Testimony Before the House Committee on Ways and Means,
Subcommittee on Social Security (Shaw) on Social Security Disability
Program's Challenges And Opportunities, Commissioner Massanari, Acting
Commissioner
Mr. Chairman, Mr. Matsui, Members of the Subcommittee:
Thank you for inviting me here to discuss the direction that the Social
Security Administration (SSA) is taking to strengthen the Social Security
Disability Insurance (SSDI) and the Supplemental Security Income (SSI)
disability programs. I am pleased to be testifying here in my first
visit before you as Acting Commissioner, especially since SSA's
stewardship of these programs touches the lives of so many people.
The monthly disability benefits provided through these programs form an
economic safety net for circumstances that any of us could face in
life. Few individuals have private or employer-provided long-term
disability insurance.
But nearly all American workers have Social Security. And the
importance of this program in the lives of American families today will
only increase in the years to come as America's baby boomers age and enter
their most disability prone years. We expect receipts of initial
disability applications will potentially increase about three percent per
year over the next decade as projected by SSA's Office of the Actuary.
It is an enormous challenge to administer these large and complex
programs efficiently, effectively and compassionately. Today I will
discuss the importance of the disability programs, the challenges facing
us, and what we are doing to improve our administration of these
programs.
Introduction
Before I begin, however, I would like to acknowledge the important
contributions of the Social Security Advisory Board. We greatly
appreciate the Board's advice and support. The Advisory Board's
reports and findings are invaluable, both now and for the future, as we
work to ensure that our programs treat our citizens compassionately and
meet the demands of the baby boom population as it ages. As the
Advisory Board notes in its January 2001 report on Social Security's
disability programs, these programs have grown rapidly in recent years and
will continue to grow as the baby boom generation ages. That growth
will coincide with the anticipated retirement of many of our experienced
employees, increasing the strain on the administration of the
program. In addition, new activities such as those associated with
the Ticket to Work and Work Incentives Improvement Act of 1999
will require a greater portion of SSA resources to assist
beneficiaries with disabilities to enter or reenter the workforce.
As you know, Mr. Chairman, the President has announced his intention to
nominate Jo Anne Barnhart to be Commissioner of Social
Security. She will be an outstanding Commissioner and a great asset
to the Social Security Administration. She comes to the position
with a broad range of experience with the Congress and with the Executive
Branch, including having served previously as an executive in SSA.
Currently, she is a member of the Social Security Advisory Board.
We are not, however, simply waiting for a new Commissioner to
arrive. In order to be in the best possible position to address the
challenges facing the disability program, we are developing a
comprehensive and integrated management plan that aligns and integrates
current process, automation, and operational policy activities. Our
goal is to have a plan ready for the next Commissioner that integrates all
disability related activities across all levels of the process to achieve
our goals of improved efficiency, customer service and program
integrity. These activities need to be aligned to ensure balanced
attention to all of the elements of the plan.
This plan will identify near-term and longer-term operational policy
changes and it will continue process improvements, such as further
refinements to our hearing process. It will support the Ticket to
Work legislation and other return to work initiatives and strengthen our
information technology capabilities. The plan will allow us to give
the new Commissioner a framework and meaningful context to consider for
future action.
The Advisory Board shares many of our concerns about disability program
administration. The January 2001 report recommended that SSA study
ways to improve the structure of its disability adjudication processes so
that it can meet the demands of these increasing workloads while ensuring
that claimants are treated consistently and fairly. We believe that
our planning will help accomplish this.
However, the solutions to the issues the Advisory Board raises are not
simple or clear-cut. SSA has taken steps to address many of them as
part of its ongoing effort to improve service to the American
public. For instance, while there have been complaints about
our hearing process, we have reduced processing times by about 100 days,
from their peak of 397 days in Fiscal Year (FY) 1997 to the
current processing time of about 300 days. We have also seen real
progress at the Appeals Council level. Over the past 15 months,
processing times for cases at the Appeals Council level have been reduced
by 140 days, and pending cases have been reduced by 45,000
cases.
These improvements have come about in part because we have modified our
procedures to increase productivity. However, they also have come
about because we have shifted resources to the areas of greatest
need. Nevertheless, it is undeniable that these processing times,
although improved, are still too long and we must continue to seek
solutions.
For initial decisions, we have also seen some significant improvements
as a result of our efforts. A major focus has been on improving the
development and analysis of claims at the initial level so that we can pay
people who should be paid as early in the process as possible. Not
only is this a great benefit to the people who are allowed much earlier in
the process, but it enables our Office of Hearings and Appeals to provide
better service to those individuals who do move through the appeals
process.
Perhaps one of our most important successes in the disability area is
the progress we have made in reducing the backlog that had developed in
continuing disability reviews (CDRs). SSA ensures the integrity of
the DI and SSI programs by periodically reviewing the continuing
eligibility of individuals receiving disability benefits to make sure that
only those who continue to be disabled receive benefits. As you
know, we have been working under a 7-year plan which we first developed in
1996 to process the backlog of CDRs that had grown throughout the early
1990s and to address a new workload of SSI CDRs that the Agency undertook
in 1996. We became current in the SSDI program in 2000, and we
expect to be current in the SSI program by the end of FY 2002.
Over the course of the entire 7-year plan, we estimate an average
savings of $10 in benefits for every administrative dollar spent. We
would not have been able to accomplish this without the help of the
Congress, particularly this subcommittee, in providing us with the
resources we needed. For future years, FYs 2003-2011, we expect the
return on investment in CDRs to be $7 to $1.
Importance of Social Security's Disability Programs
Generally, when people think about Social Security, they think about
retirement benefits. However, the disability program is an essential
part of Social Security's protections. Almost 140 million
people are insured for SSDI benefits and about 6.7 million workers and
their families are receiving benefits. About 5.3 million blind or
disabled individuals receive SSI benefits, about 30 percent of who
also receive SSDI benefits.
Approval for SSDI benefits also provides Medicare coverage after 2
years of receiving benefits. These benefits provide health care
coverage that to many SSDI beneficiaries is simply irreplaceable, since
many would not be able to obtain insurance in private markets because they
are already disabled.
The protection provided by the SSDI program is extremely important,
especially for young families. For a young worker, married with two
children and earning an average income, Social Security has a value
equivalent to a $208,000 disability income insurance policy, which is paid
through payroll taxes.
While about one in six disabled workers is under age 40, the typical
SSDI disabled worker is over age 50 and has fewer than 12 years of
education. The average monthly benefit for a disabled worker, and
his or her spouse and children is $1,311. Nearly half of these
families rely on Social Security for at least half of their family
income. Without Social Security, 55 percent of these families would
live in poverty. Additionally, SSI serves the most economically
vulnerable population with disabilities, most of whom are living in
poverty.
In fiscal 2001, we expect to pay about $90 billion in benefits to
disabled individuals and their families through both the SSDI and SSI
programs. In addition, the SSDI program also provides eligibility
for Medicare and the SSI program provides eligibility for Medicaid.
We expect that this year over 2 million individuals will apply for
disability benefits, and that we will perform 1.7 million CDRs to
determine whether those already on the rolls remain disabled.
We also have a responsibility to the beneficiaries and to the general
public to try to assist beneficiaries to return to work if they can.
The programs have for many years contained some provisions designed to
encourage people to return to work. With the passage of additional
tools in the Ticket to Work and Work Incentives Improvement Act of
1999, which we have begun to implement, we are hopeful that more
individuals will be able to start working or return to work.
As a matter of record, Mr. Chairman, you already know that President
Bush has a strong interest in disability issues. The President has
said that he is committed to tearing down the remaining barriers to
equality that face Americans with disabilities today. His "New
Freedom Initiative" will help Americans with disabilities by
increasing access to assistive technologies, expanding educational
opportunities, and increasing the ability of Americans with disabilities
to integrate into the workforce.
Clearly, SSA has a great responsibility, not only to the beneficiaries
of the program to provide the help they need as quickly and
compassionately as possible, but also to the American people to see that
benefits go only to those who are truly eligible. This is a large
and complex program and SSA administers it in cooperation with the
States. While recognizing that we can and must do better in some
areas, I want to acknowledge the hard work and dedication of Social
Security's employees and the employees in our State disability
determination units. They do a remarkably good job of handling the
enormous responsibilities assigned to them in administering the disability
programs.
Processing Disability Claims
After a disability claim is taken in one of Social Security's field
offices, it is forwarded to one of the State Disability Determination
Services (DDS). These State employees are the ones who actually make
the initial disability determination and, if the individual is
dissatisfied with the decision, they also provide the first level of
review, called a reconsideration. These determinations are
individualized and complex and will be made in more than 2 million initial
applications, in about 585,000 reconsideration decisions of initial claims
denials, and for 1.7 million CDRs this year, as I mentioned
earlier. These state employees generally must obtain at least one
year of medical evidence in support of the claim, scheduling medical
examinations to obtain further evidence if necessary.
If an individual wants to appeal the reconsideration decision, he or
she can file a request for a hearing before an administrative law judge
(ALJ). If the individual wishes to appeal the decision of the ALJ,
the individual may request that the claim be reviewed by the Appeals
Council. This is the final administrative level of review. If
the claimant is dissatisfied with the Appeals Council decision, he or she
may appeal to a Federal court.
We know that the current process works well for many people, but we
also know we can do better. I would like to discuss some of the
areas we are working on to deal with the issues mentioned in the Board's
reports.
New Adjudication Process
At the heart of our attempts to improve the disability process are our
primary goals to make the right decision, make it as early in the process
as possible, and ensure that policy is applied consistently at all levels
of the process and by all decisionmakers in all parts of the
country. This entails a major effort to document decisions in all
cases so that the decisions will, right from the beginning, represent a
high-quality product at every step of the adjudicatory process.
After carefully evaluating a number of different options for improving
the initial claims process, we settled on a new decision process which we
are rigorously testing in 10 States in a prototype environment.
Testing in those states began on October 1, 1999 and is still
continuing.
There are three key elements to the prototype adjudication
process. First, we enhanced the role of the disability examiner in
the State DDS so that they are authorized to make disability
determinations in many cases without further review by a staff physician
or psychologist. This allows medical consultants to spend time on
more complex medical cases. (Physician or psychologist signoff,
however, is still required in all cases involving children and denials
involving a mental impairment.) Second, we eliminated the
reconsideration step for initial disability claims. Finally, we
implemented informal conferences between the decisionmaker and claimant if
the evidence does not support a fully favorable determination. This
provides an opportunity for the claimant to talk directly to the
decisionmaker.
While we do not yet have complete results in our analysis of this
process change, our early indicators suggest that accuracy of decisions
for cases adjudicated under the new process has improved as measured by
quality assurance analysis as performed by SSA's Office of Quality
Analysis. We also have favorable reactions from both customers and
employees concerning the new process.
Processing times for awards in the prototype adjudicative process are
very similar to the time for the current process. Processing time
for denials takes about 20 days longer, primarily due to the addition of
the claimant conference. But, importantly, we have found that by
improving the accuracy of initial decisions, we can reduce the need for
claimants to pursue further levels of appeal and thereby shorten their
overall processing times.
Elimination of the reconsideration step would also save about 70 days
for the almost 500,000 people who seek a hearing each year. (About
70 percent of claimants are not satisfied with the decision on their
reconsideration request and appeal the decision to the hearings level.)
Although the results of the prototype adjudication process appear
promising, we have not made decisions on extending it to other
states. We do not yet have sufficient data on the decisional
outcomes of the test cases through the hearing process, nor do we have all
the data needed to gauge fully the impact of the new process on program
costs. We expect that when we have complete information we will be
able to make decisions on whether to extend the new process to other
states.
Hearings before the Administrative Law Judges
One of the major concerns expressed by the Advisory Board is the amount
of time we are taking to process hearings. During the past year, the
Office of Hearings and Appeals (OHA) has implemented a new workload
process commonly referred to as the Hearings Process Improvement
initiative or HPI. Implementation of this initiative involved
significant changes to the way we process our hearings workload, and the
organizational structure of our hearing offices. We designed the
initiative to reduce case processing times, improve productivity, and
enhance the quality of our service to claimants.
We expect to accomplish these goals by putting in place several key
elements. The new process streamlines the hearing workflow, with
emphasis on pre-hearing analysis and development. It creates a
group-based approach, which involves structural changes in the hearing
office, which is intended to foster a cooperative team environment and
enhance the skills of the staff. It incorporates administrative
efficiencies to allow cases to be prepared for hearings faster. And
it provides higher level analytical support to the ALJ and early analysis
of cases.
We have never undertaken a process change with such a broad impact in
OHA. More than 2,000 employees assumed different duties as a result
of revised position descriptions required by the new process. An
extensive effort took place to train these employees on their new duties,
as well as all employees on the new process. One of the lessons we
have learned is that it takes much longer than we had anticipated to
introduce both fundamental process and cultural change. Working to
change the process and culture at the same time is not easy, but these
changes are mutually supportive in the long run. It is disruptive,
and has taken a toll on performance. Nonetheless, we are now
seeing some positive performance indicators, and we believe that a growing
number of offices are benefiting from the new business process.
You should know that OHA management has been engaged in discussions
with a broad spectrum of employee representatives to make adjustments in
the process and to provide more flexibility to local managers. Most
recently, an agreement was reached to provide needed flexibility in the
rotation of support staff. Although our efforts thus far have
focussed on matters directly related to the support staff, we have also
taken steps to begin discussions with the ALJ union.
Over the past few months, we have responded to the challenges that have
arisen in the implementation of the new process. We are also taking
steps to ensure that best practices are more widely shared among hearing
offices. We are confident that processing times will decline as the
hearing offices gain experience with the new process and its full benefits
are realized. We are continuing to make adjustments and refinements
in the process in order to achieve continuous improvements.
This effort is a long-term investment. We are now undertaking a
broad scale evaluation of all aspects of the new process. The
Steering Committee responsible for leading the evaluation of HPI will
include employee representatives. The Advisory Board will also be
involved in the evaluation process. The Steering Committee has been
asked to develop and execute a plan that will assess the implementation of
the process in the hearing offices, solicit and consider feedback about
the process from within and outside the agency, and identify ways to
continually improve the OHA hearing process. I have asked the
Committee to be ready to report early in the tenure of the new
Commissioner.
Inability to Hire Additional ALJs
There are two areas that have the potential to affect the disability
hearing process. First, since April 1999, due to litigation pending
before the Merit Systems Protection Board, (MSPB) SSA has been unable to
hire new ALJs to replace those who have retired. From 1999 to present, we
have lost 172 ALJs without the ability to hire. We currently have
973 ALJs on board. While we were ready to hire 120 new ALJs this
spring, the order issued by the MSPB has precluded us from completing that
action. If we are unable to hire more ALJs, we expect the number of
ALJs will decline to about 950 by the end of the year. Obviously,
this has the potential to seriously affect our ability to decide cases in
the hearing offices.
The order was issued in the case of Azdell v. OPM. The
case was brought by a class of individuals who have challenged the method
that the Office of Personnel Management used to compute the veterans'
preference in the ranking of ALJ candidates. The MSPB has ruled in
favor of the plaintiffs in the case and against OPM. The MSPB
ordered OPM to revise the rankings.
On March 14, OPM issued a new register of candidates, and SSA was ready
to extend offers to 120 of these candidates when, on April 12, 2001, the
MSPB imposed a stay not to exceed 60 days. The stay, which would
have expired on June 12, 2001, effectively precluded SSA from hiring ALJs
from the March 14 register. The MSPB issued a second stay on June
11, scheduled to expire August 11.
Even if the order is not extended again and we are able to hire new
ALJs beginning in August, they would not be able to begin hearing cases
until well into next year, because of the training they must
receive. However, we are seriously concerned that the order
preventing the hiring of new ALJs may continue to be extended and further
delay the hiring of additional ALJs.
New Medicare Workload
A second area that will seriously affect our hearing offices is the new
responsibility we have under the Medicare, Medicaid and State Child
Health Insurance Program Benefits Improvement and Protection Act of
2000. Under that legislation, SSA's administrative law judges
are required to review local coverage determinations by Medicare
contractors beginning October 1 of this year. These new hearings
will require the ALJs who hear the cases to develop substantial expertise
in Medicare coverage matters. Further, the legislation provides
that, unlike SSA's current hearing process, these hearings must be
adversarial. This will be a fundamental change in our hearing
procedures.
In addition, the legislation requires that after October 1, 2002, SSA
must render a decision within 90 days of the request in all Medicare
cases, including those under Part A and Part B of Medicare, as well as
those involving local coverage determinations. The legislation also
provides that the dollar threshold for requesting a hearing will
drop from $500 to $100, which will result in an increase in the number of
hearings.
We expect that this new workload and the stringent time requirements
will have a substantial effect of the operations of the Office of Hearings
and Appeals and could seriously affect our ability to process disability
cases. We are evaluating exactly what the effect will be and how SSA
will respond to this new workload and are working with our colleagues at
the Centers for Medicare and Medicaid Services (formerly known as the
Health Care Financing Administration). However, to give you some
idea of the magnitude of the challenge, the Congressional Budget Office
has estimated that for the Social Security Administration to fulfill the
requirements of the legislation would take 1,100 workyears annually.
These workyears would represent about 1 out of every 6 workyears in
the hearing offices this year.
This workload and the inability to hire ALJs pose a significant
challenge to reducing the workloads and improving the timeliness of
decisions at the hearing level.
Appeals Council Improvements
In October 1999, a workgroup representing SSA components was convened
and charged with developing a plan to assist the Appeals Council in
reducing the backlog of pending cases in the short term, and to keep pace
with receipts in the long term. This workgroup published the Appeals
Council Process Improvement Plan in February 2000, with implementation
beginning the following month. Since that time, as I mentioned at
the beginning of my statement, we have made significant progress in
addressing the time it takes for the Appeals Council to review and issue
decisions in claims appealed to them. Processing time has fallen by
140 days and pending cases have been reduced by 45,000 cases.
We are encouraged by these positive first steps, and we expect to see
continued improvement in the performance of this important component of
SSA's appellate process. Currently, the Appeals Council has a task
force working the oldest cases, and once these cases are processed, we
expect a dramatic improvement in the overall average processing time.
We are committed to continuous process improvement in both the hearing
offices and the Appeals Council. We will need to continue to make
adjustments and refinements as we move forward.
State Variations and Consistent Application of Policy
One of the areas highlighted in the Advisory Board's report is the
variation in allowance rates among states. I know that this
subcommittee has long been interested in these differences in adjudicative
outcomes.
Because of the varied socioeconomic and demographic factors that
influence the proportion of a State's population that applies for
benefits, it is reasonable to expect some difference among state in their
allowance rates. However, such differences do not necessarily
suggest inconsistent or inaccurate application of law or policy.
Consistency among decisionmakers should not be measured solely by
allowance rates.
Nonetheless, variations in current allowance rates are cause for
attention. We are conducting a detailed regression analysis to
determine the extent to which these differences in initial allowance rates
can be explained by environmental and demographic factors. However,
in an effort to ensure consistent decisions, we have begun to address the
concern through what we term "process unification," which is a
comprehensive effort to assure that all decisionmakers apply the same
standards in making disability decisions. Process unification is
designed to help achieve greater decisional consistency, both from state
to state and at the different stages in the adjudication process.
We have seen progress with regard to improved consistency between the
DDS and hearing levels over the last few years. For example, we have
achieved improved compliance with difficult policy areas where nationwide
training was provided. This progress is consistent with an important
trend toward a higher proportion of all awards being made at the front end
of the process.
Quality Assurance
The Social Security Advisory Board recommended that SSA revise its
quality assurance process. The Board suggested that a revised
process might shed light on why State variations exist and whether they
represent problems that could or should be addressed. The Board also
recommended that a revised process should apply to all levels of
adjudication and that standard processes apply to all DDSs.
SSA has long shared the Advisory Board's concerns about the need for
improvement to our quality assurance system. Because of these
concerns, we brought in a contractor, the Lewin Group, to conduct a study
of the current process and make recommendations for revisions.
The recommendations made in the report from the Lewin Group are
sweeping. They call for the introduction of a whole new quality
management system that defines "quality" in much broader terms than we do
today. It would take us well beyond "quality assurance" and "quality
control." This quality management system would focus on process
analysis and process management and would move us away from end-of-line
inspection and detection of error.
We believe that the Lewin report, which came to us this March, has much
to offer. We are carefully reviewing these recommendations to fully
assess the advantages and disadvantages of the proposals to determine
which we should adopt. Already underway is a pilot of a new
consistency review process for claims processed in the DDS's. The
new review is intended to assure that the quality review system sends a
single message to all of the States on the accuracy of their decisions.
Disability Research
The Advisory Board has also recommended that SSA study long-term policy
changes to its disability programs. One of the most valuable
services SSA can provide the Administration, the Congress, and other
policymakers is the information they need for making sound
decisions. SSA is placing a high priority on policy analysis and
research that will provide the information necessary to evaluate and
strengthen the nation's disability programs.
For example, design plans are well underway for the benefit offset
demonstration project required by the Ticket to Work and Work
Incentives Improvement Act of 1999. In this project, SSDI
benefits will be reduced gradually by $1 for every $2 that a beneficiary
earns over a certain level. Currently, SSDI beneficiaries face losing
their entire benefit for months that they earn over $740, the substantial
gainful activity level. The fear of losing cash and Medicare
benefits is often cited as a reason beneficiaries do not return to
work. The benefit offset project will be designed and implemented to
measure the importance that these two factors have on the beneficiary's
decision to return to work. In addition, the demonstration will
identity the costs and benefits of a SSDI offset as well as the
determinants of return to work, characteristics of beneficiaries who
participate in the project, and information on employment outcomes.
Last year, we awarded a 5-year cooperative agreement for our Disability
Research Institute (DRI) to the University of Illinois at
Urbana-Champaign. The DRI will conduct research that will help SSA address
the needs of people with disabilities and to better understand the factors
that contribute to their ability to remain in the workforce. Two DRI
projects deserve special mention. The first is a design for an experiment
and demonstration in early intervention.
Many experts believe that providing intervention methods to disabled
individuals as close to the disability onset as possible significantly
improves their chance of returning to work. We plan on testing
several models including such interventions as integrated service supports
and collaboration with employers. We are in the early design phase
of the project, and are currently working with the DRI to develop the
details for several models.
The second priority project that the DRI has undertaken is research on
validating SSA's medical listings. We are working with the DRI to develop
criteria that will help determine the extent to which the listings are
predictive of work ability.
These are just a few examples of the research we have underway that
will enable us to continue making improvements in our disability
programs.
Conclusion
In conclusion, Mr. Chairman, the disability programs are large, complex
programs that are critically important to the lives of millions of
Americans. As the programs have changed over time, so have the
challenges that confront SSA in ensuring that Americans with disabilities
receive fair, accurate, consistent and timely decisions when they apply
for benefits.
SSA is committed to making the Social Security disability programs both
more responsive to claimants and beneficiaries and more accountable to the
nation's taxpayers. We are better able to do so because of the
important contributions of the Social Security Advisory Board, and I want
to thank them again for their help.
In order to succeed, we will also need the support and advice of the
Congress, and especially this subcommittee. I want to thank you,
Chairman Shaw, and the members of this subcommittee who have worked so
hard to assure the funding for Social Security. It is crucial that
we receive the funding requested in the President's FY 2002 budget
request. We will again be relying on your continued support to
obtain the needed funding for our operations.
I truly appreciate the opportunity to come before you today, so that
together we can build on the successes that we have seen in recent years
and work to meet the challenges that remain. I would be happy to
answer any questions.
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