VA Philippines Office:
Maintain Operations, but More Information Needed to Determine Future Presence
GAO-12-20R: Published: Oct 27, 2011. Publicly Released: Oct 27, 2011.
The Department of Veterans Affairs (VA) operates a regional office in the Republic of the Philippines--the only one of its 57 regional offices that is located in a foreign country. Over the last two decades, Congress has periodically reauthorized the office for an average of 3 years each time. The Philippines was a U.S. territory prior to World War II and was granted independence in 1946. Congress authorized limited benefits for Filipino veterans who served under the command of the United States during the war, and authorized VA to operate a regional office to administer these benefits. In 1958, the office expanded to include an outpatient health clinic. VA estimates that about 18,000 Filipino WWII veterans were alive as of 2010, down from an estimated 452,000 in 1977. In light of this declining population eligible for benefits, maintaining the office may no longer be warranted at some point. Public Law 111-275 extended the authority for VA to operate this office until December 31, 2011, and directed GAO to submit this report. Our objectives are to (1) describe the primary activities undertaken by the VA regional office in the Philippines, and (2) identify the estimated costs and benefits of maintaining this office in its current location versus moving its activities to the U.S.
The VA Philippines office processes disability compensation, and survivor, pension and other VA benefits for all Filipino WWII veterans and dependents, as well as for U.S. veterans and dependents living in the Philippines. In fiscal year 2010, the office processed $187 million in compensation and pension benefits for both Filipino and U.S. veterans. According to VA officials, in order to combat high levels of fraud the office staff use a variety of methods, including using photographs and interviews to determine identity, verifying claims using forensic analysis, and using WWII Japanese records to determine whether a Filipino WWII veteran collaborated with the enemy during the war. The Philippines office also provides medical exams through its outpatient clinic to support compensation and pension claims and provides other health care services for U.S. veterans. In fiscal year 2010, about 4,600 veterans made almost 24,000 visits to the clinic, which serves primarily U.S. veterans; Filipino WWII veterans are not eligible for services other than compensation and pension exams, and no dependents are eligible for these services. VA staff also process SSA benefits for individuals--which includes veterans and nonveterans--living in the Philippines and 41 other countries throughout the East Asia Pacific region. Currently, the benefits of maintaining the Philippines office likely outweigh its costs; however, more information will be needed to determine the need for its continued presence in the future. Financial savings from lower personnel costs and fraud detection efforts currently offset or lower some of the office's operating costs. The cost of processing VA benefits in the Philippines office is about $5.1 million per year. However, VA estimates that the personnel cost is about $5.5 million less than it would be in the U.S. because most employees in the Philippines office are local staff who are paid substantially less than staff would be paid in the U.S. In addition, VA estimated that this office recently prevented over $4 million in fraudulent payments through fraud prevention and investigation. The operating cost for the outpatient clinic was $10.1 million in fiscal year 2010. VA has not estimated the costs or savings that would occur if the outpatient clinic were closed and/or some of its health services were administered from the United States, such as through VA's Foreign Medical Program. According to VA, there are cost savings associated with completing the compensation and pension exams in-house by VA rather than having the exams completed by Philippine private sector physicians because this sector is known for pervasive fraud. Beyond financial savings, other benefits of the Philippines office support its presence in the short-term. VA has not developed information that would help decide the status of the office in the future, such as projections of the number of veterans and dependents in the Philippines and their future impact on office workloads. Other factors to consider in maintaining or closing the office include the capacity to investigate fraud, the impact on services to veterans in the Philippines, and geopolitical considerations. Currently, continuing operations appears to be warranted because of lower payroll costs, the specialized workload, and other factors. However, as the population of Filipino WWII veterans and dependents declines, so should the need for specialized staff and extensive fraud investigation activities. Over the past two decades, Congress has reauthorized a series of short-term extensions (averaging 3 years in length) to allow VA to operate this office. A 3-year extension beyond the December 31, 2011, deadline would allow VA to conduct a thorough analysis of future feasibility. Congress should consider extending authority for the Philippines office, but require VA to assess and report to Congress on the feasibility of maintaining a future presence in the Philippines.
Matter for Congressional Consideration
Comments: Congress has not yet acted on this recommendation.
Matter: Congress may wish to consider extending authority for the Philippines office, but require VA to assess and report to Congress on the feasibility of maintaining a future presence in the Philippines. In conducting this analysis, VA should be required to consult with SSA and State to develop and use information on the potential future workload of the office based on the projected number of Filipino WWII veterans, U.S. veterans, and dependents in the Philippines; the costs and benefits of alternative ways to provide services to veterans in the Philippines, such as delivering medical services through the Foreign Medical Program and providing some services from the United States while maintaining fraud investigation staff in the Philippines; and the foreign policy implications of maintaining or closing the VA office in the Philippines.