to be more effectively used. The accompanying table rates the performance of some of VA's most important programs. Those with ineffective ratings are targeted for rapid improvement.

Guarantee that Veterans’ Disability Claims are Processed Accurately and Quickly

    One of the President’s top priorities is to make sure that when a veteran submits a claim for a disability, it is processed quickly and accurately. Disability benefits provide a monthly benefit to veterans who are disabled as a result of their military service. Currently, 2.3 million veterans receive these tax-free benefits. The amount awarded to a veteran depends on the severity of the disability. For 2002, the basic monthly benefit ranges from $103 for a 10 percent disability rating to $2,163 for a 100 percent disability rating. Roughly half of veterans receiving compensation are less than 30 percent disabled.

     Improving the quality of life of the disabled is a national responsibility. And yet, the time and cost of processing disability claims have steadily increased. The average number of days to process a claim has risen from 100 days in 1996 to 181 days in 2001, and the number of claims awaiting a decision has jumped from 343,000 to over 644,000 during that same period. Meanwhile, the level of benefits paid increased by 27 percent in the past five years, while the cost of administering these benefits more than doubled.

VA benefits help veterans lead active lives.

    There are three main reasons for continued poor performance. First, the complexity of the claims has increased because veterans are requesting benefits for more than one disability at a time. Second, laws and regulations are passed with immediate start dates—giving VA no lead time to handle the wave of new work required. Finally, VA has failed to effectively manage its nation-wide system of benefit offices.

    To handle a growing backlog of claims, VA has repeatedly turned to hiring more and more employees. Since 1998, nearly 2,000 people have been hired to help process claims. Success, however, will ultimately depend not on hiring new employees, but on the application of modern information tools and, most of all, the establishment of true organizational accountability.

    In October 2001, Vice Admiral Daniel L. Cooper (retired), who led the 14-member Department of Veterans Affairs Claims Processing Task Force, presented a final report to VA. The report concluded that, as a result of basic flaws in organization and communication, VA is unable to handle the effects of judicial decisions and legislative changes on workload. Productivity is poor, and so far management has proven incapable of introducing change and flexibility into the workplace.

    VA should concentrate on radically changing the way it does business. These changes include identifying practices that work best at VA and enforcing their use across the country; allocating both work and funds to the best regional offices; creating specialized processing centers; and developing a computer system that allows people throughout the country to work on individual claims at the same time.

    The success of these initiatives must and will be measurable. Speed should not come at the sacrifice of accuracy, or vice versa. VA will use the following two critical performance measures to ensure that its efforts are balanced:

• Process disability compensation and pension claims in an average of 165 days in 2003 (ultimate goal is 74 days—given the legal and medical complexities and VA’s responsibility to help prepare claims); and

• Attain an 88 percent national accuracy rate for core rating work in 2003 (ultimate goal is 96 percent)

    To deliver services quickly and effectively, it is just as important to establish a relationship between performance and resources, but VA has not done this. The Department cannot, for example, say that for every $500,000 increase in funding, timeliness and accuracy improve by measurable percentages. Until relationships like these are defined, it is impossible to figure out the optimal amount of funding for veterans’ services.

Improve Health Care Delivery by Coordinating the Medical Care Systems of the Departments of Veterans Affairs and Defense

    Although VA and the Department of Defense (DoD) both operate very large medical care systems with a combined cost of over $40 billion yearly, historically there has been little cooperation between the Departments. The Departments assert that the most common barriers have been different missions, patient populations, and cultures, as well as differing opinions on who would lead the effort. However, both Departments describe sharing efforts. Only $100 million—or one-quarter of one percent—of $40 billion in expenses passes from one to the other.

    Sharing information and technology can make a world of difference to the military and veteran communities. It can speed up service, ensure veterans’ safety, and inform veterans of entitlements that they are due. In addition, information sharing can transmit important knowledge through the departments’ walls—replacing the myth that they have little in common.

    In many communities, VA and DoD hospitals are close to each other and offer similar services (e.g., primary care, surgery, or eye care). However, traditionally neither has considered the other as an option in determining construction or health delivery needs. In light of the new emphasis on sharing, the DoD and VA are working together to solve mutual problems in the Greater Chicago area, where currently there are five VA hospitals and one DoD hospital as shown in the map. DoD needs more space and had plans to build a new hospital within walking distance of a near-empty VA hospital. Now VA and DoD are planning to jointly share this hospital and save a significant amount of money by reducing construction of new buildings.

    The lack of sharing resources and information also results in a waste of the taxpayers’ money. This has frustrated the Congress, which has mandated experimental programs for sharing buildings and people. In addition, the Congress has asked VA and DoD to work together to purchase drugs and other medical supplies at a lower price, resulting in savings to the government.

    President Bush made it one of his top priorities to coordinate the two systems. Four areas have been identified as high-priority for coordination: veteran enrollment; computerized patient records; cooperation on air transportation of patients; and facility sharing instead of new construction. The President established a task force that will make recommendations this year to improve the coordination between the two Departments’ health care systems.

    Moreover, the President’s Management Agenda includes an initiative to increase coordination and delivery by VA and DoD of veterans' benefits and services. Over the past year, VA and DoD have undertaken an effort to improve cooperation and sharing in several areas by a reinvigorated VA/DoD Executive Council.

Focuses Medical Care Resources on Treating Disabled and Low-Income Veterans

    A 1996 law, allowing VA to treat patients in the most practical settings, changed the way VA delivers care to veterans in very much the same way as the private sector changed. For example, the Department now provides most of its care in clinics and homes instead of in hospitals. This shift has allowed VA to spend its resources more effectively and has provided patients with more convenient service. At the same time, patients have also benefited from new innovative safety and quality systems. Today, VA is recognized as a world leader in quality medical care.

    The same 1996 law also required VA to enroll veterans for medical care in one of seven distinct priority levels. Veterans with military disabilities or low-incomes are in the higher priority levels to preserve VA’s core mission. All other veterans fall into the lowest level. The enrollment process requires VA’s Secretary to announce, prior to the beginning of each fiscal year, what priority levels of veterans are eligible to receive care given the level of funding enacted into law. Each year since, VA has announced that all veterans are eligible to receive care. When eligible for care, a veteran is entitled to receive the full basic benefits package of services.

    Prior to the 1996 law, veterans in the lowest priority level were only treated on a space-available basis, and were restricted as to what care they could receive and where they could receive it. However, since the law took effect, these veterans have grown from two percent to over 21 percent of VA patients as shown in the chart above. They have always been required to pay for a minor portion of their care by the use of co-payments. But given their rapidly escalating numbers, these veterans will consume a critical portion of VA resources at the expense of the disabled, poorer veteran population unless they are required to pay a greater portion of their care. The budget proposes a new $1,500 annual deductible amount for these veterans, whereby they would pay 45 percent of the charge until their out-of-pocket expenses total $1,500.

    Although VA has changed the way it provides care to veterans, its buildings are relics of the past. VA’s buildings are not located where most veterans live. Although many veterans have moved to the South and Southwest (where waiting times for appointments have grown), VA still maintains underused hospitals throughout the North and East regions of the country (where few seek such services). The General Accounting Office (GAO) reported that VA was wasting up to $1 million a day in keeping these hospitals operating. VA should be expanding the number of clinics where disabled and low-income veterans are living and converting many of its massive hospitals to more efficient clinics, where needed. To do this, VA began a review process in the first of its 22 regions in the fall of 2000. This process is known as Capital Asset Realignment for Enhanced Services (CARES). The contractor's recommendations were completed June 2001, but VA has not yet decided how to proceed in the other 21 regions. In addition, VA has not modified its contract methods to correct some deficiencies identified in the first study. Savings identified will be used to provide care to veterans in the same or other geographical areas.

Funds Major Expansion in Cemeteries to Prepare for Increased Burial Demands

    Over 90 percent of family members and funeral directors who have recently received services from a national cemetery rate the quality of VA’s burial services as excellent. By the end of 2002, VA will operate 120 national cemeteries and over 40 VA-funded state cemeteries providing burial services for almost 100,000 veterans and eligible family members per year. VA’s goal is to ensure compassionate and good service, while searching for more efficient ways of doing business. For example, kiosk information centers are being placed in cemeteries to assist visitors in finding exact gravesite locations. In addition, VA orders almost all headstones by computer to shorten the waiting times for families.

VA cemeteries are rated excellent by almost all.

    Soon, VA will have a major challenge in determining the appropriate number, location, and mix of national and state cemeteries as the veteran population continues to decline and as deaths peak over the next decade (see accompanying chart).

    One of VA’s key goals is to ensure that most veterans have a national or state veterans' cemetery within 75 miles of their home. The recent opening of several new cemeteries, with more on the way, has helped improve veteran access to burial to 73 percent in 2001. Planned performance for 2003 is 76 percent. VA will never be able to accomplish 100 percent, nor should it. It is not cost-effective to construct new national cemeteries in regions with few veterans. Therefore, VA must reevaluate how best to economically maximize caring for the largest number of deceased veterans and their families. To date, though, VA has not defined the minimum number of veterans that national and state cemeteries should serve before construction is justified. Nor has the department suggested substitute benefits that might be appropriate for veterans in under-populated areas.

Strengthening Management

    Although VA has made some progress in addressing its financial performance shortcomings, it has made little progress elsewhere. The Department is working to develop a satisfactory plan to achieve the President's goals for competitive sourcing, E-Government, and human resources. The scorecard below shows VA’s 2001 status on the President's management initiatives.