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STATEMENT OF BRADLEY G. MAYES DIRECTOR, COMPENSATION AND PENSION SERVICE
VETERANS BENEFITS ADMINISTRATION BEFORE THE HOUSE COMMITTEE ON VETERANS' AFFAIRS SUBCOMMITTEE ON DISABILITY ASSISTANCE & MEMORIAL AFFAIRS

February 26, 2008

VA Plan for Rating Schedule Improvement
To address the recommendations of the Dole-Shalala Commission, as well as various commissions, organizations, and interest groups that have offered suggestions for improving the current rating schedule, VA has developed the following plan to update the schedule and to adopt various suggestions that have been made.

I. Contract for Study

The Department entered into a contract on January 25, 2008, for a study analyzing the nature of specific injuries and diseases for which disability compensation is payable under various disability programs of Federal and State governments and other countries, including VA's program. The study will examine specific approaches and the usefulness of currently available instruments for measuring disabilities' effects on an individual's psychological state, loss of physical integrity, and social inadaptability. The study will make findings and recommendations on the following: (1) the service-connected disabilities that should be included in the schedule for rating disabilities; (2) the appropriate level of compensation for loss of quality of life and for loss of earnings; and (3) the appropriate standard(s) for determining whether an injury or disease, or combination of injuries and diseases, has caused a loss in a veteran's quality of life or loss of a veteran's earnings. The study will take into account the impact of medical advances on disability functioning. We expect that the study will be completed by August 2008.

II. C&P Staff Development and Contract Assistance

Meaningful changes to the rating schedule will require strong leadership and the input of competent personnel who possess the knowledge and skills required to interpret, understand, and write regulations on complex medical concepts. The C&P Service is in the process of recruiting key personnel and expanding our Policy staff. One important aspect of this resource development is our effort to recruit physicians who can bring their medical expertise to improving the rating schedule. Physicians possess the medical knowledge necessary to assist in the effective management of a systematic, ongoing Rating Schedule review process. The hiring of physicians and other qualified individuals is the foundation for the future integration and standardization of this review process. In addition to augmenting the C&P Policy staff as described, we intend to seek assistance from organizations such as the National Academies' Institute of Medicine. We want to leverage the work already accomplished for the Veterans Disability Benefits Commission, and it is important to ensure that our review of the schedule is based on the latest science regarding compensation for disability. The Institute of Medicine already has a process of peer review of literature in place that will help as we move forward in this area.

III. Continue with Rating Schedule Changes under the Current Construct

Revision of the rating schedule has actually been underway since the 1990s, and will continue. A deliberative process is in place that includes input from sources such as the Veterans Health Administration, non- VA medical experts, and veterans service organizations. The general public has opportunity to comment on proposed changes to the schedule in compliance with the Administrative Procedure Act. To date, 12 of the 16 body system sections in the schedule have been revised, and a 13th is nearing publication. The remaining three body systems are in various stages of development. Major changes that have been made include: addition of new disabilities; deletion of obsolete and rarely used disabilities; updating of medical terminology; and most important, development of more objective criteria based on current medical knowledge. Partial revisions of body systems in the rating schedule are being carried out on an ongoing basis. This process continues.

The VDBC specifically recommended that the C&P Service generate changes to the rating schedule criteria for traumatic brain injury (TBI) and post-traumatic stress disorder (PTSD). The C&P Service created a new set of criteria for evaluating TBI and published proposed criteria in the Federal Register for public comment. New rating criteria for evaluating the severity of PTSD are being developed. The criteria will incorporate the criteria for evaluation PTSD identified in the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, published by the American Psychiatric Association. These specific criteria will replace the general criteria used for evaluating all mental disorders and will promote equity and consistency in the assignment of disability percentages for PTSD.

IV. Periodic Reviews of the Rating Schedule

Periodic reviews and studies of the rating schedule are a valuable source of information for assessment and improvement. We plan to continue supporting the tradition of reviews established by the Bradley Commission in 1956. That commission conducted studies of the rating schedule that included a survey of 169 medical specialists on the currency and validity of the schedule and a survey and comparative analysis of the earnings of 12,000 veterans receiving compensation and 7,000 veterans not receiving compensation. The survey of medical specialists indicated a consensus that the schedule generally did provide an equitable compensation for earning loss but that much of the evaluation criteria had not kept pace with modern medical diagnostic and treatment practices. The comparative study of earnings indicated that compensation was generally equivalent to lost wages. However, the commission reported that further studies were desirable. This commission served as the impetus to update many of the diagnostic codes. Another review, initiated by VA in 1961, was responsible for modernizing the classifications and nomenclature of the rating schedule's mental disorder section, which incorporated diagnoses from the first Diagnostic and Statistical Manual of Mental Disorders.

In 1971, VA submitted to Congress an important review and study was conducted by VA, referred to as the Economic Validation of the Rating Schedule ( ECVARS). The study was a response to the Bradley Commission's recommendations and recurrent criticism that ratings in the schedule were not accurate. The ECVARS report noted that the 1945 rating schedule was created during a period when most workplace activity involved physical labor, but the "muscle-oriented society of the World War II era no longer exists, and the instrument that served so well as a yardstick to measure disablement in that era must now be updated and refined." An earnings survey of 485,000 veterans receiving compensation and 14,000 veterans not receiving compensation was conducted and analyzed. The results showed that under many diagnostic codes, especially those involving mental disorders, economic loss exceeded compensation. On the other hand, under some musculoskeletal codes, there appeared to be an over-compensation. VA revised the rating schedule based on the ECVARS findings, with higher compensation provided under some codes and lower compensation under others, and submitted it to Congress in 1973. However, VA did not adopt the revised schedule.

After the failure of ECVARS to affect the rating schedule, the VA review and revision process concentrated on improving the clarity, accuracy, and appropriateness of conditions in the schedule rather than attempting to ensure that economic loss compensation for the conditions was validated. In 1988 the General Accounting Office ( GAO) [now the Government Accountability Office] published a report on the need to update the medical criteria used in the schedule. This led to the comprehensive revisions described above. In 1997, the GAO published another report on the rating schedule. This report focused on the idea that disability ratings may not reflect veterans' actual economic losses. The recent CNA Corporation study provides the foundation for assessing the effectiveness of the VA Rating Schedule in compensating for average loss of earnings as recommended by the GAO in its 1997 review.

The most recent initiative for rating schedule review and research has come from VDBC's report issued in 2007, which included input from CNA, IOM, and other groups. As mentioned, CNA analyzed the effectiveness of VA disability compensation as a replacement for average loss of earning capacity. It was determined that " VA compensation on average is about right relative to earned income losses." . . . It is about right given the average age at which service-disabled veterans come into the VA system," i.e., age 50, "and it is about right when we consider all disability types and ratings as a whole." However, the study also found that veterans entering the system at younger ages are generally under-compensated, while those entering at older ages are generally over-compensated. In addition, while those veterans with physical disabilities are properly compensated, those with mental disabilities are under-compensated. This study provides VA with an empirical basis for developing ways to correct rating inconsistencies identified.

The Dole-Shalala Commission, the VDBC, and various other commissions and groups discussed the need for continuous review and updating of the schedules. As part of our plan for improving the rating schedule, we are committed to responding in a positive manner to recommendations from reviews and studies provided by commissions and organizations concerned with the welfare of veterans. We are also committed to conducting our own reviews and studies as needed to implement improvements in a practical and efficient manner.

V. Quality of Life Compensation

In addition to the Dole-Shalala Commission, recent studies and commission reports, have also recommended that compensation should also be provided for losses incurred in other aspects of a veteran's life. These aspects are generally referred to under the term "quality of life" and include losses in the social and psychological realms. As explained, the recent contract awarded by VA will study the alternatives for incorporating a quality of life component into the disability evaluation scheme. In addition, meetings have been scheduled with representatives of the World Health Organization and the American Medical Association to obtain their views on how quality of life is impacted by physical and mental disability. We stand ready to consider any viable and practical compensation construct that would assist disabled veterans in the quality of life realm. However, as noted above, if VA is to comprehensively incorporate diminution of quality of life resulting from disability into the rating schedule as proposed in the Administration's legislation, it will require additional statutory authority from Congress.

Mr. Chairman, this concludes my prepared remarks. I and others on the panel would be pleased to answer any questions you and members of the subcommittee might have.

http://www.va.gov/OCA/testimony/hvac/sdama/080226BM.asp