Serving those who served

ou may remember reading a few years back about delays in processing veterans' pensions. Or the $100 million computer modernization that went nowhere. It's been a decade since complaints about tardy claims processing and inadequate information systems at the Veterans Benefits Administration first surfaced, and the reports have come steadily ever since.

The latest came in August, when a National Academy of Public Administration panel reported to Congress that the "actions being taken or planned are not alone sufficient to assure continuing improvement in VBA service to veterans." The report quietly criticized the White House, Congress and many in the Veterans Benefits Administration for sabotaging change, or at least failing to support it.

The NAPA report, produced by a panel of distinguished public administrators, sang a familiar song about the agency's obligation to do a better job for its customers, the nation's 25 million military veterans and their families. About 4 million people receive disability and old-age pensions under VBA's Compensation and Pensions (C&P) programs. In 1996, the VBA received 2.6 million claims for benefits and paid out more than $19 billion. Although the number of veterans is declining, the C&P workload is growing about 15 percent annually.

Nonetheless, the Clinton administration is proposing sharp cutbacks in the agency's staffing. Although the Veterans Affairs Department has lost a smaller share of its employees than the other Cabinet departments, the White House wants to cut VBA jobs by 31 percent over five years. Coupled with staggering backlogs and 20-year-old computer systems, this proposal is a disaster waiting to happen, unless the agency changes quickly.

50-Year-Old Structure

VBA has been trying to change, or at least paying lip service to change. But it's hemmed in by regulations, laws, politics, unions and bureaucratic rivalries that have withstood repeated assaults. "The organizational structure . . . has remained basically unchanged since the end of World War II," an agency team reported last year.

Now the agency is trying again. It has undertaken a far-reaching business process reengineering (BPR) effort that encompasses work processes, computer and telephone systems, job responsibilities, training, and even the rules and laws that govern agency operations.

Processing of veterans benefits claims follows the classic assembly-line model. Would-be pensioners file claims by mail, by phone or in person. An intake counselor at a field office turns the claim over to a development staff that collects documentation, such as service records. When the documentation is in place, after weeks or months, a rating specialist gets the case. For disability claims, which numbered almost 500,000 in fiscal 1996, the rating specialist may schedule a new physical exam, which adds a month or so to the processing time.

Once the rating specialist determines whether the veteran is entitled to compensation and how much he will receive, two more VBA employees review the file before the vet gets a letter outlining the decision. The veteran has a year to file a notice of disagreement, which reopens the case.

If the veteran still is not satisfied with the outcome, he can appeal to the VBA's Board of Veterans Appeals. It usually takes the board more than a year to get to the case, and during this waiting period the vet's situation often changes, requiring further action by the field office. When the board finally considers the appeal, it can agree with the vet, dismiss the appeal or-as happens in almost half the cases-return the claim to the field office for further development. This appeal and remand cycle can recur. If the appeal is rejected, the vet can appeal to the Court of Veterans' Appeals, a forum outside VBA.

One Thing After Another

The deficiencies of an assembly-line system are no secret. Time is wasted in moving items from one station or desk to the next, and keeping track of their locations takes effort. Typically communication is poor, and some of the items being processed-claims, in this case-fall between the cracks. Accountability gives way to finger-pointing. Employees are stuck doing repetitive work.

VBA reengineering will do away with much of the sequential processing model, replacing it with multipurpose field-office teams. A single field-office employee with the new title of "veterans service representative" will initiate, gather evidence for and evaluate a claim and report back to the veteran.

A senior employee, the decision review officer, will handle cases where the veteran and the service rep cannot agree. But there will be fewer such cases "because veterans will have had an accurate decision fully explained to them by knowledgeable and compassionate VBA employees," says a VBA reengineering report, "Blueprint for Change."

Automation also will contribute to clarity, accuracy and completeness of case files. New computer systems will walk employees through the process of initiating and developing a case. The system will present forms on screen and will keep reps informed of what information is missing, plus any new rules and procedures. Automation will speed the flow of information and permit ready retrieval of case files.

Consistency is another likely outcome. Although regulations spell out in excruciating detail how each claim should be remunerated, one congressional staffer described the process as "something like a lottery." That perception contributes to appeals.

Online reference tools, such as directories of health care providers, will save time. For example, if the benefits applicant says he visited Dr. John Smith in San Francisco last year, the system will display addresses for all the possible Dr. Smiths, and the vet can verify the correct one on the spot. The system then will generate a form letter to Dr. Smith asking for the applicant's medical records.

Computer links with the Defense Department, which must verify applicants' military service dates, and with VA hospitals, which do physical exams for disability claims and often have other needed records, will eliminate paper and delays. Getting copies of a veteran's medical records from a VA hospital normally takes 35 days, but that lag was cut to less than two days in recent tests of an automated records link.

The reengineering program aims to take an agency where some employees still do not have telephones on their desks and transform it into an efficient and effective customer service organization for the 21st century. Although BPR has a mixed record in the federal government, the Veterans Benefits Agency seems like an ideal place to apply IT. Matthew Black, an executive with the VBA's reengineering support contractor, SRA International Inc. of Arlington, Va., says BPR should tackle more fundamental issues than simply improving productivity through automation or modification of work flows.

In an organization like VBA, where "there are a lot of moving parts," Black says, BPR can help get a handle on the disparate elements of a complex set of issues. For example, VBA has at least seven different clerical jobs. The agency plans to merge these field-office jobs and employ only GS-4 program support clerks to do clerical tasks.

Painful Transition

But this raises issues of job classification, transition (some of the clerks are GS-3s and GS-5s), union reaction and how the clerks will work when new computer systems eliminate some paperwork. Most importantly, how will the single-function clerks be trained while their ranks are thinning? And while they are being trained, who will file and retrieve the case files and documents still needed every day?

The transition to a new way of doing business in a few pioneering offices hasn't been easy for front-line employees. "The adjudication people have never had to talk to a customer," says Bonnie Miranda, a reengineering specialist at VBA headquarters. "They dealt with folders." But there are pluses for those making the transition. They now have more information and a larger role in cases. "They actually can do something" for the client, says Miranda's boss, Frederick Gordon.

"We believe that what we have here is good people and bad systems," says Thomas J. Pamprin, an assistant director of VBA's Compensation and Pension Service and head of the BPR effort. But Pamprin worries about training employees for their new responsibilities. The staff of about 4,000 is operating nearly at full capacity now, so time lost to training may mean growth in work backlogs, at least temporarily. "We have no wriggle room," Pamprin says.

The decline in FTEs will mean that nearly all the employees of the reengineered VBA already are on the payroll. "Unfortunately," the human resources reengineering team reported, "VBA will have little opportunity to bring in the 'new blood' it clearly requires."

Holes at the Top

There may be no room for new employees on VBA's front lines, but the problem at the organization's highest levels is the opposite. The Secretary of Veterans Affairs job has been vacant since July. Deputy Secretary Hershel W. Gober was nominated to the top post, but he withdrew before being confirmed, when unsubstantiated reports of sexual harassment surfaced. In November, the Clinton administration said Army Secretary Togo West would be nominated for the VA job, but the nomination was not sent to Capitol Hill before Congress adjourned.

The Veterans Benefits Administration last had a permanent administrator in April 1996, when R.J. Vogel was reassigned to head a veterans hospital in South Carolina. Joe Thompson, director of the VBA's New York field office, has been nominated to head VBA. At a confirmation hearing in October, Sen. Arlen Specter, R-Pa., said Thompson's confirmation was likely, but it didn't come before the end of the congressional session.

Another 15 VBA management posts were vacant as of late November, although many of them had interim occupants. Agency insiders acknowledge that there is a leadership vacuum, and they say matters could get worse. More than 1 in 5 VBA employees will be eligible to retire between 1998 and 2002. And the agency is pushing some senior employees out with buyouts to cut the payroll in accordance with fiscal 1998 appropriations.

With so many management posts vacant, there is a hollow ring to employees' oft-repeated assertions that they have top management support for their BPR program. Indeed, at Thompson's confirmation hearing in October, he said his first challenge would be to review BPR and related efforts "to ensure that they have all the ingredients necessary for success." Thompson later said this review was not designed to halt the BPR program, but he told senators he believes it has some weaknesses.

'Hammer' Winner

At the same time, Thompson said he knows the system must change, because it is too inflexible. He has been a leader in changing VBA processes. In March 1994 his staff in New York won the first Hammer Award from Vice President Gore's National Performance Review for a team claims-processing approach like the one being implemented throughout VBA.

The fact that successful innovations at certain field offices have not been replicated throughout the agency reflects the historical lack of clout in VBA's Washington headquarters. Field offices, often allied with members of Congress, have tended to go their own ways, leaving local reforms "largely unmonitored and unevaluated," NAPA reported. The strong interest Congress displays in veterans benefits programs also has stymied some reform efforts. "Many key [VBA] officials do not believe they have the power to achieve change. One aspect of this is fear of offending powerful political interests," says the NAPA report, "Management of Compensation and Pension Benefits Claim Processes for Veterans."

Those powerful interests include veterans service organizations, such as the Veterans of Foreign Wars and Disabled American Veterans. They closely monitor benefits delivery and act as veterans' advocates or representatives in dealing with VBA. So entrenched are they in the system that they sit on the VBA reengineering teams and have been given desks and telephones in VBA offices and direct access to the agency's electronic mail system.

NAPA called for closing some of the 58 field offices, saying their small size and workloads made them uneconomical. But VBA insiders say that will never happen, given the political climate. VBA has consolidated its 46 home loan offices into just eight and its education benefits servicing processing centers from 58 to four. But when it comes to pensions and disability claims, consolidation is out of the question, at least until BPR is completed.

BPR implementation for the Compensation and Pension program is supposed to be finished in 2002, but a Thompson review could change that schedule. Even if the new VBA chief leaves the effort intact, the BPR program calls for action by many players, not all of whom support it. The reengineers want Congress to simplify some aspects of benefits programs for ease of administration, for example. But legislative approval of the changes is by no means certain.

Results Not Apparent

The plan also calls for VA to exchange data routinely with other agencies, especially the Defense Department, the National Archives, the IRS and the Social Security Administration. This would speed receipt of supporting documents for claims and eliminate some overpayments when vets have income from other sources besides VA.

Such data exchanges have been discussed for years, with little result. Confidentiality concerns, technical issues and mutual distrust are among the barriers. But until automated data exchanges become the norm, VBA processes will remain bogged down. Obtaining old records is a major contributor to delays and failures in resolving claims cases.

New computer systems are critical for fundamental process improvement. The reengineering team recognized that in an age when citizens can get mortgage loans in minutes over the telephone and update their insurance policies even faster, it's unacceptable for VBA to take months to complete comparable transactions.

In addition, the agency's old technology carries a high overhead cost. For example, the report says the labor cost to reduce the size of a VA pension (if, for example, a veteran's Social Security check grows) exceeds the cost savings from the downward adjustment. If a VBA employee gets the Social Security information on a computer screen and can modify the veteran's check and send him a form notice with the click of a mouse, that cost-benefit equation will change.

The computer upgrade project, known as VETSNET, is years behind its original schedule, and some within the agency doubt it will ever materialize. The project dodged a bullet last fall when Congress reluctantly agreed to leave its funding intact. The NAPA panel, which was chartered by the Senate Appropriations Committee, had recommended that VETSNET development be halted, on grounds that its technical and
management foundations are shaky.

But VA officials, who describe the first phase of VETSNET as necessary infrastructure for 21st century VBA processes, and their allies persuaded Congress at the last minute to ante up funds for 1998. That was a critical victory, because VETSNET will allow the agency to install tools for better management of the workload and backlogs.

Congress did heed the administration and cut the VBA staff. The agency lost 545 positions in the fiscal 1998 VA appropriations bill. According to David A. Brigham, VBA's acting chief of staff, about 200 of those jobs were vacant, leaving VBA to eliminate 340 employees through buyouts and attrition.

In the end, it appears that such pressure is the only way to keep VBA plugging ahead. This is a highly change-resistant agency, as its recent history demonstrates. But things are happening in VBA, even if there is little to show so far. Managers reel off lists of small-scale but significant changes-a pilot program here, a beta test of software there-that could lead to big results. Or they could wither on the vine, as have so many previous initiatives.

As the backlog of pending claims cases rose to 396,000 at the end of fiscal 1997, it was becoming apparent that more overtime and work speedups aren't enough to solve VBA's problems. Senior agency officials are cautious about projecting rosy rengineering outcomes, but they seem to be coming around to the view that garden-variety management techniques aren't up to the job.

"Right now we're at the limit of resource constraints," Thompson told the Senate Veterans Affairs Committee in October. He promised to "be an agent of change" and to build an organization that can change with the times. Many observers must have agreed with Specter's response: "Why do you want a job like that?"