Chart 3 compares projected budget authority increases for fiscal year 1993 for the major Federal health care programs, except for Department of Defense health care programs. The two major Federal programs, Medicaid and Medicare, are entitlement programs, so that expenditures rise with services provided to eligible beneficiaries. For comparison purposes, CBO projects that the Medical Services CPI will rise by 7.2 percent in 1992 and 7.1 percent in 1993.

Chart 3

Proposed Increase in Fiscal Year 1993 Budget Authority for Federal Health Care Programs

DEPARTMENT OF VETERANS AFFAIRS

GENERAL OPERATING EXPENSES

VETERANS BENEFITS ADMINISTRATION

The budget calls for funding of $591.6 million and 13,190 fulltime staff in the Veterans Benefits Administration (VBA). This is a reduction of 557 FTEE from the fiscal year 1992 current estimate. The budget also contains a request for $23.6 million to support the VBA modernization initiative, particularly the award of the stage two contract, and requests appropriation language that would provide two-year availability for $20 million specifically for this pur

pose.

The budget contains funds of $193,000 and 5 FTEE to implement the Administration's legislative proposals to lift the sunset provision for the $90-per-month pay cap for certain Medicaid-eligible pensioners, and funds of $1.5 million and 38 FTEE to administer the proposal to give VA permanent access to certain IRS and Social Security records. In each case, the resources would be funded from the Pensions appropriation.

Adjudication. As proposed by the Administration, employment in the adjudication division of the Veterans Benefits Administration (handling compensation, pension, education, and burial claims) would be reduced by lose 538 FTEE, from 4,620 in fiscal year 1992 to 4,082 in fiscal year 1993. The budget cites the expiration of certain provisions of OBRA, or completion of activities thereunder, as the basis for this reduction. A base level of 3,940 FTEE would be maintained.

The administration's budget proposal for FTEE in the adjudication division is based on an erroneous conclusion that, during fiscal year 1993, there will be a much smaller workload associated with OBRA than in fiscal year 1992. The conclusion was based on full implementation of OBRA during fiscal years 1991 and 1992. However, implementation of the OBRA provisions was not initiated until April 1991, six months into the fiscal year. Delays in the IRS/ Social Security match will result in substantial activities requiring large numbers of staff during the last quarter of fiscal year 1992 and the first half of fiscal year 1993. The Administration estimated a need for 142 FTEE. The Committee believes that the addition of an equal number (142 FTEE) would more accurately reflect the workload requirements for this area.

The Administration has also erroneously assumed that implementation of the OBRA provisions is a one-time action having no subsequent workload implications. This simply ignores the facts. In most instances, implementation of the OBRA provisions will result in an adverse action, either in the form of a reduction in benefits, or in the form of a termination. The logical consequences of such actions are increased appeals, resulting in increased notices of disagreement and statements of the case, and personal hearings; an increase in reconsideration requests; and an increase in reopened claims. The Committee's conservative estimate of the additional FTEE required for this purpose alone is 144 FTEE.

It is also noteworthy that, although in other areas, including the Board of Veterans Appeals and the General Counsel, some recogni

tion is given to the negative impact (in terms of timeliness) which judicial review by the U.S. Court of Veterans Appeals has had on the claims/appeals process, no mention is made of this with regard to adjudication activity. Notwithstanding the fact that decisions. rendered by the U.S. Court of Veterans Appeals have resulted in across-the-board procedural changes in the adjudication process, requiring an estimated 20 percent more time per case, the Administration's budget fails to provide a single additional FTEE to offset this additional burden. Even without considering the impact of judicial review, the budget estimate for accomplished workload in fiscal year 1993 is some 370,000 completed actions less than that projected for fiscal year 1992 (3.16 million vs. 3.5 million).

It is also well documented in numerous hearings conducted by the Subcommittee on Compensation, Pension and Insurance that inadequate staffing levels have played a major role in the declines in both the quality and timeliness of claims processing. As of the end of fiscal year 1991 only 23.6 percent of original compensation claims were being processed within 90 days, as opposed to 27.1 percent in 1990. (See charts which follow.) This is well below the VA's minimum acceptable level of 35 percent, and far below the 50 percent the Committee believes is acceptable. Statistics also indicate that only 47.6 percent of original pension claims are processed within 90 days. In each case, timeliness has continued to deteriorate. The continued decline in VA's timeliness correlates with the severe decline in average employment (4,832 FTEE in fiscal year 1982 down to a base level (non-OBRA) of 3,787 FTEE in fiscal year 1991) in the VBA adjudication divisions over the same time period. The following charts illustrate the direct correlation between the decline in timeliness in claims processing and reductions in staff which have occurred between fiscal year 1982 and fiscal year 1991.

70%

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991* * Actual total was 4,065, but 278 FTEE were added to implement OBRA provisions.

Percent of Compensation and Pension Claims
Completed within 90 Days

60%

50%

40%

30%

20%

10%

0%

MAL 35%
(Compensation)

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

(MAL = Minimum Acceptable Level per DVA)

Compensation eft (EPC 110)

In addition to the continued decline in timeliness, the quality of work has also suffered (see chart below) and no signs of future improvement are evident. The number of substantive errors in claims authorizations has increased from 1.84 percent at the beginning of fiscal year 1988 to 3.25 percent as of the end of fiscal year 1991. Material errors in authorizations have remained consistently high; as of the end of fiscal year 1991 this error rate was 3.77 percent. Procedural errors in authorizations declined marginally from 5.89 percent at the beginning of fiscal year 1988 to 5.84 percent as of the end of fiscal year 1991 after peaking at 6.13 percent during fiscal year 1990.

The numbers of substantive errors in rating decisions also continued to increase, from 1.51 percent at the beginning of fiscal year 1988, to 2.06 percent as of the end of fiscal year 1991. Material errors in ratings have increased from 1.8 percent in fiscal year 1988 to 2.62 percent at the end of fiscal year 1991. Some improvement in the procedural errors has been shown, with the error rate declining from 4.46 percent in early fiscal year 1988 to 3.48 percent at the end of fiscal year 1991.

Quality in Processing of C & P Claims

Substantive Error Rates in Ratings and Authorizations

In view of the unacceptable performance levels VA continues to experience, the concerns the Committee has regarding the number of errors which are occurring, and in recognition of the unquestionable impact judicial review is having and will continue to have in the future, the Committee recommends the addition of a minimum of 425 FTEE. The Committee believes such a level would enable the VA to reverse a negative trend in claims processing capability which has become injurious to veterans and their dependents or