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loss in earning capacity and whether VBA is providing compensation to all of those who should be compensated. VBA has not yet tackled these types of difficult questions and will need to do so in consultation with the Congress in order to develop a truly results oriented strategic plan. VA officials told us that these issues are particularly sensitive and that they have begun consultations with the Congress and other stakeholders about the purpose of the compensation and pension program. However, no final agreements have been made to date.

In the past, VBA has not focused on results. For example, in 1984, 1992, and again in 1996, we reported that VBA's vocational rehabilitation program did not focus on helping disabled veterans find jobs, despite a 1980 law (P.L. 96-466) requiring it to do so." Instead, VBA continued to focus on sending veterans to training, an intermediate step in finding jobs. Consequently, VBA has placed relatively few disabled veterans in jobs.

VBA is aware that it needs to focus more on its benefits programs' outcomes for veterans rather than only on the process used to administer the benefits. In its fiscal year 1998 budget submission, VBA stated that, historically, VA has engaged in little policy or program analysis of its benefits programs and that this work is needed if the intended results of GPRA are to be fully achieved. VBA acknowledges that additional data and research will be required, including formal program evaluations and extensive consultation with stakeholders.

Integrating Strategic Plans

As VBA continues its strategic planning, it will need to integrate its plan with those of the rest of VA and those of other federal agencies that support the veterans' benefits programs. For example, in determining the eligibility of a veteran for disability compensation, VBA usually requires the veteran to undergo a medical examination, which is generally performed by a Veterans Health Administration physician. Similarly, VBA looks to the Department of Defense for information about the medical conditions of veterans while they were in the military and to the Department of Labor for veterans' employment and training experiences. VBA will need to determine what impact these other entities will have on the success of VBA's performance.

Currently, VA is in the process of developing a departmentwide strategic plan. VBA is participating in this planning effort. In addition, VA has initiatives under way to improve its information exchange with the Department of Defense. Furthermore, as we recently testified before this Subcommittee, the Department of Labor's Veterans' Employment and Training Service has developed a draft strategic plan and performance measures. VBA will need to continue to coordinate with these agencies that are critical to veterans' benefits programs to ensure overall high quality service to veterans.

Measuring and Assessing Performance

Once VBA has identified results-oriented goals, it will need to effectively measure and assess its performance. As mandated by GPRA, federal agencies are required to link

'VA Can Provide More Employment Assistance to Veterans Who Complete Its Vocational Rehabilitation Program (GAOMHRD-84-39, May 23, 1984); Vocational Rehabilitation: Better VA Management Needed to Help Disabled Veterans Find Jobs (GAO/HRD-92-100, Sept. 4, 1992); and Vocational Rehabilitation: VA Continues to Place Few Disabled Veterans in Jobs (GAOMHEHS-96-155, Sept. 3, 1996).

Veterans' Employment and Training Service: Focusing on Program Results to Improve Agency Performance (GAO/T-HEHS-97-129, May 7, 1997).

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GAO/T-HEHS-97-131

their performance measures to their annual budget requests. Federal agencies are expected to limit their performance measures to a few that

best demonstrate how the agency's goals are met;
allow agency managers to balance quality, costs, customer satisfaction, stakeholder
concerns, and other matters; and

are linked directly to the offices in each agency that are directly responsible for making programs work.

The Congress, in enacting GPRA, recognized that measuring the results of many federal programs will be difficult and, as a result, permitted GPRA to be phased in over several years. Measuring results will be a challenge because the link between program operations and results can be difficult to establish. Also, a result may occur years after an agency has completed a task (for example, awarding a research grant). Nevertheless, agencies are expected to use the performance and cost data they collect to continuously improve their operations, identify gaps between their performance and their performance goals, and develop plans for closing performance gaps.

VBA will need to develop appropriate performance measures and collect adequate and reliable performance and cost data to effectively measure and assess its performance. VBA will have to balance the costs of data collection against the need for complete, accurate, and consistent data

CONCLUSION

VBA is aware that it has much work to do to fully implement GPRA VBA's success in implementing the act will depend on how successful it is in ensuring that its strategic plan focuses on results, how well it integrates its plan with the plans of VA and other key agencies, and how effectively it measures and assesses its performance in meeting its goals and bringing about program improvements. The Congress will play an important role in consulting with VBA in developing results-oriented goals and overseeing VBA's efforts to implement GPRA.

Mr. Chairman, this completes my testimony this morning. I would be pleased to respond to any questions you or Members of the Subcommittee may have.

For more information on this testimony, call Cynthia M. Fagnoni, Associate
Director, at (202) 512-7202 or Irene P. Chu, Assistant Director, at (202) 512-7102.
Gregory D. Whitney and Mark Trapani also contributed to this statement.

(105752)

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GAO/T-HEHS-97-131 STATEMENT OF

JOSEPH A. VIOLANTE
DEPUTY VATIONAL LEGISLATIVE DIRECTOR

OF THE
DISABLED AMERICAN VETERANS

BEFORE THE
HOUSE VETERANS' AFFAIRS COMMITTEE
SUBCOMMITTEE ON BENEFITS

MAY 14, 1997

MISTER CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:

Since 1920, the Disabled American Veterans (DAV) has been dedicated to one single purpose: building better lives for disabled veterans and their families. On behalf of the more than one million members of the DAV and its Auxiliary, I wish to express our deep appreciation for this opportunity to provide the Subcommittee with the DAV's assessment of the processing of Persian Gulf War veterans' claims.

In your invitation to appear, you asked for our written response to the Department of Veterans Affairs' (VA's) testimony on the Government Performance and Results Act. We will have our written response to you by May 26, 1997, as requested. You also have requested that we include in our testimony our opinion regarding the VA's proposed legislation to limit its liability for compensation and medical treatment for veterans with smoking-related diseases. Since the VA's proposed legislation has not been disseminated at this time, our remarks will be general in nature, setting forth our position at this time.

Mr. Chairman, the current system of processing Persian Gulf War claims at four regional offices, Phoenix, Arizona, Louisville, Kentucky, Philadelphia, Pennsylvania, and Nashville, Tennessee, is not working. After numerous conversations with DAV supervisory National Service Officers at the four Persian Gulf War claims processing centers, it is apparent that the current system serves neither Persian Gulf War veterans nor the local veterans very well. While the concept of developing expertise in handling Persian Gulf War claims by rating specialists and adjudicators was a worthy goal, its application has proven unworkable for reasons discussed below.

The issue of Persian Gulf War illness is a serious problem made more difficult because of its complexity, the lack of scientific/medical evidence, the failure to maintain complete military and medical records, the failure of the Department of Defense (DoD) to come forward with critical evidence establishing the possible exposure to chemical agents by U.S. troops, and the conflicting reports and conclusions being reached by various scientific/medical commissions and individuals. These are not new dynamics for veterans. Veterans returning from all our Nation's wars and military conflicts have been faced with similar problems in attempting to establish the foundation for recognizing the onset of certain conditions as service-connected; however, Persian Gulf War veterans, as a group, appear to be sicker and more severely disabled as a result of their service in the Persian Gulf than their predecessors. The fact that there are still many unanswered

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questions and conflicting medical opinions surrounding Persian Gulf illness only serves to exacerbate the situation.

Mr. Chairman, the plight of Persian Gulf War veterans suffering from undiagnosed illnesses continues to be one of our foremost concerns, as it is with this Subcommittee. Recent VA statistics on claims processing for these veterans only heighten our concerns. The VA notes that slightly more than three-quarters of Persian Gulf veteran claims have been allowed. Of the 85,402 Persian Gulf claims, service connection has been granted in approximately 66,277 claims; however, only 28,285 veterans are receiving compensation for service-connected disabilities. Further, of the 11,806 environmental hazard claims considered, slightly more than 1,600 have been granted service connection and only 803 have been granted service connection for undiagnosed illnesses.

Although the VA is proud of its 78% allowance rate, we are still concerned that many veterans do not receive service connection for their most debilitating ailments. For example, a veteran files a claim for Persian Gulf illness with symptoms such as joint pain, fatigue, a respiratory condition, memory loss, headaches, and gastrointestinal problems, and for an inservice back injury. Service connection is granted at a non-compensable rate for the in-service back injury residuals and denied for the other disabilities. Statistically, this veteran would fall into the category of claims allowed (78%); yet, his or her most debilitating disabilities are adjudicated as nonservice-connected. We have asked the VA to look at those claims allowed to determine what disabilities have been denied.

The VA has reviewed Persian Gulf War claims on three separate occasions and will conduct its fourth review based on the recent expansion of the presumptive period. Yet, as the VA embarks on its fourth review of Persian Gulf War claims, DAV National Service Officers (NSOs) in the four processing centers anticipate an onslaught of cases from the rating board. In fact, one of our NSOs has likened the situation to being in the eye of a hurricane because very few Persian Gulf War claims are being adjudicated at this time; however, it is expected that the pace will increase to the point of near chaos once the review begins. Both the VA and our NSOS will be adversely impacted as this process begins.

Mr. Chairman, the VA has denied almost 10,000 claims for undiagnosed illness. These disallowed claims for undiagnosed illnesses fall into six separate categories. These categories

are:

1. Diagnosed illness,
2. Illness not chronic,
3. Due to other etiology,
4. Not manifest on active duty or during the two-year presumptive period,
5. Not shown by the evidence of record, and
6. Undiagnosed, but less than 10% disabling.

There appears to be some question as to which claims will be reviewed during the VA's fourth review. It appears that the VA will review all claims that were denied because the undiagnosed

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illness was not manifest during the two-year presumptive period. However, it is not clear whether the VA intends to review category two, illness not chronic, category five, not shown by the evidence of record, or category six, undiagnosed, but less than 10% disabling.

It makes sense to not only review these three categories, but to provide the veteran with notice and opportunity to present any additional evidence that may not be in the claims folder to establish that the undiagnosed illness is presently shown to be chronic, that an undiagnosed disability currently exists, or that the undiagnosed illness is disabling to a compensable degree. The VA would be doing a great injustice to those veterans who fall into these categories if it does not provide them with the opportunity to update their medical evidence. Further, to not review these claims now might result in a fifth review at some later date.

Category three, due to other etiology, is somewhat confusing. According to the VA, this category includes a condition that is undiagnosed and became manifested to a compensable degree but has an intercurrent cause or is due to willful misconduct, or alcohol or drug abuse. In other words, the physician does not know what the illness is, but either the physician or the VA rating specialist knows that it is not the result of the veteran's service in the Persian Gulf. These cases, a total of 92 in all, should receive special scrutiny to ensure that these claims are being properly adjudicated.

As of March 1997, there were more than 10,000 Persian Gulf War claims pending at the four area processing offices, more than half, 5,351, were pending in the Southern area. According to the DAV's supervisory National Service Officer in the Southern area office, the pending claims workload actually equates to 18,000 issues at this processing office. Reportedly, some Persian Gulf War claims contain as many as 30-40 issues per claim. In the Southern area, new claims are coming in at a rate of 450 cases per month. Nationwide, there are an additional 4,100 claims pending development at regional offices. This is certainly a prescription for disaster if only four processing centers are responsible for all of these claims, in addition to reviewing previously disallowed undiagnosed illness claims.

Mr. Chairman, another concern we have is with the large number of service-connected veterans who are receiving no compensation. Of the more than 66,000 claims where service connection was granted, almost 38,000, or 57%, are rated less than 10% disabled and receive no disability compensation. Of those veterans rated 10% or higher, the vast majority are rated less than 30% disabled. Our NSOs believe that many Persian Gulf veterans are underrated.

Mr. Chairman, in addition to not receiving adequate compensation for their disabilities or illnesses, Persian Gulf veterans face many other dilemmas. Although most experts concede that these veterans were exposed to a wide range of environmental hazards, such as experimental drugs, high levels of toxicity in substances from oil field fires, radioactive residue, parasites, pesticides, lead paint, and chemical agents, there is little consensus in the medical scientific community as to the residuals, if any, from these exposures. Due to the confusion surrounding Persian Gulf illness, we question whether these veterans are receiving adequate medical care from the VA or DoD.

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