VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION VETERANS BENEFITS ADMINISTRATION Mark Bilosz, Acting Director, Compensation Service The American Legion | February 22, 2016

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION VBA Missions & Service Offerings in FY15 and FY16 To Date 1 TRANSITION & EMPLOYMENT −Held 55K TAP events reaching 520K Servicemembers & families in FY15 −Veterans Employment Center hired 365K+ Veterans; employers committed to hire 668K+ in FY15 COMPENSATION −Paid $63.7B to nearly 4.1M Veterans in FY15 −Completed record-breaking 1.4M claims in FY15 −3.1M non-rating end products completed in FY15 – 15% higher than FY14 HOME LOAN GUARANTY −Over 2.4M home loans on the books −Guaranteed 631K loans in FY15 (44% more than FY14) totaling $153B −Lowest foreclosure rate for 25 of 30 quarters LIFE INSURANCE −Insured 6.4M beneficiaries in FY15 −11 th largest Insurance program in U.S. −Provides over $1.3T in coverage under 10 lines of protection −Paying insurance death claims in avg. of 3.6 days at 98.7% accuracy EDUCATION −Provided est. $12.3B to over 1M beneficiaries in FY15 −4M claims processed in FY15 −Post-9/11 GI Bill paid $60B to 1.5M students and schools since inception PENSION & FIDUCIARY −Paid $5.5B in Pension benefits to over 500K Veterans & survivors in FY15 −Paid est. $6.3B in DIC to an estimated 386K survivors in FY15 −Over 183K Fiduciary beneficiaries on the rolls in FY15 – 10K more than FY14 BENEFITS ASSISTANCE SERVICE −Over 5.3M registered eBenefits users −461K Facebook likes; 66K Twitter followers to date −Over 50K outreach hours and over 2.15M encounters with Veterans, family members & survivors in FY15 VOCATIONAL REHABILITATION & EMPLOYMENT −Over 104K Veterans received an estimated $1.1B in VR&E benefits in FY15 −Nearly 132K participants in FY15 – 3% more than FY14 −22K employees −$96B in benefits distribution −$2.5B in general operating expenses VBA TRANSFORMATION *FY15 estimated actuals

VBA’s workload has risen dramatically since 2009

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION 3 VBA’s caseload has grown at an unprecedented rate since

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION Completely transformed a complex, paper-bound, compensation claims process Redesigned and deployed new national training program Designed and deployed new quality assurance program and people Designed, piloted, refined, tested and deployed – using agile development process – its first ever digital claims IT system – incorporating rules and tools for 30,000 unique user accounts Designed and deployed a complete paper to digits conversion system – turning 1.9 billion images into data and high quality, searchable PDF used by the claims system Designed and deployed Disability Benefits Questionnaires for physicians to capture evidence-based data Designed concurrently a CRM, Unified Desktop, Knowledge Management capability to more than 1,000 call agents Designed a completely new online claims filing system – customer facing – with 55+ additional self-service features and drove adoption from 250K to 5.4 million users Successfully completed over 1 million claims each year for the past 6 years Less than 36 months from paper plan to reality – less than 18 months after full implementation Reduced the backlog by 87%; the inventory by 60%; improved accuracy by 8% points – over 90% and 96%, claim and issue respectively; established records in productivity and performance on behalf of our Veterans, their Families and Survivors 4 VBA transformed service to the Veteran community in order to eliminate the backlog of disability claims

2015 Transformation Goal: Backlog Reduction Thank you to The American Legion for your help

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION 2015 Transformation Goal: 98% Quality 6 Today, VA makes the correct decision 98 percent of the time in each of the eight separate categories measured within a Veteran’s disability claim, ensuring the following: All Claimed Issues Addressed All inferred Issues Addressed Al Development Letters Sent All Medical Exams Completed Service Connection Decision Correct Evaluation Percentage Correct Effective Date Correct Payment Rate Correct Rolling 12-Month Cumulative Claimed Issues Addressed Inferred Issues Addressed Development Letters Sent Proper Development Correct Decisions Correct Evaluations Correct Effective Dates Correct Payment RatesTotal Claim-Based98.6%99.1%99.8%97.2%98.2%98.4%97.9%99.2%88.8% Issue-Based99.5%99.8%99.9%99.2%99.5%99.2%98.7%99.8%95.7%

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION 2015 Transformation Goal: 125-Day Processing Today, the average days a Veteran is waiting for a claims decision is 91 days – a 191-day reduction from a peak of 282 days in March 2013 Average days it takes to complete a claim is 128 days – a 59-day reduction from FY14 VA employees are dedicated to getting Veterans the benefits they have earned and deserve as quickly and accurately as possible, but some claims will still take more than 125 days to process −VA’s open-ended duty to assist Veterans and Survivors in developing their claim prevents VA from deciding all claims within 125 days −VA will always consider additional evidence or new medical conditions added Examples of claims that could take longer than 125 days to process include: −Veterans who add a new disability to their claim or identify additional evidence well into VA’s processing of their claim −Veterans who are unable to make scheduled medical exams −In the process of deciding the claim, VA identifies additional disabilities related to the Veteran’s service-connected disabilities that the Veteran did not claim or additional entitlements, such as adapted housing benefits −Complex disability claims, such as radiation claims, that require scientific and medical data and opinions from experts −Difficulty in obtaining National Guard and Reserve records for still serving members or military personnel records required to make a character of discharge determination 7 We will continue to work to drive down the number of claims pending more than 125 days – thank you for your continued help filing electronic fully developed claims We will continue to work to drive down the number of claims pending more than 125 days – thank you for your continued help filing electronic fully developed claims

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION 8 We couldn’t have done it without The American Legion Nationally, nearly 50% of claims submitted by The American Legion in 2015 were FDCs

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION The current VA appeals process is broken and is providing a frustrating Veterans experience. We are failing Veterans. The status quo isn’t acceptable for Veterans or for tax payers. Veterans deserve an appeals decision within one year of filing. The time to modernize the appeals process is now. A Simplified Appeals Process is Timely, Simple, Fair, and Provides a Final Answer. The time to modernize the appeals process is now VA is committed to working with stakeholders like you to improve the processes so appeals decisions are completed as quickly and accurately as possible, while still executing each legally required step in the process, and protecting the due process rights of each Veteran

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION We need your help educating Veterans about the difference between a claim and an appeal A claim is submitted by a Veteran seeking VA disability benefits (or increased benefits) for one or more medical conditions the Veteran believes is related to his or her military service −VA has completed more than a million claims in each of the past 6 years at a 96% issue- based accuracy level −More than 100,000 Veterans are receiving decisions on their claims each month −52% of Veterans with pending rating-related claims are currently receiving Compensation or Pension payments An appeal is filed by a Veteran or Survivor who is dissatisfied with one or more aspects of an initial decision on his or her claim for VA benefits −Approx % of VBA decisions are appealed, and only 4-5% are formally appealed to the Board −While the appeals rate has remained steady at 11-12%, appeals volume has increased proportionately as VA has increased the number of claims decisions over the past 6 years −Unlike other Federal and judicial processes, the current process allows Veterans or their representative to submit new evidence or make new arguments regarding the issue(s) on appeal any time in the appeal process −The average processing time for appeals resolved in FY15 was 3.1 years – 5 years for those that reached the Board −Nearly 74% of all Veteran appellants are receiving disability compensation and pension benefits 10

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION Way Forward: VBA’s National Work Queue Allows VBA to prioritize and distribute the claims inventory to match work assignments with RO capacity and resources to address each Veteran’s claim as quickly as possible Currently in Phase 1 rolled out to 8 stations: Indianapolis, Albuquerque, Oakland, Louisville, Detroit, St. Paul, New Orleans, and Jackson with nationwide deployment planned for FY16 In Phase 1, the RO in the state where the Veteran resides will continue to be the first filter for the Veteran’s claim as long as that RO has the capacity There will be automatic routing of deferred claims that need additional work 11 VSOs will retain access to claims information for the Veterans they support through VBMS at each regional office and online through SEP. The current relationship between VSOs and RO managers will not change as a result of the National Work Queue. Specialized workload will still be routed to the appropriate location Improves quality and consistency of claims processing nationwide to ensure Veterans, their families and survivors receive timely benefits, regardless of where they reside

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION Problem Definition: Research and direct communications revealed that some Veterans are frustrated or confused by the Compensation and Pension exam process, which can lead to distrusting the exam results and higher rates of appeals First Steps: An initial set of easy-to-implement solutions, pilot tested with Veterans and employees, that measurably improve the Veteran experience during select touch points between the Veteran and VA Strategic Objective: Measurably improve the Veteran experience, and by extension the employee experience, of the Compensation and Pension exam process by selecting solutions that are replicable across facilities 12 Way Forward: Improving the Veteran experience with the Compensation and Pension examination process

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION Dependency Processing Goal: By end of FY17, reduce overall inventory of dependency claims to 100K (currently 211K) and improve the ADC for dependency claims Dependency Strategy Approx. 70% of the 4.1 million Veterans currently receiving compensation are eligible for this additional benefit – nearly 45% more than those eligible for the same benefits just 5 years ago VA engineered a rules-based processing system (RBPS) that is designed to complete most dependency claims and hired a contractor to take the data from its legacy, paper-based dependency claim inventory and input this data into the rules-based processing system VA trained call center agents to input dependency claim data to enable RBPS to automate dependency adjustments 13 Way Forward: Dependency Claims Processing FY17 budget includes 300 FTE / $29.1M to “right-size” the Compensation and Pension workforce to meet timeliness expectations for non-rating claims work

Drive to 100% electronic service treatment records and separation health assessment exchanges with DoD Expand employment & educational opportunities for Veterans Drive and improve adoption of electronic filing Give Veterans full access to their own eFolders One authoritative source for Veterans contact information (address, , cell phone, self- service input Move VBA intake & customer service to more community sites - on campus, at medical centers, CBOCs, storefronts, online, SSA, military bases, museums, memorials Improve quality and consistency of C&P exams Optimize and automate claims workflow and implement predictive modeling Redesign performance management systems and align employee performance standards with a Veteran-centric approach and expanded telework capacity Increase Resource Capacity for Non-Rating and Appeals through additional people, system and process efficiencies Redesign the C&P exam process to improve the Veteran experience Ensure seamless and effective transition for Servicemembers Transition Call Centers to Service Centers for easy claims 14 Way Forward: VBA priority actions to achieve MyVA vision Legend Aligns with VA Goal 1 Aligns with VA Goal 2 Aligns with VA Goal 3

VETERANS BENEFITS ADMINISTRATION CONTROLLED UNCLASSIFIED INFORMATION Conclusion In Summary… Transformation reaped significant results: Claims backlog is down 87% from peak Quality is 98% in all but one of eight categories (one at 97.5%) Average days pending is 91 days Thank you for your continued partnership: Continue to show leadership in your submission of FDCs – nearly 50% in FY15 Make sure you’re filing online – not in paper The time to modernize the appeals process is now We need your help educating Veterans about the difference between a claim and an appeal Let us know when you see a problem Thank you for working with us day in and day out 15