Benefits Balancing Act

he Veterans Benefits Administration, long notorious for slow performance, ran into a whole new buzz saw in 1998 when the Veterans Affairs Department's inspector general found errors in VBA's reports of how long it took to process veterans' applications for disability and pension benefits.

The mistakes made claims processing look faster than it really was-and the incorrect figures were none too swift. For example, VBA reported that it processed disability claims in an average of 128 days-more than four months-but the actual average was nearly a month longer, 151 days, the IG said. (Today, VBA says, it's about 168 days.)

VBA officials did not dispute the IG's findings. "We've manipulated data," admits Joseph Thompson, the VA undersecretary for benefits and top VBA official. "We've in fact created a generation of managers who believe it's their first job to look good, not to do good, and that needs to change."

VBA had been pushing for years to deliver benefits more quickly to the 3.2 million veterans and their survivors the agency serves. The result: a dramatic reduction in quality. Only 64 percent of initial claims for benefits were being processed correctly, and of those appealed to the Board of Veterans Appeals, more than half were ruled incorrect or incomplete. Rework on completed claims was taking time and contributing to backlogs.

The General Accounting Office weighed in with a March 1999 report, "Veterans' Benefits Claims: Further Improvements Needed in Claims-Processing Accuracy" (HEHS-99-35), calling for improvements in processing and in the data collected about the processing system. In VBA, field offices are responsible for processing claims and reporting on what they've accomplished.

"Both the regional office reviewers and their managers have an inherent self-interest in having as high an accuracy rate as possible," Cynthia A. Bascetta of GAO's Health, Education and Human Services Division told a House subcommittee. And GAO's report said: "Unless VBA provides adequate separation of duties and organizational independence for accuracy reviewers, potential questions about the integrity of accuracy-related performance data will likely persist."

In Search of Credibility

Statements like this prompted Thompson to declare that VBA's number one challenge is restoring its credibility. On his first day on the job, late in 1997, Thompson used the agency's teleconferencing system to inform all VBA employees that he wanted the truth. "I know sometimes it's very painful," he says now. "You really want to mumble and get out of the room as quickly as you can. But we're almost always better off" for being truthful.

Just asking for the truth didn't cure the agency's problems, of course. "We've had teams reviewing the integrity of our data. We've had counseling sessions with the senior leadership where we thought they were contributing to this," Thompson says.

He also created a Data Management Office to improve the quality of VBA data and reporting. The new office is designed to not only to head off future embarrassments such as the IG's findings, but to give VBA employees more information about performance and results than has been available in the past.

The agency now is rolling out one of the most advanced systems in government for keeping everyone aware of performance. The agency's internal network, or intranet, has made available to every VBA employee a current "balanced scorecard" on performance. It reports on speed, accuracy, unit cost, customer satisfaction and employee development. Most scores are updated monthly.

The categories are weighted according to the needs of each VBA division, and perfect scores in every area would add up to 100. One day recently the VBA total was around 60. "You can see that we give ourselves a solid D-," Thompson says cheerfully.

To him, the total is less important than are continuous improvement and balance in agency operations. With the scorecard in place, Thompson says, "the way behavior has changed is that you can't go in and focus on one area. . . . We're seeing improvements in areas that . . . weren't paid as much attention to. So quality is inching up. Some of our appellate work is inching down."

Focusing on several objectives at once isn't easy, Thompson acknowledges, and it requires new kinds of working relationships and management skills. "I hear the moaning" of employees who feel they're now being asked to do it all at once, he adds. Thanks to electronic mail, employees can contact him directly, and Thompson says they do so to complain about the difficulty of balancing quality and quantity, present and future.

Richard Zimnoch sees this challenge firsthand. Zimnoch, a VBA attorney in Newark, N.J., also is the top VA employee in the VA Council of the American Federation of Government Employees, the union that represents the largest number of VBA employees. "There's a lot of frustrated employees," Zimnoch says.

Until this year, VBA has absorbed repeated cuts in its workforce. Few employees have been forced to leave, but many have been enticed to retire with buyouts or have simply taken other jobs. The results have been uneven, Zimnoch says, with some offices losing few employees and others suffering cuts of 35 percent or more. In the area of compensation and pensions, he notes, "a lot of the work is being accomplished by people working on overtime." Work weeks can be as long as 55 hours.

Besides being shorthanded, Zimnoch says, offices are struggling to achieve a balance between quality and speed. If service reps spend the time it takes to process a claim accurately, their numbers suffer and their managers want to know why. "It's almost like you can't win for losing," Zimnoch says. "To make quality really good, [claims] backlogs get worse."

Quantity Out, Quality In

Managers all the way up to Thompson would agree with that assessment. The workload reports and balanced scorecard show that claims are taking longer to process now that accuracy is the top priority in the compensation and pension (C&P) programs, where VBA will dispense $22 billion this year. Compensation programs provide disability benefits for all veterans with service-connected disabilities and their survivors; pension programs provide stipends to low-income disabled veterans and their survivors.

Over the last year, VBA has been installing a new, much more sophisticated case monitoring system called Systematic Technical Accuracy Review (STAR). STAR helps managers identify error-prone cases and alter procedures to head off errors. It also makes performance data more accessible and provides more complete information. It was the new system that reported an accuracy rate of 64 percent. The previous system was reporting accuracy rates above 95 percent, but VBA and GAO agree that the STAR accuracy figures are more realistic.

In the future, greater accuracy is supposed to reduce rework and paper shuffling, because more cases will be processed correctly and completely the first time they are tackled. An experiment at the Milwaukee regional office shows the potential effect of accuracy on workloads. Officials at that office spent time reviewing cases and identifying where problems arose. Then they developed specific procedural changes to reduce recurrences. As a result, the office cut the percentage of cases returned to it for further action from 40 percent in 1995 to 21 percent in 1998. Similar analyses and revisions are occurring on a national scale now.

The specialists at VBA's 58 regional offices take a veteran's application for benefits, collect military, medical and financial records to verify that the applicant is eligible, and determine the degree of disability. Disabilities are expressed in multiples of 10 percent. If the veteran has more than one handicap, the disabilities are rated individually and then added together.

Often a degree of judgment is required, even though the agency assigns a standard value to each kind of impairment. Not only does the claims examiner need to assess disabilities, he or she also must investigate each pension applicant's finances and update the records over time. This is some of the most time-consuming work VBA does.

In her congressional testimony last year, GAO's Bascetta revived the notion of simplifying the pension program, which provides less than $5,000 a year to a single disabled, low-income veteran. A congressional commission had proposed simplification in December 1996, pointing out that the pension program dispenses far less money than the compensation program but takes many more resources to administer. VBA officials now say they can streamline the pension program by issuing new regulations, which they are hoping to do this year.

Better Support Systems

In another move to make work easier, VBA is developing an electronic claims processing system that will automate and speed up the flow of paperwork.

For every one of millions of veterans and survivors VBA serves, the agency maintains 400 or more pages of paper in files. The piles of paper in the office have a "negative impact on employee morale," says Cheryl Deegan, deputy director of the agency's Washington, D.C., field office.

Thompson describes the situation this way: "Anything you want to do of importance requires you to get your hands on that paper. It greatly limits you in your ability to provide service. If a veteran moves, somehow you've got to get your hands on the paper and transfer it. If they call in with a question that is anything more detailed than what can be seen obviously on a payment record, you've got to get your hands on the file. Things get lost."

In April 1999, VBA won one of Vice President Al Gore's Hammer Awards for development of a pilot electronic claims processing system in the Washington office. With technical assistance and products donated by a consortium of well-known information technology companies, the office had set up a system of electronic claims folders, with paper records scanned into computer files and routed around a local network.

The project garnered headlines such as, "VBA Bids Adieu to Manual Filing with Free Program," but nationwide implementation of such a system has yet to begin. Even the Washington office has not yet converted to the system, which operates only on an experimental basis. Congress was reluctant to appropriate the money for an agencywide system-one result of VBA's credibility gap-but now the agency has funding and expects to launch a procurement this year.

Meanwhile, as Thompson says, the core systems that generate veterans benefits payments are housed in the same mainframe computers he worked on as a young claims examiner in the mid-1970s-"you know, the orange screens and archaic-looking data arrays." The agency is putting a modern face on those systems.

"I said I don't care if we have hamsters powering the thing in the back room, when we hire a 25-year-old out of college, I want them to see something that looks like Windows or looks like it was built, you know, within the last five years," Thompson says.

Thompson is fond of saying VBA is "in the 15th year now of a seven-year modernization plan" to upgrade its core IT architecture. "Thank God it continues to chug along," he says. "Every month it puts 3.3 million checks or direct deposits in people's hands." Funding cuts, year 2000 distractions and other problems have delayed the now-notorious modernization, known as VetsNet.

One reason Thompson continues to push for VetsNet is that it will permit each employee working on a case to see the big picture by pulling together all the disparate records on a single veteran's benefits. In Thompson's view, the assembly-line approach to organizing work, which has been the norm at VBA for decades, can be mind-numbing.

If an employee's job is to sit at a desk all day with piles of paper and "handle it from here to here, and it goes to the next person, and they handle it, and you never get any feedback," he says, "you get burned out doing that, after a while." The case-management approach that will be built into VetsNet will make the work more satisfying, he says, because employees will see the outcomes of their work on each case.

People Are the Key

Thompson says VBA's employees are the key to its success. "Everybody thinks it's technology, but they're mistaken," he says. "It is human beings. We are in a life-and-death struggle for the best people with every other agency in government and every other private-sector organization. In my view, you can buy all the IT you need. You can't easily get good people. You really have to work hard to get them and retain them and train them and maximize their capabilities."

One tool he's planning to use is an advanced IT system that will catalog each employee's skills and training, generate learning plans, deliver computer-based training and generate training effectiveness measures. Every employee will be able to see on the agency's intranet what skills he or she has and which ones he or she needs to acquire in order to be eligible for promotion. Managers will use the same system to direct workforce development and spot potential skills shortages. Progress in employee development will show up on the balanced scorecard.

Meanwhile, the agency is developing computer-based training modules that require employees to learn together in small teams. If one person on the team doesn't pass the test, everyone on the team must go through the course again. Today, employees don't get as much training as they want or need, according to GAO and AFGE.

All new employees nationwide must attend orientation classes at the agency's academy in Baltimore, where, Thompson says, "they don't just hear about org charts and things." Instead, they listen to veterans-"the guy who got caught in napalm fire in Vietnam," the Bataan Death March survivor, or perhaps someone whose service was more routine.

Thompson says it reminds VBA workers that at the end of the paper trail is a human being. That knowledge helps retain good employees, who find the agency's mission compelling, he says, "if we don't suck the life out of them with crazy business processes and putting them in cubicles from which they never arise."

Employee retention is a major challenge for VBA. By July, almost one-tenth of the agency's experienced claims examiners will be eligible to retire. Two years later, nearly one-fifth could be gone.

VBA officials say it takes at least two years for a new examiner to become fully productive, so it has been hiring and promoting people into those jobs. After years of personnel cutbacks, 265 new examiners joined the agency in fiscal 1999, more than the number who retired. However, the new employees still need seasoning. "We're holding our own," says Robert Epley, director of compensation and pensions.

Retirement eligibility is even more of a potential problem among Senior Executive Service members and GS-15 managers. By July 2002, fully 58 percent of SES members in VBA will reach normal retirement age. VBA was producing a workforce plan early this year and has taken other steps such as launching an SES candidate development program last year.

Leveraging Resources

One way VBA has sought to break down its organizational stovepipes, stretch its resources and increase its operational flexibility is by combining two core jobs. The benefits counselor, who accepts applications and gathers information, and the claims examiner, who decides how much a veteran is entitled to in monthly compensation and benefits, are becoming "veterans service representatives," who are supposed to be able to handle both kinds of duties.

It sounds good in theory, and AFGE's Zimnoch says it has given many of the affected employees a one-grade boost in their pay and status. But at the same time, it has left them feeling overwhelmed. They are so busy processing claims, he says, that they haven't had time to get training and learn their added tasks.

VBA also is leveraging its human resources by opening up its systems to outside organizations, including veterans service organizations-such as the Veterans of Foreign Wars, American Legion and Disabled American Veterans-and veterans bureaus of state and local governments. For several years now, these organizations have been able to check on the status of benefits claims for those veterans for whom they hold power of attorney.

Now VBA is going one step further by formally training individuals from veterans organizations to prepare claims. Usually, Thompson says, the veteran applies for benefits through an intermediary. The agency's aim is for the intermediary to get complete and accurate information on the spot, using a Web-based system, and to retrieve military service records and medical records to validate the claim. By the time the package reaches the VBA examiner, the claim should be ready for a decision. Once the claim is filed, the service organizations can help the veteran track its progress and, should it be rejected or approved at too low a monetary level, appeal it.

On the Right Path?

The veterans service organizations and VBA work closely together although they don't always see eye to eye. The organizations are generally pleased with the way things are going at VBA. "They're probably doing the right things now to fix themselves," says Bill Bradshaw, a senior VFW official. "But it's going to take some time."

Among the steps the VA is taking, in keeping with the mandates of the 1993 Government Performance and Results Act, is attempting to find out more about the effects of its programs, particularly the enormous compensation and pensions effort. "Data are not currently available to measure how veterans and survivors perceive the compensation program or its impact on the quality of their lives," says the VA's fiscal 2000 performance plan. As a result of this and other shortcomings in measuring outcomes, the performance plan for VBA is incomplete.

GAO, in its review of the performance plan last spring, said it was an improvement over the preceding year. Nevertheless, GAO reported, "VA does not yet have all of the information sources and the capacity needed-through its accounting and information systems-to generate reliable data to support its performance plan and to produce credible performance reports" (HEHS-99-138R).

The VA's accounting systems, most of which are centrally operated by the department rather than by VBA, are being upgraded. A new payroll system with human resources management functions and new financial systems with activity-based costing are being installed. At VBA, however, the situation is complicated because the major function of the core compensation and pension system is to dispense and account for money. Until VetsNet and other new systems are in place, the linkage between expenditures and results will be tenuous.

The department received a qualified opinion on its 1997 and 1998 audits partly because of inadequate accounting for loans VBA had transferred to an outside servicer, information security weaknesses and poor forecasting and actuarial models. Many of these problems have been corrected, and the department is expecting an unqualified opinion for fiscal 1999.

Meanwhile, VBA has undertaken a number of data collection projects, including participating in the American Customer Satisfaction Index (ACSI) survey. The agency's C&P programs received a a score of 61 in the survey, lowest of all federal benefits programs measured and well below the 68.6 average for federal agencies. However, 57 percent of the VBA customers interviewed said their satisfaction with VBA is increasing.

Lowest grades went to claims processing; highest went to the courtesy and helpfulness of VBA employees. Almost one-third of those interviewed said they had complained formally to VBA about its service, and they filed eight complaints, on average.

VBA also does its own customer satisfaction surveys and posts results and analyses on its Web site. Results have been similar. Both VA's surveys and the ACSI found that communication with customers plays a part in their satisfaction, along with other factors. The VetsNet project is expected to help in giving applicants faster and more up-to-date information about their claims.

But VetsNet is only one of 80 major initiatives VBA has been pursuing in the last two years. Thompson says he's trying to keep the work going while rebuilding the entire agency. "The people systems, the IT, the business processes, the really fundamental organizational decisions-all of those things are being changed simultaneously while we're trying to maintain the flow of work," he says.

His own view of VBA's recent performance seems close to that of America's veterans: "We're not nearly what we need to be. We're somewhat better, but we have miles to go."

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