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entitled 'Social Security Disability: Reviews of Beneficiaries'
Disability Status Require Continued Attention to Improve Service
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Testimony:
Before the Subcommittee on Social Security, Committee on Ways and
Means, House of Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, July 24, 2003:
Social Security Disability:
Reviews of Beneficiaries' Disability Status Require Continued Attention
to Improve Service Delivery:
Statement of Robert E. Robertson, Director Education, Workforce, and
Income Security Issues:
GAO-03-1027T:
GAO Highlights:
Highlights of GAO-03-1027T, testimony before the Chairman,
Subcommittee on Social Security, Committee on Ways and Means, House of
Representatives
Why GAO Did This Study:
The Social Security Administration (SSA) has had difficulty in
conducting timely reviews of beneficiaries’ cases to ensure they are
still eligible for disability benefits. SSA has been taking steps to
improve the cost-effectiveness of its review process. SSA has linked
the review process to eligibility for a new benefit that provides
return-to-work services.
This testimony looks at SSA’s ability to stay current with future
reviews, identifies potential improvements to the review process, and
assesses the review process–return-to-work link.
What GAO Found:
SSA will likely face a backlog of about 200,000 continuing disability
review (CDR) cases by the end of fiscal year 2003. SSA officials
attribute the pending backlog to its decision to reduce the number of
cases reviewed as a result of the delay in obtaining fiscal year 2003
funding. In addition, the pending backlog resulted from putting more
emphasis on initial applications over CDRs. To ensure CDRs receive
adequate attention, SSA has requested some fiscal year 2004 funds be
“earmarked” for these reviews. Given SSA’s ability to eliminate its
previous CDR backlog using targeted funds, this maneuver could help
SSA. Over the next 5 years, SSA has estimated that 8.5 million CDRs,
costing about $4 billion, are needed to stay current. If SSA generates
another backlog, cost savings and program integrity may be compromised
by paying benefits to disability beneficiaries who are no longer
eligible to receive them.
SSA is not making the best use of available information when
conducting its CDRs, leaving opportunities for improvement. First,
SSA’s decisions on the timing of CDRs are not based on systematic
analysis of available information. Second, SSA’s process for
determining which CDR method to use is not always based on the best
available information. For example, SSA requires an in-depth review
for all beneficiaries who, upon entering the program, are expected to
medically improve even if current information on certain of those
beneficiaries indicates that improvement is unlikely and that the
review would be better handled through a shorter, less expensive
method. Third, SSA has not fully pursued medical treatment data
available from the Medicare and Medicaid programs despite their
potential to improve SSA’s decisions regarding which review method to
use. Fourth, SSA’s CDRs continue to be hampered by missing or
incomplete information on beneficiaries’ case history.
SSA delays the provision of new return-to-work benefits to
beneficiaries expected to medically improve based on the assumption
that such beneficiaries are least likely to need them. However,
according to SSA data, about 94 percent of such beneficiaries are not
found to have medically improved upon completion of a disability
review. As a result, some individuals who might benefit from return-
to-work services are initially denied access to them. SSA is reviewing
this policy and while doing so, will need to consider how to best
balance its financial stewardship and return-to-work goals.
www.gao.gov/cgi-bin/getrpt?GAO-03-1027T.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Robert E. Robertson
at (202) 512-7215 or RobertsonR@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss SSA's continuing disability
review (CDR) process. The Disability Insurance (DI) and Supplemental
Security Income (SSI) programs are the largest federal income programs
for disabled individuals, paying about $86 billion to about 10 million
disabled beneficiaries in 2002. These programs have been growing in
recent years and are poised to grow further as the baby boom generation
ages. To help ensure that only eligible beneficiaries remain on the
rolls, the Social Security Administration (SSA) is required by law to
conduct CDRs for all DI beneficiaries and some SSI disability
recipients to determine whether they continue to meet the disability
requirements of the law. In addition, to assist beneficiaries who want
to return to work and leave the disability rolls, SSA began
implementing the Ticket to Work and Self-Sufficiency Program in 2002.
Under this program, beneficiaries are issued a "ticket," or voucher,
which they can use to obtain vocational rehabilitation, employment, or
other return-to-work services from an approved provider of their
choice.
Both the CDR process and the ticket program are key aspects of SSA's
effort to improve its service to the public. SSA's Fiscal Year 2004
Service Delivery Budget Plan highlights the importance of CDRs in
achieving the agency's program stewardship objective of improving
payment accuracy in its disability programs. In particular, the plan
discusses the cost-effectiveness of CDRs and the need to keep current
with the CDR workload. The plan also notes SSA's efforts to fully
implement the ticket to work program in order to achieve its objective
of increasing the number of people with disabilities who obtain
employment.
My testimony today focuses on the results of our recently completed
review of SSA's CDR process and of the relationship of this process to
determinations of beneficiary eligibility for assistance under the
ticket program. (In a report issued today,[Footnote 1] we discuss the
results of our review in greater detail and provide several
recommendations to the Commissioner of SSA for improving CDR cost-
effectiveness.) More specifically, this testimony discusses: (1) the
impact that expiration of targeted funding for CDR processing could
have on SSA's ability to remain current with the CDR caseload, and the
level of funding that would be needed over the next 5 years to keep the
workload current; (2) opportunities that exist for SSA to improve the
cost-effectiveness of the CDR process; and (3) whether SSA's rationale
for delaying return-to-work and vocational services under the ticket
program for beneficiaries who are expected to medically improve is
supported by program experience. To examine these issues, we reviewed
SSA documents, including the agency's budget request and estimates of
the cost and savings from conducting CDRs. Also, we surveyed 52
Disability Determination Services (DDS)[Footnote 2] directors to assess
the potential effect of the expiration of CDR-targeted funding on DDS
operations. Moreover, we analyzed SSA data on CDR outcomes, reviewed
SSA-contracted studies of the CDR process, examined legislation,
regulations, and SSA policy guidance related to CDRs and the ticket
program, and interviewed SSA officials.
In summary, with the expiration of CDR-targeted funds at the end of
fiscal year 2002, SSA is at risk of generating another CDR backlog. As
of March 2003, SSA was on track to complete about 200,000 less CDRs
than needed to keep its workload current. The expected shortfall is
attributable to several factors, including SSA's decision to reduce the
number of CDRs it processed pending fiscal year 2003 funding decisions.
Based on SSA's cost and workload projections, it would cost a total of
about $4 billion or more over the next 5 years to complete its CDR
workload. Other factors that could affect SSA's ability to keep current
with its CDR workload include DDS staffing difficulties and the lower
priority given to CDRs relative to initial claims. If another large CDR
backlog is generated, SSA is at risk of foregoing cost savings and
compromising the integrity of its disability programs.
While SSA has taken a number of actions over the past decade to
significantly improve the cost-effectiveness of the CDR process,
opportunities remain for SSA to better use information in deciding when
beneficiaries should undergo a CDR and which method to use in
conducting a CDR--a mailed-out questionnaire ("mailer") or a full
medical review. For example, SSA has not fully studied and pursued the
use of medical treatment data on beneficiaries available from the
Medicare and Medicaid programs despite the potential of these data to
improve SSA's decisions regarding whether to use a mailer or full
medical review to complete a CDR. Also, SSA continues to be hampered in
its CDR decisions by missing or incomplete information on
beneficiaries' case history.
In addition, SSA's rationale for delaying issuance of a ticket to
beneficiaries expected to medically improve, based on the premise that
they will regain their capacity to return to work without SSA
assistance, is not well-supported by program experience. As a result,
some beneficiaries who might otherwise benefit from potentially
valuable return-to-work assistance have to wait up to 3 years to access
services through the ticket program. As SSA reexamines this policy, it
will need to consider alternatives that better balance the agency's
program stewardship and return-to-work goals.
Background:
The DI and SSI programs are the two largest federal programs providing
cash assistance to people with disabilities.[Footnote 3] In addition to
cash assistance, DI beneficiaries receive Medicare coverage after they
have received cash benefits for 24 months, and in most cases, receipt
of cash benefits makes SSI beneficiaries eligible for Medicaid
benefits. In 2002, SSA paid about $60 billion to 5.5 million disabled
workers.[Footnote 4] In addition, about 5.5 million people with
disabilities received about $26 billion in federal SSI cash
benefits.[Footnote 5]
CDR Process:
At the time beneficiaries enter the DI or SSI programs, DDSs determine
when beneficiaries will be due for CDRs on the basis of their potential
for medical improvement. Based on SSA regulations, DDSs classify
individuals into one of three medical improvement categories, called
"diary categories": "medical improvement expected" (MIE), "medical
improvement possible" (MIP), or "medical improvement not expected"
(MINE). Based on the diary categories, DDSs select a "diary date" for
each beneficiary, which is the date that the beneficiary is scheduled
to have a CDR. The diary date is generally within 6 to 18 months if the
beneficiary is classified as MIE;[Footnote 6] once every 3 years if
classified as MIP; and once every 5 to 7 years if classified as MINE.
Upon completion of a CDR, DDSs reassess the medical improvement
potential of beneficiaries who remain eligible for benefits to
determine the most appropriate medical improvement category and time
frame for conducting the next CDR. Beneficiaries classified as MIE are
not eligible to receive Ticket to Work services until either the
completion of their first CDR, or until they have received benefits for
3 years.
While SSA uses diary categories to determine the timing of CDRs, it has
developed another method, called profiling, to determine the most cost-
effective method of conducting a CDR. Profiling involves the
application of statistical formulas that use data on beneficiary
characteristics contained in SSA's computerized records--such as age,
impairment type, length of time on disability rolls, previous CDR
activity, and reported earnings--to predict the likelihood of medical
improvement and, therefore, of benefit cessation. Through its profiling
formulas, SSA assigns a "score" to beneficiaries indicating whether
there is a high, medium, or low likelihood of medical improvement. In
general, beneficiaries with a high score are referred for full medical
reviews--an in-depth assessment of a beneficiaries' medical and
vocational status--while beneficiaries with lower scores are, at least
initially, sent a questionnaire, known as a "mailer."[Footnote 7] The
mailer consists of a short list of questions asking beneficiaries to
report information on their medical conditions, treatments, and work
activities. If beneficiaries' responses to a mailer indicate possible
improvement in medical condition or vocational status, SSA may refer
these individuals for a full medical review. However, in most cases,
SSA decides that a full medical review is not warranted and that
benefits should be continued.
In contrast to mailers, full medical reviews are labor intensive and
expensive. These reviews generally involve an interview of
beneficiaries at SSA field offices, a review of beneficiaries' medical
records by DDS personnel, and, if necessary, medical or psychological
examinations with consulting physicians outside the DDS.[Footnote 8]
CDR Backlog:
As of fiscal year 1996, about 4.3 million CDRs were due or overdue. In
response, the Congress, in the Contract with America Advancement Act of
1996 (Pub. L. No. 104-121), authorized a total of about $4.1 billion to
fund a 7-year plan to eliminate the CDR backlog. In addition, the
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(Pub. L. No. 104-193) required SSA to conduct CDRs on several
beneficiary groups, such as low birth weight babies and authorized an
additional $250 million for CDRs in fiscal years 1997 and 1998. The
actual amount appropriated during the 7-year period, about $3.68
billion, was less than the amount authorized in 1996.
SSA reported to the Congress in its fiscal year 2000 CDR report that in
that year, the agency became current with the backlog of CDRs for all
DI beneficiaries. SSA officials indicated to us that although they are
in the midst of preparing the final statistics for its fiscal year 2002
CDR report, it became current with the backlog of CDRs for all SSI
beneficiaries by the end of fiscal year 2002.
CDR Cost-Effectiveness:
Since first implementing the profiling and mailer processes in the
early 1990s, SSA has continued its efforts to improve the cost-
effectiveness of the CDR process. Most notably, SSA has refined the
statistical formulas used in profiling to identify which method--mailer
or full medical review--should be used to conduct the CDR. According to
SSA officials and studies of the profiling process, these improvements
have led to some beneficiaries receiving a mailer who otherwise would
have received a full medical review, thereby allowing SSA to reduce the
overall cost of the CDR process. Conversely, by improving SSA's ability
to identify beneficiaries who are likely to medically improve, these
refinements have also helped the agency better ensure that it is
conducting full medical reviews--and ceasing benefits--when
appropriate.[Footnote 9] In addition to improvements in its profiling
process, SSA has also implemented other CDR process improvements such
as introducing an automated review of mailers.
End of Targeted Funding and Other Issues Could Contribute to Another
Backlog, Threatening Cost Savings:
In the midst of its first year following the cessation of CDR-targeted
funds, SSA appears to be developing another CDR backlog. By the end of
fiscal year 2003, on the basis of SSA's current projections, the agency
will likely face a backlog of 200,000 CDRs. SSA attributes the mounting
backlog to the management decisions it made at the beginning of the
fiscal year during budget deliberations, as well as the need to process
a larger than expected workload of initial disability applications. SSA
has estimated that it will need a total of about $4 billion to process
its projected CDR workload over the next 5 years, although an updated
estimate, expected to be available later this year, will likely show a
higher cost as the disability rolls continue to expand. Aside from
funding issues, DDSs reported that challenges associated with
processing initial disability applications and maintaining enough
disability examiners could jeopardize their ability to stay current
with the CDR workload over the next few years. If another large CDR
backlog is generated, SSA is at risk of foregoing cost-savings, thereby
compromising the integrity of its disability programs.
CDR Backlog Likely to Reemerge:
At the end of March 2003--six months after the expiration of separate
authorized CDR funding--SSA was on a pace to generate a CDR backlog by
the end of the current fiscal year. In its fiscal year 2003 budget
justification, SSA indicated that it needed to process about 1.38
million CDRs during fiscal year 2003 to stay current with its CDR
workload. Yet, SSA expects to process a total of 1.18 million CDRs, if
not more, by the end of the fiscal year.[Footnote 10] By the end of
March 2003--the midpoint of the fiscal year--SSA had processed about
539,000 CDRs. To reach the 1.18 million end-year revised total, SSA
will need to process CDRs during the second half of the fiscal year at
a pace similar to that achieved during the first 6 months of the fiscal
year.[Footnote 11] Nevertheless, while it appears that SSA should be
able to achieve this outcome, by the end of fiscal year 2003, it will
have accumulated a backlog of 200,000 CDRs. However, according to SSA
officials, most of the backlogged claims will consist of SSI adult
CDRs, which lead to lower long-term savings than DI CDRs and do not
have the same stringent statutory requirements that apply to DI CDRs.
SSA officials attributed the delay in obtaining a fiscal year 2003
budget as the main factor in hampering their ability to conduct all of
the planned CDRs for the fiscal year.[Footnote 12] Because of concerns
that the fiscal year 2003 appropriations would not support CDR activity
at the fiscal year 2002 level, SSA reduced the number of CDRs it sent
to DDS officials for processing as well as froze DDS hiring and
overtime pay. SSA officials recognize that a hiring freeze can have a
longer-term impact because it disrupts the normal replacement of
disability examiners lost through attrition. SSA officials explained
that disability examiners generally do not increase overall
productivity when first hired and could, in fact, initially decrease
productivity because experienced examiners may devote some of their
time to training these new examiners. SSA officials noted that it
generally takes 1 to 2 years before disability examiners become
proficient.
SSA's management strategy to cut back on the number of CDRs it
processed during the delays in the fiscal year 2003 budget process
reflects the agency's higher priority for processing of initial
applications for disability benefits. Specifically, while SSA cut back
on the number of CDRs, no similar action was reported with DI and SSI
initial eligibility decision making. SSA officials indicated that the
application rate for disability benefits increased during the beginning
months of fiscal year 2003, further affecting its ability to stay
current with CDRs. SSA officials told us that although SSA sets a goal
to process all CDRs and initial applications, initial eligibility
decisions are given highest priority due to political pressure for
getting disability benefits to people in a timely manner. DDSs,
likewise, place a greater priority on processing initial applications.
Three-fourths (75 percent) of directors said processing initial
disability claims were a top priority relative to CDRs, whereas far
fewer directors (23 percent) said that processing initial claims and
CDRs were equal priorities.
SSA has recently proposed an approach to avoid this competition between
CDRs and initial claims. In SSA's fiscal year 2004 budget request, the
Commissioner requested that almost $1.5 billion be earmarked for three
activities that could provide a return on investment--CDRs, SSI
nondisability redeterminations,[Footnote 13] and overpayment
workloads. While we did not review the sufficiency of the level of this
request, the earmarking of funds for activities such as CDRs could help
SSA keep current with these activities. For example, if the number of
initial applications for disability benefits continues to increase over
the next several years, holding apart the necessary funds for CDRs
could be a prudent measure.
SSA has indicated in its annual CDR reports, as well as in its
performance and accountability report, that its ability to complete all
CDRs as they become due in the future is dependent upon adequate
funding. In 2000, SSA estimated that a total of about $4 billion was
needed to process the CDR workload during the 5-year period between
fiscal year 2004 and 2008 (see table 1). SSA based these "rough
estimates" on cost and workload projections available at that time. SSA
expects to release updated workload and cost projections in the summer
of 2003. The updated numbers for the fiscal year 2004 to 2008 period
will likely be higher than the past estimate for this time period
because of the recent growth in the disability rolls.
Table 1: Estimated CDR Activities, Fiscal Year 2004-08:
Fiscal year: 2004; CDRs to be processed during year (in thousands):
1,637; CDR expenses (dollars in millions): $716; Cessations[A](In
thousands): 61.
Fiscal year: 2005; CDRs to be processed during year (in thousands):
1,682; CDR expenses (dollars in millions): $729; Cessations[A](In
thousands): 59.
Fiscal year: 2006; CDRs to be processed during year (in thousands):
1,632; CDR expenses (dollars in millions): $787; Cessations[A](In
thousands): 61.
Fiscal year: 2007; CDRs to be processed during year (in thousands):
1,769; CDR expenses (dollars in millions): $896; Cessations[A](In
thousands): 65.
Fiscal year: 2008; CDRs to be processed during year (in thousands):
1,793; CDR expenses (dollars in millions): $857; Cessations[A](In
thousands): 62.
Source: SSA's Office of the Chief Actuary, May 2000 estimates.
[A] Estimated ultimate cessations after all appeals.
[End of table]
DDS Directors Expressed Concerns about Their Ability to Meet Future CDR
Workload:
Several of the issues that have contributed to the pending fiscal year
2003 CDR backlog will also appear, in the views of DDS directors, in
the future. First, nearly all directors expect the number of initial
disability claims to exceed those in the past. Most DDS directors have
a strategy in place to deal with this rising initial claims workload,
but still expect increased initial claims to negatively affect their
ability to process their CDR workload (see table 2). Second, most
directors expect to experience difficulties in maintaining an adequate
level of staffing, caused by many examiners leaving and difficulties
finding replacements. Most DDSs who anticipate facing these staffing
challenges reported that they have strategies in place to manage them.
Nevertheless, nearly all believe that these staffing issues will
negatively impact their ability to stay current with their expected CDR
workloads.
Table 2: DDS Directors' Reported Likelihood, If Any, of Experiencing an
Event That Jeopardizes Meeting CDR Workload During Fiscal Year 2004 and
2005:
Numbers in percent:
Higher number of initial disability claims than in past (n=51); Numbers
in percent: Not at all likely: 2; Numbers in percent: Somewhat likely:
35; Numbers in percent: Very likely: 63.
State budget shortfalls causing constraints (e.g., personnel
restrictions) (n=49); Numbers in percent: Not at all likely: 25;
Numbers in percent: Somewhat likely: 29; Numbers in percent: Very
likely: 47.
Difficulties hiring disability; examiners (n=51); Numbers in percent:
Not at all likely: 28; Numbers in percent: Somewhat likely: 31; Numbers
in percent: Very likely: 41.
High turnover of disability examiners due to reasons other than
retirement (n=51); Numbers in percent: Not at all likely: 35; Numbers
in percent: Somewhat likely: 51; Numbers in percent: Very likely: 14.
Large number of disability examiner retirements (n=51); Numbers in
percent: Not at all likely: 39; Numbers in percent: Somewhat likely:
39; Numbers in percent: Very likely: 22.
Source: GAO survey of DDS directors, February 2003.
[End of table]
Cost Savings and Program Integrity Could Be Jeopardized If CDR Backlog
Grows Again:
To the extent that funding, staffing, and other issues limit SSA's
ability to process its CDR workload, the full realization of CDR cost
savings could be in jeopardy. SSA maintains that the return on
investment from CDR activities is high. In fact, SSA's most recent
annual CDR report to the Congress summarizes its average CDR cost-
effectiveness during fiscal year 1996 to 2000 at about $11 returned for
every $1 spent on CDRs.[Footnote 14] SSA has noted, however, that such
rates of return are unlikely to be maintained because as SSA works down
the backlog and beneficiaries come up for their second and third CDRs,
the agency does not expect as many cessations and, therefore, the cost-
benefit ratio could decline. Nevertheless, since the Congress'
provision of dedicated CDR funding starting in fiscal year 1996, SSA
has reported completing millions of CDRs that will lead to long-term
savings ranging from about $2 billion to $5.2 billion.[Footnote 15]
In addition to a favorable return on investment, SSA's CDR activities
help protect DI and SSI program integrity. Keeping current with the CDR
workload can help build and retain public confidence that only
qualified individuals are receiving disability benefits. In addition,
it helps protect the programs' fiscal integrity and allows SSA to meet
its financial stewardship responsibilities. To the extent the agency
falls behind in conducting CDRs, a CDR backlog undermines these
positive outcomes.
Further Opportunities Exist for SSA to Improve CDR Cost-Effectiveness:
While SSA has taken a number of actions over the past decade to
significantly improve the cost-effectiveness of the CDR process,
opportunities remain for SSA to better use program information in CDR
decision making. While DDS personnel study available information on
beneficiaries to decide when they should undergo a CDR, they do not
conduct a systematic analysis of this information. As a result, CDRs
may not be conducted at the optimal time. Also, SSA's process for
determining what method to use for a CDR--mailer or full medical
review--is not always based on the best information available. In
addition, SSA has not fully studied and pursued the use of medical
treatment data on beneficiaries available from the Medicare and
Medicaid programs despite the potential of these data to improve SSA's
selection of the most appropriate CDR method. Finally, SSA continues to
be hampered in its CDR decisions by missing or incomplete information
on beneficiaries' case history, which may prevent SSA from ceasing
benefits for some individuals who no longer meet eligibility standards.
Decisions on Timing of CDRs Are Not Based on Systematic Analysis of
Available Information:
While DDS personnel review available information on beneficiaries to
establish a diary date indicating when beneficiaries should undergo a
CDR, they do not conduct a systematic analysis of this information.
Diary decisions are inherently complex because DDS personnel must
assess a beneficiary's likelihood of medical improvement and how such
medical improvement will affect that person's ability to work. Based on
these judgments, beneficiaries are placed in a diary category
indicating either that medical improvement is "expected," "possible,"
or "not expected." DDS personnel then assign a diary date that
corresponds with the diary category; the more likely a beneficiary is
to medically improve, the earlier the diary date.
Although SSA has established guidance for DDS personnel on diary date
decisions, SSA officials told us that, ultimately, such decisions are
difficult to make and are based on the judgment of the DDS staff. An
SSA contracted study of the diary process found that this process is
often subjective and that the setting of diary categories and dates is
"almost an afterthought" once the case file is developed and a
disability determination has been made. SSA's study identified
shortcomings in the diary date process. For example, most beneficiaries
assigned to the diary category indicating they are expected to
medically improve are not found to have improved when a CDR is
conducted. Our analysis of SSA data indicates that between 1998 and
2002, only about 5 percent of beneficiaries in the MIE
category[Footnote 16] were found to have medically improved to the
point of being able to work again.
SSA's diary process study indicated that diary predictions of medical
improvement could be substantially improved through the use of
statistical modeling techniques similar to those used in the CDR
profiling process that SSA uses to determine whether a mailer or a full
medical review is needed. The study noted that this systematic,
quantitative approach to assigning diary categories and dates would
likely enhance disability program efficiency by reducing the number of
CDRs that do not result in benefit cessation.[Footnote 17] Another
benefit derived from a more systematic approach to diary
categorization, according to SSA's study, is improved integrity of the
diary process resulting from more timely CDRs and from actual medical
improvement rates that more closely correlate with the diary categories
that SSA assigns to beneficiaries. For example, SSA's study indicates
that the actual medical improvement rate for beneficiaries assigned to
the MIE diary category would increase to about 29 percent under this
improved process.
SSA officials told us that, in response to the diary study
recommendations, the agency has begun to revise its diary process to
introduce a more systematic approach to selecting a CDR date. In
particular, SSA is developing a process that will use beneficiary data
collected at the time of benefit application, such as impairment type
and age, in a statistical formula to help determine when a CDR should
be conducted. While this change is likely to result in some
improvements in the timing of CDRs, the fundamental diary
categorization process used by DDSs will remain the same. Despite the
study's findings and recommendations, SSA officials told us that they
will not replace SSA's current process for assigning diary categories
with a statistical process because of what they believe would be
significant costs involved in changing this system across DDSs.
However, SSA's study acknowledged the potential cost of implementing a
new process in DDSs, and instead recommended that a revised diary
process be centrally administered in order to avoid such high costs.
The officials also said that such fundamental changes in the diary
process would require a change in regulations.
SSA's Process for Determining CDR Method Not Always Based on Best
Information Available:
SSA's process for determining what method to use for a CDR is not
always based on the best information available. In the 1990s, SSA
introduced a system that develops a "profile score" for each
beneficiary, which indicates the beneficiary's likelihood for medical
improvement based on a statistical analysis of beneficiary data. The
purpose of the profile score is to allow SSA to determine whether it is
more cost-effective to send a mailer or to conduct a full medical
review. SSA's own contracted studies indicate that profiling results
provide the best available indication of whether a beneficiary is
likely to medically improve. Nevertheless, for some beneficiaries, SSA
continues to use the diary category that was judgmentally assigned by
DDS personnel as the basis for their decision about whether to send a
mailer or conduct a full medical review.
SSA requires a full medical review for all beneficiaries whose diary
category indicates that medical improvement is expected (MIE) and who
have not yet undergone a CDR.[Footnote 18] This is the case even when
the profile score indicates that improvement is unlikely. In fiscal
year 2002, about 14 percent of beneficiaries in the MIE diary category
were assigned to the "low" profile category, which indicates that
medical improvement is not likely. SSA officials acknowledged that
their policy requiring full medical reviews for all beneficiaries in
this diary category departs from their usual practice of using mailers
for beneficiaries in the low profile category, but they believe that
this policy is reasonable given that these beneficiaries are more
likely to medically improve than those assigned to other diary
categories. However, SSA's data from 1998 to 2002 shows that most
beneficiaries in this category--about 94 percent--do not medically
improve to the point of being able to work.
For other CDR cases, SSA may require that a mailer be sent even when
the profile score indicates that conducting a full medical review would
be most cost-effective. Specifically, SSA's policy is to send a mailer
to all beneficiaries who were assigned a diary category that indicates
medical improvement is not expected (MINE),[Footnote 19] even if the
profile score indicates a relatively high likelihood of medical
improvement.[Footnote 20] Whether or not these beneficiaries
subsequently receive a full medical review will be based on the results
of their mailer. SSA officials said that MINE beneficiaries with a high
profile score are more likely to receive a full medical review based on
their mailer responses because SSA conducts a more stringent review of
their mailer responses.[Footnote 21] However, it is not clear that
sending mailers to beneficiaries in the high profile category is the
most cost-effective approach. SSA studies of the mailer process have
indicated that, while this process is effective, it does not provide
the same assurance as full medical reviews that medical improvement
will be identified. As a result, the use of mailers for beneficiaries
whose profile scores indicate a high likelihood of improvement could
result in SSA identifying fewer benefit cessations.[Footnote 22]
SSA Has Not Fully Studied and Pursued the Use of Medical Treatment Data
from Medicare and Medicaid:
SSA has not fully studied and pursued the use of medical treatment data
on beneficiaries available from the Medicare and Medicaid programs
despite the potential of these data to improve SSA's decisions
regarding whether to use a mailer or full medical review to complete a
CDR. In 2000, an SSA contracted study found that the use of Medicare
data from the Center for Medicare and Medicaid Services (CMS)--such as
data on hospital admissions and medical treatments--resulted in a
significant improvement in SSA's ability to assess potential medical
improvement through CDR profiling. Based on these results, SSA, in
fiscal year 2003, implemented a process that uses CMS Medicare data in
CDR profiling to determine if DI beneficiaries who are initially
identified as candidates to receive a full medical review should
instead receive mailers.[Footnote 23] SSA expects that this will result
in administrative savings due to the reduced number of full medical
reviews the agency must conduct. SSA has also initiated a study to
assess whether CMS Medicaid data can be used in the same way to decide
if SSI beneficiaries, scheduled to receive full medical reviews, could
instead be sent mailers.
But SSA's efforts to obtain and use CMS Medicare or Medicaid data are
incomplete because the data will only be used to reclassify full
medical reviews to mailers but not to reclassify mailers to full
medical reviews. SSA officials told us that they have no plans to
pursue this additional use of the data because they believe their
current profiling system is sufficient for identifying beneficiaries
who have a low likelihood of medical improvement. While they agreed
that the CMS data could potentially be useful for reclassifying mailers
to full medical reviews, they noted that they would need to first study
this particular use of the data and would need to develop another
interagency agreement with CMS to authorize and obtain data for this
purpose. Also, they said that any action to reclassify mailers to full
medical reviews would require SSA to publish a Federal Register notice
describing this action.
SSA could potentially achieve substantial program savings from
conducting additional full medical reviews in cases where CMS data
indicate that beneficiaries originally identified as mailer candidates
have a relatively high likelihood of medical improvement. Using CMS
Medicare data for this purpose would be consistent with the results of
an SSA study that recommended that these data be used whenever it
improves the agency's ability to accurately predict medical
improvement. For example, the study noted that the CMS data would be
useful for enhancing SSA's profiling of beneficiaries with mental
impairments, including those with a low likelihood of medical
improvement for whom SSA would usually send a mailer. To the extent
that CMS data improves SSA's ability to identify beneficiaries for full
medical review, the program savings from reduced lifetime benefit
payments to those beneficiaries whose benefits are ceased could easily
exceed any increased administrative costs resulting from additional
full medical reviews.
Missing or Incomplete Case Folders May Result in Fewer Benefit
Cessations:
SSA continues to be hampered in its CDR decisions by missing or
incomplete information on beneficiaries' case history, which may
prevent SSA from ceasing benefits for some individuals who no longer
qualify for benefits. To cease benefits based on a CDR, SSA must
determine if the beneficiary has improved by comparing information
about the beneficiary's current condition to information from the
agency's previous decision regarding the beneficiary's medical
condition. This previous decision and the evidence supporting it are
recorded by SSA and maintained in case folders that are usually stored
in SSA records storage facilities. However, in conducting CDRs, DDSs
sometimes have difficulty retrieving the case folders or the key
medical evidence that is maintained in these folders.
Without the information contained in case folders, DDSs cannot
establish a comparison and, therefore, cannot determine if medical
improvement has occurred. As a result, SSA is legally required to keep
the beneficiary on the disability rolls even though the beneficiary may
have been judged to no longer qualify for benefits had the DDS been
able to establish a comparison. SSA's inability to cease benefits in
cases where folders are missing or incomplete could result in a
substantial cost to the federal government arising from continued
payments of benefits--cash and medical--to people who no longer meet
eligibility standards.[Footnote 24]
Our discussions with SSA officials, survey of DDSs, and review of SSA
studies indicate that missing or incomplete folders present an obstacle
to effective processing of CDRs. However, evidence on the extent of
this problem is mixed. In responding to our survey on CDRs, about 72
percent of DDSs informed us that missing or incomplete information from
case folders negatively impacted the quality or timing of CDR decisions
to a moderate or great extent. Recent SSA studies have also identified
problems with missing or incomplete case folders. For example, a study
contracted by SSA identified problems with disability case folder
management, such as misrouted or missing folders, and recommended that
SSA "analyze the reasons for missing folders and provide
recommendations for process and systems improvements.":
SSA headquarters officials we spoke with said that SSA has examined the
incidence of missing or incomplete case folders and found that the
problem is not as significant as claimed by DDSs. For example, in
fiscal year 2000, SSA investigated allegations of substantial numbers
of missing case folders in two DDSs. SSA officials told us that they
were able to locate many of the folders that had been reported as
missing. The officials attribute the discrepancy between their findings
and the allegations of DDSs, in part, to staff shortages and workload
pressures at field offices, which result in a failure of these offices
to take further steps to look for folders. However, our survey of DDSs
indicates that regardless of SSA's ability to locate many case folders
upon further investigation, DDSs are still having difficulty obtaining
the information they need to make CDR decisions.
In a 2002 memorandum to SSA's Inspector General, the SSA Commissioner
acknowledged that missing or incomplete case folders are a problem in
the CDR process, but noted that the problem had been overstated. The
memorandum cited data indicating a lost folder rate of about 0.5
percent for DI CDRs and about 3 percent for SSI CDRs.[Footnote 25] The
Commissioner also said that SSA had taken a number of actions in recent
years to reduce the incidence of lost folders, such as issuance of
additional guidance and training on this issue. In addition, the
Commissioner noted that the agency was committed to building a system
of electronic folders[Footnote 26] that will "virtually eliminate the
incidences of lost folders." While electronic folders may be a key
initiative in resolving SSA's problems with missing or incomplete case
folders, SSA does not plan to fully implement this system until mid-
2005.[Footnote 27] In addition, these electronic folders will be
established only for new disability cases; cases established prior to
implementation of electronic folders will remain in a paper format.
Therefore, problems in handling these older case folders will likely
continue.
SSA's Rationale for Postponing Return-to-Work Services to Some
Beneficiaries Is Not Well-Supported by Program Experience:
SSA's rationale for postponing issuance of a ticket to beneficiaries
expected to medically improve--those who are assigned an MIE diary
category--is not well-supported by program experience. In issuing
regulations implementing the ticket act, SSA decided to postpone
issuance of tickets to MIE beneficiaries who have not yet had a CDR
based on the premise that these beneficiaries could be expected to
regain their capacity to work without SSA assistance.[Footnote 28]
However, our analysis of SSA data indicates that the vast majority of
MIE beneficiaries in the DI and SSI programs--about 94 percent--are not
found to have medically improved upon completion of a CDR. As a result,
some beneficiaries who might otherwise benefit from potentially
valuable return-to-work assistance must wait up to 3 years to access
services through the ticket program.[Footnote 29]
Some disability advocacy groups and SSA's own Ticket to Work and Work
Incentives Advisory Panel have questioned SSA's policy of delaying the
issuance of tickets to MIE beneficiaries. In particular, they have
commented that delaying tickets to all MIE beneficiaries when only a
small proportion of these beneficiaries return to work underscores the
inherent weakness of relying upon the MIE category as a basis for
granting access to ticket services. In our prior work examining DI and
SSI return-to-work policies, we noted that delays in the provision of
vocational rehabilitation services can diminish the effectiveness of
such return-to-work efforts.[Footnote 30] Delaying services to some
disability beneficiaries, therefore, undermines SSA's recent efforts to
increase its emphasis on helping these beneficiaries return to work.
SSA officials told us that they are examining the current policy of
issuing tickets to MIE beneficiaries to identify possible alternatives
but they are not sure when this assessment will be completed.[Footnote
31] However, they noted that their policy of limiting ticket issuance
reflects congressional interests in striking an appropriate balance
between program stewardship and encouraging return to work. Moreover,
they explained that reversing the current policy would be costly. SSA's
actuaries have estimated that issuing tickets to all MIE beneficiaries
would cost an additional $822 million over 10 years because the ticket
law prohibits SSA from conducting CDRs on beneficiaries who are using a
ticket. Therefore, SSA would continue to pay DI and SSI benefits to
some beneficiaries who might have otherwise had their benefits
terminated.
The drawbacks of SSA's current policy of postponing issuance of tickets
to MIE beneficiaries and the potential costs associated with an
alternative policy that would allow immediate issuance of tickets to
these beneficiaries highlights the need for SSA, as part of its policy
reexamination, to consider other policy alternatives that might better
balance the agency's program stewardship and return-to-work objectives.
While we did not conduct an in-depth assessment of potential
alternatives to SSA's current policy,[Footnote 32] our review of the
CDR program and ticket provisions indicate that other options may exist
that would achieve a better balance among SSA's program objectives. For
example, SSA could develop a better means of identifying beneficiaries
who are expected to medically improve. Earlier in this testimony, we
noted that an SSA-contracted study of the diary process recommended
implementation of an improved system that, among other things, would
better identify MIE beneficiaries through statistical modeling of diary
decisions. One effect of such improved identification, according to the
study, would be to substantially reduce the proportion of beneficiaries
with an MIE diary category. For instance, the study found that although
SSA, over the past decade, has assigned the MIE diary category to about
9 percent of DI beneficiaries, a statistically-based diary process
would result in about 3 percent of DI beneficiaries being assigned to
the MIE category. This would potentially minimize the number of
beneficiaries initially denied tickets and may also provide more
assurance, within and outside SSA, that such beneficiaries can truly be
expected to improve.
SSA might also consider an option that provides for the issuance of
tickets to all MIE beneficiaries while allowing CDRs to be conducted as
scheduled for these beneficiaries. This policy would require a
legislative change because, as we noted earlier, the Ticket to Work Act
currently prohibits SSA from conducting a CDR while a person is using a
ticket.[Footnote 33] While the ticket program's prohibition on CDRs for
ticket users was intended to remove a potential disincentive for
beneficiaries to return to work, MIE beneficiaries currently get
neither a ticket nor protection from a CDR. A policy allowing CDRs to
be conducted on these beneficiaries while they use a ticket would at
least give these beneficiaries immediate access to return-to-work
services offered under the ticket program. In addition, SSA will still
be able to achieve the cost savings that are derived from CDRs for
beneficiaries that it considers most likely to medically improve.
Conclusions:
CDRs are a vital component of SSA's efforts to strengthen the integrity
of its disability programs, an objective that will only increase in
importance as the disability rolls continue to grow in the years ahead.
As such, it is important that SSA pursue and implement initiatives to
prevent the recurrence of CDR backlogs. SSA's recent proposal for
targeted funding of program activities, including CDRs, that provide a
return on investment as well as efforts to further improve the cost-
effectiveness of the CDR process could positively contribute to SSA's
efforts to improve service delivery. As SSA pursues such initiatives,
it should also examine options for better balancing its need to conduct
CDRs with its responsibility for providing return-to-work assistance
under the ticket to work program to beneficiaries who are expected to
medically improve.
Mr. Chairman, this concludes my prepared statement. I will be happy to
respond to any questions you or other Members of the Subcommittee may
have.
GAO Contacts and Staff Acknowledgments:
For information regarding this testimony, please contact Robert E.
Robertson, Director, or Shelia Drake, Assistant Director, Education,
Workforce, and Income Security at (202) 512-7215. Individuals making
contributions to this testimony include Brett S. Fallavollita, Mark
Trapani, Melinda L. Cordero, and Corinna A. Nicolaou.
FOOTNOTES
[1] U.S. General Accounting Office, Social Security Disability: Reviews
of Beneficiaries' Disability Status Require Continued Attention to
Achieve Timeliness and Cost-Effectiveness, GAO-03-662 (Washington,
D.C.: July 24, 2003).
[2] SSA contracts with state DDS agencies to determine whether
applicants are disabled.
[3] The DI and SSI programs use the same statutory definition of
disability. To meet the definition of disability under these programs,
an individual must have a medically determinable physical or mental
impairment that (1) has lasted or is expected to last at least 1 year
or to result in death and (2) prevents the individual from engaging in
substantial gainful activity (SGA). Individuals are considered to be
engaged in SGA if they have countable earnings above a certain dollar
level. For 2003, SSA considers countable earnings above $800 a month to
be substantial gainful activity for persons who are not blind and above
$1,330 a month for persons who are blind.
[4] Included among these 5.5 million beneficiaries are about 1.2
million beneficiaries who were dually eligible for SSI benefits because
of the low level of their income and resources. In 2002, the DI program
also paid about $6 billion in cash benefits to about 1.7 million
spouses and children of disabled workers.
[5] About 3.9 million of these individuals were working age adults aged
18 to 64.
[6] Although SSA's policy guidance indicates that CDRs for MIE
beneficiaries should generally be scheduled at intervals of 6 to 18
months, the guidance provides DDS personnel with flexibility to
establish a diary date for any time period between 6 and 36 months.
[7] While SSA uses mailers primarily for beneficiaries with low profile
scores, the agency has recently expanded its use of mailers to some
beneficiaries with medium and high profile scores.
[8] SSA field offices perform the initial processing of CDRs to
determine if beneficiaries meet nonmedical requirements. They then
transfer the cases to DDSs for medical determinations.
[9] According to SSA's study of its profiling model, the agency's
recent improvements in statistical profiling have resulted in hundreds
of millions of dollars in annual savings from being better able to
identify and cease the benefits of individuals who have a relatively
high likelihood of medical improvement.
[10] On May 14, 2003, SSA released its revised final performance plan
for fiscal year 2003. The plan projects that SSA will process 1,129,000
CDRs during fiscal year 2003. SSA also expects to process an additional
20,000 CDRs initiated for reasons other than maturation of the
scheduled diary date (e.g., a third party reports that the individual
may no longer be disabled).
[11] SSA indicated that 710,000 CDRs had been processed nearing the end
of April 2003. This year-to-date completion rate positions SSA to
complete all 1.18 million CDRs.
[12] The federal government had operated under a series of continuing
resolutions from the beginning of the fiscal year through February 20,
2003. A continuing resolution is legislation that may be enacted to
provide budget authority for agencies to continue in operation when the
Congress and the President have not completed action on appropriations
by the beginning of the fiscal year.
[13] To determine whether beneficiaries remain financially eligible for
SSI benefits after the initial assessment, SSA conducts nondisability
redeterminations to verify eligibility factors such as income,
resources, and living arrangements. Beneficiaries are reviewed at least
once every 6 years, but reviews may be more frequent if SSA determines
that changes in eligibility are likely.
[14] SSA calculated its annual cost-effectiveness ratios by dividing
the estimated present value of total lifetime benefits saved with
respect to CDR cessations (including Old Age, Survivors, and Disability
Insurance, SSI, Medicare, and Medicaid savings) by the dollar amount
spent on periodic CDRs in a given year. SSA points out that the ratios
should be considered an approximation because, for example, costs do
not include the costs of appeals processed after the end of a given
year. However, SSA officials also noted that the administrative costs
for CDRs in a given year include the costs of appeals of CDR cessations
in prior years which are processed in that year.
[15] Although we did not independently verify these savings estimates,
we discussed how SSA made its calculations and believe its approach is
reasonable. To estimate long-term savings, SSA calculated the value of
the reduction in both cash and medical insurance coverage that
otherwise would have been provided to individuals whose benefits were
ceased following the completion of a CDR. SSA factored in the effect of
appealed cases: SSA did not count savings from those beneficiaries who
were initially found ineligible for continued benefits but whose
cessations were later successfully appealed. Moreover, SSA officials
told us that to estimate savings over 10 years, they took into account
the likelihood that some individuals whose benefits were ceased through
a CDR would likely have left the disability rolls through death,
retirement, and other reasons pertaining to eligibility.
[16] This figure includes all MIE beneficiaries--those who have already
undergone a CDR as well as those who have not yet had a CDR.
[17] The study recommended that DDSs continue to assign diary
categories because this process is useful for indicating the severity
of an impairment. The statistical formula would then factor in this DDS
diary category in developing an ultimate diary determination.
[18] SSA applies a different process for MIE beneficiaries who have
undergone one or more CDRs. These beneficiaries may receive a mailer if
their CDR profile score indicates that they have a low likelihood of
medical improvement. However, most beneficiaries assigned to the MIE
category have not yet undergone a CDR; in fiscal year 2002, about 88
percent of all beneficiaries in this diary category had not had a CDR.
When referring to MIE beneficiaries in the remainder of our discussion
in this section, we are describing only those beneficiaries who have
not yet had a CDR.
[19] SSA officials told us that while it is their intention to do
mailers for all MINE beneficiaries, they may be unable in some years to
send mailers to all of these beneficiaries if their overall funding for
mailers is insufficient.
[20] In addition to sending mailers to high profile beneficiaries in
the MINE diary category, SSA has recently begun to send mailers to some
high profile beneficiaries in the MIP diary category.
[21] SSA also sends mailers to medium profile beneficiaries in the MINE
diary category. However, SSA has some evidence from its profiling
studies indicating that issuing mailers to medium profile beneficiaries
is likely to be cost-effective. No similar evidence exists regarding
high profile beneficiaries.
[22] Although a relatively small proportion of beneficiaries have their
benefits ceased based on a CDR, the savings from these benefit
cessations are substantial, as noted earlier in this testimony.
[23] SSA is using CMS Medicare data to reassess the prospects of
medical improvement for beneficiaries who, based on their initial CDR
profiling results, are considered to have a high or medium likelihood
of medical improvement. Typically, SSA would conduct full medical
reviews for these beneficiaries. However, SSA's reassessment may
indicate that some of these beneficiaries instead have a low likelihood
of medical improvement and therefore should receive mailers.
[24] Missing or incomplete case folders may also result in additional
administrative costs to the extent that SSA and DDS personnel spend
time attempting to locate or reconstruct missing information.
[25] Data are based on CDRs conducted from 1997 to 2001.
[26] SSA is currently developing a Disability Electronic Folder (EF)
which, when completed, will be the repository of all information used
in the disability process and should eventually replace the paper
folders. As a result, processing components should not have to rely on
a paper folder to take adjudicative actions. The EF is planned to be
linked to all existing and future systems that support the disability
case process. Information will be captured electronically during the
case intake process and transmitted to the EF. Documentation and forms
received from external sources (e.g., claimants, medical providers,
third parties, etc.) will be converted to an electronic format (e.g.,
scanning and imaging) and added to the EF. Electronic documents
received from medical providers will be indexed and added to the EF.
[27] SSA plans to begin rollout of electronic disability folders in
January 2004 and plans to achieve national implementation over an 18-
month period.
[28] The Ticket to Work Act gave the SSA Commissioner authority to
determine which disabled beneficiaries would be eligible to participate
in the ticket program.
[29] SSA's policy on ticket eligibility states that any MIE beneficiary
who has been on the disability rolls for at least 3 years will be
eligible for a ticket, even if they have not yet had a CDR.
[30] U.S. General Accounting Office, SSA Disability: Program Redesign
Necessary to Encourage Return to Work, GAO/HEHS-96-62 (Washington,
D.C.: Apr. 24, 1996).
[31] In May 2003, SSA announced in the Federal Register (Social
Security Administration: Semiannual Regulatory Agenda, 68 Fed. Reg.
31,240, May 27, 2003) that its long-term plans include a proposal to
revise its rules to allow the immediate issuance of tickets to MIE
beneficiaries. However, SSA's Associate Commissioner responsible for
reviewing the ticket policy for MIEs told us that SSA has not made a
final decision regarding any changes to the current policy and that the
agency's review has not been completed.
[32] Given the recent implementation of the ticket program,
insufficient data were available during the period of our review to
conduct the analysis necessary to fully evaluate such options.
[33] However, the prohibition on CDRs for all other ticket users could
remain in effect.