Good afternoon. Thank you for affording me the opportunity to discuss some of the things we're doing within the Department of Veterans Affairs.
It's been a couple of years since I testified before all of you. I've been up there a couple of times, but usually when I come up, it's January and February, so it's a little colder.
I'm happy to talk about the Department of Veterans Affairs and some of the new initiatives we are doing. First, I'll put it in context so that everybody understands the organizational structure of the Department of Veterans Affairs.
We are the second largest cabinet in the government, the first being the Department of Defense. VA has three administrations under it. It has our benefits side, which I reside in, our health side, and our cemeteries and memorials side.
Our health side has what is probably the largest hospital network facilities in the world. We have over 1,700 facilities, from big brick-and-mortar facilities all the way to what we call community-based outpatient clinics, along with what we're doing more and more of, which is telehealth benefits. We serve nearly nine million veterans in the health care arena.
Our cemeteries and memorials side would be our smaller administration. We oversee cemeteries for about 4.3 million veterans and their family members who reside on our grounds. We inter about 130,000 a year within our memorial affairs side.
On the benefits side, which is what I fall under, we have seven business lines within DVA. Our biggest one would be disability compensation. In our disability compensation, we provide monetary benefits to just over 4.6 million veterans who are in receipt of disability compensation. Our pension and fiduciary program, which is a program for our wartime veterans, is a smaller program, as it's a means-based one, based on your income. That has about 500,000 veterans.
Our vocational rehabilitation and employment program is a benefit program for those veterans who are service connected for disability compensation but who might need further education. That's actually how I got my undergrad degree. It was through vocational rehab, not our education program. For voc rehab, we have about 135,000 veterans who participate in that program as well. It's really to help those with service-connected disabilities to get back to the daily act of living.
I'm sure you've heard about our education program. It's mostly our Post-9/11 GI Bill. We've given that benefit out to 1.74 million, so it's getting close to two million. That would be not only veterans; this benefit allows you to transfer that entitlement to your spouse or dependant as well.
In our home loan benefit, this past year we did over 705,000 guaranteed loans. It's a great benefit that can be used numerous times throughout your life once you're eligible. One of the keys to that benefit is that, as you know, we've been working hard to end homelessness, and part of doing this in the VA home loan program is that if we become aware you're becoming delinquent on a home payment or are in financial problems, whether you have a home loan with VA or not, we will work on your behalf, the veteran's behalf, with the lending institution to try to keep you in that home.
For example, last year we helped 97,000 veterans stay in their homes, without going to foreclosure, to keep them from becoming homeless. This is a huge benefit, because once you lose your home, typically where do you go next? It's a great program within our home loan benefit.
Another part of that is what we call our specially adapted housing benefit. That is for severely disabled veterans who need a benefit to adapt their home to make it wheelchair accessible or whatever that may be. We did almost 2,000 applications last year in the specially adapted housing program.
We have over six million who are covered under our insurance. Our insurance has a huge coverage, with about $1.2 trillion in coverage for those who have opted for our insurance program.
Our benefits assistance service, our last program, is really our outreach. It's the three phases: I can do face-to-face communicating of benefits; I can do it online—and for many of the systems, we're moving toward self-service capabilities—and I can do it over the phone.
Last year we did a huge initiative. We answered about 20 million phone calls last year, but one of the big problems we had was the blocked call rate. We had a 59% blocked call rate. Veterans couldn't get in. To get an answer to the call, there was a hold of five or 10 minutes or even longer. We reduced that to 25 seconds and a 0% blocked call rate. Really, a lot of that is attributed to driving more services online. That's what we're seeing with today's veterans. They want to do things online. They want it fast and quick. We still need to do some work, though, to get into the mobile app arena, which is what we're looking at as well, but that initiative was huge for us.
There are a couple of other big initiatives.
You might have heard the President and our secretary announce today our electronic health records initiative. We do most everything with DOD in partnership. Today's announcement was a historic one, in that we had worked together to do interoperability with information and data exchange. DOD did a long assessment over a couple of years to determine what application and architecture platform they wanted. They made that decision while VA was still wondering where it was going to go. Today, the secretary and the President announced that we will be going with the same platform and the same software as DOD. That is a huge win-win for service members and veterans, because we will use the same software and the same electronic health record from the moment the service member comes in, all the way through their life cycle, until they use their last benefit, which is memorial affairs.
We have worked on making some huge strides in VBA and VA as a whole. On the benefit side, I know that the last time I testified to you, it was around our backlog. We were really taking a lot on that.... We had a peak inventory of 611,000 claims. That number is down, with the backlog being just under 100,000, at about 95,000 or so. We've made great strides there.
Also, we've automated the process to go completely paperless. We have another initiative now for all of our paper record folders that were in our regional offices. In VBA, we have 56 regional offices, including two in Manila and Puerto Rico. They had paper folders there. We have an initiative now whereby we're taking out the paper folders and sending them to our scan vendor, who is digitizing them and putting them into our application, or what we call the veterans benefits management system, which is what we use to process disability claims.
We've also created a centralized intake claims processing piece, to the point where we no longer accept mail. We learned this from you on our trips up there in terms of how you had centralized your processes. Now, all the mail we receive goes to our intake site, where it is digitized and scanned, and then it becomes electronic for our use. We're looking at doing more OCR technology to pull the data, because you can do a lot more with data than you can with paper.
I've talked about another couple of concepts before, including e-benefits, the joint VA-DOD portal, where we're capturing service members as soon as they enlist and staying engaged with them throughout their life cycle, helping them until they get ready to separate. Also, we had legislation passed in 2011 that now makes it mandatory for all separating service members to attend a separation briefing. We call it the transition assistance program, but it's not just with VA and DOD; it includes the Department of Labor, the Social Security Administration, the Office of Personnel Management, and the Department of Education. It includes our other cabinet organizations, which are all working together to help that service member transition into the civilian sector. We're seeing a lot of benefits from that program.
We still have some work to do. The secretary is really concerned about our suicide prevention efforts. There are too many suicides.
Thank you, Mr. Chairman, vice-chairs, and members of the committee. I appreciate the opportunity to discuss with you the Office of Inspector General. It really is a tremendous honour to have this opportunity to speak with you today.
First, let me provide a very brief introduction to the history of inspectors general. The Inspector General Act of 1978 established federal IGs at 12 agencies including VA. Today there are 73 federal IGs across the government, about one-third of whom are appointed by the President.
The stated purpose of the IG Act was to create independent objective units at an agency, the primary duty of which was to combat waste, fraud, and abuse in the programs and operations of that agency. It authorized IGs to conduct audits and investigations and to make recommendations for the purpose of promoting economy, efficiency, and effectiveness. IGs have law enforcement powers including the power to make arrests. IGs are also entitled to all records of an agency and can interview employees under oath and subpoena records from outside of the agency.
The IG Act also set up a dual reporting structure by requiring each IG to keep the agency head in Congress fully and currently informed about problems and deficiencies at the agency. IGs are required to provide both the head of the agency and Congress a semi-annual report that includes information on the IG's activities for the previous six months. Thus, IGs make reports to the agency heads and to Congress but do not report to them.
To promote independence of IGs, our budgets are separate from the agency's.
Although IGs do not report to anyone, there are some checks on them, including the ability of the President to remove an IG after notice to Congress, and the requirement that IGs adhere to professional standards.
With respect to me, prior to being the IG, I was in the private practice of law in Washington, D.C., for 29 years. I also served as the chairman of the independent review committee of Vanguard Canada based in Toronto. I was nominated by President Obama to be the IG of Veterans Affairs on October 2, 2015, and confirmed by the United States Senate on April 19, 2016. I've had the honour and privilege of serving as the VA IG since May 2, 2016.
To put in context some of the challenges of my position, let me provide you with some facts about VA. It is the second largest federal agency with over 370,000 employees and a fiscal year 2017 budget of about $180 billion. If VA were a public company, its budget would make it the sixth largest U.S. company, ahead of General Electric, AT&T, and General Motors.
There are over 21 million veterans in the United States, about 10% of whom are women, and VA provides well-earned services and benefits to many of them. VA operates 144 hospitals and 1,200 outpatient clinics that treat almost seven million veterans annually. To take it one step further, in the last fiscal year VA completed more than 58 million medical appointments and over 25 million community care appointments. VA also has 56 regional offices that are responsible for the distribution of benefits for veterans who have earned them. Around 4.5 million veterans receive disability compensation. About 300,000 veterans and over 200,000 survivors receive pension benefits.
VA also operates and maintains the largest national cemetery system in the United States with 135 national cemeteries. In fiscal year 2017, VA is projected to inter over 130,000 veterans and family members. VA operates the 10th largest life insurance program in the U.S. with over $1.2 trillion in face amount of insurance policies. VA also provides education assistance to over one million students. VA has a home mortgage program with over $2.5 million active loans guaranteed by VA. VA provides vocational rehabilitation and employment benefits to over 140,000 veterans. These numbers are staggering and highlight the size and complexity of VA.
On my first day on the job, I emphasized to my staff that we would always strictly adhere to the following three principles: First, we must ensure that we maintain our independence. Put another way, we make reports to the secretary and Congress, but we do not report to anyone. Second, we must be fully transparent by promptly releasing reports of our work that are not otherwise prohibited from disclosure. Third, we must maintain the highest integrity of our work. This means that each of our reports must meet at least these five standards. They must be accurate, timely, fair, objective, and thorough.
Let me tell you a bit about the structure of our office. We are currently at about 700 staff, with about 200 in Washington, D.C., and 500 in 40 offices around the country. Our fiscal year 2017 appropriation is about $159 million. This is an increase from fiscal year 2016. Even though we're about 700 staff, we're a relatively small office to conduct oversight of an organization that has a budget of $180 billion and includes so many important and complex services. Compared to other inspectors general offices, we are small with respect to both our budget as a percentage of the agency budget and the number of employees compared to number of employees of the agency overall.
We are divided into three directorates. The first and largest is audits and evaluations. They conduct performance and financial audits and other evaluations of VA programs and operations. The next largest of our directorates is investigations, with about 215 staff. Investigations conducts criminal investigations related to VA's programs and operations, as well as administrative investigations of allegations against senior VA officials. Next is our health care inspections, with about 125 staff. Health care inspections conducts inspections of the medical centres and community-based outpatient clinics, performs national reviews of health care issues, and also reviews individual cases.
We speak through our reports and produce about 300 work products a year. This includes the results of our investigations, audits, inspections, and reviews. Our goal is to make our reports of the highest quality.
The OIG provides a healthy return on investment. Over the past five years, we have averaged 475 arrests, 330 convictions, and $3.125 billion in monetary benefits, for a return on investment of $30 for every dollar expended on OIG oversight. This is a strong return and supplements the inestimable value we bring by helping VA improve its health care and benefits services that impact so many lives.
Let me answer some common questions that we have been asked.
How do we see our role? We see our role as helping VA become a more effective organization and ensuring that taxpayer money is spent as appropriated. We do not see it as an adversarial relationship with the department. Although we are independent and must always avoid even the appearance of an impairment to our independence, we meet with VA staff to better understand the programs and operations of the department. It also allows VA staff to get to know us better and learn more about our mission.
How do we get information? We do so in a number of different ways. We have a hotline that gets over 40,000 contacts a year, primarily through phone calls and emails. About 40% of these contacts are from veterans. We review each and every hotline contact we get. We also get numerous requests from members of our Congress. Unfortunately, we are not able to handle each and every matter, and we refer some of these matters to the department for action and follow-up as appropriate. As well, we get tips and other information from VA staff. A number of these are substantiated, so we take these and other tips we receive seriously. We also data mine, to be as proactive as possible. We have a data analytics group based in Austin, Texas, which has access to VA's databases. This allows us to sort and analyze data in numerous ways.
What do we include in our reports? We try to answer at least the following questions in our reports. Why is this report important? If the matter isn't important, then it's not something we should be doing. What happened here? Again, we try to present it in a fair and balanced manner. Why did it happen? This is really important to put the facts in context and to determine whether there are lessons to be learned. Finally, who, if anyone, is responsible for any wrongdoing? This promotes individual accountability.
How do we decide what matters to take? We can take only a small fraction of the potential matters brought to our attention. When deciding whether to take on a matter, we look at a variety of factors, including whether it impacts a large number of veterans, whether there is imminent harm, the impact on taxpayers, whether the conduct is widespread, the public interest, whether we have done something in that area before, whether the issue can be handled by VA or another federal agency, and whether Congress has legislated that we should conduct a certain activity. These are not the only factors but rather some of the more important ones that we consider.
What are our current priorities? We are focused on a number of areas. Among the most significant are the following:
Timely access to quality health care. We have recently issued a number of reports on wait times at VA hospitals, as well as allegations regarding how the quality of care may not have been acceptable, and we have many more reports pending.
Mental health services. VA is a leading provider of mental health services. Suicides of veterans remain tragic and significant in the United States, with recent estimates of 20 veteran suicides a day. We have issued a number of significant reports in this area, and have more pending.
Pain management. There is an opioid crisis in the United States, and we have reported on the use of opioids and other narcotics. Our reporting in this area will continue.
The veterans choice program and other care in the community programs. After the wait time scandal in 2014, Congress appropriated $10 billion for VA to enhance its care in the community. It allows veterans who cannot get an appointment for preauthorized care within 30 days or who live more than 40 miles from a VA facility to get care in the community from a provider who is on an approved VA network. We have issued a few reports on the challenges faced by VA in establishing this program and have more reports to come. The funding for veterans choice was just extended, and Congress will be considering the future of care in the community programs.
Construction. VA has an outdated infrastructure and is in need of remodelled and new facilities. One facility being constructed is for the replacement of the Denver medical centre in Colorado. Congress appropriated $800 million and it was hoped that the facility would have been finished several years ago; however, construction is ongoing. We issued a report last year which showed that the current cost estimates to finish construction are around $1.675 billion, or almost $1 billion above budget. There are a number of other major construction projects set for VA, and we will be watching them closely.
Procurement is another focus area. VA buys billions of dollars' worth of different products, including drugs and prosthetics. We have a number of active investigations related to allegations of fraud and waste of these products and many others.
Information technology. VA has many antiquated IT systems, including its system to prepare its financial statements and schedule appointments. We have issued a number of reports of VA's IT challenges and have a number of other ongoing IT projects.
Benefits fraud. There are numerous instances of benefits fraud committed by veterans, families, and others. We have aggressively investigated and helped criminally prosecute a number of benefit frauds.
I thank you again for inviting me here today, and I hope you have a better understanding of our work. In the time remaining, I'm happy to answer any questions that you may have.