[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
 SOCIAL SECURITY ADMINISTRATION'S CONTINUING DISABILITY REVIEW PROCESS

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 25, 1997

                               __________

                             Serial 105-44

                               __________

                              -----------

                      U.S. GOVERNMENT PRINTING OFFICE
51-401 cc                     WASHINGTON : 1999

         Printed for the use of the Committee on Ways and Means




                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Social Security

                    JIM BUNNING, Kentucky, Chairman

SAM JOHNSON, Texas                   BARBARA B. KENNELLY, Connecticut
MAC COLLINS, Georgia                 RICHARD E. NEAL, Massachusetts
ROB PORTMAN, Ohio                    SANDER M. LEVIN, Michigan
JON CHRISTENSEN, Nebraska            JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona               XAVIER BECERRA, California
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
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                            C O N T E N T S

                               __________

                                                                   Page

Advisory of September 17, 1997, announcing the hearing...........     2

                               WITNESSES

Social Security Administration, Susan M. Daniels, Ph.D., 
  Associate Commissioner, Office of Disability; accompanied by 
  Joseph Markovic, Director, Division of Disability Process 
  Policy.........................................................     6
U.S. General Accounting Office, Jane L. Ross, Director, Income 
  Security Issues, Health, Education, and Human Services 
  Division; accompanied by Cynthia Bascetta, Assistant Director, 
  Income Security Issues, Health, Education, and Human Services 
  Division.......................................................    10


 SOCIAL SECURITY ADMINISTRATION'S CONTINUING DISABILITY REVIEW PROCESS

                              ----------                              


                      THURSDAY, SEPTEMBER 25, 1997

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:05 p.m., in 
room 1100, Longworth House Office Building, Hon. Jim Bunning 
(Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE

September 17, 1997

No. SS-11

                 Bunning Announces Oversight Hearing on

                    Social Security Administration's

                  Continuing Disability Review Process

    Congressman Jim Bunning (R-KY), Chairman, Subcommittee on Social 
Security of the Committee on Ways and Means, today announced that the 
Subcommittee will hold an oversight hearing on the Social Security 
Administration's (SSA's) progress in conducting continuing disability 
reviews (CDRs). The hearing will take place on Thursday, September 25, 
1997, in the main Committee hearing room, 1100 Longworth Office 
Building, beginning at 1:00 p.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony will be from invited witnesses only. However, any individual 
or organization may submit a written statement for consideration by the 
Committee and for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    SSA is required to review the continuing eligibility of individuals 
with non-permanent disabilities at least once every three years. 
Congress enacted this statutory requirement to ensure that individuals 
remain on the disability rolls only if they continue to be disabled. 
SSA's difficulties in conducting the required number of CDRs in recent 
years have resulted in extraordinary backlogs. According to the U.S. 
General Accounting Office (GAO), 4.3 million recipients were due or 
overdue for a CDR in fiscal year 1996.
      
    The extraordinary growth in the Social Security disability rolls 
over the last decade and the increased length of time disabled 
recipients remain on the rolls, demonstrates the importance of 
conducting CDRs. Last year, Congress authorized an additional $3 
billion for fiscal years 1996 through 2002 to help SSA eliminate the 
CDR backlog.
      
    In announcing the hearing, Chairman Bunning stated: ``Individuals 
who work and pay into Social Security must be able to count on 
disability benefits to support their families if severe disability 
strikes. However, the public should also be able to count on SSA 
managing the program well, and that means stopping payments to people 
who have recovered and are no longer disabled.''
      

FOCUS OF THE HEARING:

      
    During the hearing, the Subcommittee will: (1) review the current 
status of the CDR workload, (2) examine SSA's use of the additional 
funds made available last year to SSA for CDRs, and (3) consider the 
findings of the GAO regarding SSA's management of the CDR process.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit at least six (6) 
single-space legal-size copies of their statement, along with an IBM 
compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect 5.1 
format only, with their name, address, and hearing date noted on a 
label, by the close of business, Thursday, October 9, 1997, to A.L. 
Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of 
Representatives, 1102 Longworth House Office Building, Washington, D.C. 
20515. If those filing written statements wish to have their statements 
distributed to the press and interested public at the hearing, they may 
deliver 200 additional copies for this purpose to the Subcommittee on 
Social Security office, room B-316 Rayburn House Office Building, at 
least one hour before the hearing begins.
      

FORMATTING REQUIREMENTS:

      
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    Note: All Committee advisories and news releases are available on 
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
      


    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
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noted above.
      

                                

    Chairman Bunning [presiding]. This afternoon the 
Subcommittee will examine the Social Security Administration's 
progress in conducting what we call continuing disability 
reviews, or CDRs.
    Congress enacted a statutory CDR requirement to ensure that 
only those individuals who continue to be disabled remain on 
the disability rolls. However, SSA has consistently failed to 
conduct the required number of CDRs, resulting in a tremendous 
backlog. In 1996, 4.3 million recipients were due or overdue 
for a CDR.
    Over the years, SSA has requested additional funding to 
help them address the CDR backlogs. Last year Congress took 
extraordinary steps to adjust the discretionary spending limits 
to provide SSA with over $4 billion--that's right, $4 billion--
for fiscal years 1996 through 2002, in order to conduct CDRs 
and other redeterminations.
    Today's hearing will give us a chance to see what the 
Social Security Administration has been doing with that money. 
While the public should be able to count on disability benefits 
to support their families if disability strikes, the public 
should also be assured that SSA is managing the program so that 
only those who are truly disabled remain on the rolls.
    Today we will focus on the current status of the CDR 
workload and SSA's use of additional funds made available last 
year. I am pleased to hear that SSA is making strides in 
reducing the backlogs and look forward to hearing more details. 
We will also hear about GAO's findings regarding SSA's 
management of the CDR process.
    [The opening statement follows:]

Statement of Hon. Jim Bunning, a Representative in Congress from the 
State of Kentucky

    This afternoon the Subcommittee will examine the Social 
Security Administration's progress in conducting continuing 
disability reviews (CDRs).
    Congress enacted a statutory CDR requirement to ensure that 
only those individuals who continue to be disabled remain on 
the disability rolls. However, SSA has consistently failed to 
conduct the required number of CDRs, resulting in tremendous 
backlogs. In 1996, 4.3 million recipients were due or overdue 
for a CDR.
    Over the years, SSA has requested additional funding to 
help them address the CDR backlogs. Last year, Congress took 
extraordinary steps to adjust the discretionary spending limits 
to provide SSA with over $4 billion for fiscal years 1996 
through 2002 in order to conduct CDRs and other 
redeterminations.
    Today's hearing will give us a chance to see what the 
Social Security Administration has been doing with that money.
    While the public should be able to count on disability 
benefits to support their families if disability strikes, the 
public should also be assured that SSA is managing the program 
so that only those who are truly disabled remain on the rolls.
    Today, we will focus on the current status of the CDR 
workload and SSA's use of additional funds made available last 
year.
    I am pleased to hear that SSA is making strides in reducing 
the backlogs and look forward to hearing more details.
    We will also hear about GAO's findings regarding SSA's 
management of the CDR process.
      

                                

    Chairman Bunning. In the interest of time, it is our 
practice to dispense with opening statements except from the 
Ranking Democrat Member. All Members are welcome to submit 
statements for the record.
    I yield to Congresswoman Kennelly for any statement that 
she may wish to make.
    Ms. Kennelly. Thank you, Mr. Chairman.
    Today we take up the subject of continuing disability 
reviews. For some time this Subcommittee, under both 
Republicans and Democrats, has been interested in assuring that 
the Social Security Administration has adequate resources to 
conduct continuing disability reviews. Last year we adopted a 
measure similar to the one coauthored by Chairman Bunning and 
the previous Democratic Chairmen of the Subcommittee, and 
supported by me, which authorized additional CDR administrative 
funds outside the discretionary spending caps. This measure 
recognized that CDRs are a cost-effective means of reducing the 
disability rolls and assuring that only those who continue to 
be disabled will receive Social Security benefits.
    We are here today to ask several questions about the 
implementation of these reviews. How effectively have the 
additional funds been used? How many disability cases has SSA 
reviewed with these increased funds? Are we on the road to 
eliminating the backlog of CDRs which accumulated during the 
late eighties and the early nineties?
    I am pleased with the results of the General Accounting 
Office review of the status of CDRs. The Social Security 
Administration seems to have met its own targets for conducting 
CDRs, even in the face of additional SSI childhood disability 
workloads imposed on the agency in last year's welfare bill.
    Further, the SSA seems to be making progress reducing its 
backlog of CDR cases. The agency projects that with sufficient 
funding it will have eliminated the backlog of cases by the 
year 2002.
    It would appear that the additional CDR funding was money 
well spent. The Social Security Administration has completed 
the target number of cases with less funds than anticipated and 
may be able to schedule additional reviews for next year. Above 
all, those cases have already been targeted for review.
    Moreover, if authorized funding is appropriated, the Social 
Security Administration may be able to eliminate its current 
backlog in the next 5 years. More importantly, SSA is 
projecting that it will save the taxpayers considerable money 
through reduced disability payments.
    Let me also point out that routine CDRs are not the only 
answer for reducing Social Security disability costs. Some 
individuals have permanent disabilities, but might still return 
to work if they had a little additional assistance. I have 
introduced legislation, as Mr. Bunning has, to help individuals 
with disabilities return to work by providing continual health 
care coverage and other incentives to these individuals. I look 
forward to moving similar legislation through the Subcommittee 
in the near future.
    With respect to CDRs, I want to thank the General 
Accounting Office for completing in a timely fashion much of 
the work that I requested of them. And I look forward to 
hearing from the Social Security Administration about the 
agency's plans for the future and thank the agency for the work 
that it's done already. Thank you.
    Thank you, Mr. Chairman.
    Chairman Bunning. Thank you, Ms. Kennelly.
    First, we will hear from the Social Security 
Administration, Dr. Susan Daniels, Associate Commissioner of 
the Office of Disability; accompanied by Joseph Markovic, 
Director of the Division of Disability Process Policy.
    Testifying from the GAO is Jane Ross, Director of Income 
Security Issues for the Health, Education, and Human Services 
Division; accompanied by Cynthia Bascetta, Assistant Director 
of Income Security Issues.
    Dr. Daniels, if you would please begin.

 STATEMENT OF SUSAN M. DANIELS, PH.D., ASSOCIATE COMMISSIONER, 
     OFFICE OF DISABILITY, SOCIAL SECURITY ADMINISTRATION; 
     ACCOMPANIED BY JOSEPH MARKOVIC, DIRECTOR, DIVISION OF 
                   DISABILITY PROCESS POLICY

    Ms. Daniels. Thank you, Mr. Chairman and Members of the 
Subcommittee, for inviting me here to report on SSA's success 
in protecting the integrity of the Social Security Disability 
Program.
    Effective stewardship at the Social Security Administration 
is one of our highest priorities. Toward that end, we processed 
roughly half a million CDRs in 1996 with an estimated lifetime 
savings, including Medicare and Medicaid, of nearly $2.5 
billion.
    I also appreciate this opportunity to thank each of you 
personally for the additional funding for processing CDRs that 
made this progress possible. Achieving additional funding 
resulted from the work of both the appropriating and 
authorizing committees and has the full support of this 
Administration.
    The Social Security Act requires SSA to review continuing 
disability eligibility for individuals with nonpermanent 
disabilities every 3 years. These reviews are called periodic 
CDRs. We also conduct CDRs for individuals who have returned to 
work, some of which require a full medical review; others do 
not.
    Beginning in 1990, SSA faced unprecedented increases in 
initial claims, resulting, not surprisingly, in growing 
backlogs of overdue CDRs. In 1996, Congress authorized 
additional funding for SSA to process CDRs through fiscal year 
2002.
    Beginning in 1993, we implemented a series of innovations, 
the most notable of which is the mailer questionnaire and 
profiling system, which is now in its sixth year. It is an 
efficient and cost-effective way to accurately differentiate 
beneficiaries who do and do not need full medical reviews in 
the State Disability Determination Services.
    CDRs have always generated program savings well above 
administrative costs. Under our improved processes, including 
the mailer and questionnaire, the program savings are far in 
excess of the administrative costs. We expect similar results 
well into the next decade.
    Now let's look at our recent accomplishments. In fiscal 
year 1996, we nearly doubled the number of CDRs conducted 
during the previous fiscal year, resulting in the second 
largest annual volume of periodic CDRs in the history of the 
agency. We processed over half a million, 565,000, and this 
chart shows you that some were done with mailers; some were 
full medical; some were work activity; and some were periodic. 
Our Office of the Actuary estimates that there will be savings 
of about $2.5 billion resulting from final benefit terminations 
for 26,500 individuals. In fiscal year 1997, through August, we 
have processed over 700,000 CDRs, again using the full medical 
and mailer processes.
    [The following was subsequently received:]
    
    
      

                                

    Ms. Daniels. Our future goals include two important 
features. First, almost doubling the number of CDRs at far less 
than double the cost. We project processing over 1.1 million 
periodic CDRs in fiscal year 1998. In addition, we plan to fold 
in the welfare reform legislation, including CDRs for children 
under age 18 who do not have permanent impairments and for low-
birth-weight babies.
    The mailer profiling system provides a high level of 
confidence in both our ability to achieve the estimated 
workload targets and in the accuracy and reliability of the 
decisions resulting from these processes. Our achievements in 
processing CDRs over the last 2 years demonstrate Congress' and 
the Administration's commitment to addressing this crucial 
workload.
    Discretionary cap adjustments for additional funds have 
been authorized to enable SSA to eliminate the backlog of CDRs 
by fiscal year 2002 while staying current on our annual review 
requirements. However, further congressional action is 
necessary each year to make additional CDR funding available. 
If Congress appropriates additional funds as requested each 
year, we can meet our legislatively mandated CDR workload 
goals.
    In that regard, the House version of the fiscal year 1998 
SSA appropriation, expected to be considered by the conference 
committee next week, provided $45 million less than the 
President's request for processing CDRs and related SSI welfare 
reform legislation. The Senate version of this bill includes 
the full amount of the President's request. Failure to provide 
the additional funds would mean some 15 percent fewer 
individuals would receive CDRs in 1998. We strongly urge the 
conference committee to provide the additional $45 million, 
consistent with the Senate action.
    Mr. Chairman, we are proud of our recent accomplishments. 
We are confident in our CDR strategy. We are grateful for your 
support, and we thank you for your attention. And I would be 
happy, as would Mr. Markovic, to take any questions.
    [The prepared statement follows:]

Statement of Susan M. Daniels, Ph.D., Associate Commissioner, Office of 
Disability, Social Security Administration

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me here today to testify about the 
success of SSA's efforts to protect the integrity of the Social 
Security disability program. As you know, continuing disability 
reviews (CDRs) are how we ensure that only people who are still 
disabled continue to receive monthly benefits. Effective 
stewardship of the Social Security trust funds is one of SSA's 
highest priorities. Toward that end, we processed roughly half 
a million CDRs in FY 1996, with estimated lifetime savings 
(including Medicare and Medicaid) of nearly $2.5 billion.
    I also appreciate this opportunity to thank each of you 
personally for authorizing last year the additional funding for 
processing CDRs that has allowed us to achieve such significant 
progress. Achieving this additional funding was the work of 
both the authorizing and appropriating committees, and had the 
full support of the Administration. At the same time, SSA was 
required to submit an annual report to Congress at the end of 
each fiscal year through FY 2002 on the amount spent on CDRs, 
the number of reviews conducted, their results, and the 
estimated savings. We submitted the report for FY 1996 to 
Congress two weeks ago.

                               Background

    The Social Security Act generally requires SSA to review 
the continuing eligibility of individuals with non-permanent 
disabilities entitled to Social Security Disability Insurance 
(DI) benefits at least once every 3 years. It also requires SSA 
to review the continuing eligibility of such individuals with 
permanent disabilities at such times as the Commissioner 
determines to be appropriate. Together, these reviews are known 
as periodic CDRs. We also conduct CDRs when there has been an 
indication that the individual has returned to work, some of 
which require a full medical review, some of which do not.
    Beginning in 1990, SSA faced unprecedented increases in 
initial disability claims workloads, resulting, not 
surprisingly, in a substantial number of overdue CDRs. Even 
though the number of periodic CDRs processed each year 
increased from 48,000 in FY 1993 to 217,200 in FY 1995, SSA 
recognized that it could not conduct the required CDRs without 
additional resources. In 1996, Congress authorized 
administrative funding to enable SSA to process additional CDRs 
through FY 2002 and provided that the discretionary spending 
caps could be adjusted for appropriations above a base funding 
level of $200 million a year. Congress appropriated $260 
million for FY 1996 for SSA to process CDRs, including a $60 
million discretionary cap adjustment. For FY 1997, Congress 
appropriated $510 million for CDRs, including a $310 million 
adjustment to the discretionary cap to process CDRs, including 
SSI CDRs and redeterminations related to the welfare reform 
legislation. These funds are apportioned separately by the 
Office of Management and Budget and tracked separately by SSA's 
accounting systems.

                            SSA Innovations

    Beginning in 1993, SSA implemented a series of innovations 
to increase the number of CDRs processed. The primary 
innovation in this area was the CDR mailer questionnaire and 
profiling system, now beginning its sixth year of operation. It 
is an efficient and cost-effective means for accurately 
identifying beneficiaries who do not require full medical 
reviews in the Disability Determination Services (DDSs), as 
well as identifying those cases that are productive referrals 
for full medical reviews.
    During FY 1996, we implemented further enhancements to the 
mailer/profiling system. Specifically, we automated the process 
further by using optically scannable mailers and computer-based 
decision logic, an important step as SSA prepares to begin 
annually processing more than three-quarters of a million 
mailers. Additionally, through experience, we continue to 
improve our ability to profile cases. We expect that these 
improved processes will increase our efficiency, program 
savings, and our ability to accurately process even larger 
volumes of CDRs.
    CDRs have always generated program savings well above 
administrative cost. Under our improved process in FY 1996, 
program savings were far in excess of administrative costs. We 
expect to receive similar returns over the lifetime of the 
authorized additional funding by continuing to work toward our 
goal of processing CDRs in the most cost-effective manner 
consistent with program requirements.

                        FY 1996 Accomplishments 

    During FY 1996, SSA processed a total of 566,000 CDRs, of 
which 162,900 were for Supplemental Security Income (SSI) 
recipients. Out of the 566,000 total, 498,400 were periodic 
CDRs and 67,600 were work issue CDRs. The FY 1996 total was 
nearly double the number of CDRs conducted during the previous 
fiscal year, and the second largest annual volume of periodic 
CDRs that SSA has ever processed. During FY 1996, SSA made 
initial determinations that benefits should be ceased due to 
medical improvement and the ability to work in 60,300 cases. Of 
these, 41,910 were cessations resulting from periodic CDRs, 
18,622 were DI only cases, 6,253 were concurrent DI/SSI cases, 
and 17,035 were SSI only. Out of these, we estimate that 26,500 
beneficiaries will have their benefits terminated after all 
appeals: 10,500 DI only, 4,000 concurrent, and 12,000 SSI only. 
This represents life-time savings of nearly $2.5 billion--over 
$1.7 billion in the DI and Medicare programs and over $700 
million in Federal savings for the SSI and Medicaid programs.

                                SSI CDRs

    The Social Security Act was amended in 1994 to require SSA 
to perform CDRs for a minimum of 100,000 SSI recipients during 
each of fiscal years 1996, 1997, and 1998.
    Additionally, last year's welfare reform legislation 
requires SSA to make redeterminations of disabled childhood SSI 
recipients who attain age 18, using the adult disability 
eligibility criteria, and to conduct CDRs once every 3 years 
for SSI recipients under age 18 with impairments that are 
likely to improve, and by age 1 for children whose low birth 
weight is a contributing factor material to the determination 
of disability. This year's Balanced Budget Act permits us to 
schedule a CDR for a low birth weight child at a later date if 
the child's impairment is not expected to improve by age 1.
    During FY 1996, we confirmed the effectiveness of the 
profile/mailer system for SSI cases and conducted 162,900 SSI 
CDRs. These reviews included 5,700 initial determinations made 
for low birth weight children, of which 3,200 were cessations.

                             Future Goals 

    SSA's budget projected spending of about $288 million in FY 
1997 to process 603,000 periodic review CDRs, including about 
151,000 SSI cases. Through August 1997, we have processed 
nearly 636,000 periodic review CDRs. By the end of the fiscal 
year, we expect to have processed at least 650,000, at a cost 
of about $315 million, plus another 74,000 work issue CDRs.
    For FY 1998, SSA's budget projects that we will spend about 
$366 million to process over 1.1 million periodic CDRs--almost 
double the number of CDRs in FY 1997 at far less than double 
the cost. Our improved mailer/profiling system provides a high 
level of confidence in both our ability to achieve our 
estimated workload targets and in the accuracy and reliability 
of the decision resulting from our case reviews.
    Also, in FY 1998, we will begin processing CDRs for SSI 
recipients under age 18 whose impairments are likely to 
improve. These cases will allow us to develop a database to 
profile children's cases for CDR mailers.

                              Conclusion 

    Our achievements in processing CDRs over the last two years 
demonstrate Congress' and the Administration's commitment to 
addressing this crucial workload. Discretionary cap adjustments 
for additional funds have been authorized to enable SSA to 
eliminate the backlog of CDRs by FY 2002, while staying current 
with annual review requirements.
    However, further congressional action is necessary each 
year to make additional CDR funding available. If Congress 
appropriates additional funds, as requested each year, we 
expect to become current with our legislatively mandated CDR 
workloads. In that regard, the House version of the FY 1998 SSA 
appropriation, expected to be considered by a Conference 
Committee next week, provided $45 million dollars less than the 
President requested to process CDRs and SSI administrative work 
related to the welfare reform legislation. The Senate version 
of this bill includes the full amount of the President's 
request. Failure to provide the additional funds would mean 
that some 15 percent fewer individuals would have their status 
reviewed in FY 1998. We would strongly urge the Conference to 
provide the additional $45 million consistent with Senate 
action.
    Mr. Chairman, we are proud of our recent accomplishments 
and are confident that our CDR strategy will lead to reliable 
and cost-effective monitoring of the disability rolls. I thank 
you for your attention and would be happy to answer any 
questions.
      

                                

    Chairman Bunning. Ms. Ross.

 STATEMENT OF JANE L. ROSS, DIRECTOR, INCOME SECURITY ISSUES, 
 HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, U.S. GENERAL 
 ACCOUNTING OFFICE; ACCOMPANIED BY CYNTHIA BASCETTA, ASSISTANT 
DIRECTOR, INCOME SECURITY ISSUES, HEALTH, EDUCATION, AND HUMAN 
                       SERVICES DIVISION

    Ms. Ross. Mr. Chairman and Members of the Subcommittee, I'm 
pleased to talk with you today about SSA's recent experience in 
conducting continuing disability reviews. I want to make two 
points.
    First of all, SSA is meeting its 1997 goal because they 
have been able to hire additional staff and because other 
competing workloads have declined. Also, in future years we 
encourage SSA to set more ambitious targets in its CDR goals, 
so that program costs can be reduced and program integrity can 
be enhanced.
    Let me go back and set the stage for the current emphasis 
on CDRs, directing your attention to the chart showing CDR 
history. In the late eighties----
    Chairman Bunning. It's awfully small. You're going to have 
to do a lot of explaining for us to understand it.
    Ms. Ross. I think you'll be able to see which are the big 
red bars and which are the small red bars.
    In the late eighties, because of budget constraints, SSA 
reduced the number of staff who were available to do CDRs, and 
as a consequence, reduced its CDR goal. I'm sure the gentleman 
can point out on the chart where the late eighties are. And 
then in the early nineties, the number of DI and SSI 
applications increased dramatically, and as a part of its 
effort to keep up with this tremendous applications workload, 
SSA again significantly reduced its CDRs.
    So by 1993, both Members of Congress and the GAO were 
concerned that SSA's very limited number of CDRs, no matter how 
legitimate the reasons for those numbers, had resulted in 
unjustified program expenditures and a breakdown of public 
confidence in the programs. Over the next few years, as you 
know, people struggled to find mechanisms to increase funding, 
and last year's legislation represented a real breakthrough on 
the CDR issue.
    Now that SSA has funding authorization for CDRs and 1 
year's experience under its belt, you asked GAO to give you an 
assessment on SSA's progress in achieving its goal. Getting to 
the bottom line, SSA data indicate, and Dr. Daniels just 
confirmed, that SSA will exceed its target of 603,000 CDRs for 
1997, while it was also processing the required SSI childhood 
redeterminations.
    As I said, one reason that SSA was able to achieve its 
goals was that the State Disability Determination Services were 
able to hire up and increase their capacity. They did so 
despite some problems about hiring freezes and shortages of 
qualified applicants in certain places, but they were able to 
do it, and they expect to meet their 1998 hiring goals as well.
    Another important reason that SSA was able to meet its 1997 
goal was that the number of applications for disability 
benefits declined between 1996 and 1997 by several hundred 
thousand. The people who evaluate these initial applications 
for disability are the same people who conduct the CDRs. So 
when you have fewer initial applications, you have more 
resources available to do CDRs.
    In other words, the problems that we saw in the late 
eighties and the early nineties--reductions of staff and 
increased initial workloads--have now turned around for the 
agency. They're increasing their capacity in terms of staff to 
do CDRs and the initial workload is down.
    So let me summarize. SSA plans to conduct over 8 million 
CDRs by 2002, more than double the number they've ever 
conducted in the preceding 21-year period. Our preliminary 
findings indicate that SSA is meeting its capacity-building 
goals in the DDSs, and that if the funds are appropriated as 
planned, they should have adequate funding to carry out their 
plans.
    Their current plan also assumes making some technical 
improvements. We assume that these will go as projected. The 
more quickly SSA can remove persons who are no longer eligible 
from the rolls, the more it can save in program benefits.
    Finally, we note that many beneficiaries who will not 
medically improve could, nevertheless, have or regain work 
capacity. In light of this, we continue to encourage SSA to 
consider ways to integrate return-to-work efforts into its 
overall management of the CDR process for beneficiaries.
    Mr. Chairman, this concludes my statement. I'd be glad to 
answer your questions.
    [The prepared statement follows:]

Statement of Jane L. Ross, Director, Income Security Issues, Health, 
Education, and Human Services Division, U.S. General Accounting Office

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me to testify on the Social Security 
Administration's (SSA) plan to eliminate the backlog of 
continuing disability reviews (CDR) in the Disability Insurance 
(DI) and Supplemental Security Income (SSI) programs. These 
programs together pay about $60 billion annually to 9 million 
disabled beneficiaries. CDRs, required by law for all DI and 
some SSI beneficiaries, help ensure that only those eligible 
continue receiving benefits. During the last 20 years, however, 
SSA has conducted from as few as 36,000 to as many as 544,000 
reviews in various years. We have reported on several occasions 
that because SSA has not consistently done the required CDRs, 
hundreds of millions of dollars in unnecessary costs have been 
incurred each year, and program integrity has been undermined. 
(See the list of related GAO products at the end of this 
statement.)
    For almost a decade, budget and staff reductions and large 
increases in initial claims hampered SSA's efforts to conduct 
these reviews. Consequently, more than 4 million beneficiaries 
were due or overdue for CDRs by 1996. Both SSA and the Congress 
focused attention on CDRs in that year. As a result, SSA 
developed a plan to conduct 8.2 million CDRs between 1996 and 
2002, and the Congress authorized funding of about $4.1 billion 
over 7 years for this purpose. Soon after SSA developed its 
plan, the Congress established a new requirement for CDRs and 
for disability redeterminations for certain SSI children, for 
whom eligibility criteria were made more restrictive as part of 
welfare reform. SSA expects to complete an update of its plan 
in November 1997 to incorporate these SSI CDRs as well as its 
progress conducting CDRs.
    My testimony today presents our observations on SSA's 
ability to achieve its current 7-year plan cost effectively and 
on schedule. I will discuss SSA's progress so far, its spending 
rate, and the status of selection formulas needed to meet 
future goals. My testimony is based on our previous reports and 
our ongoing work for you and Representative Kennelly.
    In summary, we have found that SSA's experience in 
conducting CDRs during fiscal year 1997 is encouraging. For 
1997, SSA expects to meet or exceed its goal to conduct 603,000 
CDRs. And, for 1998, it is planning to increase its goal 
because it was able to meet its 1997 goal, while also 
processing at least 235,000 SSI childhood eligibility 
redeterminations. Reviewing more cases sooner than planned, to 
the extent possible, is clearly desirable because of the high 
costs--in taxpayer dollars and program integrity--of continuing 
benefits to those who are no longer eligible. In addition, 
SSA's spending to date and estimates of future processing costs 
suggest that it will be able to complete its current 7-year 
plan with the funds the Congress has authorized, although its 
revised plan will not be available until November 1997. Key 
issues, however, such as deciding which beneficiaries should 
undergo a full medical review--a lengthy and costly process--
are still unresolved but will determine how quickly and at what 
cost SSA can become current on its CDR workload.

                      Priority of CDRs has Varied

    SSA's disability programs provide cash benefits to people 
with long-term disabilities. The DI program provides monthly 
cash benefits and Medicare eligibility to severely disabled 
workers; SSI is an income assistance program for blind and 
disabled people. The law defines disability for adults for both 
programs as the inability to engage in substantial gainful 
activity because of a severe physical or mental impairment that 
is expected to last at least 1 year or result in death. For 
children seeking SSI disability benefits, the impairment must 
meet the duration requirement and result in marked and severe 
functional limitations.
    Both the DI and SSI programs are administered by SSA and 
state disability determination services (DDS). DDSs receive 100 
percent of their funding from SSA and make disability decisions 
in accordance with SSA's policies and procedures. They process 
initial disability applications, assess beneficiaries' 
potential for medical improvement, set due dates for CDRs, and 
conduct full medical reviews.
    In early 1978, we had reported on serious program 
administration weaknesses that allowed thousands of medically 
ineligible recipients to go undetected.\1\ Because of its 
concerns about the effectiveness of the CDR process and the 
growing number of disability beneficiaries, the Congress 
enacted a provision in a 1980 law requiring periodic CDRs for 
all DI beneficiaries.\2\ This provision requires SSA to 
review--at least once every 3 years--the status of DI 
beneficiaries whose disabilities are not permanent to determine 
their continuing eligibility for benefits. The law also 
requires CDRs for DI beneficiaries with permanent impairments 
but gives SSA latitude in determining the frequency of these 
reviews. The 1980 provision does not require SSA to review 
cases involving SSI recipients. Before the 1980 legislation, 
SSA scheduled beneficiaries for medical reviews only if medical 
improvement was expected.
---------------------------------------------------------------------------
    \1\ See GAO numbered correspondence HRD-78-97.
    \2\ See the Social Security Disability Amendments of 1980 (P.L. 96-
265) Sec. 311.
---------------------------------------------------------------------------
    As a result of the 1980 law, SSA began increasing the 
number of CDRs in fiscal year 1981, using age, benefit amount, 
and medical characteristics as selection criteria. This 
resulted in the selection of a disproportionate number of young 
people with mental impairments for CDRs, as shown in table 1. 
Many of these cases were terminated because they did not meet 
new strict mental disability criteria that had been implemented 
after they had been put on the rolls.
    In response to this situation, the Congress enacted a law 
in 1984 establishing the Medical Improvement Review Standard, 
which prohibits benefit termination unless SSA can show that 
the beneficiary's medical condition has improved since the last 
medical decision and that this improvement relates to the 
individual's ability to work.\3\ As a result, SSA declared a 
moratorium on conducting CDRs until the new medical improvement 
standard was implemented by regulation in late 1985. Since 
enactment of the new standard, the cessation rate for CDRs has 
declined greatly.
---------------------------------------------------------------------------
    \3\ See the Social Security Disability Benefit Reform Act of 1984 
(P.L. 98-460).
---------------------------------------------------------------------------
     SSA's regulations require CDRs every 6 to 18 months for DI 
beneficiaries expected to improve medically and at least once 
every 3 years if medical improvement is considered possible. 
For DI beneficiaries whose impairments are judged to be 
permanent, the regulation requires CDRs once every 5 to 7 
years. Until 1993, all CDRs were labor-intensive full medical 
reviews. In full medical reviews, one of SSA's 1,300 field 
offices first contacts the beneficiary to determine whether he 
or she is engaged in any gainful activity that would make the 
beneficiary ineligible for benefits. If not, the field office 
forwards the case to a DDS, which determines whether the 
beneficiary still meets the medical eligibility requirements. 
SSA currently estimates that a full medical review costs about 
$800.

           Table 1: CDR Historical Data, Fiscal Years 1975-96
------------------------------------------------------------------------
                                           Initial
                               Number of  cessation        Selected
         Fiscal year            CDRs \1\   rate (in   significant events
                                           percent)     in CDR history
------------------------------------------------------------------------
1975.........................    147,200         21  ...................
1976.........................    170,000         24  ...................
1977.........................    150,300         38  ...................
1978.........................    118,800         46  GAO reported its
                                                      concern that
                                                      thousands of
                                                      medically
                                                      ineligible
                                                      recipients were
                                                      going undetected.
1979.........................    134,500         46  ...................
1980.........................    159,600         46  The Congress
                                                      established
                                                      requirement for
                                                      periodic reviews
                                                      of DI
                                                      beneficiaries.
1981.........................    257,100         47  SSA increased CDRs
                                                      and began
                                                      targeting CDRs on
                                                      the basis of age,
                                                      benefit amount,
                                                      and medical
                                                      factors that
                                                      disproportionately
                                                      affected younger
                                                      people and the
                                                      mentally impaired.
1982.........................    496,800         45  ...................
1983.........................    544,200         41  ...................
1984.........................    156,600         24  The Congress
                                                      enacted medical
                                                      improvement review
                                                      standard, and SSA
                                                      declared
                                                      moratorium on
                                                      CDRs.
1985.........................     35,900         11  ...................
1986.........................     47,700          6  SSA lifted the CDR
                                                      moratorium after
                                                      publishing
                                                      regulations for
                                                      the medical
                                                      improvement review
                                                      standard. SSA also
                                                      published criteria
                                                      for scheduling
                                                      CDRs.
1987.........................    206,000         13  ...................
1988.........................    353,800         12  ...................
1989.........................    366,800          9  ...................
1990.........................    195,100         11  SSA began diverting
                                                      CDR resources to
                                                      initial disability
                                                      claims, which were
                                                      growing rapidly.
1991.........................     73,500         10  ...................
1992.........................     73,100         13  ...................
1993.........................  64,800 \2         11  SSA implemented
                                       \              mailer CDR process
                                                      for certain DI
                                                      beneficiaries
                                                      under age 59.
1994.........................  118,400 \         14  Congress enacted
                                      2\              requirement for
                                                      100,000 SSI CDRs
                                                      annually during
                                                      fiscal years 1996-
                                                      98.
1995.........................  217,000 \         17  ...................
                                      2\
1996.........................  498,400 \         11  The Congress
                                      2\              authorized $4.1
                                                      billion for CDRs
                                                      during fiscal
                                                      years 1996-2002
                                                      and required
                                                      additional SSI
                                                      childhood
                                                      disability reviews
                                                      and
                                                      redeterminations
                                                      for which it
                                                      authorized an
                                                      additional $250
                                                      million.
------------------------------------------------------------------------
\1\ CDR data for 1975 through 1994 include ``work'' CDRs for which DDSs
  conduct full medical reviews. Work CDRs are unscheduled reviews that
  SSA's field offices initiate when, for example, they receive reports
  indicating a beneficiary is working or has income. SSA estimates that
  DDSs annually conduct about 20,000 full medical reviews as a result of
  work CDRs.
\2\ For 1993-96, the number of mailers, respectively, were about 34,600,
  31,000, 76,500, and 248,000.
Source: SSA.


     To conduct CDRs more cost effectively, SSA developed an 
alternative to full medical reviews.\4\ Under this alternative, 
SSA mails a questionnaire (referred to as a ``mailer'') to 
beneficiaries who have a low likelihood of benefit termination 
for them to report information on their medical conditions, 
treatments received, and work activities. About 2 percent of 
these beneficiaries eventually undergo a full medical review 
because their responses to the mailer and statistical 
information used to indicate the likelihood of cessation 
indicate that a more comprehensive review is warranted. SSA 
currently estimates that a mailer CDR costs about $50 to 
process.
---------------------------------------------------------------------------
    \4\ To develop the mailer CDR process, SSA used the outcomes of 
previous DI CDRs to statistically estimate the likelihood that a CDR 
would result in benefit termination. The estimate is based on 
characteristics such as age, impairment, length of time on the 
disability rolls, and previous CDR activity. If the estimated 
likelihood of benefit termination is high, SSA routes the case to a DDS 
for a full medical review. If the estimated likelihood of benefit 
termination is low, SSA sends a mailer to the beneficiary, permitting 
SSA to do more CDRs than if all cases were forwarded to DDSs for full 
medical reviews.
---------------------------------------------------------------------------
     Due to budget and staff reductions after 1986 and large 
increases in initial disability claims beginning in 1990, SSA 
diverted resources from CDRs and could not conduct all required 
DI CDRs; nor could the agency conduct many SSI CDRs. In 1994, 
the Congress established the first statutory requirement for 
SSI CDRs, mandating that SSA review one-third of the SSI 
beneficiaries who reach age 18 and at least 100,000 additional 
SSI beneficiaries annually in fiscal years 1996 to 1998.\5\
---------------------------------------------------------------------------
    \5\ See the Social Security Independence and Program Improvements 
Act of 1994.
---------------------------------------------------------------------------
    We reported in October 1996 that about 2.4 million DI 
beneficiaries were due or overdue for CDRs, all required by 
law, and about 1.9 million SSI beneficiaries due or over due 
for CDRs, of which 118,000 were required by law.\6\ SSA 
calculated a smaller number of due or overdue CDRs--1.4 million 
for DI beneficiaries and 1.6 million for SSI beneficiaries. SSA 
excluded from its calculation DI worker beneficiaries aged 59 
and older, disabled adult children and disabled widows and 
widowers of DI worker beneficiaries, and SSI beneficiaries aged 
59 and older. SSA officials have acknowledged that CDRs were 
required for all DI beneficiaries excluded from its calculation 
but stated that because of the CDR backlog it was focusing on 
the portions of the CDR population that the agency estimated as 
the most cost effective to review.
---------------------------------------------------------------------------
    \6\ See Social Security Disability: Alternatives Would Boost Cost-
Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2, Oct. 16, 
1996) and Social Security Disability: Improvements Needed to Continuing 
Disability Review Process (GAO/HEHS-97-1, Oct. 16, 1996). Also see 
Supplemental Security Income: SSA Is Taking Steps to Review Recipients' 
Disability Status (GAO/HEHS-97-17, Oct. 30, 1996).
---------------------------------------------------------------------------
     In early 1996, SSA developed an ambitious 7-year plan to 
conduct 8.2 million CDRs during fiscal years 1996 to 2002, and, 
in March 1996, the Congress authorized a total of about $4.1 
billion to fund SSA's plan.\7\ The current 7-year plan includes 
(1) CDRs for DI worker beneficiaries under age 59, (2) SSI CDRs 
required under the Social Security Independence and Program 
Improvements Act of 1994, and (3) about 2 million additional 
SSI CDRs.
---------------------------------------------------------------------------
    \7\ The Contract With America Advancement Act of 1996 (P.L. 104-
121) authorizes funding for 7 years for CDRs from the Federal Old-Age 
and Survivors Insurance Trust Fund and the Federal Disability Insurance 
Trust Fund.
---------------------------------------------------------------------------
     In November 1997, SSA plans to complete its updated plan 
to include additional beneficiary groups mandated in recent 
legislation. SSA estimates adding about 600,000 cases to its 
plan during fiscal years 1998 to 2000 to comply with 
requirements to conduct (1) CDRs at least every 3 years for SSI 
children under age 18 who are likely to improve; (2) CDRs for 
infants in their first year of life who receive SSI benefits 
due to low birth weight; and (3) redeterminations for all SSI 
children beginning on their 18th birthdays, using adult 
disability criteria.\8\ The August 1996 legislation also 
required that SSA conduct SSI eligibility redeterminations for 
all children who previously qualified for disability on the 
basis of an individualized functional assessment (IFA), which 
the law eliminated, or on maladaptive behavior criteria, which 
the law revised to eliminate double counting of impairments. 
SSA estimated that about 300,000 had been approved on the basis 
of the IFA or maladaptive behavior criteria. These cases, which 
are not counted in the CDR workload, must be completed by 
February 1998. 
---------------------------------------------------------------------------
    \8\ See the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996. This act repealed the provision for CDRs 
for 18-year-olds in the 1994 legislation. SSA determined that newly 
required CDRs on low birth weight babies and children under age 18 
whose impairments are likely to improve, and redeterminations for 18-
year-olds may count toward the 100,000 CDRs required under the Social 
Security Independence and Program Improvement Act of 1994. The Balanced 
Budget Act of 1997 permits SSA to schedule a CDR for a low birth weight 
child after the child's first birthday if it is determined that the 
child's impairment is not expected to improve within 12 months after 
birth.
---------------------------------------------------------------------------

             SSA Met 1997 Target, Further Progress Expected

     SSA data indicate that it will meet its CDR target for 
1997, while also processing the newly required SSI childhood 
redeterminations. This result is due in part to SSA's working 
with the DDSs to increase case processing capacity to handle 
the unprecedented workloads in SSA's CDR plan. We find this 
progress encouraging and will continue to review SSA's progress 
in our ongoing work.

                    Table 2: SSA's CDR and SSI Childhood Redetermination Workload Targets and Cases Completed, Fiscal Years 1996-2002
                                                                      In thousands
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1996      1997       1998          1999          2000          2001          2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current workload targets
CDRs processed (mailers and full medical reviews).............         500     603         1,117         1,397         1,595         1,527         1,443
SSI childhood initial redeterminations \1\....................         Not     288  Not provided           Not           Not           Not           Not
                                                                applicable                   \2\    applicable    applicable    applicable    applicable
Actual cases completed
CDRs \3\ (mailers and full medical reviews)...................         498     603   Unavailable   Unavailable   Unavailable   Unavailable   Unavailable
SSI childhood initial redeterminations \1\....................         Not  235 \4   Unavailable           Not           Not           Not           Not
                                                                applicable       \                  applicable    applicable    applicable    applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Years other than 1997 and 1998 are not applicable for childhood redetermination targets or cases completed because the Aug. 1996 legislation
  required that all childhood redeterminations be completed by Aug. 22, 1997, and in 1997 the Congress extended this deadline to Feb. 1998 in P.L. 105-
  33. Actual cases completed for 1998 are unavailable until the end of 1998.
\2\ SSA did not provide the current target workload for childhood redeterminations in 1998.
\3\ CDRs completed for 1996 represents CDRs for DI and SSI beneficiaries. CDRs completed for 1997 includes periodic CDRs, CDRs for SSI low birth weight
  babies, and redeterminations for SSI children after they reach age 18. The 603,000 cases for 1997 is an estimate based on actual cases completed
  through the end of Aug. 1997. Cases completed for fiscal years beyond 1997 are unavailable until the end of each fiscal year.
\4\ As of the end of Aug. 1997, about 235,000 of the original 288,000 SSI childhood redeterminations had been processed. Of the 235,000 cases processed,
  SSA determined on the basis of a review of existing medical evidence that about 28,000 cases could be continued without referring them to DDSs for
  medical redeterminations. DDSs conducted medical redeterminations for the remaining 207,000 cases. SSA did not provide an estimate of the initial
  redeterminations it will complete by the end of Sept. 1997.
Source: SSA.


     In fiscal year 1997, SSA faced a new SSI childhood 
redetermination workload that competed for the same resources 
that conduct CDRs. Even so, the DDSs were on track to meet or 
exceed the 1997 target of 603,000 CDRs (see table 2). Both SSA 
and DDS officials told us that they attributed part of their 
success to the decline in initial applications--from about 2.4 
million in fiscal year 1996 to about 1.9 million through the 
first 11 months of fiscal year 1997. SSA is reassessing its CDR 
workload target for 1998 to determine the extent to which it 
can increase the CDR target beyond the 1.1 million the plan 
currently calls for.
     To prepare for this ambitious CDR workload, SSA has 
negotiated with the DDSs to increase CDR workloads and increase 
the DDSs' efforts to hire, train, and supervise additional 
staff. After several months of training, the new staff would be 
expected to handle initial disability determinations, freeing 
more senior examiners to handle CDRs. Training and supervising 
new disability examiners, however, can require a great deal of 
the senior disability examiners' time. Our preliminary work 
indicates that the DDSs substantially succeeded in meeting 
their 1997 hiring goals, despite problems such as hiring 
freezes, shortages of qualified applicants, or limited office 
space, which sometimes caused DDS to reach their hiring goals 
later in the year than planned. From 1996 to 1997, the number 
of full-time disability examiners in the DDSs increased from 
5,459 to 5,724, not including 435 trainees. SSA also expects 
DDSs to be able to meet their 1998 hiring goals.

      Budget Authority Appears Sufficient To Conduct Required CDRs

    On the basis of SSA's current cost estimates, the 
congressionally authorized funding levels for fiscal years 1998 
through 2002 will exceed the estimated costs of the CDR 
workloads in SSA's current plan. The Congress has authorized a 
total of about $4.3 billion for DI and SSI CDRs and SSI 
redeterminations during fiscal years 1996 through 2002 (see 
table 3).\9\
---------------------------------------------------------------------------
    \9\ The Contract With America Advancement Act of 1996 (P.L. 104-
121) authorized about $4.1 billion for DI and SSI CDRs during fiscal 
years 1996 to 2002. The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (P.L. 104-193) added a total of $250 million 
to the authorized amounts for fiscal years 1997 and 1998.

 Table 3: Amounts Authorized, Requested, Appropriated, and Obligated for
          CDRs and SSI Redeterminations, Fiscal Years 1996-2002
                           Dollars in millions
------------------------------------------------------------------------
 Funding for DI and SSI CDRs
  and SSI redeterminations     1996     1997     1998       1999-2002
------------------------------------------------------------------------
Amount authorized...........    $260     $510     $670          $720 \1\
SSA's budget request........     260      510  490 \2\    Not applicable
Amount appropriated.........     260  510 \2\  490 \3\    Not applicable
Amount obligated by SSA
CDRs........................     207      288      366    Not applicable
SSI redeterminations........       0      235      164    Not applicable
Total obligations...........    $207  $523 \4  $530 \5    Not applicable
                                            \        \
Amount not spent and carried
 forward
CDRs........................      53       40        0    Not applicable
SSI redeterminations........       0        0        0    Not applicable
Total.......................     $53      $40       $0    Not applicable
------------------------------------------------------------------------
\1\ The annual authorization from 1999-2002 is $720 million.
\2\ The $510 million appropriated in 1997 and the $490 million requested
  for 1998 include $200 million annually from SSA's administrative
  expenses to be used for CDRs. The remaining funds--$310 million in
  1997 and $290 million in 1998--are from an additional budget authority
  that can be used to process either CDRs or SSI redeterminations.
\3\ The Senate approved SSA's $490 million request on Sept. 11, 1997.
  Final approval by the Congress is pending.
\4\ In 1997, SSA obligated more than the amount appropriated because $53
  million of unobligated 1996 funds had been carried forward to 1997.
\5\ SSA estimates it will have $530 million in obligations available in
  1998--its $490 million request plus the unobligated $40 million
  carried over from 1997.
Source: SSA.

    For fiscal year 1996, SSA requested and received $260 
million for CDRs, of which the Congress designated $60 million 
as 2-year funding for use in 1996 or 1997. SSA spent a total of 
$207 million in 1996 to conduct 498,000 CDRs--only 2,000 short 
of its goal of 500,000. In 1996, SSA found that full medical 
reviews cost less than previously estimated--about $800 each 
rather than $1,000 each. As a result, SSA carried forward $53 
million from 1996 into 1997.
    For fiscal year 1997, SSA requested and received $510 
million--$200 million for CDRs and $310 million of 2-year 
funding that could be used for either CDRs or SSI 
redeterminations. Including the $53 million that SSA carried 
forward from 1996, SSA had a total of $563 million available 
for 1997. Of this $563 million, SSA estimates it will spend 
$288 million to meet its goal of conducting 603,000 CDRs and 
$235 million on SSI redeterminations--or a total of $523 
million. This means SSA will spend $13 million more than the 
$510 million appropriated; however, it still will be able to 
carry forward $40 million into 1998 because of the $53 million 
carried forward from 1996 into 1997.
    SSA officials told us that in fiscal years 1996 and 1997 
the agency could not have effectively spent the unused funds 
($53 million and $40 million, respectively) to greatly increase 
the number of full medical reviews conducted during those years 
because the DDSs were gearing up to handle the increased CDR 
workloads. As mentioned previously, some DDS officials told us 
they could not have expanded any faster. 
    In 1996, the Congress authorized $670 million for CDRs and 
SSI redeterminations in fiscal year 1998. This $670 million 
consisted of $570 million authorized by Public Law 104-121 for 
CDRs and an additional $100 million authorized by Public Law 
104-193, which enacted the SSI redetermination requirements. 
SSA officials told us that the $570 million authorization 
assumed that the DDSs would conduct 533,000 full medical 
reviews costing $1,000 each. In formulating its budget request 
for 1998, however, SSA reduced the full medical review workload 
from 533,000 to 428,000 (costing $800 each). SSA reduced the 
workload because of the size of other DDS workloads. As a 
result, SSA submitted a budget request of $490 million or $180 
million less than the total amount authorized for CDRs and SSI 
redeterminations.
    On the basis of SSA's current 7-year plan and the current 
estimated average cost of processing CDRs, it appears that the 
$720 million authorized for each year from 1999 to 2002 will 
exceed the cost of conducting CDRs (see table 4). For example, 
the current plan calls for the largest number of CDRs to be 
conducted in 2000. At an average estimated cost of $800 per 
full medical review and $50 per mailer, the estimated total 
cost for CDRs in 2000 is about $668 million, compared with the 
authorized amount of $720 million. 

  Table 4: Estimated Costs of Conducting CDRs During Fiscal Years 1999-
               2002 Under SSA's Current CDR Workload Plan
------------------------------------------------------------------------
                                           1999    2000    2001    2002
------------------------------------------------------------------------
Workload targets specified in current
 plan (CDRs in thousands)
Full medical reviews....................     593     780     778     678
Mailer CDRs.............................     880     890     820     840
Estimated average cost per CDR in FY
 1998
Full medical reviews....................    $800    $800    $800    $800
Mailer CDRs.............................      50      50      50      50
Estimated total cost (dollars in
 millions)
Full medical reviews....................     474     624     622     542
Mailer CDRs.............................      44      44      41      42
Total cost..............................    $518    $668    $663    $584
Amount authorized (dollars in millions).     720     720     720     720
Authorized amount less estimated cost        202      52      57    136
 (dollars in millions)..................
------------------------------------------------------------------------
Source: GAO computations based on SSA data.


  Timely Completion of Selection Formulas Needed To Meet Future Goals

    To make the CDR process more cost effective, SSA has been 
developing selection formulas to identify which beneficiaries 
should receive lower cost mailers and which should be 
designated for higher cost full medical reviews. In October 
1996, we reported that SSA had sufficiently developed the 
selection formulas to apply them to about one-half of the 
beneficiaries due for CDRs. SSA is still developing selection 
formulas for many of the other beneficiaries due for CDRs, 
however, and the extent of SSA's success could affect its 
ability to complete its 7-year plan cost effectively and on 
schedule.
    We reported that although SSA had developed selection 
formulas for beneficiaries under age 59 who have potential for 
medical improvement, the formulas could not identify for most 
beneficiaries in this group who should receive a mailer or be 
referred for a full medical review. Recently, however, SSA 
began full medical reviews for the 10 percent of these 
beneficiaries with the highest probability of benefit 
cessation. Successful completion of selection formulas for the 
remainder of the beneficiaries is important because if SSA has 
to do full medical reviews for all of them, it could jeopardize 
meeting the 2002 goal.
    SSA is also developing selection formulas to apply to more 
than 600,000 SSI childhood cases that will be coming due for a 
CDR by fiscal year 2000. Completing these CDRs on schedule may 
depend on SSA's ability to develop and implement a reliable 
mailer process for children.
    SSA has finished developing selection formulas for 
beneficiaries aged 59 and older and for beneficiaries not 
expected to improve medically. Of this latter group, SSA sent 
mailers to 44,000 beneficiaries in early 1997. For 
beneficiaries aged 59 and older, SSA plans to send mailers to 
60,000 beneficiaries in October 1997.
    SSA officials also said that the agency is nearing the 
completion of selection formulas for disabled adult children 
and disabled widows and widowers of DI worker beneficiaries, 
and mailers for this group could start going out sometime in 
fiscal year 1998.

                        Concluding Observations

    SSA plans to conduct over 8 million CDRs by 2002, more than 
double the number of CDRs conducted during the entire preceding 
21-year period. Our preliminary findings indicate that SSA is 
meeting its capacity-building goals in the DDSs and should have 
adequate funding to carry out its current plan. In fact, SSA 
may be able to conduct these CDRs in a shorter time period. The 
more quickly SSA can remove those who are no longer eligible 
from the rolls, the more it can save in program benefits. 
Therefore, in light of the lower levels of initial 
applications, SSA should increase its yearly CDR goals. 
Finally, we note that many beneficiaries who will not medically 
improve could nevertheless have or regain work capacity. In 
light of this, we continue to encourage SSA to consider ways to 
integrate return-to-work efforts into its overall management of 
the CDR process for all beneficiaries.
    Mr. Chairman, this concludes my prepared statement. At this 
time, I will be happy to answer any questions you or the other 
Subcommittee members may have.

                          Related GAO Products

    Social Security Disability: SSA Must Hold Itself Accountable for 
Continued Improvement in Decision-Making (GAO/HEHS-97-102, Aug. 12, 
1997). 
    Social Security: Disability Programs Lag in Promoting Return to 
Work (GAO/HEHS-97-46, Mar. 17, 1997). 
    Supplemental Security Income: SSA Is Taking Steps to Review 
Recipients' Disability Status (GAO/HEHS-97-17, Oct. 30, 1996).
    Social Security Disability: Alternatives Would Boost Cost-
Effectiveness of Continuing Disability Reviews (GAO/HEHS-97-2, Oct. 16, 
1996).
    Social Security Disability: Improvements Needed in Continuing 
Disability Review Process (GAO/HEHS-97-1, Oct. 16, 1996).
    Social Security: New Continuing Disability Review Process Could Be 
Enhanced (GAO/HEHS-94-118, June 27, 1994).
    Social Security: Continuing Disability Review Process Improved, But 
More Targeted Reviews Needed (GAO/T-HEHS-94-121, Mar. 10, 1994).
    Social Security Disability: SSA Needs to Improve Continuing 
Disability Review Program (GAO/HRD-93-109, July 8, 1993).
    Social Security: Effects of Budget Constraints on Disability 
Program (GAO/HRD-88-2, Oct. 28, 1987).
    Social Security Disability: Implementation of the Medical 
Improvement Review Standard (GAO/HRD-87-3BR, Dec. 16, 1986).
    More Diligent Followup Needed to Weed Out Ineligible Disability 
Beneficiaries (HRD-81-48, Mar. 3, 1981).
      

                                

    Chairman Bunning. Thank you, Ms. Ross.
    Let me start out with Dr. Daniels. According to GAO, in 
fiscal year 1996 you spent all but $53 million of the $260 
million authorized and appropriated to process almost 500,000 
CDRs. The total number of reviews you did complete, almost 
500,000, was more than double the total number of CDRs you 
completed the previous year. In fiscal year 1997, you project 
that you will spend all but $40 million of the $563 million 
authorized and appropriated to process 650,000 CDRs, plus 
235,000 SSI childhood redeterminations. The number of total 
reviews, 885,000, represents a 68-percent increase over the 
total number of reviews you conducted in fiscal year 1996. I 
commend DDS and SSA staff for your exemplary efforts in 
processing these complex workloads.
    However, in fiscal year 1998, Congress authorized $670 
million for CDRs and SSI redeterminations. This $670 million 
includes $570 million authorized through this Subcommittee and 
an additional $100 million requested by SSA and included in the 
welfare reform legislation. Yet, SSA's fiscal year 1998 budget 
request includes only $490 million. That's $180 million short 
of what was originally authorized. Please explain why SSA 
didn't request all the money we've provided for you.
    Ms. Daniels. The most important part of the medical CDR 
process occurs in the DDS. And as we looked across the 
workloads for the next few years, increasing the capacity of 
the State DDS agencies to do CDRs was one of the chief factors 
in determining how fast we could grow the CDR Program. Staffing 
up, finding eligible and available disability examiners, or, in 
some cases, training large numbers of examiners is very labor-
intensive and difficult for the State DDSs. So we have tried to 
span the increase over the last year and this year the numbers 
in the DDSs. We're expanding as rapidly as we think all the 
DDSs can handle and manage, and at the same time, continue to 
work their current workloads. So that's one feature that 
determines how many CDRs we think we can do.
    In addition, we thought it was time to step back and see if 
there were other improvements--other populations or subgroups--
that we could make with the profiling and mailer systems. We 
plan to do this in the next year, looking at testing profiles 
for children, and so forth. We thought that the most judicious 
use of the funds would be to spend some time trying to perfect 
the most cost-effective way to do these CDRs.
    So we're ramping up as fast as our capacity allows to do 
CDRs in both SSA and in the DDSs, and we're still working on 
increasing our efficiency by perfecting our processes.
    Chairman Bunning. In October of last year, GAO indicated 
the CDR backlog was 4.3 million cases. What is the backlog 
today?
    Ms. Daniels. If we consider in the backlog everybody who 
has a diary that has come due, we think it might be somewhere 
around 3.5 million.
    Chairman Bunning. And, on average, how many CDR diaries 
come due each month?
    Ms. Daniels. Each month? Well, it's about 1 million a year.
    Chairman Bunning. About 1 million a year come due?
    Ms. Daniels. Yes.
    Chairman Bunning. What are the lifetime average savings to 
the trust funds for each individual who medically recovers and 
is removed from the rolls?
    Ms. Daniels. I would like to provide that answer for the 
record, since I'm not an actuary.
    Chairman Bunning. In other words, you don't have the answer 
with you? You would like to submit it in writing?
    Ms. Daniels. I would. I would very much like to submit 
that.
    [The following was subsequently received:]

    The average present day value of the lifetime savings to 
the trust funds for each beneficiary estimated to be ultimately 
removed from the rolls as a result of the initial CDR 
cessations in FY 1996 is $75,000 to the Old-Age and Survivors 
(OASI) Trust Fund and Disability Insurance (DI) Trust Fund 
(virtually all of which is for the DI Trust Fund), plus $45,000 
to the Medicare trust funds.
      

                                

    Chairman Bunning. GAO reports that the cost of completing a 
full medical review has dropped from about $1,000 per case to 
about $800 per case. Is that accurate, and what do you 
attribute the cost savings to?
    Ms. Daniels. Yes, that is accurate. As we began to ramp up 
the capacity of the DDSs, the initial cost of providing the 
infrastructure for those individuals, those new examiners, 
additional training, additional workspace, computer systems, 
and so forth, contributed to that cost. Once that 
infrastructure is in place, we estimate the ongoing cost to be 
$800 per case.
    Chairman Bunning. Barbara, go ahead.
    Ms. Kennelly. Thank you, Mr. Chairman.
    Dr. Daniels, some people have suggested that disability 
benefits should be limited to 3 years, and thereafter the 
person disabled will have to prove again that they are in need 
of these benefits. Do you agree with this? And I would add to 
that, doesn't an effective CDR process like the one SSA is 
conducting right now produce the same results as limiting it to 
3 years and then starting the process again?
    Ms. Daniels. I completely agree with you, Ms. Kennelly. The 
CDR process we have put into place and our plans and targets 
for the next few years will assure the integrity of the 
program, especially when we're doing a full complement of CDRs, 
like we plan for this coming year. Still, only a small number 
of people, though it's very cost effective, leave the rolls as 
a result of CDRs. If we put a time limit, we would be 
readjudicating every case, not just those who leave the rolls. 
It could be very, very costly and time consuming. I think the 
way that we're doing it now with a combined efficient system of 
mailers and full medicals is probably the way to go.
    Ms. Kennelly. Thank you, Doctor. Doctor, much of the 
workload for CDRs has fallen on the State Disability 
Determination Services, and these DDSs are facing other 
possible increases in their workloads. For example, DDSs are 
being required to write more comprehensive explanations when 
they deny the application for the benefit. Has SSA taken these 
additional burdens on the DDSs into account when determining 
the resources that will be necessary to complete the CDRs? If 
anybody could hear us with these initials----
    [Laughter.]
    Ms. Daniels. The DDSs are a remarkable arm of the agency. 
They're very hard working, very dedicated, and they're very 
dedicated to this workload of CDRs. They know how important it 
is to ensure the integrity of the program. And even this year, 
when we had the additional welfare reform legislation, they 
still exceeded the goal that we set for them. I think that, 
with a strong signal and good management and careful planning 
with them, we could do all of the workloads that we have 
planned.
    Ms. Kennelly. Doctor, you mentioned that one of the things 
you're doing is using the mailer, and I'm just wondering if 
this low-cost mailer process that began in 1993 is effective. 
What I wonder, if after a certain amount of time that the 
person won't be able to kind of realize how you should answer 
that mailer. It's effective now, but will they begin to use it 
in maybe a less effective way in the future, or have you 
thought about that?
    Ms. Daniels. We certainly have thought about this. And I'm 
going to ask Mr. Markovic to tell you about a research project 
we're planning for this coming year.
    But before he does, I'd like to tell you that the mailer is 
not an attempt to elicit from the individual any trick. We're 
simply asking these individuals to tell us what their condition 
is and how they're doing. We have already determined by the 
profile that it is not cost effective to do full CDRs on these 
individuals. So by the profiling system, we have determined 
that these are not likely to be disability cessations. We, of 
course, do check this assumption through integrity samples and 
ongoing empirical analysis of our own data.
    But, in addition, we have planned a research project that 
I'd like Mr. Markovic to tell you about.
    Ms. Kennelly. Thank you, Doctor.
    Mr. Markovic. Well, it's very simple. We are looking for 
expert advice on how we could better word the questions on the 
mailer to get the information that we're looking for that would 
allow us to better distinguish the responses, and how we can 
structure it to safeguard against any deliberate falsification 
of the answers.
    Ms. Kennelly. Thank you. Thank you, Mr. Chairman.
    Chairman Bunning. Mr. Portman.
    Mr. Portman. Thank you, Mr. Chairman.
    First, I want to commend the Subcommittee and you for 
holding the oversight hearing, and to say that I'm very 
encouraged by what we've heard today about the potential 
savings to the taxpayer as a result of these stepped up efforts 
to address the backlog. The numbers are incredible, and I think 
they really justify the kind of time and effort you put into 
this, Mr. Bunning, and I, again, think these hearings are 
helpful just to keep everybody informed and keep the process 
moving.
    I have a couple of questions. One is: How accurate are 
these CDRs? I mean, Dr. Daniels, we have now seen a lot of 
progress. You talked about the potential savings over the 
lifetime, and what I want to know is, are these CDRs accurate? 
Specifically, do you have any statistics on the number of 
people whose benefits might have been terminated in the last 12 
months, as we've stepped this up, who have successfully 
appealed those decisions, and therefore been reinstated?
    Ms. Daniels. I think I'd like to go back to the 1996 data, 
and maybe that would help me explain. Let's put up the chart on 
the estimated savings, Jim.
    [The following was subsequently received:]
    [GRAPHIC] [TIFF OMITTED] T1401.002
    
      

                                

    Ms. Daniels. The estimated savings are in the lower box 
because our estimate is very conservative. For the number of 
initial CDR cessations, we have 60,000 from the CDRs that we 
did in 1996. Of the work CDRs, there were 7,300 initial 
cessations. Then we had another 11,000 from, what we call, 
periodic voluntary CDRs. And the last one, the category we 
tracked closely for you was the periodic SSA-initiated CDRs; 
that was 41,900. Now that's empirical data; that's actually 
what happened.
    Mr. Portman. Yes.
    Ms. Daniels. From that 41,900, our actuary estimates that 
there will be over 26,000 ultimate cessations; that is, after 
all hearings, all appeals, all the way through the system, that 
eventually over 26,000 people will have benefits terminated.
    Now let's go back. We started with half a million CDRs and 
we're going to end up with 26,000 terminations, yielding 
savings of $2.5 billion over the lifetime of the benefits.
    Does that answer your question?
    Mr. Portman. Well, that's very helpful information as to 
how the process works and how, in the end, we get tremendous 
savings, even from a relatively small number from our base. But 
do you think the CDRs, based on those numbers--maybe I should 
ask GAO this also--are accurate? Do you think that they're 
doing--whether it's the mailer or whether it's the full 
medical--whether the CDRs are meeting the kind of accuracy 
standards that you'd like to see?
    Ms. Daniels. Well, we certainly don't count on my feeling 
about whether or not they're accurate. We do samples of the 
mailer group when we send the mailers out. Then, later, we come 
back and we do integrity samples. We do full medical reviews on 
some of these to see if our prediction is correct. And we 
improve our profile as we go along, in order to increase our 
accuracy. We don't rely just on a gut feeling that the mailers 
are accurate. We actually do integrity samples.
    Mr. Portman. GAO, are you satisfied with the accuracies of 
the CDRs, particularly on the mailers side?
    Ms. Ross?
    Ms. Ross. Well, we've looked at the processes that Susan 
Daniels is talking about, and as long as they continue to do a 
quality assurance study of all of the CDRs, and as long as they 
look particularly at doing full medical reviews of some of the 
people receiving mailers, we think they have some of the pieces 
in place to assure that, if there are quality problems, they'll 
be able to discover them.
    Mr. Portman. On the mailers, Ms. Ross--and my time's almost 
up--I guess my concern would be, as I understand it--and I've 
learned more today--as Ms. Kennelly said, it's almost like 
self-reporting, and I guess there's a group of people that you 
choose to send the mailers to who you figure are less likely to 
come off the rolls, based on certain criteria you have, and 
those folks would get a short questionnaire, seven questions, I 
think, based on your testimony. And this questionnaire, this 
short questionnaire, really is the CDR. Are you satisfied, from 
the GAO perspective, that there are adequate safeguards in 
place to be sure that people are self-reporting accurately?
    Ms. Ross. Let me start back a little bit to answer the 
question. The requirement in the law is that SSA review 
everybody, so everybody receiving DI and SSI benefits is 
supposed to get a CDR at some point. If you're going to do that 
on everybody and there are 9 million people on the rolls, then 
you need a cost-effective way of doing it. You know that some 
people are never going to recover. You're trying to figure out 
how to select those people who might recover and do the expense 
of the $800 medical review on those and something less on other 
people. They have been working on this mailer--and it's not 
just a mailer; it's statistical profile--they've been working 
on that since 1993. So they're getting pretty proficient at 
figuring out which group of people are less likely to recover. 
So they're using the more cost-effective way of dealing with 
them, the process that costs $50 rather than $800.
    And as I said, as long as they continue to do some full 
medical reviews on people who are in this mailer group, just to 
be sure that they would know if they were starting to have 
problems, then I think we can be comfortable, because they are 
doing it on people who are very unlikely to recover.
    Chairman Bunning. Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman.
    I'm interested in following up on a couple of these 
questions. First, according to your chart, you're attaining 
about a 50-percent rate out of the total that are actually 
taken off; is that true?
    Ms. Daniels. Yes.
    Mr. Johnson. OK. Well, then you say you've reduced the 
backlog from 4.3 million to about 3 million; is that true?
    Ms. Daniels. Yes.
    Mr. Johnson. OK. Of that 3 million, how much of that 1 
million increase is added in each year? You say you get about 1 
million a year new.
    Ms. Daniels. You're asking if----
    Mr. Johnson. Can we say that the system is going to 
eliminate 1 million in a year and take it down to zero?
    Ms. Daniels. We'll never get down to zero because every 
year individuals become----
    Mr. Johnson. Getting 1 million more, OK.
    Ms. Daniels. Every year, yes, there are individuals who 
become due. So you never have a zero number. But what you want 
is to have done some type of CDR on people whose time has come 
due. We believe that we can eliminate that backlog and stay 
current by the year 2002 using the processes we have.
    Mr. Johnson. OK. And be down to approximately 1 million 
reviews a year then?
    Ms. Daniels. Correct.
    Mr. Johnson. Of that number, how many of them are actually 
given medical reviews?
    Ms. Daniels. Less than half of 1.1 million will get a full 
medical review.
    Mr. Johnson. Less than half?
    Ms. Daniels. Yes.
    Mr. Johnson. And of that 1 million, how many of them fall 
into the category of appealing and are kept on the rolls?
    Ms. Daniels. Well, we have hit----
    Mr. Johnson. Is it going to be 50 percent still?
    Ms. Daniels. Oh, certainly, yes. The initial cessation rate 
for CDRs has varied from year to year. The 11-percent initial 
cessation rate for 1996 was considered relatively high, and we 
expect an initial cessation rate of around 9 percent of the 
CDRs----
    Mr. Johnson. I thought I saw a number 4 or 5 percent 
somewhere.
    Ms. Daniels. That's correct. It's still very cost 
effective.
    Mr. Johnson. Well, but how can you say 9 percent if it's 4 
or 5? If it's 10 or 11 in 1996 and you say it's going to go 
down to 9, I thought somewhere I saw the number 4 or 5 percent. 
Did that come out of your studies, Ms. Ross?
    Ms. Ross. Well, the initial cessation rate is at about 11 
percent. That's the number that first came off the rolls.
    Mr. Johnson. Off the 1996 numbers?
    Ms. Ross. Right. And then the estimate is that, after all 
the appeals take place, about half of those will actually leave 
the rolls. So I think that's how you get from 11 percent to 5 
percent.
    Mr. Johnson. OK, I've got you. Some of your questions on 
your CDR mailer ask them whether they're interested in 
receiving rehabilitation or other services that enable them to 
work. How many of those were in the affirmative?
    Ms. Daniels. In 1991, there were 76,000 affirmatives. We 
referred a great number of those to State VR agencies. The 
feedback we got from the State vocational rehabilitation 
agencies is that these were not productive referrals. They did 
not result in a great number of people entering into formal 
rehabilitation plans and leaving the rolls. And so we have cut 
back on the number of referrals that we make through the CDR 
process.
    Mr. Johnson. So you don't--how many do you refer then to 
the State rehabilitation programs?
    Ms. Daniels. It varies by State, Mr. Johnson. The number of 
people who are referred in each State is worked out between the 
State Disability Determination Services and the State VR agency 
themselves, because the States have varying capacity to receive 
referrals, and they accept the ones that they are most likely 
to be able to work with.
    Mr. Johnson. So what percentage of that million go back to 
work?
    Ms. Daniels. Very few.
    Mr. Johnson. Less than 1 percent?
    Ms. Daniels. Yes.
    Mr. Johnson. Thank you very much. Thank you, Mr. Chairman.
    Chairman Bunning. Ms. Ross in her testimony referred to the 
fact that SSA is revisiting its 7-year plan to eliminate the 
CDR backlog. Yet, in your testimony you don't even mention a 
plan. Is there such a plan and is it being revisited? What will 
it do?
    Ms. Ross. Mr. Chairman, are you asking me or----
    Chairman Bunning. I'm referring to Dr. Daniels.
    Ms. Daniels. OK. Yes, there is such a plan and we are 
revisiting the plan right now. The welfare reform legislation 
made new requirements on the agency that we need to fold into 
our plan, as well as intended improvements we hope to make in 
the mailer profiling system. We are looking at staging out 
those workloads and we're looking at the number of CDRs we can 
do in the future, including the numbers that were required by 
the welfare reform legislation. For these reasons we are 
reworking that plan to stage out the number of CDRs over the 
next 7 years.
    Chairman Bunning. And that's what it says? Will you share 
that plan with this Subcommittee?
    Ms. Daniels. We'll be delighted to.
    [The following was subsequently received:]

Revised 7 Year Plan for Conducting Continuing Disability Reviews in 
Fiscal Years 1996 Through 2002

                              Introduction

    SSA is now in its third year of a plan to become current in 
processing continuing disability reviews (CDRs). SSA has been 
processing CDRs under a 7 year plan, issued August 16, 1996, in 
response to the applicable provisions of Public Law (P.L.) 104-
121, The Contract With America Advancement Act of 1996. The 
legislation provided for an increase in discretionary spending 
caps for fiscal years (FYs) 1996 through 2002 to fund the cost 
of processing additional CDRs. SSA made good progress during 
the first two years, exceeding processing targets by more than 
90,000 cases.
    Subsequently, five primary forces drove SSA to revisit and 
revise the plan. The original plan needed to be revised:
     to address title II disabled workers over age 58, 
disabled surviving spouses and disabled adult children.
     to address the subsequent enactment of P.L. 104-
193, the ``welfare reform'' legislation which, as amended by 
P.L. 105-33, required CDRs for certain title XVI disabled 
children.
     in light of actual CDR productivity in FYs 1996 
and 1997, and more definitive data regarding the remaining 
backlog(s) and whether they were appropriate for processing as 
a mailer and/or a full medical review.
     in light of the assessment of processing capacity 
based on our recent experience with the CDR workload, and in 
consideration of revised budget assumptions.
     because it was put together without definitions of 
the ``backlog'' and what it means to be ``current,'' or a 
consensus about whether all cases with a matured medical diary 
warrant review.
    The revised plan holds to the original goal of becoming 
current with title II by the end of FY 2000 and adds a new 
goal; to bring SSA current with title XVI by the end of FY 
2002. Of course, the revised plan assumes that Congress 
continues to appropriate adequate funds to process the 
projected workloads.

                              Definitions

    The ``backlog'' is defined as those beneficiaries who have 
been found to be disabled and have a matured medical 
reexamination diary (or for a title XVI disabled child case a 
review is required), are considered ``workable'' (e.g., a trial 
work diary is not present). A case remains in the backlog while 
a review is in process until a mailer deferral decision, or an 
initial level CDR or redetermination decision, is made.
    Being ``current'' is defined as when the backlog is reduced 
to roughly one year's processing for full medical reviews and 6 
months processing for mailer reviews. The overall process from 
identifying cases for selection to completing processing takes 
about 12 months for full medical reviews and 6 months for 
mailers.
    Finally, it was also recognized that some cases, for 
reasons of age, nature of permanent impairment, basis for 
entitlement, and/or need for further consideration, are not 
good candidates for CDRs. Accordingly, CDR ``backlogs'' and 
``deferred cases'' have been defined.
    The backlogs represent those groups of cases the available 
data indicate as being productive, and good stewardship demands 
that continuing disability status be reviewed. As of October 1, 
1997, the backlogs were:

 
------------------------------------------------------------------------
                                                            Backlog (in
                  Beneficiary Category                      thousands)
------------------------------------------------------------------------
OASDI (including concurrent SSI beneficiaries)
    Disabled Workers under age 62.......................           1,643
    Disabled Surviving Spouses under age 60.............              16
    Disabled Adult Children under age 65................             504
        Subtotal, OASDI.................................           2,163
SSI (excluding concurrent OASDI beneficiaries)
    Disabled and Blind Adults under age 65..............           1,266
    Disabled Children...................................             371
        Subtotal, SSI...................................           1,637
        Total OASDI and SSI.............................           3,800
------------------------------------------------------------------------


    Deferred cases represent those groups of cases that are 
known to be much less productive or unproductive under the 
existing CDR processes (full medical review or CDR mailer), or 
are under study to determine how they should be reviewed in 
order to be productive. Deferred cases include those in which a 
finding of disability cessation would result in entitlement to 
another benefit administered by the Agency, often with minimal 
or no reduction in benefit amount, and those in which the 
beneficiaries are of advanced age, markedly decreasing the 
likelihood of medical improvement.
    As of October 1, 1997, the deferred cases were:

 
------------------------------------------------------------------------
                                           Medical Diary
          Beneficiary Category              Has Matured    All Cases (in
                                          (in thousands)    thousands)
------------------------------------------------------------------------
OASDI (including concurrent SSI
 beneficiaries)
    Disabled Workers age 62 to 65.......             394             585
    Disabled Surviving Spouses age 60 to              36              83
     65.................................
    Disabled Adult Children age 65 and                60              60
     older..............................
    Medicare for Qualified Gov't                      --              --
     Employees..........................
        Subtotal, OASDI.................             490             728
SSI (excluding concurrent OASDI
 beneficiaries)
    Disabled and Blind Adults age 65 and             678             678
     older..............................
    Grandfathered-In Disabled Adults                  79              79
     under age 65.......................
    Permanently Impaired Disabled                      8              70
     Children...........................
        Subtotal, SSI...................             765             827
        Total OASDI and SSI.............           1,255           1,555
------------------------------------------------------------------------


    Title II Deferred Cases: If disability ceases, disabled 
workers age 62 to age 65 can elect to receive payment of 
reduced retirement insurance benefits (RIB). At age 60 or 
later, disability cessation causes a disabled surviving spouse 
to convert to regular surviving spouse benefits (WIB).
    Disabled adult children are individuals whose disability 
began before they became 22 years old. Although disability is 
always a factor of entitlement regardless of age, a productive 
CDR is unlikely considering both advanced age and duration of 
impairment (more than 4 decades as of age 65); to be determined 
is whether an alternative process is appropriate.
    Medicare for Qualified Government Employment beneficiaries 
are a small group of former government employees under age 65 
entitled only to Medicare benefits based on disability, and who 
are not insured for title II disability insurance benefits. 
Productive reviews are unlikely. An exact number of cases is 
not yet available.
    Title XVI Deferred Cases: Approximately 16.2% of all 
disabled or blind adults are age 65 or older. They would 
convert to SSI Aged payment eligibility if cessation were 
found.
    The ``grandfathered-in'' disabled adults under age 65 were 
converted from the old State rolls. Medical eligibility is 
based on State determinations in which the bases were less 
strict State Plans that bear no relation to the Agency's 
adjudicatory standards. There is usually no medical evidence in 
their files. For these reasons, in part, they have not been the 
subject of subsequent CDRs. Productive CDR referrals are 
unlikely.
    Permanently impaired children are under study to determine 
if an alternative review procedure is appropriate, inasmuch as 
a productive CDR referral done under existing policies and 
procedures is considered unlikely.

        Comparisons of the Original and Revised 7 Year CDR Plans

    Under the original plan, we expected to process 
approximately 8.2 million cases during the 7 year period. Under 
the revised plan, in order to work off the priority backlogs 
and stay current, it is projected that SSA will have to process 
9.3 million reviews, an increase of 1.1 million. This includes 
the backlogs described above and newly maturing cases. For 
example, approximately 436,000 title II and 271,000 title XVI 
medical diaries will come due in FY 1998.
    Much of the 1.1 million increase is necessary to 
accommodate title XVI welfare reform cases and to attain 
current status with respect to the title XVI disabled and blind 
adults by the close of FY 2002.
    Five million cases, including 200,000 title XVI child 
cases, are projected to be processed under the CDR mailer 
process, with an overall increase of 312,000 cases in the 
revised plan as compared to the original plan.
    The attached chart provides more detailed summaries and is 
included in the President's 1999 budget decisions.

                               Conclusion

    Periodic review and revision of this plan is necessary to 
ensure that the plan reflects what we have learned (our 
experiences and the latest data), addresses current legislative 
mandates, and is, to the extent possible, a realistic 
assessment of resources and goals. At a minimum, a review every 
other year is necessary; a yearly review may be more 
appropriate, depending on the factors and issues that arise 
during the preceding year that demonstrate the need for review.
    With adequate funding, the Agency can and will continue to 
improve the profiling, mailer and direct release processes 
necessary to realize the projections in the revised plan.

Attachments:
Tab A: Continuing Disability Review Budget Plan Revised for 
1999 President's Budget Decisions--Workloads
Tab B: SSA Office of the Chief Actuary Memo and Actuarial 
Tables and Charts 












      

                                

    Chairman Bunning. OK, let me be perfectly clear. I want to 
tell you through your new Commissioner, that this Subcommittee 
expects you to request and to spend every dime authorized until 
your CDR backlog is down to zero. By that, I mean until the new 
cases that you get are the only ones that you have to process.
    During the 104th Congress, both the House and the Senate 
took extraordinary steps to authorize the funds you said you 
needed and wanted to conduct continuing disability reviews and 
other redetermination workloads. Frankly, I'm stunned that you 
would not take full advantage of the funds we authorized for 
you. From what you just told me, you certainly have the 
capacity to do more, and we expect you to take full advantage 
of your maximum capacity to reduce this workload as quickly as 
possible. The American public deserves nothing less.
    So if you can tell the new Commissioner, that this money is 
authorized and ought to be used for what it is authorized for, 
I expect you to do that. I expect the GAO to continue 
monitoring, at my request, what is going on with CDRs, and with 
redeterminations that you are responsible for.
    Mr. Weller.
    Mr. Weller. Thank you, Mr. Chairman. I do have a couple of 
questions I would like to ask, if I could direct them to Dr. 
Daniels.
    In your annual CDR report, you indicated that you take 
steps to ensure the integrity of the CDR process and the 
accuracy of decisions that are based partly on a self-reported 
beneficiary information, and that you perform full medical 
reviews of some cases that the mailer process would otherwise 
identify as not requiring such a review.
    Of the 498,400 CDRs you completed in fiscal year 1996, 
248,000, or about 50 percent, were mailer cases. Of the CDR 
mailer cases not requiring a full medical review, how many did 
you review to ensure the integrity of the mailer process?
    Ms. Daniels. The mailer process integrity samples were not 
taken in the 1996 pool, though we did have some smaller number 
of mailer responses that indicated to us that a full medical 
review would be appropriate. We did not do an integrity sample 
on the 1996 mailer itself. The mailer was previously validated 
in the 1995 integrity sample.
    Mr. Weller. Now, in 1996, have you done an integrity 
sample?
    Ms. Daniels. In 1996?
    Mr. Weller. Excuse me, 1997.
    Ms. Daniels. No, we did not.
    Mr. Weller. OK. In your annual CDR report, you indicated 
that you reviewed 10,736 CDRs processed by State agencies, 
which is about 4 percent according to the statistics we have. 
How many appealed CDRs decided by administrative law judges did 
you review, and why wasn't this information included in your 
report?
    Ms. Daniels. Mr. Weller, could you give me the year again? 
I'm sorry, I missed it in the beginning.
    Mr. Weller. In looking at your annual CDR report, you 
indicated that you reviewed 10,736 CDRs processed by the State 
agencies, which is about 4 percent. How many appealed CDRs 
decided by administrative law judges did you review, and why 
wasn't this information included in the report?
    Ms. Daniels. I'm not exactly sure I understand your 
question. I'm going to try to answer it. We did, in 1996, we 
did almost half a million CDRs, of which--I don't have my chart 
up there, but there are well over 200,000 in the DDSs. So are 
you asking me how many of those cessations from 1996 were 
appealed?
    Mr. Weller. How many of the appealed CDRs that were 
reviewed by administrative law judges did you review, and why 
was there no information regarding this review in the report?
    Ms. Daniels. OK.
    Mr. Weller. It's a quality review.
    Ms. Daniels. I'm going to have to look that up for you and 
submit it for the record in writing.
    Mr. Weller. OK. All right.
    [The following was subsequently received:]

    Although there was no statutory requirement to do so, we 
included quality assurance data in the FY 1996 Annual Report of 
Continuing Disability Reviews (CDRs). As mentioned in the 
report, SSA ensures the integrity of the CDR process and the 
accuracy of CDR decisions through integrity samples (performing 
full medical reviews on some cases that the mailer process 
would otherwise identify as not requiring such reviews) and 
ongoing quality assurance reviews.
    In FY 1996, we selected approximately 400 title II low 
profile mailers for an integrity sample of the CDR mailer 
process. Preliminary results show that there were 4 cessations 
out of 92 reviews completed to date, yielding a 4.3% initial 
cessation rate. The ultimate cessation rate, after all appeals, 
will be lower. Data from these integrity samples conducted in 
1994 and 1995 demonstrate that the cessation rate for these 
cases, after all appeals, is so low that it is not cost 
effective to conduct full medical reviews. That is, the amount 
of benefit savings is lower than the administrative costs 
required to do the reviews.
    As also mentioned in the report, SSA performed quality 
assurance reviews in FY 1996 on 10,736 CDRs processed by the 
State Disability Determination Services, resulting in an 
overall performance accuracy rate of 95.9 percent. The Appeals 
Council reviews approximately one percent of all favorable 
decisions rendered by Administrative Law Judges (ALJs). This 
review is ongoing and random; CDRs are included in the sample. 
Although data on the quality of CDRs picked up in this sample 
is not compiled nationally, feedback is provided to the ALJ and 
the Office of Hearings and Appeals.
      

                                

    Mr. Weller. Let me ask one more question here. Last year 
the Social Security Administration implemented legislation that 
we passed in 1995 which eliminated patients--excuse me--
benefits to individuals disabled by drug addiction or 
alcoholism. During the implementation process, SSA indicated 
that many recipients' files contained inaccurate diagnosis 
coding. Are you confident that the CDR diary coding used by the 
State agencies and the administrative law judges is accurate?
    Ms. Daniels. I'm confident that we have a very good grip on 
the number of people who are in our CDR backlog, and I'm very 
confident that any mistakes that were made in coding can be 
corrected through the process.
    Mr. Weller. Can you specifically describe for me the 
quality review process that you have in place to ensure that 
the CDR diary coding is accurate?
    Ms. Daniels. We have a quality review system to look at 
CDRs that's parallel to the initial claims process; that is, a 
random sample of cases are drawn from the cases that are 
reviewed by the DDS, and those are reviewed by Federal 
reviewers for two kinds of errors: Documentation errors, errors 
in the way it's documented, and decisional errors. We report 
the figures on the quality sample of CDRs as part of our 
ongoing quality assurance system. The 1996 quality assurance 
data indicated that the DDSs met a quality standard of 95 
percent or better with no errors in the number of CDRs that 
they did.
    Mr. Weller. Thank you, Mr. Daniels. Mr. Chairman, I see my 
time has expired.
    Chairman Bunning. Ms. Ross, you know that I'm particularly 
interested in SSA spending, specifically when funds aren't 
being spent for what they were intended to be spent for. We had 
a problem, as you know, when we authorized $200 million for a 
specific program and it was spent for other programs. Can you 
assure me that SSA has spent the funds authorized by the 
Committee on Ways and Means only on those CDRs and 
redetermination workloads specified in the law?
    Ms. Ross. Well, Mr. Chairman, let me tell you what I can 
assure you of at this point. GAO has done a lot of work on the 
accounting systems at the Social Security Administration. We've 
done over the years a lot of work on what their internal 
controls are, and we have reasonable assurance that their 
systems provide accurate information, so that now when SSA 
reports that in fact they have expended a certain amount of 
money to do a certain function, GAO is comfortable, given what 
their financial systems are like, that that's accurate. Were 
somebody to tell us that they thought there might be a 
particular problem, you might go do indepth work there, but 
basically we feel confident because of the general good 
condition of their financial systems.
    Chairman Bunning. In other words, you are taking their word 
for what they say they spend their money on?
    Ms. Ross. No, sir, we have been doing financial audits at 
the Social Security Administration for many years.
    Chairman Bunning. Well, I understand that.
    Ms. Ross. And we have audited and now we feel comfortable 
enough about their procedures that the Inspector General of SSA 
audits every year. Given that and each year looking at what 
goes into their accounting, at least saying for this year, even 
though the financial audit isn't finished, we feel confident 
that they have spent their money appropriately, I think 
that's----
    Chairman Bunning. In other words, their Inspector General 
does the auditing, and you should be auditing the Inspector 
General?
    Ms. Ross. And we do.
    Chairman Bunning. Well, I just want to make sure that you 
are accurately doing that and are making sure that the money we 
allocated for CDRs and other reviews are being spent for those 
specific purposes.
    Ms. Ross. We are.
    Chairman Bunning. You are?
    Ms. Ross. Yes.
    Chairman Bunning. The whole business of CDR mailers is a 
little confusing. SSA has this CDR backlog of about 4 million 
cases. You say--this is for Ms. Ross--you say that SSA somehow 
tried to figure out who is in this backlog and likely to come 
off the rolls and who isn't, based on certain criteria: Age, 
impairment, length of time on rolls, and so forth.
    SSA then sends those cases likely to come off the rolls to 
the State agency for a full medical review, new medical 
reports, all kinds of updated information, the whole ball of 
wax. For those SSA cases that are not likely to come off the 
rolls SSA sends them a short questionnaire with seven 
questions. You are telling me that this little questionnaire 
counts as a continuing review; is that correct?
    Ms. Ross. They do count, and let me explain why I think 
that under certain conditions that's appropriate. SSA is 
required to review everybody on the rolls. A medical review 
costs $800. If you review everybody who's on the rolls, it's 
not cost effective. So----
    Chairman Bunning. You mean medically review them?
    Ms. Ross. Medically review them.
    Chairman Bunning. It's not cost effective?
    Ms. Ross. Right. And so what SSA did, I think using the 
word ``mailer'' is--they probably ought to try a different 
term.
    Chairman Bunning. But we have it in our----
    Ms. Ross. Yes.
    Chairman Bunning. What is sent is this short questionnaire 
in our folder here. So it isn't very comprehensive.
    [The following was subsequently received:]
    [GRAPHIC] [TIFF OMITTED] T1401.003
    
    [GRAPHIC] [TIFF OMITTED] T1401.004
    
      

                                

    Ms. Ross. No, it isn't, but it comes--it's sent to people 
after some amount of profiling of who's likely to recover and 
who's not. Those formulas about who's likely to recover and who 
is very unlikely to recover have been formulas they have been 
refining now for about 4 years.
    Chairman Bunning. Ms. Ross, how many people can read that 
get this? How many people actually fill out their own review? 
Do you have any idea? In other words, if this is sent into some 
areas in my State, some people couldn't read it. So how many 
people fill it out on their own or how many people have 
somebody else fill it out? Can you answer that question?
    Ms. Ross. No, sir, we have not looked into that particular 
piece. Perhaps the people at Social Security have.
    Chairman Bunning. Dr. Daniels.
    Ms. Daniels. No.
    Chairman Bunning. You have no idea?
    Ms. Daniels. No. I do know that there are some number of 
people on disability who have representative payees because 
they are not able to handle their own affairs, and I would 
imagine that some portion of these were filled out by 
representative payees.
    Chairman Bunning. But you don't have any idea how many they 
are? In other words, 5, 10, 15, 25, 30 percent? What?
    Ms. Daniels. I could certainly find out how many people who 
have responded to mailers have representative payees and report 
that back for the record.
    Chairman Bunning. No, no, no. No, I know about the 
representative payees. I'm asking you how many people fill out 
their own questionnaire when it's sent to them. Because you've 
made a determination on the information sent back to you that 
this is a continuing disability review and it's accurate.
    Ms. Daniels. We send the mailer only to those people who we 
believe that it is not cost effective to do full medical 
reviews on.
    Chairman Bunning. Yes, ma'am, I understand that.
    Ms. Daniels. The pool of people who get the mailers are 
people whose disabilities we do not expect to cease, if they 
had a medical review. So it is our judgment that it is more 
cost effective not to do one on people whose disabilities are 
not likely to cease.
    Chairman Bunning. As you already have testified, you didn't 
do a quality review in the last 2 years on this?
    Ms. Daniels. We did not do an integrity sample on the 1996 
cases.
    Chairman Bunning. OK. So you're not sure about the accuracy 
of the questionnaire. I understand those people that are 
permanently disabled, and you know that they're not going to 
get better, can accurately fill something like this out. If 
there are some people that are on the edge, somehow you've got 
to get them in for a medical exam, so that you can really 
determine if they continue to be disabled. It's a no-brainer 
when somebody is totally and permanently disabled for life, but 
it isn't if it's a temporary total disability. Those are the 
individuals that we want to capture in those statistics that 
you have up there, so that you can accurately review those 
people.
    Ms. Daniels. That's right. I agree with you. I think we 
need to have both systems. We have to have full medical reviews 
because there are some number of people for whom we can't 
predict.
    Chairman Bunning. All I'm telling you is that there are an 
awful lot of people who aren't permanently disabled for life 
that you are sending this to.
    How many of the total amount of people on SSDI do you think 
are permanently disabled for life?
    Ms. Daniels. This is not something I would be willing to 
conjecture to, Mr. Chairman. I think that we have----
    Chairman Bunning. Oh, but it's very important. It's very 
important for us to have an accurate picture of whether you can 
conduct continuing disability reviews as required by law or 
whether you can't over the next 4 or 5 years.
    Ms. Daniels. What we can do is look at the data that 
predict whether or not a person will cease benefits and use 
those formulas to create profiles. We certainly can do many 
more medical reviews, but the question is, will they be cost 
effective? And we're trying to balance those two things, the 
cost effectiveness with the capacity of the State DDSs as well.
    Chairman Bunning. Well, as the bottom line on that chart 
indicates, the cost effectiveness of someone coming off the 
rolls because they're no longer permanently disabled is pretty 
breathtaking.
    Let me ask Ms. Ross, whether SSA has ever told her how many 
recipients in the backlog have never had a full medical review?
    Ms. Ross. No, we have not gotten that information from 
them.
    Chairman Bunning. Dr. Daniels, could you possibly enlighten 
me on that question?
    Ms. Daniels. I can't at this moment, but I would be willing 
to see if our data can indicate that, and if so, provide it for 
the record.
    [The following was subsequently received:]

    Of the approximately 2.2 million disabled OASDI 
beneficiaries with a past-due diary for a CDR--including about 
588,000 concurrently entitled to Supplemental Security Income 
(SSI)--about 1.75 million (or about 80 percent) have not had a 
full medical CDR.
    Of the approximately 1.64 million SSI recipients (excluding 
concurrent OASDI beneficiaries and including about 370,000 
childhood cases) with a past-due diary for a CDR, about 1.59 
million (or about 97 percent) have not had a full medical CDR.
    Altogether, about 3.3 million disabled individuals with a 
past-due diary for a CDR (or about 87 percent of the total CDR 
backlog of approximately 3.8 million) have not had a full 
medical CDR.
    The 3.8 million amount is higher than the 3.5 million 
figure we previously reported to the Subcommittee because it 
now includes cases where a full medical review is currently in 
progress, as well as cases where the diary due date on the 
system is blank or invalid. The 3.8 million figure does not 
include certain cases whose reviews have been deferred: 
Individuals who would be eligible for a non-disability benefit 
if disability ceased (widows age 60 and workers age 62) or 
individuals for whom the likelihood of a productive CDR is 
remote (individuals over age or SSI recipients who were 
grandfathered-in from State welfare in 1974 at the beginning of 
the SSI program).
      

                                

    Chairman Bunning. Sam, do you have any more questions?
    Mr. Johnson. I wonder if I could ask you, on this form, Dr. 
Daniels, it says there's a signature block. It says, ``Sign 
here.'' Is the person signing or the person that fills it out 
signing?
    Ms. Daniels. It's the intention that the person who's 
filling out the form should sign it.
    Mr. Johnson. But it doesn't say that. Do you--have you 
checked that in your studies?
    Ms. Daniels. Are you asking, Have we conducted a study----
    Mr. Johnson. Well, the Chairman asked a question, How many 
of them are filled out by the actual person receiving the 
benefit as compared to those who are filling them out for 
them--a parent, a guardian, or whatever, and/or somebody who 
can't read getting somebody else to fill it out for them. So 
how do we know the accuracy if we don't know who's signing 
them? And do you get any back with an ``X'' on them?
    Ms. Daniels. I can't tell you off the top of my head--I 
certainly don't have the data in front of me now--how many come 
back with an ``X'' on them, but I will ask the data center if 
we have that kind of information.
    Mr. Johnson. Well, I think it would be interesting to know 
how many are actually filled out by the recipient and how many 
are actually filled out by a second person, and whether or not 
that signature--I think you need to change that block. If 
that's who you intend to have the signature of, it should be 
the person who fills it out, if it's somebody else other than 
the recipient.
    I would ask the Chairman if we could have that statistic 
next time we get----
    Chairman Bunning. Well, we could request the SSA to add a 
block: If the person who is filling it out is the actual 
recipient or if somebody is filling it out for them. I don't 
know how many you have printed in advance. I would imagine you 
have quite a few, but when you run out, reprinting them would 
not require an awful lot of additional information.
    Mr. Johnson. Yes, and I would say----
    Ms. Daniels. In our instruction form that goes along with 
the questionnaire, we ask the individual claimant to sign it or 
their legal guardian, but I can't tell you how many come back 
with a signature of a legal guardian. But I will check and see 
if we have that data available.
    Mr. Johnson. But even if the claimant's signing it, that 
doesn't mean he filled it out. And, you know, there's room for 
fraud there--there really is--if someone else is filling the 
form out.
    Chairman Bunning. What would help, though, is finding out 
how many people actually have had medical reviews and how many 
didn't. That information would really assist us also.
    I'd like to remind you both that I may be submitting 
questions in writing for you to answer for the record.
    [The questions and answers follow:]

GAO Responses to Questions

    Question 1. What effect has the medical improvement review 
standard had on the continuing disability review process, and 
in your view, is the medical improvement standard working?
    GAO response: While GAO's work has not addressed these 
issues directly, the MI standard's history provides perspective 
on these issues. The impetus for the medical improvement 
standard can be traced back to SSA's implementation of a 
provision in the Social Security Disability Amendments of 1980 
that required SSA to do CDRs at least once every 3 years for 
all DI beneficiaries not considered to be permanently disabled 
and at least once every 7 years for all other DI beneficiaries. 
In its implementation of this requirement in 1981, SSA did CDRs 
for more beneficiaries than required by the 1980 amendments. As 
a result, the number of benefit terminations increased greatly, 
which attracted substantial Congressional attention.
    According to House of Representatives Report 98-618, dated 
March 14, 1984, the increase in terminations occurred primarily 
because many beneficiaries undergoing CDRs had been put on the 
disability rolls before 1979, and at that time, medical 
disability criteria were more lenient than when these 
beneficiaries later underwent CDRs. This occurred because SSA 
had implemented stricter medical disability standards in 1979. 
Many beneficiaries who qualified for disability benefits under 
the more lenient pre-1979 standards were being terminated when 
they were reassessed under the stricter post-1979 standards. As 
a result, according to the House report, the Congress enacted 
the medical improvement standard in the Social Security 
Disability Benefits Reform Act of 1984 (P. L. 98-460) to 
prevent the termination of benefits for beneficiaries whose 
medical conditions had not improved substantially since they 
first were allowed benefits, even if they do not meet current 
disability standards.
    Since enactment of the medical improvement standard in 
1984, there has been a significant decline in the CDR initial 
termination rate (the rate before any reconsideration or 
appeals). According to data provided by SSA, the yearly initial 
termination rate exceeded 40 percent during 1980-1983. However, 
after 1984, the yearly initial termination rate has ranged from 
6 percent to 14 percent. While the MI standard certainly played 
a role in this decline, other factors, such as doing more CDRs 
for beneficiaries whose impairments are considered permanent, 
also may have contributed to the decline in the termination 
rate.
    Question 2. There are concerns in the State Disability 
Determination Services (DDS) that the medical improvement 
standard requires DDS examiners to terminate the benefits of 
severely disabled beneficiaries whose conditions have slightly 
improved. However, there are beneficiaries on the rolls who 
would not be found disabled based on the current medical 
listings. The medical improvement standard prohibits DDS 
examiners from terminating the benefits of these beneficiaries 
since medical improvement cannot be found for those who are not 
truly disabled. Do you have any ideas on how to remedy this 
situation?
    GAO Response: While GAO has not done any work that would 
enable us to comment on remedies, we believe there are at least 
two scenarios in which the medical improvement standard 
potentially could prohibit DDSs from terminating benefits for 
persons who are not disabled under current SSA criteria. First, 
a person could have been found disabled under medical listings 
that later were revised and made more stringent. When such an 
individual undergoes a CDR, he or she might be considered able 
to work based on the current listings, even though his or her 
medical condition has not changed since the time of the 
original award. The medical improvement standard, however, 
prohibits terminating such an individual's benefits merely 
because disability criteria have changed. Benefits can be 
terminated only if it can be shown that the individual's 
medical condition has improved since the prior determination. 
According to SSA officials, medical listings have not undergone 
sufficient changes in recent years for this first scenario to 
be a significant problem today.
    In a second scenario, the medical improvement standard 
could make it difficult to terminate the benefits of 
individuals who were awarded benefits erroneously by the 
original adjudicators. In such cases, one would not expect to 
be able to find significant medical improvement at the time of 
a CDR for a beneficiary who was not actually disabled at the 
time of the original decision. However, when adjudicators 
believe the original award was made in error, the medical 
improvement standard provides an exception under which benefits 
may be terminated, even if medical improvement cannot be shown. 
Under this exception, benefits may be terminated if (1) 
substantial evidence on the record at the time of the prior 
determination shows on its face that the decision in question 
was in error, (2) required and material evidence of the 
severity of the individual's impairment was missing at the time 
of the prior evaluation, or (3) new evidence related to the 
prior favorable decision refutes the conclusions that were 
based on the prior evidence. A substitution of current judgment 
for that used in the prior favorable decision cannot be the 
basis for applying this exception. GAO has no data on how often 
or how successfully adjudicators use these exception criteria 
when they believe the original decision was made in error.
    In addition, the medical improvement standard provides an 
exception for fraudulent prior decisions. If SSA finds that any 
prior favorable decision was obtained by fraud, SSA may find 
that the beneficiary is not disabled. In determining whether a 
prior favorable decision was obtained fraudulently, SSA takes 
into account any physical, mental, educational, or linguistic 
limitations that the beneficiary may have had at the time.
    Question 3. In fiscal year 1996, SSA conducted 11,542 CDRs 
on DI cases designated as medical improvement expected (MIE). 
Of that number, the benefits of only 2,466 DI beneficiaries 
have been terminated to date. Do you view the MIE coding as an 
accurate measure of which beneficiaries are likely to improve? 
If so, why isn't the ultimate cessation higher?
    GAO Response: While we have not assessed these issues 
specifically, we are aware that SSA does not rely on the DDSs' 
assessments of the likelihood of medical improvement to 
determine which beneficiaries should undergo full medical CDRs. 
Instead, SSA has developed statistical formulas and profiles 
that are used to estimate the likelihood that a beneficiary's 
benefits will be terminated due to medical improvement if a 
full medical CDR is conducted. For those with a high likelihood 
of termination, SSA refers these cases to DDSs for full medical 
reviews. For those with a low likelihood of termination, SSA 
sends them a brief questionnaire to gather limited information 
about their disability, medical treatments, and work activity, 
if any. For those receiving the mailer questionnaire, about 98 
percent have their benefits continued without any further 
review. We do not know the percentage of MIEs who undergo full 
medical reviews versus those who receive mailer questionnaires.
      

                                

    Chairman Bunning. I want to thank you again for appearing 
before the Subcommittee and updating us on this critical issue 
of SSA's handling of the CDR backlog. The Subcommittee will 
continue to closely oversee SSA's management of the CDR 
process.
    The Subcommittee stands adjourned.
    [Whereupon, at 3:07 p.m., the hearing was adjourned subject 
to the call of the Chair.]

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