[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
SUPPLEMENTAL SECURITY INCOME FRAUD AND ABUSE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
FEBRUARY 3, 1999
__________
Serial 106-2
__________
Printed for the use of the Committee on Ways and Means
----------
U.S. GOVERNMENT PRINTING OFFICE
56-028 CC WASHINGTON : 1999
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 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
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Human Resources
NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma FORTNEY PETE STARK, California
RON LEWIS, Kentucky ROBERT T. MATSUI, California
MARK FOLEY, Florida WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
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C O N T E N T S
__________
Page
Advisory of January 27, 1999, announcing the hearing............. 2
WITNESSES
Social Security Administration:
John R. Dyer, Principal Deputy Commissioner.................. 9
James G. Huse, Jr., Acting Inspector General................. 23
U.S. General Accounting Office, Cynthia M. Fagnoni, Director,
Income Security Issues, Health, Education, and Human Services
Division....................................................... 26
______
American Coalition for Filipino Veterans, Inc., Eric Lachica..... 39
Arc of the United States, and Consortium for Citizens with
Disabilities, Marty Ford....................................... 34
Filner, Hon. Bob, a Representative in Congress from the State of
California..................................................... 6
SUBMISSIONS FOR THE RECORD
Campbell, Hon. Tom, a Representative in Congress from the State
of California, statement....................................... 56
National Alliance for the Mentally Ill, Arlington, VA, Gerald R.
Tarutis, statement............................................. 57
SUPPLEMENTAL SECURITY INCOME FRAUD AND ABUSE
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WEDNESDAY, FEBRUARY 3, 1999
House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3:15 p.m., in
room B-318, Rayburn House Office Building, Hon. Nancy L.
Johnson (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
January 27, 1999
No. HR-1
Johnson Announces Hearing on
Supplemental Security Income Fraud and Abuse
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Human Resources of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on Supplemental Security
Income (SSI) fraud and abuse. The hearing will take place on Wednesday,
February 3, 1999, in room B-318 of the Rayburn House Office Building,
beginning at 3:30 p.m.
Oral testimony at this hearing will be from invited witnesses only.
Witnesses will include representatives of the Social Security
Administration (SSA), the SSA Office of the Inspector General, the U.S.
General Accounting Office (GAO), and other organizations. However, any
individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing.
BACKGROUND:
SSI will provide more than $27 billion to 6.6 million aged, blind,
and disabled recipients this year. In several reports issued since
1997, GAO has kept SSI on its list of government programs at ``high-
risk'' for waste, fraud, abuse, and mismanagement. The problems
uncovered by GAO are wide-ranging. One problem is the ability of
applicants to divest their assets in order to qualify for SSI benefits.
A second problem is the lack of adequate information on the income,
resources, and public benefits of SSI recipients that could limit their
eligibility for the program. A third problem is that many SSI
overpayments either go uncollected or are collected at a very slow
pace, preventing or delaying the collection of hundreds of millions of
dollars incorrectly paid to beneficiaries.
Congress addressed some of these problems in the ``Personal
Responsibility and Work Opportunity Reconciliation Act of 1996'' (P.L.
104-193). For example, the Act created a ``bounty'' system of cash
incentives for local prisons that report lists of inmates for matching
against SSI rolls so that prisoners could be disqualified from
receiving further SSI benefits. Many of the proposals under review by
the Subcommittee expand on such efforts to ensure both that qualified
recipients receive the benefits they are due and that taxpayers are
protected from attempts to defraud or otherwise abuse the SSI program.
In announcing the hearing, Chairman Johnson stated: ``Although the
SSI program continues to be on GAO's list of programs at high risk of
waste, fraud, and abuse, I think that we have started to make real
progress in fixing the problems. We have taken bi-partisan action such
as ending benefits for drug addicts and alcoholics, prisoners, and
others who had no rightful claim on taxpayer-paid benefits. We are now
working on another set of reforms that we think will lead to further
improvements. Working together, we can improve this program, protect
taxpayers, and finally get SSI off the list of vulnerable programs.''
FOCUS OF THE HEARING:
The hearing will focus on fraud and abuse within the SSI program. A
major goal of the hearing will be to discuss possible legislative
proposals to prevent continued fraud and abuse.
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and Means, U.S. House of Representatives, 1102 Longworth House Office
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noted above.
Chairman Johnson of Connecticut [presiding]. All right. The
hearing on SSI will now begin. First of all, let me compliment
the Social Security Administration, the Office of SSA Inspector
General, and the General Accounting Office. All of these
organizations have worked together with staff from both sides.
Oh, I did forget. I don't know how I skipped over it. I am
sorry. I did want to introduce the staff before I went on to
the rest of the program. Ron Haskins is my chief of staff. Ron,
stand up. Why don't you stand up as I introduce you. Cassie
Bevan, Margaret Pratt, Shavonne McNeill, and Nick Gwyn, the
staff for the other side. But, we are very blessed to have very
knowledgeable staffers on both sides of the aisle, and for
that, I am very grateful.
To go back to this hearing, this is a hearing that has been
prepared in close cooperation and in close communication, more
importantly, with the Social Security Administration, the
Office of Inspector General, and the General Accounting Office.
All of these offices have worked with our staff on both sides
and Ben and I, to introduce the bill before us.
It seems especially appropriate to observe that this
legislation represents the Federal Government at its best. Both
the Inspector General and the GAO have carefully studied the
administrative procedures being followed by the Social Security
Administration, as well as types of fraud and abuse that were
occurring in the program. On this basis, they recommended
changes that show promise of reducing fraud and abuse, saving
taxpayers' dollars, but protecting and preserving the purpose
of the program.
Although I am a new Chairman of this Subcommittee, I served
on this Subcommittee for many years under Tom Downing. And I
want to emphasize the record of bipartisan work that has
developed over all of these years, and a lot over the past 3
years.
Bipartisan bills include legislation on promoting adoption,
on ending discrimination in foster care and adoptive
placements, and on strengthening child support enforcement.
These bills went on to receive overwhelming bipartisan support
on the House and Senate floors, and to be signed into law by
the President. So, this important SSI bill joins a growing list
of measures originated by this Subcommittee that have enjoyed
broad bipartisan support.
And as you can tell from my comments, not only have we
worked together in many other instances that some of you may
recall, but we both come to this subject with a lot of interest
and experience in the past and commitment to addressing some of
the current problems in the future. In this spirit, I want to
draw our attention to what looks like a significant shift in
the way the Social Security Administration approaches its
responsibilities in dealing with fraud and abuse and the
programs under its stewardship.
As the General Accounting Office pointed out in a recent
report, the culture of SSA as an organization has been focused
almost exclusively on developing procedures to make sure people
get their benefits. As a result, SSA does not have a track
record of diligence in working to minimize fraud and abuse. I
think the role that SSA played in developing this bill, as well
as their solid implementation of the 1996 reforms of the SSI
Children's Program, shows that they are absolutely capable of
seriously implementing fraud and abuse prevention and
provisions, and at the same time, guaranteeing a very high
level of performance in delivering appropriate benefits.
[The opening statement follows:]
Opening Statement of Hon. Nancy L. Johnson, a Representative in
Congress from the State of Connecticut
I want to begin by complementing the Social Security
Administration, the Office of SSA's Inspector General, and the
General Accounting Office. All of these organizations have
worked together to develop the provisions in the bill that Ben
Cardin and I introduced earlier today.
It seems especially appropriate to observe that this
legislation represents the federal government at its best. Both
the Inspector General and GAO carefully studied the
administrative procedures being followed by the Social Security
Administration as well as the types of fraud and abuse that
were occurring in the program. On this basis, they recommended
changes that show great promise for reducing fraud and abuse
and thereby saving taxpayer dollars.
Although I am new as Chairman of this Subcommittee, I
served on the Subcommittee for many years under Tom Downey and
I want to emphasize the record of this Subcommittee in
producing bipartisan legislation over the past three years.
These bipartisan bills included legislation on promoting
adoption, on ending discrimination in foster care and adoptive
placements, and on strengthening child support enforcement. All
of these bills went on to receive overwhelming bipartisan
support on the House and Senate floors and to be signed into
law by the President. So this important SSI reform bill joins a
growing list of measures, originated by this Subcommittee, that
have enjoyed broad bipartisan support.
Mr. Cardin and I have worked on many issues over the years
and we share an interest in practical, effective solutions to
the nation's social problems. I am looking forward to working
with you, Ben, for at least the next two years.
In this spirit, I want to draw attention to what looks like
a significant shift in the way the Social Security
Administration approaches its responsibilities in dealing with
fraud and abuse in the programs under its stewardship. As the
General Accounting Office pointed out in a recent report, the
culture of SSA as an organization has been to focus almost
exclusively on developing procedures to make sure people get
their benefits. As a result, SSA does not have a track record
of vigilance in working to minimize fraud and abuse. I think
the role that SSA played in developing this bill, as well as
their solid implementation of the 1996 reforms of the SSI
children's program, shows that they now take these issues
seriously and that in the future we can expect the same level
of performance in attacking fraud and abuse as in providing
appropriate benefits.
I thank all our distinguished witnesses for appearing today
to give us the benefit of your comments on our bill. We will
pay close attention to your testimony. Mr. Cardin, would you
care to make an opening statement?
Chairman Johnson of Connecticut. I thank all of our
witnesses who are appearing today, and to give us the benefit
of your comments on our bill. We will pay close attention to
your testimony.
Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. We are off to a good
start. At this hearing we will be concentrating on SSI and
fraud, the bill that was filed by the Chair and myself in a
very bipartisan way. It is a good start for the Subcommittee
and I think it bodes well for our future.
SSI is a very important program to millions of Americans.
There are 6.6 million low-income, elderly and disabled
Americans who benefit from SSI. It means the difference for
many people of being able to keep their heads above water or
living or drowning in poverty. Fraud is disturbing in SSI
because of the importance of that program. And it is important
for us to look at ways to rid out with the system, fraud, so
that people who need and benefit from SSI can continue to do
so.
Our bill attempts to deal with this problem in a
responsible way. The bill provides for the administration to be
able to get more data on SSI applicants and make sure that they
are truly eligible for the benefits. It adds additional
protections that are already in the Medicaid Program related to
individuals disposing of their assets in order to obtain SSI
benefits, and provides stronger penalties for those who are
guilty of fraud.
It is important to note, however, the bill does not include
past proposals to lower benefits for multiple SSI recipients
who live in the same household. It does not limit the evidence
used to determine a child's eligibility for SSI or eliminate
the cap on how much a recipient's current benefits can be
reduced to recoup past overpayments. Our proposal focuses on
cutting fraud, not benefits to needy individuals.
I do look forward to listening to the witnesses as to how
they believe we can improve SSI and the administration of the
program. That we can strike the right balance between reducing
fraud while still protecting those in need. We do have a
distinguished panel of witnesses today, and we look forward to
your testimony. I particularly want to acknowledge my colleague
from California, Congressman Filner. It is a pleasure to have
you before our Subcommittee.
Chairman Johnson of Connecticut. Representative Filner, it
is a pleasure to have you and thank you for your interest.
STATEMENT OF HON. BOB FILNER, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF CALIFORNIA
Mr. Filner. Thank you, Madam Chair. Mr. Cardin and
colleagues, I thank you for your courtesy. You have an
ambitious agenda ahead of you and I wish you well on it.
I want to thank you for your consideration today in the
legislation of a measure to allow Filipino World War II
veterans who are currently citizens of the United States and
receiving SSI benefits, to return to the Philippines with a
portion of these benefits intact. Congressman Gilman, the
distinguished Chair of the International Relations Committee,
has recently introduced associated legislation, H.R. 26, the
Filipino Veterans SSI Extension Act, of which I am an original
cosponsor. You may know that Congressman Gilman and I have been
working long and hard for several years on behalf of this group
of great veterans, and we are most appreciative of your
interest in this important matter.
Thousands of Filipino World War II veterans who were
drafted into service during World War II by President Roosevelt
and then denied benefits by Congress in 1946, have immigrated
since to the United States. It was widely, but mistakenly
believed by them that when they arrived in the United States,
their veterans benefits would be restored, and they would have
the financial means to bring their families to the United
States. Instead, many of these veterans, who today are in their
seventies and eighties, are ill, lonely, and living in poverty
in our major cities. Your consideration of a measure to provide
relief for these Filipino veterans is very wise.
Most importantly, the measure would allow families to be
united and many veterans would no longer be lonely and living
in poverty in the United States. But, in addition, our
government would save millions and millions of dollars, the
amount of savings dependent on how many veterans actually
return to the Philippines. Savings would come from the reduced
amount of SSI payments the veterans would receive in the
Philippines, as well as the elimination of Medicaid and food
stamp payments, which these veterans currently receive while
residing here.
I urge you to include in the legislation that is before you
today this provision to allow Filipino World War II veterans
who are currently citizens of the United States and receiving
SSI payments to take a portion of their benefits with them if
they return to live in the Philippines.
Thank you, Madam Chair, for allowing me to speak on behalf
of these brave veterans of World War II.
[The prepared statement follows:]
Statement of Hon. Bob Filner, a Representative in Congress from the
State of California
Madame Chairman and colleagues, I would like to thank you
for your consideration, today, of a measure to allow Filipino
World War II veterans who are currently citizens of the United
States and receiving SSI benefits to return to the Philippines
with a portion of these benefits intact.
Congressman Gilman, Chairman of the International Relations
Committee, has recently introduced associated legislation, H.R.
26, the Filipino Veterans SSI Extension Act, of which I am an
original co-sponsor. You may know that Congressman Gilman and I
have been working long and hard for several years on behalf of
this group of brave veterans, and we are most appreciative of
your interest in this important issue.
Thousands of Filipino World War II veterans, who were
drafted into service during the war by President Franklin D.
Roosevelt and then denied benefits by Congress in 1946, have
immigrated to the United States. It was widely but mistakenly
believed by them that when they arrived in the United States,
their veterans benefits would be restored and they would have
the financial means to bring their families to the States.
Instead, many of these veterans who today are in their 70s and
80s are ill, lonely, and living in poverty in our major cities.
Your consideration of a measure to provide relief for these
Filipino veterans is very wise! Most importantly, this measure
would allow families to be united--and many veterans would no
longer be lonely and living in poverty in the United States.
But, in addition, our government would save millions of
dollars, the amount of savings dependent on how many veterans
returned to the Philippines. Savings would come from the
reduced amount of SSI payments the veterans would receive in
the Philippines, as well as the elimination of Medicaid and
food stamp payments which these veterans currently receive in
the United States.
I urge you to include, in the legislation before you today,
this provision to allow Filipino World War II veterans who are
currently citizens of the United States and receiving SSI
payments to take a portion of their benefits with them if they
return to live in the Philippines! Thank you, again, for
allowing me to speak on behalf of Filipino World War II
veterans.
Chairman Johnson of Connecticut. Thank you, Congressman.
You stated the case very, very well, and it is a very important
matter to consider. We will discuss it as a Committee and let
you know.
Mr. Filner. Thank you very much.
Chairman Johnson of Connecticut. Are there questions?
Scott, Congressman McInnis of Colorado.
Mr. McInnis. Thank you, Madam Chairman. How many other
countries do we allow this to occur in? Do we allow it to
happen to residents of France that fought in World War II on
our behalf or residents of Canada or residents of Mexico?
Mr. Filner. I know of no other nation, Congressman.
However, what we have here is a unique situation. Out of the 66
nations whose nationals actually served in World War II, only
one nation, the Philippines, had their nationals denied the
benefits that were implicitly and explicitly promised. That is,
we are in a unique situation in terms of an actual act of
Congress that was passed in 1946, 53 years ago, that took away
the benefits that had been promised. So Congress acted in 1946,
and it has been a matter, in my opinion and many people in this
Nation, of injustice and a blot on our own historical record
that we have been trying to correct since.
Mr. McInnis. What is the reasoning? I mean, the Congress
didn't just decide to be mean to people from the Philippines. I
mean, there must be some basis for this decision in 1946.
Mr. Filner. To put the best light on it, the Philippines
were a dependency of the United States, and did receive their
independence in 1946. The Congress at that point said you have
got independence, it is your problem now to take care of these
folks. And I think there was a tinge of racism, given the fact
that nationals of 65 other nations did receive benefits. But to
put the best light on it, it was seen as a reaction to the
independence, and therefore, solve your own problems.
Mr. McInnis. One more question on my mind, Madam
Chairwoman. That is, Congressman, do you have copies of the
historical records on the----
Mr. Filner. Oh, yes.
Mr. McInnis. Could you give us a copy of that?
Mr. Filner. We would be happy to. We have tons.
[The information is being retained in the Committee files.]
Mr. Filner. This has been an issue that has occupied
Congressman Gilman and other Congressmen in this Congress, and
Senators, for many, many years. Historians have written on it.
There is a statement by Congressman Campbell which summarizes
the case; you will have a witness later today on the panel who
will have that, but we can provide you with much of the
material, and I appreciate your interest, sir.
Thank you, Madam Chair.
Chairman Johnson of Connecticut. I might note that the
legislation would cover only those who are on the rolls at this
time and that the provision will actually save money because of
the reduced benefit that those who take up this option would
agree to.
Mr. Cardin.
Mr. Cardin. I was just going to point out that the
Committee has received from the last Congress an estimate on
H.R. 4716, which I believe is the provision that you are
referring to, that it would reduce spending, direct spending by
$4 million over the 1999 to 2003 period, and $30 million
potential savings. So, the bill would reduce middle cost.
Mr. Filner. Thank you, Mr. Cardin.
Chairman Johnson of Connecticut. I have the pleasure to
welcome Mr. Jefferson to our meeting. Any questions or comments
from any other Member?
Thank you very much, Mr. Filner.
Mr. Filner. Thank you, Madam Chair.
Chairman Johnson of Connecticut. I would like to call
forward John Dyer, who is Principal Deputy Commissioner of the
Social Security Administration. Welcome, it is a pleasure to
have you.
STATEMENT OF JOHN R. DYER, PRINCIPAL DEPUTY COMMISSIONER,
SOCIAL SECURITY ADMINISTRATION
Mr. Dyer. Good afternoon. Thank you, Madam Chair, and
Members of the Subcommittee, for this opportunity to appear
before you today to discuss our mutual commitment to
strengthening the integrity of SSI, the Supplemental Security
Income Program. We have appreciated the opportunity to work
closely with this Subcommittee in identifying and refining
approaches to strengthen the administration of the Nation's SSI
Program.
About 6.5 million aged, blind, and disabled individuals,
who have little income or resources, now receive monthly SSI
benefits. More than 2 million are age 65 or over, and of these,
over half are 75 or older. Nearly three-fourths are women, and
many if not most are widows. At the other end of the age
spectrum, nearly 890,000 are severely disabled children.
These individuals are also among our most vulnerable
citizens. For them, SSI is truly the program of last resort,
providing a safety net that protects them from complete
impoverishment. We must, therefore, work to increase the
administrative efficiency of the SSI Program while assuring the
program continues to meet the needs of people who are dependent
upon it.
We believe that a key element of stronger SSI management is
ongoing program evaluation and public accountability.
Last April, I appeared before this Subcommittee to discuss
the development of a comprehensive SSI management plan. We told
you we would produce one, and this last October, the
Commissioner issued such a plan.
The areas identified for improvement are overall payment
accuracy; increasing continuing disability reviews; approving
debt collections; and, expanding our effort to combat program
fraud. In each area, we have set challenging, but achievable,
goals.
To improve payment accuracy, we have expanded our
successful electronic information significantly over the last
few years with Federal and State agencies, prisons, jails, and
other correctional facilities.
This past October, we began State wage and unemployment
information matching through the National Directory of New
Hires database. This matching effort has produced more than
350,000 alerts about wages on records of SSI beneficiaries and
their spouses, or their parents if they are children. By 2002,
we expect that this matching effort will prevent $110 million
in overpayments each year.
The President's fiscal year 2000 budget calls for
increasing the number of redeterminations of individuals'
income and resources to 2.2 million for a total increase of 22
percent over the fiscal year 1998 number of redeterminations.
Through this initiative, we expect to reduce overpayments by
$260 million annually by fiscal year 2002. When overpayments do
occur, our debt collection efforts are vital. Each year, SSA
detects substantial amounts of SSI overpayments, more than $1.3
billion in fiscal year 1998. SSA has collected about $539
million of the 1998 debt this past year. Over a period of
several years, a substantial part of each year's discovered
debt is recovered. For example, so far we have recovered about
60 percent of the new debts that we discovered in 1990.
We are also focusing on program fraud. SSA and our
Inspector General have developed a comprehensive antifraud
plan, which we call Zero Tolerance for Fraud, which our OIG
will discuss later in this hearing.
Last May, Commissioner Apfel sent to the Congress the
Supplemental Security Income Program Integrity Act of 1998, and
proposals in that bill have been included in the President's
fiscal year 2000 budget. We are encouraged that the
Subcommittee has included most of our proposals in its draft
bill, the SSI Fraud Prevention Act of 1999. These provisions
will strengthen the SSI Program and will help us manage this
important program.
The SSI proposals under discussion today generally fall
into three categories: Payment accuracy, debt collection and
antifraud. Both our and the Subcommittee's proposals will
improve payment accuracy by providing for data matches that
will enable us to identify unreported changes earlier, so that
we can prevent or reduce overpayments. Specifically, these
proposals would require further matches with the Health Care
Financing Administration's nursing home admission data, which
will help SSA to identify unreported admissions of SSI
beneficiaries.
Second, the proposals would require SSI applicants and
beneficiaries to authorize SSA to obtain all financial records
from any and all financial institutions so that we can obtain
the information electronically. These matches will help uncover
undisclosed accounts, and allow us to get information more
efficiently. In addition, we support the proposal in the
Subcommittee's bill that would deem SSA's rigorous data privacy
standards to meet all State standards for the purposes of
sharing data.
With regard to debt collection, both our and the
Subcommittee's bills would extend to SSI all overpayment debt
collection authorities currently available under the Old-Age,
Survivors, and Disability Insurance Program. These include
reporting delinquent debt to credit bureaus, using private
collection agencies and charging interest. We also support the
Subcommittee's proposal relating to overpayment collections
from individuals convicted of crimes.
Our antifraud initiatives would be greatly strengthened
with the enactment of the administrative sanctions that we both
have proposed, as would the proposal in the Subcommittee's bill
for penalties for attorneys and physicians who commit program
fraud. The proposal requiring SSA to look for patterns of abuse
by physicians who conduct consultative examinations is a useful
tool for strengthening the integrity of the program.
Although not strictly antifraud proposals, we thank the
Subcommittee for adopting the Administration's proposals to
close loopholes in current law that allow SSI applicants to
contravene basic program principles, namely that an individual
with the means to provide for his or her needs should use them
for this purpose. With the enactment of these proposals,
individuals would no longer be able to dispose of their
resources for less than fair market value or shelter them in a
trust solely to qualify for SSI benefits.
In conclusion, we are pleased that the Subcommittee has
included in its bill almost all of the Administration's payment
accuracy, debt collection, and antifraud proposals. The
Commissioner and I believe that we have common ground to
advance meaningful legislation that will improve SSA's
administration of SSI. By working together, we can strengthen
this vitally important program.
This concludes my testimony, and you have my written
statement. I would be glad to answer any questions, Madam
Chair.
[The prepared statement follows:]
Statement of John R. Dyer, Principal Deputy Commissioner, Social
Security Administration
Madame Chair and Members of the Subcommittee:
I appreciate this opportunity to appear before the
Subcommittee to discuss the Social Security Administration's
(SSA) ongoing efforts for strengthening the integrity of the
Supplemental Security Income (SSI) program and the provisions
in the Subcommittee's bill, the ``SSI Fraud Prevention Act of
1999.'' SSA is firmly committed to effective management of the
SSI program, and we look forward to working with the
Subcommittee to strengthen the SSI program.
We are pleased that the proposals that have been advanced
by the Administration have been included in the Subcommittee's
own draft bill. We believe that these measures will help SSA to
ensure that individuals who are eligible for SSI receive the
correct amount of assistance, while further reducing the
possibility that individuals erroneously receive benefits. SSA
continually strives to balance our responsibility to process
initial applications promptly with our duty to ensure that
payments made are accurate.
SSA has established major administrative initiatives to
improve Agency stewardship of the SSI program. These
initiatives demonstrate our commitment to take the actions
necessary to effectively deal with program integrity issues. A
number of initiatives that SSA has underway will yield results
in the near future, while others will take longer to produce
significant improvements. We will aggressively monitor each
initiative and make modifications when necessary to ensure that
the best possible results are achieved.
Current Beneficiaries
Before I begin discussing specific program issues and
proposals, I would like to give you some idea of the scope of
the SSI program. The positive effects that the SSI program has
on millions of needy aged, blind, and disabled individuals of
this country is best described through the individuals that the
program serves.
On average during fiscal year (FY) 1998, 6.6 million aged,
blind, and disabled individuals received SSI benefits on a
monthly basis. For these beneficiaries, SSI is a vital lifeline
that enables them to meet their needs for basic necessities of
food, clothing, and shelter. In FY 1998, these individuals
received more than $27 billion in Federal SSI benefits and an
additional $3 billion in State supplementary payments.
More than 2 million of the individuals receiving SSI are 65
or older. Of these, over half (57 percent) are 75 or older.
Seventy-three percent of those over 65 are female and many, if
not most, are widowed. At the other end of the age spectrum,
nearly 890,000 severely disabled children under age 18 receive
benefits.
The 1999 Federal SSI benefit rate is $500 a month. While
the 1999 Federal poverty guidelines have not yet been
published, the SSI monthly benefit rate over the years has
consistently represented just 74 percent of the Federal poverty
guideline for an individual. The Federal benefit rate for
eligible couples--$751--represents 82 percent of the poverty
guidelines for two persons.
Here are some typical examples of SSI beneficiaries:
An aged beneficiary who is a 71 year-old widow and
lives alone in a rented apartment, has only a small OASDI check
and no other income. For her, the SSI check along with her
small survivors benefit provides only a basic level of
subsistence;
A disabled beneficiary who is 45 years old and
mentally ill. This beneficiary has had limited or no prior
connection to the workforce (and therefore no OASDI benefits)
and no other income; and
A disabled child who is 12-years old with mental
retardation, with a single parent who has no income or who
works and has fluctuating wages. Their total family income is
well below established poverty guidelines.
As you can see, these individuals are among the most
vulnerable Americans. For them, SSI is truly the program of
last resort and is the safety net that protects them from
complete impoverishment.
After a decade of substantial growth, the number of SSI
beneficiaries has leveled off. A projection of SSI participants
presented in the 1998 ``Annual Report of the Supplemental
Security Income Program,'' that was sent to Congress in May,
indicates that the program is expected to grow only modestly
over the next 25 years. Expressed as a percentage of the total
U.S. population, the number of Federal SSI beneficiaries
declined from its 1996 level of 2.3 percent to 2.2 percent in
1997, and is projected to remain fairly level at roughly 2.2
percent of the population through 2022.
Program Administration
In 1972, when the SSI program was established, Congress
moved the responsibility for administering programs for needy
aged, blind, and disabled individuals from the States to the
Federal Government. SSA was given the job of administering SSI
because Congress wanted to provide a standard floor of income
to needy aged, blind, and disabled individuals based on
nationally uniform criteria.
From that perspective, the program and SSA's administration
of it have been highly successful. SSA has always aimed to
administer this program in a uniformly fair, humane, and
responsive manner. Our efforts have been designed to maximize
the program's efficiency while, at the same time, to safeguard
its integrity and to meet our responsibilities to the American
taxpayers. Achieving this balance has been and continues to be
one of SSA's biggest challenges.
However, what the framers of the SSI program may not have
fully recognized was the complexity associated with designing
and administering a system that is sensitive and responsive to
individuals' changing needs. The program has become
increasingly complex over the years due to numerous changes
that were enacted in response to concerns about program
policies that address the multiplicity of events and situations
that occur in the everyday lives of aged, blind and disabled
individuals.
We have always been committed to administering the SSI
program as efficiently and accurately as possible. It is
important to our nation and the needy aged, blind, and disabled
individuals that the program serves. We are strengthening the
administration of SSI in order to retain public confidence in
the program.
Our reliance on recipient reporting, data matches, and
selective, periodic eligibility reviews has permitted SSA to
achieve a relatively good payment accuracy rate for the SSI
program. In FY 1997, the payment accuracy rate--a widely
employed gauge of how well the program is being administered--
was about 94.7 percent. However, we believe we can improve our
administration of the SSI program in ways that will further
increase the accuracy rate and reduce erroneous payments.
Our goal is to increase the accuracy rate to 96 percent by
2002 through management improvements and through the changes
that we have recommended in our legislative proposals, which
are included in the draft bill under consideration by this
Subcommittee. Many of the proposals in the Subcommittee bill
were included in the ``Supplemental Security Income Program
Integrity Act of 1998,'' which Commissioner Apfel sent to the
Congress on May 4, 1998.
SSI Management Report and Initiatives
As the Commissioner has stated, one of the key elements of
stronger management of the SSI program is ongoing evaluation
and public accountability. Last April, I appeared before the
Subcommittee and discussed the development of a plan which
would allow SSA to reach our 96 percent payment accuracy goal.
This plan is embodied in the report ``Management of the
Supplemental Security Income Program: Today and in the
Future,'' which was issued by Commissioner Apfel in October.
Copies of the report were sent to the Subcommittee and the
other committees in Congress with responsibility for the SSI
program.
The report was prepared at the direction of Commissioner
Apfel and led to a comprehensive review of the SSI program,
which identified the program's challenges and vulnerabilities.
Our review identified areas in which the SSI program can be
better managed: improving overall payment accuracy; increasing
continuing disability reviews; expanding our efforts to combat
program fraud; and improving debt collections. In each area, we
have set aggressive but achievable goals to improve our
management of the program. The SSI report--the first ever
issued by SSA--demonstrates Commissioner Apfel's and the
Agency's commitment to meeting these goals.
Payment Accuracy
In order to understand the complexity of the program, it is
essential to understand how SSI payments are calculated.
Two factors used to determine an individual's monthly
benefit are income and living arrangements. Income can be in
cash or in-kind, and is anything that a person receives that
can be used to obtain food, clothing, or shelter. It includes
cash income such as wages, OASDI and other pensions, and
unemployment compensation. In-kind income includes food,
clothing, and shelter or something someone can use to obtain
those items. Generally, the amount of the cash income or the
value of the in-kind income is deducted from the Federal
benefit rate, which is currently $500 a month. SSI is designed
to supplement the individual's other income up to a minimum
monthly floor of income.
Individuals' SSI benefit amounts also may change if they
move into a different living arrangement. By living
arrangement, we mean whether a person lives alone or with
others, or resides in a medical facility or other institution.
When individuals move into nursing homes, their benefits may be
reduced to not more than $30 per month, and when they leave
their benefit may be increased. If they move from their own
household into the household of another person, and that person
provides food, clothing, or shelter, their benefits also may be
reduced. If their incomes or resources in a month exceed the
limits specified in the law they may be ineligible. The design
of the SSI program requires SSA to take into account the many
changes in an individual's financial and personal life and make
adjustments in benefit payments to reflect those changes.
To a significant extent, SSA must rely on applicants and
beneficiaries to report relevant information that may affect
their benefits, especially information that is not available
from other sources. For example, reports of people moving in
and out of a household would not be available from any other
source than the recipients. Because it is extremely difficult
for SSA to obtain information about every change in an
individual's income, resources, or living arrangement in a
timely fashion, there will inevitably be some overpayments and
underpayments that will be made some month.
The first line of defense against overpayments is to assure
that those who receive SSI understand how the program works and
why timely reports of changes are important. At every
opportunity, our employees emphasize to SSI beneficiaries or
their representative payees the importance of reporting changes
in their circumstances. However, if beneficiaries do not report
or if reports are made or changes occur after benefits have
been paid, overpayments may occur. We have found that often,
beneficiaries do not fully understand how changes in their
everyday situations may affect their eligibility for SSI or the
amount of their monthly payment; nor do they always understand
their responsibility to report changes, even seemingly minor
changes that still can affect their eligibility or monthly
payment.
For example, every time the wages of a disabled child's
parent fluctuate because of working extra hours, because of a
raise, or because of an additional payday within a month, the
amount of income deemed to the child changes. If an individual
has slightly more than the allowable resource limit in his or
her bank account at the beginning of a month, he or she may be
overpaid SSI for the month. An unanticipated living arrangement
change in the middle of a month can cause an overpayment.
The areas of wages, financial accounts, and
institutionalization account for nearly half of the
overpayments made in the SSI program. We believe that matching
information with various databases holds great promise in the
prevention of overpayments caused by these factors and that
access to data is vitally important in our plans to improve
program administration.
To this end, we have expanded our electronic information
exchanges significantly over the years. Currently our computer
matching efforts include matches with:
Office of Personnel Management;
Department of Veterans Affairs;
Railroad Retirement Board;
Internal Revenue Service;
Health Care Financing Administration (HCFA);
State wage and unemployment records;
Savings bonds records; and,
Prisons, jails, and other correctional facilities.
These matching efforts have been very successful. For
example, in October 1998 we began matching SSI records with
State wage and unemployment information in the National
Directory of New Hires database. This matching effort has
produced more than 350,000 ``alerts'' about wages paid to SSI
beneficiaries and their spouses, or, in the case of children,
their parents, and we estimate that by 2002 these matches will
prevent $110 million in overpayments annually. In addition,
during the same time, there have been over 19,000 ``alerts''
with regard to unemployment compensation. While undoubtedly
many individuals' SSI records already included wage and
unemployment compensation information, it appears that some of
the amounts of the income were not accurate, and in some
instances, the income had not been reported.
Another example of the effectiveness of data matching is
the November 1998 match with Medicaid and Medicare information
in HCFA's database. The match disclosed 38,000 nursing home
admissions by SSI beneficiaries. Again, not all of these
admissions were unreported by the SSI beneficiaries, but it is
clear that getting the data from these matches will prevent or
reduce SSI overpayments. By 2002, we estimate that these
matches will prevent about $20 million in overpayments each
year.
While computer matching produces information at periodic
intervals, online access to data allows SSA to electronically
access current information held by other organizations for
purposes of determining accurate SSI benefit payments. Online
access provides the means to prevent overpayments by
identifying undisclosed income or resources, or the current
value of these items. SSA is testing an on-line approach to
State databases--human services, vital statistics, and
unemployment and workers' compensation--in a pilot program in
Tennessee. SSA has begun implementing this model with multiple
agencies in other States.
Another example of successful data exchange involves State
reports of death to SSA. Most States currently report death
information to SSA promptly. This allows us, and other State
and Federal agencies that use SSA's death information file, to
avoid paying benefits to deceased individuals. To address
problems with reporting of deaths from a small number of
States, the Administration has included in its FY 2000 budget a
proposal that would improve the timeliness of death reports
from the States. Under this proposal, States would be required
to furnish SSA with death reports within 30 days after the
State receives it. We urge the Subcommittee to support this
provision.
We also have a significant matching program underway with
over 3,500 prison facilities nationwide, which covers 99
percent of the inmate population. Reports received from these
facilities about the incarceration of SSI or OASDI
beneficiaries enable us to promptly stop benefits. Since
November 1998, we have had the capacity to share this
information with other Federal agencies in order to help them
prevent overpayments or even fraud with respect to their
programs.
These examples show how matches and online data can ensure
that SSA makes accurate SSI payments. However, we do not
currently have the authority to carry out matches in some
situations that would enable us to verify more efficiently
individuals' income resources and living arrangements for SSI
purposes. The legislative proposals SSA sent to Congress last
year and that have been included in both the Administration's
and the Subcommittee's bills would strengthen SSA's ability to
obtain information electronically that will lead to earlier
detection of changes in income, resources, and living
arrangements that may have not been reported.
Debt Collection
Each year, SSA detects substantial amounts of individual
overpayments in the SSI program (more that $1.3 billion in FY
1998). In FY 1998, SSA collected $539.2 million in existing
debt. Although these collections represented a relatively small
proportion of SSA's entire outstanding portfolio of debt in
1998, the result over time is that a substantial portion of
each year's debt is recovered. For example, a recent study of
the debt detected in calendar year 1990 shows that as of
December 31, 1997, 60 percent of the total 1990 SSI debt had
been recovered. Given the current status of the collections for
these overpaid dollars, we believe that we will eventually
recover more than 62 percent of the 1990 debt.
To recover SSI debts, SSA can currently use the following
debt collection tools: benefit offset (SSI and OASDI),
repayment by refund, and offsets from tax refunds. The process
SSA uses in recovering debt is as follows:
When an individual has been overpaid, SSA sends a notice
that explains the reason for the overpayment, the options for
repayment, and the individual's's rights in connection with the
overpayment. Under provisions of the Social Security Act, an
individual has the right to appeal the decision that he or she
is overpaid or to request that recovery of the debt be waived.
Waiver of recovery of an overpayment generally is granted if an
individual is without fault in causing the overpayment and
repayment would cause a hardship.
Collection is relatively certain from individuals who
remain on the SSI rolls. SSA eventually recovers more than 90
percent of overpayments made to individuals who remain on the
rolls through offset of their ongoing monthly benefits.
Overpayment collection from persons who are no longer receiving
SSI is more difficult and costly. Although these individuals
may be in better financial circumstances than they were when
they were receiving SSI, they are often only marginally better
off. Thus, it is often difficult to obtain voluntary repayments
of these overpayments.
SSA has an automated system for managing the pursuit and
recovery of these debts. The system sends bills and requests
for repayment to overpaid individuals. If these individuals do
not repay, SSA sends them a series of follow-up requests for
repayment. If these are unsuccessful, SSA's own debt collectors
contact these debtors and attempt to negotiate a repayment
arrangement.
SSA notifies the Treasury Department of individuals with
delinquent debts related to overpayments. These debts are
deducted from the individuals' tax refunds. With the expansion
of SSA's tax refund offset program in 1998 to include
delinquent SSI debts, the collection of debts from those no
longer on the rolls has been strengthened. In 1998, SSA
collected $23.5 million in SSI debts via offset, and another
$12.1 million in voluntary repayments from people who wanted to
avoid the offsets. SSA uses the tax refund offset program to
recover from both the delinquent debtors being pursued through
the billing and follow-up process as well as from those debtors
whose debts have been written off.
In addition, SSA has a new and important tool to recover
SSI debt from the individual's OASDI benefit, and we thank
members of the Subcommittee for their support in providing us
with this tool. The enactment of the ``Noncitizen Benefit
Clarification and Other Technical Amendments Act of 1998,''
authorized SSA to recover an SSI debt from the individual's
Social Security benefit (up to a limit of 10 percent of that
benefit). Previously, SSI overpayments could be recovered from
OASDI benefits only if the person authorized SSA to do so. We
expect that we will recover an estimated $30 million annually
using this tool.
We are also implementing wage garnishment to recover SSI
debt. While we are only in the preliminary stages of developing
policies and procedures for this debt recovery tool, I mention
it here as an example of SSA's commitment to collect as much of
the debt as possible.
Our SSI recovery tools are somewhat limited in comparison
to those that are authorized for the purpose of recovering
OASDI debt. In order to expand those tools, the President's
budget contains a proposal, that I will discuss later, that
will give SSA additional debt collection authorities that will
help us do even more to recover outstanding SSI overpayments.
We are grateful that an identical proposal is included in the
Subcommittee's bill.
Measures To Address Vulnerabilities to Fraud
Although we believe that the most important elements in
strengthening the SSI program are improved payment accuracy and
debt collection, we are also very concerned about fraud in the
SSI program. Included in SSA's strategic plan is a goal to make
our management of the SSI program the best in business with
zero tolerance for fraud. To this end, SSA and the Office of
the Inspector General (OIG) have cooperated in developing a
comprehensive anti-fraud plan, which we call ``Zero Tolerance
for Fraud.'' The plan has three goals:
change programs, systems, and operations to reduce
instances of fraud;
eliminate wasteful practices that erode public
confidence in SSA; and
prosecute vigorously, individuals or groups who
violate the integrity of SSA's programs.
The activities in the plan fall generally under the
categories of fraud prevention and detection, referral and
investigation, and enforcement.
The SSI Management Report, which I referred to earlier,
includes comprehensive descriptions of OIG's efforts concerning
residency fraud, and the joint OIG/SSA efforts with regard to
collaborator or ``middleman'' fraud. I will not reiterate what
is in the report. However, I do want to mention that we have
expanded our efforts at uncovering and preventing residency
fraud in the Chicago, New York, and Atlanta regions.
The SSI Management Report also described the pilot project
underway in 5 States involving State Disability Determination
Service (DDS) Cooperative Disability Investigation (CDI) units
made up of OIG and DDS employees. These units are designed to
improve the DDS' capability to detect fraud and abuse at the
earliest point in the disability determination process, thereby
preventing erroneous eligibility. The CDI units are presently
located in California, Georgia, Illinois, Louisiana, and New
York. Due to the success of the CDI units, two new sites
(Missouri and Oregon) have been funded for FY 1999.
Consideration is being given to expand the CDI units into other
States.
As of the end of 1998, the CDI units had processed 756 case
referrals and developed evidence to support 101 denials for
benefits for projected program savings of over $6 million. In
addition, over $100,000 will be recovered through repayment
agreements, restitution orders, offsets to continuing benefits
and the return of uncashed checks. These amounts exemplify the
success of these operations and SSA's and OIG's commitment to
combat fraud through a variety of methods.
In spite of our continued efforts to protect U.S. taxpayers
by making sure that only those aged, blind, and disabled
individuals who are eligible for benefits receive only amounts
due them, there are a small number of persons who attempt to
obtain benefits fraudulently. I want to assure the Subcommittee
that we will continue to strengthen our ability to prevent,
detect, and investigate fraud and to penalize those who
misrepresent or omit facts in order to obtain benefits for
which they are not eligible.
Both the President's Budget and the Subcommittee bill
include proposals for strengthening SSA's hand in preventing
fraud.
SSI Redeterminations
Redeterminations are the most powerful tool available to
SSA for improving the accuracy of SSI payments. They are
periodic reviews of an individual's income, resources, and
other nondisability-related factors that affect an individual's
eligibility or benefit amounts, and are a very effective way to
uncover unreported changes in individuals' income and resources
and to avoid large overpayments.
Every year SSA contacts SSI beneficiaries to update the
income and resource factors which affect eligibility and
payment amount. These contacts can be face-to-face
comprehensive reviews in which only a single issue is
addressed, and those in which a specially designed mailed
questionnaire is appropriate.
This year SSA is increasing the number of redeterminations
it will conduct from 1.8 million in FY 1998 to 2.1 million. The
President's FY 2000 budget calls for yet another increase to
2.2 million. With these increases, SSA by 2002 expects to
reduce SSI overpayments by $260 million annually.
We ask your support for our full administrative budget
request for FY 2000.
Proposals in the President's Budget
Although I said it earlier, it bears repeating: SSA takes
the administration of the SSI program very seriously. As
careful stewards of the SSI program, SSA has always worked to
improve its administration of this vitally important program.
Last May, Commissioner Apfel sent to Congress the
``Supplemental Security Income Program Integrity Act of 1998.''
Proposals in that bill have been included in the President's
fiscal year FY 2000 budget. We believe that the proposals will
give SSA valuable tools to further our efforts, and we are
encouraged and grateful that the Subcommittee has included our
proposals in its draft bill.
Three of the proposals in the Budget are intended to
improve SSA's ability to gather information that is material to
an individual's eligibility or correct amount of assistance.
These improvements will enable us to identify unreported
changes earlier so we can prevent overpayments or reduce the
amount of overpayments flowing from the unreported event. The
proposals would expand the pool of data available to SSA or
make the data available on a more timely and economical basis.
The Subcommittee bill includes two similar proposals that:
Would require the Commissioner to conduct more
frequent, periodic matches with Medicare and Medicaid data held
by the Secretary of Health and Human Services. It would also
authorize the Commissioner to substitute information from the
matches for the physician's certification otherwise required in
order to maintain the full benefit level of an individual whose
institutionalization is expected to last fewer than 3 months.
This proposal will allow SSA to correctly adjust the SSI
benefit without having to rely on the individual, a family
member, or the institution phoning or writing us concerning the
change. It will also enable SSA to identify situations in which
the individual's admission to a facility has gone unreported;
and
Would authorize the Commissioner to require SSI
applicants and recipients to permit SSA to obtain all financial
records from any and all financial institutions. Refusal to
provide an authorization may result in the individual's SSI
ineligibility. Other changes would allow the Commissioner to
obtain the information electronically rather than on paper as
is done currently. This proposal will allow us to uncover
undisclosed accounts and to efficiently get data from the
financial institutions without SSA's and the banks' employees
having to use the current, time-consuming, paper process. We
believe that this provision has the potential to significantly
reduce the amount of overpayments from undisclosed financial
accounts.
Another proposal in both the President's Budget and
Subcommittee bill would allow SSA to improve efforts to collect
SSI overpayments by extending to SSI all of the debt collection
authorities currently available for the collection of
overpayments under the OASDI program. The overpayment recovery
tools that would be extended to the SSI program under this
proposal include reporting delinquent debt to credit bureaus,
using private collection agencies, administrative offset,
Federal salary offset, and interest charging or indexing. These
additional tools will help us recover overpayments when our
previous recovery attempts have been unsuccessful. This
proposal helps address the problem of collecting overpayments
from individuals who are no longer SSI or OASDI beneficiaries.
Two of the Administration's proposals are designed to
strengthen program provisions that now allow individuals to
qualify for the program by disposing of resources for less than
fair market value, and by transferring assets to a trust.
Actions such as these contravene a basic principle underlying
the SSI program--namely that an individual with the means to
provide for his or her own needs should use them for this
purpose. Proposals on trusts and disposal of assets are also
included in both the President's FY 2000 Budget and in the
Subcommittee's bill. Although we believe this abuse occurs
infrequently, enactment of these proposals will help strengthen
the integrity of the program.
The Administration has also advanced a proposal that would
authorize SSA to impose specified periods of ineligibility for
SSI and OASDI benefits on any individual who knowingly provides
us with false or misleading information in order to qualify for
benefits. This proposal would provide a way to respond to
situations where criminal or civil penalties may not be
feasible, for example, when overpayment amounts are low or when
the claimant has little or no resources to attach.
In addition, administrative sanctions will give SSA field
office employees a tool that they can use to respond
appropriately to individuals who knowingly furnish inaccurate
or misleading information material to eligibility or payment
amount. These sanctions will act as a disincentive for others
who may mislead SSA in their attempt to claim benefits.
Conclusion
We thank the Subcommittee for including most of the
Administration's proposals in its bill. I believe that the
Administration and Congress can find common ground to enact
meaningful legislation that will improve SSA's ability to
administer the SSI program in a way that evokes increased
congressional and public confidence in both the program and the
agency.
I believe that by working together we can strengthen this
vital program by adding overpayment collection tools and
program sanctions, providing the authority for data matches for
verifying SSI eligibility, and closing program loopholes that
have been subject to abuse.
This concludes my testimony. We will be glad to answer any
questions that the Subcommittee members may have. Thank you.
Chairman Johnson of Connecticut. Thank you very much, Mr.
Dyer. I am going to recognize Mr. English.
Mr. English. Thank you, Madam Chair. Mr. Dyer, have you had
an opportunity to review in advance the testimony of the GAO
that they are presenting here today?
Mr. Dyer. Yes, sir.
Mr. English. I wonder if you could comment on one portion
of Ms. Fagnoni's presentation and specifically:
We have noted that SSA's operations have been heavily
influenced by an organizational culture or value system that
places a greater value on quickly processing and paying claims
than on controlling program costs. Our most recent work has
confirmed the continued existence of an agency culture that
views the SSI Program in much the same way as SSA's Old Age and
Survivors Insurance and Disability Insurance Programs, where
emphasis is placed on quickly processing claims for individuals
with an earned right to benefits, rather than as a welfare
program where stronger income and asset verification is
necessary. SSA's organizational culture has been most evident
in the low priority it has often placed on verifying
recipients' initial and continuing eligibility for benefits,
recovering SSI overpayments, and addressing program fraud and
abuse.
How do you respond to that assessment?
Mr. Dyer. I think we agree with GAO in that we need to have
a better balance between payment of claims and program
integrity. And I think as you can see with our plan, I should
have brought some copies here to show you, we have laid out a
very aggressive strategy that goes after overpayments,
increasing debt collection, everything that the General
Accounting Office has identified in their reports. Both our
Inspector General and we have moved, I think, to a more even
balance. That is the way we are proceeding.
Mr. English. I find their testimony interesting. I find
your comments on it somewhat reassuring. I wonder, on another
point in the testimony, Marty Ford says that SSA has inadequate
procedures for recording earned income by SSI recipients. Do
you agree with that claim, and if so, is SSA currently taking
adequate steps to improve income reporting?
Mr. Dyer. Marty brought this to our attention a few weeks
ago, and I think it is something that we need to look into. But
I would like to set it in context, that we have about 16
million changes a year in the SSI files. And, you know, I am
going to be the first to admit that we may have a few cases
where we get behind and we don't get to things quickly.
The second thing is that we have been interested in how to
help our SSI claimants and beneficiaries to better understand
and be able to give us up-to-date information. I think it is an
area we need to look into, do some piloting, do some checking,
and work with Marty and other such groups.
Mr. English. Well, again, I find your testimony to be
interesting, and in some ways, reassuring, and may I add,
working with some of your people on the local level, we have a
very favorable impression of their professionalism. We do feel
that more needs to be done to address the waste of fraud
component.
Madam Chair, I would like to yield back the balance of my
time.
Mr. Dyer. Thank you.
Chairman Johnson of Connecticut. Thank you, Mr. English.
Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. Mr. Dyer, I also
appreciate your testimony, and I agree with all my comments and
my colleague. But let me just give a word of caution in our
anxiety to make sure we don't pay out any money that shouldn't
be paid out. I can relate many situations of casework in my
office, and I am sure that every congressional district in the
country can tell you examples. But people are very desperate in
need of SSI, and I don't want to see the rules not adhered to.
I don't want to see people receiving payments who shouldn't be
receiving payments. On the other hand, I want to make sure that
people who need help can get that help as quickly as possible
without too much bureaucracy interfering with their need to get
that check.
So I do hope we strike a balance here. And, I think the
Inspector General's report is important that we adhere and
change the procedures. The bill that we have introduced will
give you more tools to do that. But I also hope that you will,
as I know you will, be mindful of the objective of this program
and not put unnecessary roadblocks in the way of people to get
the help that they need.
As you have commented in your statement about the
Subcommittee bill, I am curious as to whether you have any
objections to any of the provisions that are in that bill or
any changes that you would like to see? In prefacing this
question, I would just like to acknowledge the help of your
agency in our drafting of this legislation. I want to give you
an opportunity if there are any changes that you would like to
see made in this bill.
Mr. Dyer. I think as you heard in my testimony, we are
comfortable with the major provisions. The bill is still being
drafted, and I am also cautious before I see the final draft.
But at this point, we don't see any objection. We think you
have covered most of the bases that we think are priority areas
to cover.
Mr. Cardin. Thank you. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Mr. Lewis.
Mr. Lewis of Kentucky. Thank you, Madam Chairman. Mr. Dyer,
if our Subcommittee bill passes, there are going to be some
penalties involved for those that did not disclose their SSI
benefits while they were in prison. In the application form
now, do you have specific questions about overpayment, past
overpayments or past payments?
Mr. Dyer. I don't know. I would have to get that for you
for the record. I assume we do, but I can't give you the exact
answer. That is something we may have to put in to make sure we
capture this information if we get the bill passed through this
Committee.
[The following was subsequently received:]
In the current application forms, there are no specific
questions about prior applications or eligibility for SSI
payments. However, all interviewers must currently obtain
systems' records on all of the Social Security numbers that the
claimant alleges. These records will show whether the claimant
has previously filed for SSI or OASDI benefits and whether any
overpayments exist.
The Subcommittee may also be interested to learn about a
planned improvement to SSI records where overpayments from a
prior record will automatically be brought forward to the new
record. For example, if a beneficiary stops receiving SSI and
has an unpaid debt, and he or she files again, this prior
overpayment will automatically be posted to his or her new
record for possible recovery. This new control system, which is
scheduled to start this summer, will help us in identifying and
recovering overpayments.
Mr. Lewis of Kentucky. OK, thank you. Thank you.
Chairman Johnson of Connecticut. Mr. Jefferson.
Mr. Jefferson. Thank you, Madam Chair. I subscribe to the
comments that Ben Cardin made a few minutes ago about the
emphasis on the purpose of the program. In that regard, I want
to ask whether and what effort is made to distinguish between
overpayments which are fraudulent and overpayments which are
not, and whether you proceed in these cases differently?
Mr. Dyer. Sir, we do. We realize that it is very
complicated to the people who are in this program. It is not
always that easy, that people start to work and they get a
little extra money, and they just don't quite realize that they
need to report. So within our regulations and authorities and
the procedures we use, our employees are instructed to try to
take a look at this as something that was a mistake, an honest
mistake, versus really an outright commitment to defraud. For
instance, it is clear that they had a bank account, they knew
they had it, and they didn't tell us about it, versus they
forgot that they had a small savings account that grandmother
left them.
Mr. Jefferson. How, with respect to overpayments, can you
quantify how much of it, if you will, is fraud and how much of
it is a mistake?
Mr. Dyer. Actually, we think there isn't all that much
fraud in the overpayments. I mean, because if we did, we would
be pursuing it. We think a lot of it has to do with mistakes.
Inherently, in the program as I said in my testimony,
overpayments will routinely occur.
Mr. Jefferson. Do you and the GAO disagree on that point?
Mr. Dyer. I think we might differ in a very fine line
there. But as I said in my testimony, the way the program works
is that if somebody gets the check from us and then 2 or 3 days
later they start to work, they technically are in an
overpayment status. We pay them in advance for the month. So,
we realize that there are a lot of overpayment dollars we are
going to have to live with. The flip side is that we are asking
for this authority here so when those folks fail to report to
us they are working, we can catch it faster, intercept it, and
correct the record.
Mr. Jefferson. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Mr. Dyer, first of all,
does the Social Security Administration support the proposal to
allow Filipino veterans to receive benefits, and return to the
Philippines?
Mr. Dyer. We are still reviewing it. We have a couple of
concerns. First of all, we need to discuss it with the Veterans
Affairs Administration. The other thing is we looked at it. We
did have a question about equity, if you look at other veterans
and how it might play out. It looks like other veterans would
end up with a little less money proportionately. So, we are in
the process of reviewing and making an assessment.
As you know, the agency's policy has always been to not pay
SSI to people outside the country, except under limited
situations. On the other side, we realize that the Filipino
veterans were extremely valuable to us in the war effort. They
are great people, and we are going to take a fair and balanced
look at this proposal.
Chairman Johnson of Connecticut. You do now currently only
allow some servicemen, students, and what is the other
category, to receive benefits abroad?
Mr. Dyer. If it is a hardship, a short-term trip.
Chairman Johnson of Connecticut. And the Marianas too?
Mr. Dyer. Yes.
Chairman Johnson of Connecticut. So, this would be an
exception?
Mr. Dyer. Yes.
Chairman Johnson of Connecticut. It is also, however,
unique in that these individuals don't receive veterans
benefits.
Mr. Dyer. I think we just need to touch all the bases and
then we will get back to you.
Chairman Johnson of Connecticut. Well, we will look forward
to your input on that later. We are very sympathetic to this
proposal, although it is not in our legislation at this time.
Mr. Dyer. OK. Thank you.
Chairman Johnson of Connecticut. And then would you just
enlarge or clarify your testimony with regard to
redeterminations? You say that the President's budget increases
the number of redeterminations of individuals and resources to
2.2 million for a total of a 22-percent increase. What
percentage--over how many years will you redetermine
eligibility of your population, the SSI population? If 22-
percent increases is consistent?
Mr. Dyer. We did about 1.8 million redeterminations in
fiscal year 1998. At that time, when Commissioner Apfel came
in, he said that we needed to do a better job in that area. So
as part of the fiscal year 1999 proposal, he went in and asked
for additional funds that got us up to about 2.2 million, if I
recall.
Chairman Johnson of Connecticut. But that would mean you
would be able to redetermine everyone in about 4 years?
[The following was subsequently received:]
We redetermine some individuals every year based on
profiles that target high risk cases. Others are redetermined
on a less frequent basis, but no one is seen less than once
every 6 years. Our latest studies show we have more than an 8
to 1 return on these high risk cases, and no category of
redetermination yields less than a 5 to 1 return on investment.
We also see some of these individuals when we conduct
continuing disability reviews. In Fiscal Year 1999 we plan to
conduct more than 875,000 of these reviews.
Chairman Johnson of Connecticut. It was also interesting
that you expect to collect $260 million in overpayments in the
next 2 years.
Mr. Dyer. The $260 million refers to debt prevented, not
collected.
Chairman Johnson of Connecticut. That is $130 million a
year. That is pretty formidable.
Mr. Dyer. That is right. We have done a lot of studies and
analyses with our quality assessment people. The data have
shown us that with the way we are now profiling and targeting
how we do the redeterminations, we should get those kinds of
returns. We also will be monitoring very closely to see if we
are getting the recoveries we have been projecting.
Chairman Johnson of Connecticut. Would you clarify your
recovery rate on overpayments versus debt, which I assume is
overpayments from the preceding years that were not collected?
Mr. Dyer. The number the General Accounting Office uses is
15 percent. Fundamentally, if you look at it in simple terms,
we have about $3 billion of money owed to us that we have
identified, and we are recovering about half a billion dollars
of that a year. So, that gets you the 15 percent.
If you go off of the base of everything that is owed us, if
you look at it compared to new debt that has occurred, it is
another way to count it. I think the different way I think
about it is that, of the new debt, if you are detecting $1.3
billion, we are recovering over one-half billion, so we are
doing relatively good in terms of trying to keep up with it. I
think you have to look at the numbers differently too, in terms
of how successful we are.
As I pointed out, when we did a study tracking recovery of
overpayments from 1990 to now, we actually eventually recovered
60 percent of what was owed to us. The other thing that I think
the General Accounting Office did when they analyzed our cases,
is see how many people are not actually paying us. If you look
at the amount of money that is owed us, about 60 percent of
that debt is actually recovered. We have a recovery plan in
place. We are collecting about 60 percent of those dollars. It
is only 40 percent that we are not getting a handle on and
recovering.
We would also like to do better. I think the most important
thing is not to let debt occur and to intercept the payment
before it becomes an overpayment. When you look at all the
things we are doing, we think we are covering all fronts that
are possible and available to us. If this Committee gives us
the additional authority, we can even be more aggressive.
Chairman Johnson of Connecticut. So are you saying that
then 34 percent of the 40 percent is really the problem?
Mr. Dyer. I am saying that of the money that is owed to us,
the $3 billion, that it is out there.
Chairman Johnson of Connecticut. Just 40 percent of the
debt that is uncollected?
Mr. Dyer. No. Of the $3 billion that is out there to be
collected, we will collect about 60 percent. The recovery is
just going to take us years.
Chairman Johnson of Connecticut. From a recovery plan. OK.
One last thing. You have 6.5 million aged, blind, and disabled
individuals of which 2 million are over 65 and almost 1 million
are severely disabled children. Of the remaining 3\1/2\
million, what percentage would you say are working some portion
of the time?
Mr. Dyer. I will have to get you that for the record.
[The following was subsequently received:]
As of December 1998, approximately 8.5 percent of those
receiving SSI aged 18 and older but under age 65 are working.
Chairman Johnson of Connecticut. Well, I would be
interested in that, because we have a much better approach to
SSI recipients who want to work some of the time than we do to
SSDI recipients who want to work some of the time. So I would
be interested in any information you can give me on SSI
recipients who are working, how many are working, 10 percent,
25 percent, 50 percent, 75 percent, of the time. Do they get
health benefits? How do the health benefits trigger down as the
earnings go up and that kind of information?
Mr. Dyer. We will be glad to provide you what information
we have.
[The following was subsequently received:]
In most States, individuals who receive SSI benefits are
also eligible for Medicaid. A few States' Medicaid plans do not
cover all SSI beneficiaries. When an SSI beneficiary goes to
work, he or she can continue to get cash benefits until his or
her countable earnings exceed certain limits. For example, an
SSI beneficiary with no other income can earn up to $1,085 a
month and still continue to receive cash SSI benefits. (This
``break-even'' level is higher in States with federally
administered State supplements.) As a technical point,
individuals who earn between $500-$1,085 receive these
``special'' cash benefits under section 1619(a) of the Social
Security Act, which is one of several work incentives in the
SSI program.
Even though a disabled individual's earnings, or a
combination of earnings and other income, may be too high to
permit a regular or special cash benefit, Medicaid coverage is
provided to the working individual under section 1619(b) of the
Social Security Act, another SSI work incentive. Medicaid
coverage under 1619(b) continues until the person medically
recovers, no longer meets other SSI eligibility factors, no
longer needs Medicaid in order to work, or generally has gross
earnings in an amount to replace Medicaid and other benefits he
or she would be eligible for if he or she were not working.
In December 1998, there were 326,475 SSI disabled
beneficiaries working which represented 6.2 percent of the
total SSI disabled caseload. The total SSI disabled caseload
includes beneficiaries who are age 65 or older and who came on
as disabled, as well as children under age 18.
Of the total SSI disabled count, there were 59,542 section
1619(b) participants who have special SSI recipient status for
Medicaid purposes. Almost three-fourths (72.6 percent) of the
SSI disabled beneficiary workers had amounts of earned income
below $500 per month.
SSA does not have data on the number of hours per month
worked by working SSI beneficiaries, nor information on any
other health benefits other than Medicaid that they may have
because of SSI eligibility.
Chairman Johnson of Connecticut. Thank you. Any other
questions?
Thank you very much, Mr. Dyer, for your testimony. It is a
pleasure to work with you.
Mr. Dyer. It has been our pleasure.
Chairman Johnson of Connecticut. I would also mention to
the Subcommittee for their review, the plan that Mr. Dyer
referred to is in your materials, the bottom item, their plan
for greater effectiveness in recovering overpayments, and also
the GAO performance review that was issued just in 1999.
Let me call forward the panel. James Huse, Acting Inspector
General of the Social Security Administration; Cynthia Fagnoni,
the Director of Income Security Issues for the GAO; Marty Ford,
the assistant director of governmental affairs of the Arc of
the United States, on behalf of the Consortium for Citizens
with Disabilities; and Eric Lachica, executive director of the
American Coalition for Filipino Veterans.
You may proceed please.
STATEMENT OF JAMES G. HUSE, JR., ACTING INSPECTOR GENERAL,
SOCIAL SECURITY ADMINISTRATION
Mr. Huse. Thank you. Madam Chairman, and Members of the
Subcommittee. Thank you for the opportunity to discuss the
draft House resolution entitled SSI Fraud Prevention Act of
1999. You have been given the full text statement of my
statement for the record.
Today, I would like to briefly discuss that statement and
highlight a few key points. The SSI, Supplemental Security
Income, Program, has proven to be an invaluable resource to
those who need it most. However, over time, the program has
grown significantly more difficult to administer and the
complex web of SSI eligibility rules has created opportunities
for fraud, waste and abuse. Even before the General Accounting
Office added the SSI Program to the high-risk list, the Office
of the Inspector General began working with the Social Security
Administration and this Subcommittee to help reduce the
program's exposure to fraud. To that end, we have issued a
number of audit, evaluation, and management advisory reports in
the SSI area.
Several of our recommendations from these reports were
adopted in SSA's comprehensive report, ``Management of the
Supplemental Security Income Program: Today and in the
Future,'' which was issued last October. Other recommendations,
however, require amendment of the Social Security Act for full
implementation. Therefore, we are extremely pleased that this
Subcommittee has expressed an interest in many of our SSI-
related recommendations. I applaud the Subcommittee for
developing the draft bill that addresses the problems
associated with administering this program.
Our work has indicated that the SSI Program is susceptible
to fraud from the following sources. Representative payees who
improperly collect benefits on the records of individuals who
are deceased, prisoners who improperly collect benefits,
individuals who transfer valuable assets to become eligible for
SSI benefits, individuals who provide false residency
information, and third-party facilitators who commit fraud
involving SSI eligibility determinations. Your draft bill
proposes legislation that would combat these types of fraud,
and therefore, we fully support the draft bill.
Before I close, I would like to emphasize two key issues
that the Subcommittee should consider. These issues involve the
administrative sanctions provisions that are in your draft.
First, we believe administrative sanctions should apply to all
Social Security and SSI benefits as opposed to strictly
disability benefits.
Second, in light of the severity of the penalties imposed,
the violations should be supported by the investigative
process. This will provide SSA with a body of evidence to
present at any subsequent administrative proceedings.
We would be happy to assist this Subcommittee in addressing
these issues before the Chairman's markup to clarify these
points. We want to ensure that this legislation strengthens the
Subcommittee's fight against fraud, and provides both SSA and
the OIG with the best possible means of fighting fraud in the
SSI Program. Although our work has been successful in combating
SSI fraud, there is still more work to do. We are committed to
continuing our audit and investigative work at a national level
to help SSA in its fight against fraud.
I would like to thank the Subcommittee for its continued
interest in combating fraud, and for its support of the OIG.
With this Subcommittee's support and with the passage of the
Subcommittee's bill, I believe we can strike even harder at
SSI-related fraud. Thank you.
[The prepared statement follows:]
Statement of James G. Huse, Jr., Acting Inspector General, Social
Security Administration
Madame Chairman Johnson and members of the Subcommittee,
thank you for the opportunity to discuss the draft House
Resolution entitled SSI Fraud Prevention Act of 1999.
The Supplemental Security Income (SSI) program has proven
to be an invaluable resource to those who need it most.
However, over time, the program has grown significantly more
difficult to administer, and the complex web of SSI eligibility
rules has created opportunities for fraud, waste, and abuse.
Even before the General Accounting Office (GAO) added the SSI
program to the high-risk list, the Office of the Inspector
General (OIG) began working with the Social Security
Administration (SSA), GAO, and this Subcommittee to help reduce
the program's exposure to fraud, waste, and abuse. To that end,
we have issued a number of audit, evaluation, and management
advisory reports in the SSI area.
Several of our recommendations from these reports were
adopted in SSA's comprehensive October 1998 report entitled
Management of the Supplemental Security Income Program: Today
and in the Future. Other recommendations, however, require
amendment of the Social Security Act for full implementation.
Therefore, we are extremely pleased that this Subcommittee has
expressed an interest in many of our SSI-related
recommendations. I applaud the Subcommittee for developing a
draft Bill that addresses the problems associated with
administering this program.
Our work has indicated that the SSI program is susceptible
to fraud from the following sources: representative payees who
improperly collect benefits on the records of individuals who
are deceased, prisoners who improperly collect benefits,
individuals who transfer valuable assets to become eligible for
SSI benefits, individuals who provide false residency
information, and third-party facilitators who commit fraud
involving SSI eligibility determinations. I would like to
briefly discuss each of these areas.
Recovery of Overpayments From Representative Payees.
A recent OIG evaluation found that representative payees
received about $41 million in overpayments. These payments were
made after the death of the beneficiary they were representing.
Recovery of these overpayments, some of which were obtained
fraudulently, continues to be a significant and ongoing problem
for SSA. When we completed our evaluation, SSA had recovered or
accounted for $13 million, leaving $28 million uncollected or
unaccounted for. Based on the results of our evaluation, SSA
agreed to consider legislation that would hold the overpaid
representative payees primarily liable for overpayments made
after a beneficiary's death. Your draft Bill accomplishes this
important objective, and we support it as a means of combating
this type of fraud, waste, and abuse.
Recovery of Overpayments From Prisoners.
In most circumstances, the Social Security Act prohibits
the payment of benefits to prisoners under the Old-Age,
Survivors, and Disability Insurance and SSI programs. We
conducted an audit to determine whether SSA was effective in
collecting overpayments from prisoners who were subject to such
nonpayment provisions. Our audit found that payments to
prisoners were not always detected, and SSA had only limited
success in recovering overpayments made to these prisoners.
SSA implemented a new system (Prisoner Update Processing
System) to control alerts resulting from prisoner data matches.
Under this System, alerts are transmitted to field offices
electronically, and, if the case is still pending after 120
days, it is sent to the respective Regional Office for follow-
up.
Your draft Bill would allow more aggressive pursuit of such
overpayments. Therefore, we fully support the prisoner and
fugitive collection provision set forth in the draft Bill.
Transfer of Valuable Assets.
We conducted an audit to determine whether individuals were
transferring assets to become eligible for SSI benefits. Our
audit revealed that individuals were transferring assets within
3 years of applying for, or while receiving, benefits; (2) the
value of assets transferred could have been a substantial
resource for meeting beneficiary financial needs; and (3)
assets were generally transferred to relatives, which kept the
assets within the family. Our audit fully supports the need for
legislative changes to prevent individuals from abusing the SSI
program by disposing of valuable assets solely to receive SSI
benefits.
False Residency Information.
To receive SSI benefits, an individual must be a U.S.
resident. SSA field office personnel were concerned that
individuals were obtaining SSI benefits based on false
statements regarding their residence. Because of this concern,
we worked with SSA staff to conduct a series of residency
verification projects. Our work resulted in the issuance of an
informational report suggesting that individuals who provide
false residency information on their initial applications for
SSI benefits should be subject to criminal penalties and/or
periods of ineligibility for SSI benefits.
Since SSI is a gateway program for Medicaid, Food Stamps,
and other Federal and State assistance programs, the impact of
individuals who are fraudulently receiving SSI benefits can be
far-reaching. For that reason, we fully support the language in
the draft Bill, which would institute a period of ineligibility
for those SSI applicants or beneficiaries who defraud the
program.
Third-Party Fraud.
OIG, SSA, and a State Disability Determination Service
(DDS) formed a cooperative team to identify potential
vulnerabilities in the disability determination process. In
December 1997, this team conducted a Special Joint
Vulnerability Review of an extended family in a small Georgia
town. There were 181 members of this family, which spanned 4
generations, receiving SSI benefits. The same medical provider
conducted the consultative examinations (CE) for many of these
family members.
Based on the results of this joint review, recommendations
were made to
monitor and disclose questionable medical reports
and disqualified CE providers,
provide more information in medical reports
relating to applicant performance on psychological tests to
detect malingering,
modify the SSI information systems display to
alert subsequent users of potential fraud or abuse, and
emphasize rotating CE providers.
Because the SSI program is especially vulnerable to
disability fraud, we have created Cooperative Disability
Investigative (CDI) units in five major cities. These units use
the combined skills and knowledge of OIG Special Agents, State
law enforcement authorities, and SSA professionals to identify
and resolve disability fraud reported by front-line SSA
employees at the application stage. These ongoing projects have
illustrated the need to sanction third-party facilitators who
engage in fraudulent activities as many of the allegations to
date involve third-party facilitators, such as physicians,
lawyers, interpreters, and other service providers.
Before I close, I would like to emphasize two key issues
that the Subcommittee should consider. These issues involve the
administrative sanctions provisions.
First, we believe administrative sanctions should apply to
all Social Security and SSI benefits, as opposed to strictly
disability benefits. Second, in light of the severity of the
penalties imposed, the violations should be supported by the
investigative process. This will provide SSA with a body of
evidence to present at any subsequent administrative
proceedings.
We would be happy to assist the Subcommittee in addressing
these issues before the Chairman's mark-up to clarify these
points. We want to ensure that this legislation strengthens the
Subcommittee's fight against fraud, waste, and abuse and
provides both SSA and the OIG with the best possible means for
fighting fraud in the SSI program.
Although our work has been successful in combating SSI
fraud, there is still more work to do. We are committed to
continuing our audit and investigative work at a national level
to help SSA in its fight against fraud.
I would like to thank the Subcommittee for its continued
interest in combating fraud and for its support of the OIG.
With this Subcommittee's support and with the passage of the
Subcommittee's Bill, I believe SSA and the OIG can strike even
harder at SSI-related fraud.
Chairman Johnson of Connecticut. Thank you. We have
actually rewritten the text to reflect those suggestions that
you have just reiterated, and we look forward to your looking
at the language of the new bill, and providing us with any
comments you may have.
Mr. Huse. I would be glad to do that. Thanks.
Chairman Johnson of Connecticut. Ms. Fagnoni.
STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, INCOME SECURITY
ISSUES, HEALTH, EDUCATION, AND HUMAN SERVICES DIVISION, U.S.
GENERAL ACCOUNTING OFFICE
Ms. Fagnoni. Thank you. Good afternoon, Madam Chair, and
Members of the Subcommittee. I am pleased to be here this
afternoon to discuss the Social Security Administration's
Supplemental Security Income Program.
Reports by the media and oversight agencies have
highlighted SSI Program abuses and mismanagement, increases in
SSI overpayments, and SSA's inability to adequately recover
outstanding SSI debt. These issues have spurred congressional
criticism of SSA's ability to effectively manage SSI workloads.
As you know, in February 1997, we designated SSI a high-risk
program because of its susceptibility to fraud, waste, and
abuse, and insufficient management oversight of the program.
Today I will discuss the underlying causes of longstanding
SSI problems, the progress SSA has made in improving SSI
Program management and oversight, and the additional actions
needed to ensure the financial integrity of this important
program. Our work has shown that to a great extent, SSA's
inability to address its most significant longstanding SSI
Program weaknesses is attributable to two underlying causes, an
organizational culture that places a greater priority on
processing and paying claims than on controlling program
expenditures, and a management approach characterized by SSA's
reluctance to fulfill its policies, development, and planning
roles in advance of major program crises.
As Mr. English mentioned earlier, regarding organizational
culture, SSA has tended to view the SSI Program much the same
way as its Social Security and DI Programs, where emphasis is
placed on quickly processing claims for individuals who have an
earned right to the benefits. But SSI is a welfare program
where additional income and asset verifications are necessary.
During fiscal year 1998, for example, current and former SSI
recipients owed SSA more than $3.3 billion, including $1.2
billion in newly detected overpayments for the year. Based on
prior experience, SSA is likely to collect less than 15 percent
of the outstanding debt in a given year.
SSA's culture has contributed to the lack of priority
placed on recovering payments once they are identified. This
has been evidenced by SSA's traditional reluctance to use
overpayment recovery tools currently available and aggressively
pursue additional tools when warranted. Recently, SSA has taken
a number of actions to improve the financial integrity of the
SSI Program. For example, SSA is expanding its use of online
data maintained by State DDSs to better verify recipient
financial information and prevent program overpayments. SSA has
also sought statutory authority, as you have heard, to use
credit bureaus, private collection agencies, interest levies,
and other ways to recover more SSI overpayments.
Regarding the second issue, policy development and
planning, our work shows that SSA has been reluctant to use its
research and policy development capabilities to assess the
effects of demographic changes in the SSI population and
legislative and court-mandated program changes. In addition,
SSA has often hesitated in initiating changes in internal
policy to address identified weaknesses or suggest changes in
laws governing SSI. For example, in the congressional debate
surrounding SSI eligibility for children, SSA did not develop
and communicate timely information to the Congress on the
effects of prior legislative and court-mandated changes.
SSA has acknowledged the need to play a more active policy
development role, and is currently in the process of
restructuring its research and policy components to better
address these concerns. In this regard, SSA has made conducting
effective policy development, research, and program evaluation
a key agency goal, and attention to the SSI Program is an
important element of this goal. Additional staff and resources
are being obtained by SSA's Office of Policy. Consequently, SSA
should be better positioned to develop policy alternatives in
the SSI Program.
SSA is also taking certain measures that it believes will
strengthen the integrity of the SSI Program. SSA produced its
first management report, as Mr. Dyer noted, in October 1998,
which discusses the need to take aggressive action in four
areas; Improving overall payment accuracy, increasing
continuing disability reviews, combating program fraud, and
improving debt collection. The management report established
goals to measure the anticipated yearly impact of its planned
initiatives in each of these areas. The agency now intends to
begin planning how it will implement these goals in its day-to-
day operations. Toward this end, each SSA component is defining
its specific role in these initiatives.
To remove the SSI Program from our high-risk list, however,
SSA must produce and use research information on the program,
be more responsive in suggesting legislative changes, and
improve program policies. The agency should also continue to
search for ways to improve its payment controls and debt
collection activities. Until additional progress is made in
each of these areas, the SSI Program will maintain its high-
risk designation.
Thank you. This completes my statement. I would be happy to
answer any questions.
[The prepared statement follows:]
Statement of Cynthia M. Fagnoni, Director, Income Security Issues,
Health, Education, and Human Services Division, U.S. General Accounting
Office
Madam Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Social
Security Administration's (SSA) Supplemental Security Income
(SSI) program. SSI is the nation's largest cash assistance
program for the poor. In fiscal year 1998, the program paid
about 6.6 million low-income aged, blind, and disabled
recipients a total of approximately $27 billion. In that same
year, current and former SSI recipients owed SSA more than $3.3
billion in overpaid benefits, including $1.2 billion in newly
detected overpayments for the year. Since assuming
responsibility for SSI in 1974, SSA has been significantly
challenged in its efforts to serve the diverse needs of
recipients while still protecting the financial health and
integrity of the program. Our reports and those of oversight
agencies have highlighted program abuses and mismanagement,
increases in SSI overpayments, and SSA's inability to recover
outstanding debt. These and other problems documented over the
years have spurred congressional criticism of SSA's ability to
effectively manage SSI workloads and have also served to
reinforce public perceptions that SSA pays SSI benefits to too
many people for too long. In February 1997, we designated SSI a
high-risk program because of its susceptibility to fraud,
waste, and abuse, and because of insufficient management
oversight of the program. We also initiated a broad-based
review of the program to determine the root causes of long-
standing SSI problems and the actions necessary to address
them.\1\ Today I would like to discuss the findings of our
review and the problem areas that currently pose the greatest
risk to the SSI program. I would also like to discuss SSA's
recent efforts to improve SSI program integrity and additional
actions that should be taken.
---------------------------------------------------------------------------
\1\ Supplemental Security Income: Action Needed on Long-Standing
Problems Affecting Program Integrity (GAO/HEHS-98-158, Sept. 14, 1998).
---------------------------------------------------------------------------
In summary, our work shows that, to a great extent, SSA's
inability to address long-standing SSI program problems is
attributable to two underlying causes: (1) an organizational
culture that places a greater priority on processing and paying
claims than on controlling program expenditures and (2) a
management approach characterized by SSA's reluctance to
fulfill its SSI policy development and planning role in advance
of major program crises. As a result, SSA has continued to
experience significant difficulties with regard to verifying
recipients' initial and continuing eligibility for benefits,
recovering SSI overpayments, combatting program fraud and
abuse, and providing adequate program direction. Since SSI was
designated high risk, SSA has taken a number of actions to
improve the financial integrity of the program and revise its
traditional approach to program management. However, several of
SSA's initiatives are now in the early planning or
implementation stages, or require the passage of new
legislation before they can move forward. In other areas, SSA's
actions have been insufficient. Thus, it is important that SSA
sustain and expand its efforts to address problem areas and
strike a balance between meeting the needs of SSI recipients
and fiscal accountability for its programs.
Background
SSI provides cash benefits to low-income aged, blind, or
disabled people. Those who are applying for benefits on the
basis of age must be at least 65 years old and financially
eligible for benefits; those who are applying for disability
benefits must qualify on the basis of financial and medical
criteria. To qualify for benefits financially in fiscal year
1998, individuals could not have income greater than the
maximum monthly SSI benefit of $494 ($741 for a couple) or have
resources that exceeded $2,000 ($3,000 for a couple). To be
qualified as disabled, applicants must be unable to engage in
any substantial gainful activity because of an impairment
expected to result in death or last at least 12 months.
The process SSA uses to determine an applicant's financial
eligibility for SSI benefits involves an initial determination
when someone first applies and periodic reviews to determine
whether the recipient remains eligible. SSI recipients are
required to report significant events that may affect their
financial eligibility for benefits, including changes in
income, resources, marital status, or living arrangements--such
as incarceration or moving into a nursing home. To verify that
the information provided by a recipient is accurate, SSA
generally relies on matching data from other federal and state
agencies, including Internal Revenue Service 1099 information,
Department of Veterans Affairs benefits data, and state-
maintained earnings and unemployment data. When staff find
discrepancies between income and assets claimed by a recipient
and the data from other agencies, they send notices to SSA
field offices to investigate further.
To determine a person's medical qualifications for SSI as a
disabled person, SSA must determine the individual's capacity
to work as well as his or her financial eligibility. To
determine whether an applicant's impairment qualifies him or
her for benefits, SSA uses state Disability Determination
Services (DDS) to make the initial assessment. Once a recipient
begins receiving benefits, SSA is required to periodically
conduct Continuing Disability Reviews (CDR) to determine
whether a recipient's disabling condition has improved.
Organizational Culture Has Perpetuated Several Long-Standing SSI
Problems
To a significant extent, an agency's culture emanates from
and is shaped by top management officials who are charged with
establishing the priorities and performance goals that drive
day-to-day program operations. Thus, over time, what is
regularly emphasized, measured, and rewarded by agency
management becomes ingrained in the immediate workload
priorities of line managers and field staff. If agency
priorities are not adequately balanced, serious program
vulnerabilities may arise.
In work spanning more than a decade, we have noted that
SSA's operations have been heavily influenced by an
organizational culture or value system that places a greater
value on quickly processing and paying claims than on
controlling program costs. Our most recent work has confirmed
the continued existence of an agency culture that views the SSI
program in much the same way as SSA's Old Age and Survivors
Insurance (OASI) and Disability Insurance (DI) programs--where
emphasis is placed on quickly processing claims for individuals
with an earned right to benefits--rather than as a welfare
program, where stronger income and asset verification is
necessary. SSA's organizational culture has been most evident
in the low priority it has often placed on verifying
recipients' initial and continuing eligibility for benefits,
recovering SSI overpayments, and addressing program fraud and
abuse.
Verifying Recipient Eligibility
In regard to verifying recipients' initial and continuing
eligibility for benefits, our work has shown that SSA has
relied heavily on recipients to self-report important
eligibility information relating to their financial status and
disabling condition. However, recipients do not always report
required information when they should and may not report it at
all. Although SSA has procedures in place to verify this
information, they are often untimely and incomplete. Over the
last several years, we have documented numerous examples of
payments made to ineligible recipients as a result of SSA's
inattention to the verification aspects of the SSI program,
including millions of dollars in benefit payments to prisoners
\2\ and nursing home residents.\3\ These erroneous payments
occurred because incarcerations and nursing home admissions
were not being reported as required, and SSA lacked timely and
complete automated verification data. In the nursing home
example alone, SSA has estimated that overpayments may exceed
$100 million annually.
---------------------------------------------------------------------------
\2\ Supplemental Security Income: SSA Efforts Fall Short in
Correcting Erroneous Payments to Prisoners (GAO/HEHS-96-152, Aug. 30,
1996).
\3\ Supplemental Security Income: Timely Data Could Prevent
Millions in Overpayments to Nursing Home Residents (GAO/HEHS-97-62,
June 3, 1997).
---------------------------------------------------------------------------
SSA also continues to rely heavily on computer matching
with other federal and state agencies to verify that recipient
financial information is correct. However, these matches are
not always the most effective means of verification, because
information is often quite old and sometimes incomplete. For
example, SSA's computer matches for earned income rely on data
that are from 6 to 21 months old, allowing overpayments to
accrue for this entire period before collection actions can
begin. We have estimated that direct on-line connections (as
opposed to computer matches) between SSA's computers and
databases maintained by state agencies--welfare benefits,
unemployment insurance, and worker's compensation benefits--
could have prevented or quickly detected $34 million in SSI
overpayments in one 12-month period.\4\ We also reported in
March 1998 that newly available Office of Child Support
Enforcement (OCSE) databases maintained by SSA could prevent or
more quickly detect about $380 million in annual SSI
overpayments caused by unreported recipient income.\5\ In
addition, we concluded that opportunities existed for SSA to
prevent almost $270 million in overpayments by accessing more
timely financial account information via a nationwide network
that currently links all financial institutions. Such
information would help ensure that individuals whose bank
accounts would make them ineligible for SSI do not gain
eligibility. Our September 1998 SSI report confirmed that SSI
verification problems continue. In that report, we recommended
that SSA enhance its ability to verify applicant and recipient
eligibility information by accelerating efforts to identify
more timely and complete financial verification sources.
---------------------------------------------------------------------------
\4\ Supplemental Security Income: Administrative and Program
Savings Possible by Directly Accessing State Data (GAO/HEHS-96-163,
Aug. 29, 1996).
\5\ Supplemental Security Income: Opportunities Exist for Improving
Payment Accuracy (GAO/HEHS-98-75, Mar. 27, 1998).
---------------------------------------------------------------------------
SSA management has acknowledged that because of the rapidly
rising workloads of prior years, the agency decided to
emphasize and prioritize the expedient processing and payment
of claims rather than delay final decisions by requiring more
thorough verification steps. Recently, however, SSA has begun
to take more decisive action to protect the financial integrity
of the SSI program. For example, SSA has started a program to
better identify recipients in jail who should no longer be
receiving benefits and is expanding its use of on-line state
data to obtain more real-time applicant and recipient
information. In accordance with one of our recommendations, SSA
also plans to give field offices on-line access to OCSE wage
data, new-hire data, and unemployment insurance data by the
Spring of 1999. Once implemented, this should allow field staff
to better prevent SSI overpayments by identifying undisclosed
earnings at application. In its fiscal year 1999 budget, SSA
also requested an additional $50 million to complete additional
financial redeterminations of individuals who have been
designated as having a high probability of being overpaid.
Finally, in May 1998, SSA submitted a legislative proposal to
the Congress seeking statutory authority to expand its
eligibility verification tools, including the ability to more
quickly obtain essential information from financial
institutions, state databases, and federal and state prisons in
order to determine an individual's eligibility for SSI
benefits.\6\ SSA's proposal also sought authority to use a new
computer match with the Health Care Financing Administration to
more quickly identify SSI recipients residing in nursing homes.
If they become law, these and other provisions currently under
consideration by the Congress have the potential to improve
SSA's ability to better verify initial and continuing
eligibility and deter SSI program overpayments.
---------------------------------------------------------------------------
\6\ This proposal is entitled the Supplemental Security Income
Program Integrity Act of 1998 and was submitted to the Congress on May
4, 1998.
---------------------------------------------------------------------------
Recovering Overpayments
In addition to problems associated with SSA's verification
of SSI eligibility information, SSA has not always aggressively
pursued the recovery of overpayments. Thus, over time SSA's
recovery efforts have been outpaced by outstanding SSI debt,
which is becoming an increasingly large portion of all debt
owed to the agency. Between 1989 and 1998, outstanding SSI debt
and annual overpayments more than doubled to about $3.3
billion. Although overpayment recoveries also increased each
year during this period, the gap between what is owed SSA and
what is actually collected has continued to widen (see fig. 1).
[GRAPHIC] [TIFF OMITTED] T6028.001
As noted in our September 1998 report, to a great extent
overpayment recoveries have remained low because of SSA's
reluctance to use debt collection tools already available to it
or seek statutory authority for more aggressive tools. We
reported that SSA only began using tax refund offsets in 1998
to recover overpaid SSI benefits, despite having had the
authority to do so since 1984. The tax refund offset represents
one of the few tools available to SSA for recovering overpaid
benefits from former recipients. In the first 4 months of 1998,
SSA reported that it had collected more than $23 million
through this initiative. Waiting many years to move forward
with this important recovery tool has likely cost the SSI
program millions of dollars in collections. We also reported
that, until recently, SSA had not pursued the authority to use
more aggressive debt collection tools, such as the ability to
administratively intercept other federal benefit payments
recipients may receive, notify credit bureaus of an
individual's indebtedness, use private collection agencies, and
charge interest on outstanding debt.
Our work also identified another potential barrier to
increased overpayment recoveries: the law that limits the
amount SSA can recover each month from overpaid SSI recipients.
Before 1984, SSA could withhold up to 100 percent of an
overpaid individual's benefit amount. However, pursuant to the
Deficit Reduction Act of 1984 (P.L. 98-369), SSA was limited to
offsetting a maximum of 10 percent of a recipient's total
monthly income. Thus, SSA lost the discretion to withhold
larger amounts, even for individuals who willfully and
continually fail to report essential information. Our September
1998 report recommended that SSA seek legislative authority to
withhold larger amounts than the current 10-percent maximum
from recipients who chronically and willfully abuse program
reporting requirements.
Following a number of GAO briefings over the last year, and
our April 1998 testimony before this Subcommittee in which we
noted SSA's continued reluctance to pursue more aggressive debt
collection tools, SSA submitted a legislative proposal to the
Congress seeking statutory authority to use credit bureaus,
private collection agencies, interest levies, and other tools
to strengthen its collection efforts. To date, SSA has taken no
action on our recommendation to withhold greater amounts for
recipients who abuse reporting requirements. However, SSA did
include a provision in its legislative proposal that would
allow the agency to suspend for a period of time the benefits
of individuals who provide false information or withhold
information that affects their eligibility.
Addressing Fraud and Abuse
Over the years, we have documented the SSI program's
susceptibility to fraud and other abusive practices. For
example, we have reported that ``middlemen'' were facilitating
fraudulent SSI claims by providing translation services to non-
English-speaking individuals applying for SSI.\7\ We are also
currently conducting a follow-up review of the activities of
middlemen in the SSI program. In prior work, we also found that
thousands of individuals had transferred ownership of resources
such as cars, cash, houses, land, and other items valued at an
estimated $74 million to qualify for SSI benefits.\8\ Although
such transfers are legal under current law, using them to
qualify for benefits has become an abusive practice that raises
serious questions about SSA's ability to protect taxpayer
dollars from waste and abuse. The Congressional Budget Office
has estimated that more than $20 million in additional savings
could be realized through 2002 by implementing an asset
transfer restriction.
---------------------------------------------------------------------------
\7\ Supplemental Security Income: Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug. 31,
1995).
\8\ Supplemental Security Income: Some Recipients Transfer Valuable
Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr. 30, 1996).
---------------------------------------------------------------------------
The SSI program continues to be vulnerable to fraud and
abuse. Although SSI represents less than 8 percent of total
agency expenditures, when compared with SSA's other programs--
OASI and DI--the SSI program accounted for about 37 percent of
allegations received by SSA's fraud hotline and 24 percent of
convictions obtained. However, SSA has begun to take more
decisive action to address SSI fraud and abuse since the
program was designated high risk. For example, the number of
Office of Inspector General (OIG) investigators have been
increased significantly, and combatting fraud and abuse was
made a key goal of SSA's 1997 Agency Strategic Plan. SSA has
also established national and regional anti-fraud committees to
better identify, track, and investigate patterns of fraudulent
activity. Several OIG ``pilot'' investigations are also under
way that are aimed at detecting fraud and abuse earlier in the
application process. In addition, SSA has established
procedures to levy civil and monetary penalties against
recipients and others who make false statements to obtain SSI
benefits. Finally, in its May 1998 legislative proposal to the
Congress, SSA included a provision aimed at preventing
individuals from transferring assets in order to qualify for
SSI.
It is too early to tell what immediate and long-term
effects SSA's activities will have on detecting and preventing
SSI fraud and abuse. However, we have noted that many years of
inadequate attention to program integrity issues have fostered
a strong skepticism among both headquarters and field staff
about whether fraud detection and prevention is an agency
priority. Many staff believe constant agency pressure to
process more claims has impeded the thorough verification of
claims and the development of fraud referrals. Staff also have
expressed concern that SSA has not developed office work credit
measures, rewards, and other incentives to encourage employees
to devote more time to developing fraud cases--a process that
often takes many hours. Our review of SSA's work credit system
confirmed that adequate measures of the activities and time
necessary to develop fraud referrals have not been developed.
Nor has SSA developed a means of recording and rewarding staff
for the time they spend developing fraud cases. As a result,
many staff may be unwilling to devote significant time to more
thorough claims verification because they fear production--that
is, cases processed--will be negatively affected. Our report
recommended that SSA reevaluate its field office work credit
and incentive structure to encourage better verification of
eligibility information and attention to fraud and abuse. SSA
has initiated a review of its existing work measurement system
with a specific focus on the kind of work that is counted and
how time values are assigned to units of work. SSA expects to
complete this review by mid-1999.
Recent Changes in Management Approach May Improve Program Direction
In addition to long-standing problems attributable to SSA's
organizational culture, our work suggests that SSA's management
of the SSI program has often led to untimely and flawed program
policies and inadequate program direction. Proactive program
management requires a willingness on the part of an agency to
identify and decisively address problems before they reach
crisis levels. Where internal operational remedies are
insufficient to address a particular program weakness, the
agency should then suggest and develop legislative proposals
for change. Proactive management also requires a willingness to
identify short-and long-term program priorities and goals and
to develop a clearly defined plan for meeting those goals. In
prior reports, we have noted that program direction and problem
resolution at SSA have been hindered by SSA's continued
reluctance to take a leadership role in SSI policy development
before major program crises occur. We have also reported that
program direction has been impaired by a strategic planning
process that has not sufficiently focused on the specific needs
of the SSI program and its recipients. However, recent actions
taken by SSA show that the agency has begun to take a more
proactive role in both SSI policy development and program
planning.
SSI Policy Development
As the nation's SSI program expert, SSA is uniquely
positioned to assess the program impacts of trends in the SSI
population and initiate internal policy ``fixes'' to address
problems. If internal revisions would not be effective, SSA is
best qualified to identify areas where new legislation is
needed and assist policymakers in exploring options for change.
However, we concluded in our September 1998 report that SSA has
not always been sufficiently aggressive in this regard. Our
report also included numerous examples in which SSA did not
take a leadership role in SSI policy development before major
crises occurred. An example of SSA's approach was evident in
the congressional debate surrounding SSI for children in which
the Congress ultimately passed legislation limiting SSI
childhood eligibility. SSA did not develop and communicate
timely information to the Congress on the effects of prior
legislative and court-mandated changes. Nor did SSA develop its
own proposals for revising childhood eligibility policies,
despite the fact that it had information that guidelines for
determining the severity of childhood mental and physical
impairments were difficult to interpret, unclear, and too
subjective. At a much earlier time, this information could have
been shared with the Congress for consideration in reassessing
whether the SSI program was meeting the needs of the most
severely disabled children.
SSA has acknowledged the need to play a more active policy
development role and has restructured its research and policy
development components to better address our concerns. In this
regard, SSA has also made conducting effective policy
development, research, and program evaluation a key agency
goal. Additional staffing resources are also being obtained by
the newly created Office of Policy. Consequently, SSA should
ultimately be better positioned to develop policy options and
proposals for the SSI program. As noted earlier, SSA also
recently developed and submitted to the Congress its first
major SSI legislative proposal aimed at improving program
integrity by ensuring that only eligible individuals receive
benefits. This proposal responds to many of our prior
recommendations and, if enacted, has the potential to
significantly improve SSA's ability to deter and recover SSI
program overpayments.
SSI Strategic Planning
Our earlier work has also shown that SSI program direction
has suffered as a result of SSA's failure to develop program-
specific goals, priorities, and plans for addressing program
weaknesses. The persistence of the long-standing problems
discussed today demonstrates SSA's inability to focus on its
most critical program challenges. To a significant degree, this
may be due to SSA's strategic planning efforts, which generally
involve agencywide goals and concerns with no programmatic
focus. As required by the Government Performance and Results
Act of 1993.\9\ SSA issued its current agency strategic plan in
September 1997. This plan outlines SSA's strategic goals and
objectives for the next 5 years. SSA also recently published
its fiscal year 1999 annual performance plan, which provides
more detailed information on how SSA intends to achieve its
goals and measure performance. In reviewing these plans, we
found that SSA still had not adequately developed programmatic
goals, initiatives, and performance measures to address the
specific needs and problems of the SSI program. Thus, we
recommended that SSA move forward in developing an SSI-focused
plan with clearly defined goals and measures to gauge SSA's
progress in addressing its SSI program challenges.
---------------------------------------------------------------------------
\9\ The Results Act requires federal agencies to implement results-
oriented management reforms, such as conducting strategic planning,
establishing program goals and objectives, measuring progress in
meeting those goals, and reporting publicly on that progress.
---------------------------------------------------------------------------
In response to our recommendation, SSA produced its first
SSI management report in October 1998, which discusses the need
to take aggressive action in four areas: improving overall
payment accuracy, increasing continuing disability reviews,
combatting program fraud, and improving debt collection. The
management report established specific goals to measure the
anticipated yearly impact of planned initiatives in each of
these areas. In this report, SSA notes that a number of
initiatives should achieve results in the near future, while
others will take longer to produce significant impacts. The
agency plans to closely monitor each initiative and make
modifications when necessary to ensure that the best possible
results are achieved.
Conclusions
Because the SSI program is essential to the financial
health and well being of millions of low-income aged, blind,
and disabled recipients, it is essential that the program is
adequately protected from fraud, waste, and abuse. However,
after more than 20 years of operation, the SSI program remains
vulnerable and faces significant, long-standing challenges. To
a large extent, the problems we have discussed today are
attributable to an ingrained organizational culture that has
historically placed a greater value on quickly processing and
paying claims than on controlling program costs, and a
management approach characterized by a reluctance to address
SSI problems requiring long-term solutions and/or legislative
changes. As a result, billions of dollars have been paid over
the years to ineligible individuals and SSA has not always
dealt proactively with its most pressing program problems.
SSA has acknowledged the important role of management in
defining organizational priorities and the need to strike a
better balance between serving the public and fiscal
accountability for its programs. As noted, SSA has begun to
take steps internally and in coordination with the Congress to
address a number of SSI program vulnerabilities. This includes
seeking out more timely and complete automated sources for
verifying recipient eligibility information, stepping up its
efforts to combat fraud and abuse, and working with the
Congress to obtain legislative authority for additional debt
collection tools. We believe that this combination of internal
program solutions and legislative proposals for change is
essential to improving program integrity.
All of the ongoing and proposed initiatives we have
discussed have the potential to improve the integrity and
financial health of the SSI program. However, many of the
difficulties experienced by the SSI program are the result of
more than 20 years of inattention to payment controls.
Therefore, significantly revising SSA's underlying culture and
management approach will require a concerted effort at the
highest levels of the agency and a willingness by the Congress
to provide SSA with needed legislative authorities.
Mr. Chairman, this concludes my prepared statement. I will
be happy to respond to any questions you or other Members of
the Subcommittee may have.
Chairman Johnson of Connecticut. Thank you very much.
Ms. Ford.
STATEMENT OF MARTY FORD, ASSISTANT DIRECTOR, GOVERNMENTAL
AFFAIRS OFFICE, ARC OF THE UNITED STATES; AND COCHAIR, SOCIAL
SECURITY TASK FORCE, CONSORTIUM FOR CITIZENS WITH DISABILITIES
Ms. Ford. Madam Chair, and Members of the Subcommittee,
thank you for this opportunity to comment on issues under
consideration. I am here in my capacity as a cochair of the
Social Security Task Force of the Consortium for Citizens with
Disabilities. We applaud your willingness to work in a
bipartisan manner on these issues.
As you have heard, we want to caution that not all errors
in the system are caused by people acting with fraudulent
intent. Therefore, we believe that statutory provisions should
be carefully crafted to ensure that they do not harm innocent
people who are the intended beneficiaries of the program.
I think it is important to note that the disability
community has been concerned about overpayments for quite some
time, and in fact, a colleague reminded me yesterday that there
is testimony in the Subcommittee going back at least as far as
1987, 1988, and 1990, dealing with some of these issues. It is
to be expected that a certain level of overpayments and
corrections will take place on a regular basis in the SSI
Program given the retrospective accounting system. The
disability community, however, struggles with the inability of
SSA's reporting and recording systems to keep pace with
fluctuating income of beneficiaries. As we understand it, there
is no specific way in which SSA requires earned income reports
to be made. You can make them in writing, by calling the 800
number, or by stopping in to report in an SSA field office.
There is no particular form to file and no official record that
the beneficiary can use in the future to prove that that report
was made.
In addition, there appears to be no effective internal
system for recording the income which beneficiaries report. To
add to that, the program rules and formulas are so complex that
when an individual reports and assumes they have done the right
thing in terms of following the rules, they may not know that
they are incurring an overpayment because they don't understand
how the formulas work in relation to their income, anyway.
As a result of the system's insufficiencies and the
tremendous impact it has on an individual to receive a notice
of overpayment, the disability community often views the
potential for overpayments as a distinct work disincentive.
People with disabilities experience that numerous reports to
SSA and their requests to adjust benefits often go unheeded by
the administration. I am sorry, I can't offer you any data. We
don't have the ability to collect that. But these issues are
regularly occurring complaints from our memberships.
While there are some administrative improvements that could
be made, we think it is critical to get some statutory changes
also. We believe SSA should be required to make improvements in
its reporting and recording systems so that beneficiaries are
notified of overpayments in a timely manner. It is not uncommon
to be notified years after an overpayment has occurred. A
reasonable time period should be allowed for SSA to notify the
beneficiary, and where there is no suggestion of fraud, if SSA
does not meet that time limit, we believe that the overpayment
should be waived.
We are pleased to see the inclusion of a study in section
17 of the bill, which would address the measures to improve
processing of reported income changes by beneficiaries.
Streamlining SSA's procedures could eliminate many
overpayments, could reduce the administrative hassle involved,
and certainly prevent the disastrous personal circumstances
that arise when SSA withholds much needed funds. Given the view
of overpayments discussed above, we have a slightly different
perspective of some of the provisions in the bill and have
offered some comments on those provisions to assist in avoiding
harsh results or unintended results, and those are included in
my testimony.
I would like to just touch briefly on a couple of the other
issues in the bill. The first is the treatment of assets held
in trust and preventing the disposal of resources for less than
fair market value. We thank the Subcommittee for its work in
incorporating the Medicaid transfer of asset and trust
exceptions into the corresponding SSI provisions in the bill.
We think that is quite important. We would also urge you to
take a look at the penalty period for people who have
transferred assets and consider limiting that to no more than
the old 2-year penalty. We applaud the inclusion of authority
for the Commissioner to waive the bar in cases of undue
hardship. We also urge that there be some way to coordinate
between the Social Security Administration and the Health Care
Financing Administration the penalty periods between SSI and
Medicaid, so that there isn't double counting of the same
amount of income.
And finally, just to highlight, we urge verification of
computer matches. For instance, if someone has been in a
nursing home and if the data does not indicate that they have
been discharged, those things should be verified before action
is taken.
Again, we thank you for this opportunity to address these
proposals. We appreciate the work you have done to address our
concerns to date, and we look forward to working with you on
these and other issues as the bipartisan legislation moves
forward. Thank you.
[The prepared statement follows:]
Statement of Marty Ford, Assistant Director, Governmental Affairs
Office, Arc of the United States; and Cochair, Social Security Task
Force, Consortium for Citizens with Disabilities
Chairwoman Johnson, Members of the Human Resources
Subcommittee, thank you for this opportunity to comment on
issues under consideration before the Subcommittee. We believe
that there is much to gained from an on-going dialog which
allows different perspectives to be brought to the table in
discussions of any potential changes to the Supplemental
Security Income law which affects so many people in such vital
areas as food, clothing, and shelter. We applaud your work in
making this a bipartisan bill.
I am Marty Ford, Assistant Director of the Governmental
Affairs Office of The Arc of the United States. I am here today
in my capacity as a co-chair of the Social Security Task Force
of the Consortium for Citizens with Disabilities.
The Consortium for Citizens with Disabilities is a working
coalition of national consumer, advocacy, provider, and
professional organizations working together with and on behalf
of the 54 million children and adults with disabilities and
their families living in the United States. The CCD Task Force
on Social Security focuses on disability policy issues and
concerns in the Supplemental Security Income program and the
disability programs in the Old Age, Survivors, and Retirement
programs.
The undersigned member organizations of the CCD Social
Security Task Force appreciate this opportunity to comment on
the bill that the Subcommittee is reviewing under the general
goal of preventing fraud and abuse in the program.
The Consortium for Citizens with Disabilities Social
Security Task Force believes that fraud in the Supplemental
Security Income program and other programs should be weeded
out. From the point of view of taxpayers and also from the
point of view of people with severe disabilities who must rely
on the SSI and OASDI programs, it is critical that precious
funding not be wasted on fraudulent situations. However, we
must caution that not all errors in the system are caused by
people acting with fraudulent intent; therefore, statutory
provisions should be carefully crafted to ensure that they do
not harm innocent people who are the intended beneficiaries of
the program.
Chairwoman Johnson and Members of the Subcommittee, we are
appreciative that you have listened to our concerns and that
certain proposals which were under consideration earlier last
year are not contained in the draft legislation. We believe
that your willingness to listen to concerns from the
perspective of people with disabilities has contributed to a
better understanding of the potential impact of those
proposals.
We are in support of the overall goals of the draft bill.
As noted, we believe that the integrity of the program must be
protected and that only people who are actually eligible should
be receiving benefits. Improvements should be made to the
Social Security Administration's systems that strike a balance:
to further the goal of improved integrity of the SSI program by
fixing the system where there are inadequacies while attacking
real fraud. Following are our recommendations for additions to
certain provisions as well as some cautions regarding the
potential impact of certain provisions on people with
disabilities.
Overpayments
Before making some specific recommendations regarding
overpayments and collection of overpayments, it is important to
note that the disability community has also been concerned
about overpayments for quite some time. However, we view the
overpayment problem from a different point of view, seeing it
as less a problem of fraud and more of a problem of inadequate
reporting and recording systems in the SSA structure.
First, given the retrospective accounting that takes place
in SSI, it is to be expected that a certain level of
overpayments and corrections would take place on a regular
basis. This is particularly true given SSI provisions (such as
Sections 1619(a) and (b)) that encourage work often cause
fluctuations in monthly benefits which must be reconciled after
the fact with fluctuating monthly earnings.
The disability community struggles with the inability of
SSA's reporting and recording systems to keep pace with the
fluctuating income of beneficiaries. There is no specific way
in which SSA requires earned income reports to be made; they
can be made in writing, by calling the 800 number, or by
stopping in to report at an SSA field office. There is no
particular form to file and no official record for the
beneficiary to use to prove the report was made. In addition,
there appears to be no effective internal system for recording
the income which beneficiaries report. Finally, the program
rules and formulas are so complex that, when an individual
reports income and there is no change in the benefit amount,
the individual may not be aware that an overpayment is
occurring. As a result of the system's inefficiencies and the
impact on the individual of an unexpected overpayment, the
disability community often views the potential for overpayments
as a distinct work disincentive.
A nightmare that occurs often for people with disabilities
is a notice from SSA stating the existence of an overpayment
that amounts to thousands, if not tens of thousands, of dollars
which accumulated over several years. Even for those people on
SSI who are savvy enough to realize that an overpayment is
occurring, it may be hard to fix. People with disabilities
experience that numerous reports to SSA and requests to adjust
benefits often go unheeded by the Administration. Yet, because
they are on SSI, beneficiaries cannot ``save'' the excess for
ultimate pay-back to SSA, without risking excess ``resources''
and loss of basic SSI eligibility. An additional nightmare can
be the request from SSA to produce pay-stubs and receipts going
back many years.
The CCD Task Force on Social Security has raised these
issues with SSA and recognizes that SSA is operating under
certain limitations, such as the fact that certain reports are
only available to SSA on an annual basis. While there are some
administrative improvements that SSA can make, we believe that
it is critical to get some statutory changes to help alleviate
the situation. SSA should be required to make improvements in
its reporting and recording systems to ensure that
beneficiaries are notified of overpayments in a timely manner.
A reasonable time period should be allowed for SSA to notify
the beneficiary and correct the overpayment; where there is no
suggestion of fraud, overpayments which are not corrected and
for which beneficiaries are not notified within the time limits
should be waived.
We are pleased to see the inclusion of a study (Section 17
of the bill) which would address measures to improve processing
of reported income changes by beneficiaries. In reviewing GAO
reports, I have not found any discussion of what actually
happens, or does not happen, to the earnings reports that
beneficiaries make. We believe that this is where the real crux
of the problem lies. Until systems inadequacies are minimized,
it will be difficult to ferret out cases of true fraud.
Streamlining SSA's procedures to ensure that the information is
input and acted upon immediately could eliminate many
overpayments (or substantially reduce the amount of
overpayments), reduce the administrative hassle involved in
overpayments for SSA and recipients, and prevent the disastrous
personal circumstances that arise when SSA withholds much-
needed funds.
Since the disability community views the majority of large
overpayments as the result of SSA's administrative practices,
our comments (below) on other overpayment issues reflect that
perspective.
Increased Collection of Certain SSI Overpayments
We believe the 50 percent minimum for collection of
overpayments from lump sum payments may be too high. Often,
people awaiting receipt of their benefits go without and/or
incur debts that need to be repaid (i.e., the landlord waits
for the rent, the corner grocer extends a little more credit,
the telephone company hasn't been paid and is about to
terminate service). A lower minimum (such as 20 percent) with
statutory language requiring SSA to consider these types of
circumstances would help people in these difficult
circumstances.
Increased Collection of SSI Overpayments to Convicted Criminals
We believe that, to protect people with mental retardation
and mental illness who are or have been incarcerated and who
may not fully understand the complex SSI rules, there needs to
be a requirement that SSA specifically ask for information
about past overpayments on the application and record the
individual's answer. SSA should have an affirmative
responsibility to inquire about the needed information and to
assist people in understanding the request. In addition, we
urge you to consider giving the Commissioner discretion to
waive the penalty where the Commissioner finds that the
individual's impairment itself is part of the reason for the
individual's failure to properly report.
Further, we are concerned about the potential impact on a
prisoner's family of the requirement for SSA to continue debt
collection while the individual is incarcerated. The
Commissioner appears to have some flexibility in the draft bill
and we urge that such flexibility remain. Otherwise, we could
imagine scenarios where SSA would be required to attach
resources or assets that other family members are dependent
upon, such as a home or car.
Added Debt Collection Tools
While we understand the need for SSA to have debt
collection tools for those situations where a beneficiary has
left the program, we urge that notice and an opportunity to
contest the overpayment be given to the individual before the
matter is turned over to a collection agency. Especially given
the view that people with disabilities hold about SSA's role in
how overpayments occur, it would be particularly harsh for
people to discover an overpayment and action against them in
the normal course of conducting their personal business, such
as applying for a first mortgage or a car loan.
Other Issues
Treatment of Assets Held in Trust and Preventing the Disposal
of Resources for Less Than Fair Market Value
Many important public policy issues regarding the long-term
planning often required for a young person with significant
disability were taken into consideration in the work done in
conjunction with passage of the OBRA 93 tightening of the
Medicaid rules regarding transfers of assets and trusts.
Chairwoman Johnson, we thank the Subcommittee for its work in
incorporating those Medicaid transfer of asset and trust
exceptions into the corresponding SSI provisions included in
this bill.
Regarding the prohibition on transfers of assets, we
believe that the penalty period formulation in the bill (time
barred from benefits is related to the value of the transfer)
should be limited to no more than the old two-year statutory
bar. However, since even this two-year bar could be life-
threatening for many people who are elderly or disabled, we
applaud the inclusion of authority for the Commissioner to
waive the bar in cases of undue hardship.
Further, if assets incur a penalty period in both SSI and
Medicaid, there should be coordination of the penalty periods
to prevent the same amount of funds from being ``double-
counted'' as if the person could have covered his/her own SSI
and Medicaid expenses with the same finite amount of money. We
appreciate your consideration of this issue.
Administrative Sanctions Process
In the section addressing the sanctions for criminal
conviction for fraud, we urge that the loss of benefits period
for a beneficiary be made consistent with that for the
attorneys' and physicians' first conviction (five years) rather
than the ten years now included in the draft.
Annual DDS Evaluation of Performance of Consultative Examiners
We believe that one additional performance criteria should
be included for evaluation of consultative examiners by SSA and
the Disability Determination Service: evaluation of the
performance of consultative examiners for the ``completeness of
exams'' they perform. Too often, the exams are so cursory as to
be meaningless, resulting in needless administrative waste.
Computer Matches with Medicaid and Medicare Data
While we recognize the need for better data matching, we
believe that some protections need to be incorporated since
data may not be accurate or up-to-date and, for instance, where
some people may have very short stays in nursing homes, the
matched data may not reflect the more recent events, such as
discharge. We urge that SSA be required to corroborate any
information before it relies upon it in changing benefits.
Referrals of Fraud to the OIG and Authority to Contract Out
We believe that this provision should be limited to cases
in which there is a strong suspicion that fraud is an issue.
Good public policy would counsel against numerous private
investigators, working on commission, disrupting the lives of
innocent, law-abiding citizens.
Treatment of SSI Income
We urge the Subcommittee to consider a provision to bar
counting SSI income for purposes of TANF income determination
for other family members. Otherwise, families may be placed in
a Catch-22 situation where SSI funds are intended to be
dedicated to the needs of the individual, yet they are counted
as income to the whole family.
Evaluation of 18-year-olds
Finally, we urge the Subcommittee to consider a provision
to correct an application of the law which encourages 18-year-
olds to leave school before completion of secondary-level
education. Current law requires a redetermination of an 18-
year-old's SSI eligibility under the adult standard. For those
young people who are still in school, application of the work-
based adult standard is inappropriate. We urge the Subcommittee
to consider delaying the application of the adult standard
until such time that the young person has completed secondary-
level education.
Again, we thank you for the opportunity to address these
proposals. We appreciate the work you have done to address our
concerns to date and look forward to working with you on these
and other issues as this bipartisan legislation moves forward.
On Behalf Of:
American Council of the Blind
American Counseling Association
American Foundation for the Blind
American Network of Community Options and Resources
Bazelon Center for Mental Health Law
Children and Adults with Attention Deficit Disorders
International Association for Psychosocial Rehabilitation Services
Inter/National Association of Business, Industry and Rehabilitation
National Alliance for the Mentally Ill
National Association of Developmental Disabilities Councils
National Association of Protection and Advocacy Systems
National Association of State Directors of Developmental Disability
Services
National Mental Health Association
National Parent Network on Disabilities
NISH
Paralyzed Veterans of America
Research Institute for Independent Living
The Arc of the United States
United Cerebral Palsy Associations, Inc.
Chairman Johnson of Connecticut. Thank you very much, Ms.
Ford.
Mr. Lachica.
STATEMENT OF ERIC LACHICA, EXECUTIVE DIRECTOR, AMERICAN
COALITION FOR FILIPINO VETERANS, INC.
Mr. Lachica. Good afternoon, Madam Chairman, and Members of
the Subcommittee. My name is Eric Lachica. I am the executive
director of the American Coalition for Filipino Veterans, a
nonprofit organization that advocates for the interest of
Filipino-American World War II veterans. We are based here in
Washington, DC. Our national coalition is composed of more than
45 organizations, and has 1,200 individual members. We are
campaigning for recognition, justice, and equal treatment of
our elderly Filipino veterans in America. I am also the son of
a 78-year-old Filipino-American veteran, who was honorably
discharged in 1946 from the U.S. Armed Forces in the Far East.
My father now lives in Bakersville, California.
Madam Chairman, with your permission, I would like to
briefly introduce to the Subcommittee, the president of our
coalition, Patrick Ganio, Sr., a veteran who fought in the
battles of Bataan and Corregidor. He is also a recipient of the
Purple Heart, and a former teacher who now lives in the
District. Also, with us here today, are 12 feisty veterans.
Could you stand up? Mr. Alisuag, a retired teacher, Mr.
Caberto, and Mr. Rumingan, a disabled New Philippine Scout, are
all from the Washington, DC area. They all fought for America's
freedom as U.S. soldiers more than half a century ago. Today
they are still fighting for recognition as American veterans.
We are here this afternoon to ask for your Committee's
support for the bipartisan and humanitarian bill, the Filipino
Veterans SSI Extension Act, introduced by Congressman Gilman
and Congressman Filner. It would permit Filipino-American World
War II veterans currently receiving SSI to continue to receive
their SSI payments in the Philippines with a reduction in
payments.
There are two compelling reasons for your Committee to
support this bill. First, it would provide a humanitarian
relief for an estimated 7,000 elderly, Filipino-American vets
who are poor, lonely, and isolated in the United States, and
are financially unable to petition their families to immigrate
to the United States, and therefore, want to rejoin them in the
Philippines. Second, it would save the American taxpayers
millions of dollars annually in SSI, Medicaid, and food stamp
payments.
Let us look at the supporting facts. Regrettably, since the
1946 Rescission Act was passed by Congress, the Department of
Veterans Affairs has denied pension, medical coverage and
burial benefits to Filipinos who are nonservice-connected
veterans. During the past 2 years, our veterans have frequently
demonstrated at the White House and on the steps of the Capitol
to remind our President, Congress, and fellow Americans of the
wartime pledges of President Harry Truman and General
MacArthur.
I would like to quote President Truman in 1946. He said,
The Philippine Army veterans are nationals of the United
States and will continue in that status until July 4, 1946.
They fought under the American flag and under the direction of
our military leaders. They fought with gallantry and courage
under the most difficult conditions. I consider it a moral
obligation of the United States to look after the welfare of
the Filipino veterans.
The CBO, in a December 16, 1998 memorandum, estimated
17,000 veterans are naturalized under the 1990 Immigration Act,
and became U.S. residents. If this bill is passed, we expect,
however, the great majority of our veterans will choose to
remain in the United States because of the disincentives of the
reduction, the loss of Medicaid, as well as their newly
established family ties in America. But for our desperate
veterans who chose to return to the Philippines, this would
mean the chance to be with their loved ones when they die.
H.R. 26 is fiscally appealing because no additional
appropriations will be made. In fact, the CBO again estimated
it will save $30 million in direct budget savings over 4 years.
According to our veteran leaders, these desperate veterans
would be willing to give up, sacrifice 25 percent of their
monthly SSI, give up their Medicaid and their food stamps just
so they can be with their families in the Philippines. In our
judgment, the 25-percent reduction would be the most realistic
and acceptable. Any further reduction would lead to a situation
of diminishing returns.
Example. In April last year, we lost a member from
Arlington, Virginia, Rosa Nanalig. She was 73 years old. She
usually joined us at the demonstration at the White House. Ms.
Nanalig was a former Filipino nurse's aide who fought in the
war with the rank of third lieutenant and she saved a few U.S.
soldiers' lives. In the last 2 years of her life, she lived on
SSI and Medicaid, because she was quite ill from heart problems
and a form of leukemia. She desperately wanted to go back to
her husband and six grown children, which she could not have
petitioned to join her here. She had to obtain regular
transfusions at the Arlington Hospital. And she had to save
what she could from her SSI. According to her landlord, when
she realized that her end was near, she left for Manila. She
died 3 months later with her family at her bedside. Her example
vividly depicts the lonely life that faces a number of
veterans.
Madam Chairman, Members of the Subcommittee, we urge you to
be fair and compassionate to these honorable men and women.
They are Americans too. They deserve to live with dignity with
their loved ones in their few remaining years. I thank you for
this great honor of testifying in this hearing.
[The prepared statement follows:]
Statement of Eric Lachica, Executive Director, American Coalition for
Filipino Veterans, Inc.
Good afternoon, Madame Chairman and members of the
committee.
My name is Eric Lachica, the executive director of the
American Coalition for Filipino Veterans. Our nonprofit
organization advocates for the interests of Filipino American
WW II veterans and is based in Washington, D.C.
Our national coalition is composed of more than 45
organizations and has twelve hundred (1,200) individual
members. We are campaigning for recognition, justice, and equal
treatment of our elderly Filipino veterans in America.
I am also a son of a 78-year-old Filipino American veteran
who was honorably discharged in 1946 from the U.S. Armed Forces
in the Far East. My father now lives in Bakersfield,
California.
Madame Chairman, with your permission, I would like to
briefly introduce to the Committee, the president of our
coalition, Mr. Patrick Ganio Sr., a veteran who fought in the
battles of Bataan and Corregidor. He is a recipient of a Purple
Heart, and a former teacher who lives in the District.
Also, with us here today are other feisty veteran leaders
like, Mr. Alisuag, a retired teacher from Oxon Hill, Maryland,
Mr. Caberto of Washington DC, and Mr. Rumingan of Arlington,
Virginia, a disabled New Philippine Scout.
They all fought for America's freedom as U.S. soldiers more
than half a century ago. Today, they are still fighting for
recognition as American veterans.
During the 105th congress, we and our allies garnered 209
cosponsors for the ``Filipino Veterans Equity'' bill, nine
votes shy of majority in the House.
We are here this afternoon to ask for your committee's
support for the bipartisan and humanitarian bill, ``The
Filipino Veterans SSI Extension Act,'' H.R. 26 introduced on
January 6, 1999 by Rep. Gilman and Rep. Filner. It would permit
Filipino American WW II veterans currently receiving
Supplemental Security Income to continue to receive their SSl
monthly benefits in the Philippines with a reduction in
payments.
There are two compelling reasons for your committee to
support this bill
FIRST, It would provide a HUMANITARIAN RELIEF for an
estimated 7,000 elderly Filipino American vets who are POOR,
LONELY AND ISOLATED in the U.S. and are financially unable to
petition their families to immigrate to the U.S.; and
therefore, want to rejoin them in the Philippines,
SECOND, It would SAVE THE AMERICAN TAXPAYERS MILLIONS of
dollars annually in SSI, Medicaid and Food Stamps payments.
Let us look at the supporting facts:
The eligible veterans covered by this bill are American
citizens and U.S. residents by virtue of their well-documented
and loyal military service in the U.S. Army more than fifty
years ago. As a result, they were given the right to become
American citizens during the period from 1990 until February 3,
1995.
Regrettably, since the ``Rescission Act'' was passed by
Congress in 1946, the Department of Veterans Affairs has denied
pension, medical coverage and burial benefits to our Filipino
nonservice connected veterans.
During the past two years, our veteran leaders have
frequently demonstrated at the White House and on the steps of
the Capitol to remind our President, Congress, and fellow
Americans of the wartime pledges of President Harry Truman and
General Douglas MacArthur.
As an example, on February 20, 1946, President Truman, who
objected to the ``Rescission Act,'' said, and I quote,
``The Philippine Army veterans are nationals of the United
States and will continue in that status until July 4, 1946.
They fought under the American flag and under the direction of
our military leaders. They fought with gallantry and courage
under the most difficult conditions... They were commissioned
by us. Their official organization, the army of the Philippine
Commonwealth was taken into the Armed Forces of the United
States on July 26, 1941. That order has never been revoked nor
amended. I consider it a moral obligation of the United States
to look after the welfare of the Filipino veterans.''
In a December 16, 1998 memorandum, the Congressional Budget
Office estimated 17,000 Filipino veterans were naturalized
under the 1990 Immigration Act and became U.S. residents.
If this SSI bill is passed, we expect the GREAT MAJORITY OF
OUR VETERANS TO REMAIN IN THE U.S. because of the DISINCENTIVES
of the reduction, the loss of Medicaid, as well as their newly
established family in America.
BUT, for our DESPERATE veterans who choose to return to the
Philippines, this would mean the chance to be with their loved
ones when they die.
H.R. 26 is fiscally appealing because most of these
veterans are currently receiving SSI and no additional
appropriations would be made. In fact, the Congressional Budget
Office on Dec. 16, 1998 estimated that H.R. 4716 (the previous
version of H.R. 26), which proposed a 25 PERCENT reduction of
SSI benefits, would mean $30 MILLION DIRECT BUDGET SAVINGS over
four years (1999-2003).
The C.B.O. assumes that 7,000 Filipino AMERICAN veterans
would choose to return to the Philippines.
As you know, the SSI program was created to assure a
minimum DIGNIFIED level of income to aged, blind or disabled
Americans of limited income and resources.
Under the SSI law, a recipient can only receive SSI
benefits overseas if he or she is 1) a disabled student, or 2)
a dependent of a US military personnel, or 3) a Northern
Marianas Islands resident.
According to our veteran leaders, these desperate veterans
would be willing to sacrifice 25 PERCENT of their monthly SSI,
give up their Medicaid, and their Food Stamps, just so they can
be with their families in the Philippines.
In our judgment, the 25 PERCENT reduction rate would be the
most realistic and acceptable. Any further reductions would
lead to a situation of diminishing returns.
From our community's perspective, this legislation would
mean FINANCIAL SAVINGS. As an example: when a poor Filipino
veteran dies in America, it costs our community an average of
$5,000 to ship his remains to the Philippines for burial.
With a conservative 2 PERCENT annual mortality rate or ONE
poor veteran dying each day, it would cost us $150,000 per
month or nearly $2 MILLION per year.
In April last year, we lost a member from Arlington
Virginia, MS. ROSA NANALIG, age 73. She usually joined us at
the demonstrations at The White House. Nanalig was a former
nurse's aide who fought in the war with a rank of third
lieutenant. And she SAVED a few U.S. soldiers' lives.
In the last two years of her life, she lived on SSI and
Medicaid because she was quite ill from heart problems and a
form of leukemia. She desperately wanted to go back home to her
husband and six grown children. However, she could not. She had
to obtain regular blood tranfusions at the Arlington Hospital,
and she had to saved what she could from her SSI.
According to her landlord, when she was realized that her
end was near. She left for Manila. She died a three months
later with her family at her bedside.
Her example vividly depicts the lonely life that faces a
number of our vets.
Madame Chairman, and members of the committee, we urge you
to be FAIR AND COMPASSIONATE to these honorable men and women.
They are Americans too. They deserve to live with DIGNITY with
their loved ones in their few years remaining. I thank you for
this great honor of testifying in this hearing.
Madame Chairman, I will be glad to answer any questions.
OUR ORGANIZATION RECEIVES NO FEDERAL GRANTS
ACFV Support Organizations: Filipino War Veterans, Inc.
(DC), American Legion Post, Alejo Santos (PA); Veterans of
Foreign Wars, Douglas MacArthur Post (MD); Filipino Veterans
Families Foundation (DC); United Filipino American Veterans
(Los Angeles); Fil-Am Vets of Carson CA; Society of Guerrillas
and Scouts (L.A.); Newly Arrived WWII Filipino Veterans (S.F.);
U.S. Filipino WW II Veterans (San Jose); U.S. Filipino WW II
Veterans (Seattle), U.S. Filipino WW II Veterans (Hawaii),
Phil. Am. Veterans Organization, New Jersey & NY; Filipino
Civil Rights Advocates; Sons & Daughters Assn. Filipino
Veterans; Philippine Nurses Assn of America; Phil. American Bar
Assn., Filipino Am Women's' Network, Asian Am Voters Coalition;
Phoenix Filipino Community; Phil. Am. Heritage Federation (DC)
Natl. Federation Filipino American Assoc.; Natl. Filipino
American Council; Fil. Am. Service Group (L.A.); S.F. Veterans
Equity Center; and others.
Questions & Answers:
1) Under this Act, how much will the Filipino American WWII
veteran get if he/she returns to the Philippines?
ANSWER: A maximum of $379 dollars per month at the proposed
25% reduction proposed rate. See table, Exhibit 1.
2) How will this be administered in Manila?
ANSWER: The U.S. Social Security Administration has an
adequately staffed office in Manila managed by the Veterans
Affairs Dept.
3) Will the SSI Extension Act make the Filipino veterans a
special class?
ANSWER: NO. Dependents of US military personnel and
disabled students studying abroad are eligible to receive SSI
payments. 46,000 residents of the Northern Marianas Islands are
eligible too.
As a COMPARISON: According to the VA in Puerto Rico, the
Puerto Rican WW II veterans who are poor and disabled are
generously covered by the U.S. Department of Veterans Affairs
``nonservice connected pension.'' It reaches a monthly maximum
of $722 for each veteran depending on their income level. 7,416
nonservice connected Puerto Rican WWII veterans received a
total of $3,088,250 for the month of November 1998.
4) Will the veteran's spouse and children be eligible for SSI
in the Philippines?
ANSWER: NO.
5) How would you compare the proposed SSI payments REDUCED by
25 percent and Medicaid benefits with the Veterans Department
benefits?
ANSWER: The reduced SSI payment would be $343 less per
month than the VA pension and $126 less per month than the full
SSI rate. The returning Filipino American veteran will not have
Medicaid nor Food Stamps in the Philippines. See attached
table, Exhibit 1.
Exhibit No. 1. Comparison of SSI and VA Benefits with the Proposed
``Filipino Veterans SSI Extension Act''
------------------------------------------------------------------------
U.S. Veterans
Supplemental Security Income for Nonservice PROPOSED H.R. 26
Individuals in U.S. or No. Connected Pension ``Filipino Vet SSI
Marianas/dependent US MILITARY 1998 rate payable Ext. Act'' 25%
anywhere Reduction
------------------------------------------------------------------------
$ 505 per month................. $722 per month.... $379 per month
Medicaid & Food Stamps.......... VA Medical None
coverage.
Additional SSI to Spouse & Additional Pension NONE
dependents. to Spouse &
dependents.
BUDGET SAVINGS--NONE............ BUDGET SAVINGS-- CBO Estimate
NONE. SAVINGS--$30
MILLION
------------------------------------------------------------------------
By the American Coalition for Filipino Veterans, Inc. 2/3/99
Chairman Johnson of Connecticut. And we thank you for your
eloquent testimony, Mr. Lachica, and we welcome the Filipino
veterans who are with us today. I appreciate your having
brought this to our attention. It is surely a terrible
injustice.
I would like to just ask a question of the three of you.
Mr. Huse, you mentioned the complexity of the rules, and Ms.
Ford, you eloquently testified to the impact of that complexity
on people's lives, that it is very hard in fact to know when
you are in the moving end of status of overpayment. I thought
it was particularly interesting that there is no simple and
consistent way for people to report or inquire or keep track of
that issue themselves.
And Ms. Fagnoni, you mentioned that the department has not
used its resources to develop policy or to impact policy
changes, to develop policy proposals and to implement them to
the degree that you think they should have. This does seem to
me like a very obvious area that you need to look at.
Complexity really does deny people equity at a certain point.
And people then end up accused of fraud, when actually they
were trying to comply. And I think particularly when people are
on disability benefits, they have enough difficulty in their
lives without our support program posing other difficulties and
threats to them.
It is my understanding that we have asked the SSA to study
this issue and to report back to us on how these procedures can
be changed, you know, how the system may be changed. It may
take legal changes to make the regulations simpler, but I think
we really need to address this. When we get that report back,
Ms. Ford, we will look forward to your view of it and your
input into it.
There are just so many instances in which complexity really
literally creates a situation where people are accused of
fraud. We see this in Medicare, we see this with the IRS. It is
really a common pattern as we have let our laws and regulations
become ever more complex. So I hope you will work on this and
maybe use Ms. Ford as a source of examples of problems that
need to be attacked. Because certainly, the agency ought to
have the ability to move particularly with today's technology
toward a more effective way of relating to recipients and
beneficiaries to see that they do know and can communicate with
the agency in a way that is good for everybody.
Mr. Cardin.
Mr. Cardin. Mr. Huse, you point out in your statement a
pretty extreme case where 181 members of a family or four
generations had qualified for SSI benefits, received SSI
benefits. What intrigued me about that is that you indicated
that it was the same medical provider who conducted most of the
consultative examinations. My question is, have you noticed
whether we have taken action against physicians who have
routinely been in cases that are suspect on qualifications for
SSI?
Mr. Huse. Our experience with this type of work is really 3
years old, since independence, we are only an agency that has
been in the field for 3 years. This was one of the first big
cases that the Office of the Inspector General was confronted
with when we came into existence. To answer your question, we
have improved our ability in terms of our investigative work to
try and see these patterns where consultative examinations,
anybody in this category of third-party facilitators commits
what appears to us to be fraudulent activity, would be then
brought to appropriate criminal justice resolutions. But it is
something that takes a very comprehensive investigation.
In the case of this particular study, much of this issue of
whether there was or was not criminality involved was very
confusing and complex, very difficult for the U.S. Attorney's
Office, and the State concerned to deal with it also. However,
on our investigative side, and on the agency's side, we are
improving our ability to be able to take on physicians, and in
another context, the legal community that provide this type of
underpinning to these frauds.
Mr. Cardin. And, of course, the legislation that we are
working on tries to give some additional help there. We
certainly are concerned about individuals who are wrongfully
receiving payments. But when there are professionals out there
who are aiding and abetting this type of activity, I would hope
that would be a high priority. So the information you supply
there could be very helpful.
Mr. Huse. One of our key new projects, in partnership with
SSA, is the deployment of what we call cooperative disability
investigative teams. These are teams made up of SSA, OIG/OI
agency, State DDS professionals as well as local law
enforcement entities who knock away from these benefits those
who are fraudulently trying to obtain them. At the same time,
we are gathering intelligence about physicians who are
providing boilerplate evidence or perhaps some other type of
third-party facilitators that are trying to subvert this
complex area.
Mr. Cardin. Ms. Fagnoni, in your statement you talk about
the 10-percent cap of overpayment that can be collected from an
individual as a problem on SSA's ability to recover for
overpayments. And then you indicate that there should be some
relaxation of that for recipients who chronically and willfully
abuse program reporting requirements. My reading of the current
law is that you already have the ability to do that, that the
10-percent cap does not apply in cases of fraud, willful
misrepresentation, or concealment of material information. Am I
wrong, or is there something more that you were trying to bring
out to the Subcommittee's attention here?
Ms. Fagnoni. Well, I think we were trying to make the
recommendation that in the DI Program right now, SSA has more
flexibility to go above the 10-percent limit, and we think as
with other tools that SSA should have more flexibility to go
above that 10-percent limit. That one way to target it would be
to those who were more chronically abusing the system.
Mr. Cardin. Well, do you have specific changes that you
would like to make to fraud, willful misrepresentation or
concealment of material information which is recurrent?
Ms. Fagnoni. Well, I think that we wanted to be a little
bit broader to give SSA a little bit of flexibility if they
wanted to target certain people that they felt they wanted to
go over that 10-percent limit, but might not make that current
strict definition, that they would have the flexibility where
other people have the resources to collect above that 10
percent.
Mr. Cardin. Well, it seems to me that the language where
they can currently go is broader than recipients who
chronically and willfully abuse the program reporting
requirements, but maybe we can talk about that a little bit
later. I am curious, how many programs that are on the high-
risk fraud have been identified by the GAO?
Ms. Fagnoni. Right now, we have 26, not just programs, 26
either programs, agencies or areas that we have identified as
high risk.
Mr. Cardin. And if SSA continues their internal
improvements, if the bill that we are suggesting is enacted and
implemented by SSA, what is the prospect that they could get
off this list?
Ms. Fagnoni. Well, agencies and programs do get off our
list. Since we began the high-risk list in 1990, six programs
or agencies have been. We have taken them off the list for
different reasons where we saw sustained improvement in
management, in particular. So, there is the opportunity----
Mr. Cardin. There is hope.
Ms. Fagnoni [continuing]. In the program to get off. Right.
Mr. Cardin. Good. Glad to hear that. I just wanted to let
SSA know that there is hope that we can succeed here. That is
always encouraging.
Ms. Ford, there is part of the statement, that you have in
your written statement. It intrigues me because I don't
understand why the current law requires an automatic
redetermination of SSI when a youngster reaches 18 years of age
and is still in high school. Age eligibility for SSI continues.
That is not a problem. Redeterminations should be done, but why
trigger a redetermination when the child is still in high
school? And you point out that it may even discourage the
individual who is staying in high school.
Ms. Ford. Correct. That was one of the changes made in the
1996 welfare law as part of the change in the childhood SSI
eligibility. And what we are concerned about is that an 18-
year-old may still be in school, particularly a child who might
be in special education or some other program. And because we
are dealing with a family which is by definition low income, to
remove the SSI income may force the child out of school early
and into the work force, when perhaps staying in school and
being supported through that would be better for the individual
in the long run.
Mr. Cardin. If the automatic redeterminations were required
for a child on SSI when either the child over 18 left high
school or reached 21, would that take care of most of your
concerns?
Ms. Ford. It would take care of our concern regarding this
issue. Yes, I think if we could put the redetermination on
hold, the application of the adult standard on hold while the
child is in school, that would be a very important step to
take.
Mr. Cardin. Thank you. Thank you, Madam Chair.
Chairman Johnson of Connecticut. Mr. Lewis.
Mr. Lewis of Kentucky. Yes, Mr. Huse, you have mentioned in
your testimony that asset transfers--can you tell me what type
of asset transfers, what they are and what they are worth?
Mr. Huse. They are relatively easy to describe. It would be
cash, residences, financial assets such as life insurance
policies, trusts, bonds, notes, that type of thing. Not
anything too sophisticated.
Mr. Lewis of Kentucky. And do you have any total of what--
--
Mr. Huse. No, I don't have any totals. In those instances
where we get a case like that, of course, we investigate, but
we don't have any broad guess.
Mr. Lewis of Kentucky. OK.
Mr. Huse. Broad estimate.
Mr. Lewis of Kentucky. This Subcommittee has been really
good from stopping checks from going to prisoners. What type of
advice would you have for us with fugitive felons and stopping
the checks from going to those individuals?
Mr. Huse. Well, sir, as you know in the Welfare Reform Act
of 1996, if I can use the short version, the long title is a
little wordy, it does provide for the fact that anyone who is a
fugitive from justice, from prosecution, those who are
violating probation and parole in a felony area, are not
entitled to, if they have, the SSI benefit. We have addressed
this particular obligation with SSA, and we have a very
comprehensive plan that we are now working on. We have amassed
some success with it already. If I could just take 1 second to
explain exactly what the universe is here.
The FBI tells us from their National Crime Information
Center statistics that we have about 700,000 felony warrants
recorded at the Federal Government level every year. We don't
even know what the number would be if we tried to amass that
total State by State. But of that 700,000, we estimate that
about 3.5 percent of that number would be individuals
collecting SSI. That gives us a very challenging task then as
an agency, and as the OIG, to ensure that of the 3.5 percent,
the warrants that deem those people as fugitives are valid,
which those of you familiar with our criminal justice system
know that that requires a little bit of an investigation since
these are not always timely. We have to be sure that the
warrant is still in effect. And then from there we have a
comprehensive process of suspending those benefits after we
identify the fugitive.
By way of numbers, I think I can say that we believe,
looking at the next 2 budget years, that we could possibly save
around $95 million in benefit payments from this particular
process. We expect that we will at least identify 24,000 or so
of these suspensions a year after we conduct this
investigation, and certainly, at least 5,000-plus of those
felonies will actually be people who are returned and arrested
by local, State, county and Federal law enforcement. So, it is
a really vigorous program of ours.
Mr. Lewis of Kentucky. Right. Thank you. Ms. Fagnoni, you
mentioned organizational culture, could you explain that a
little bit?
Ms. Fagnoni. What we are really talking about there is that
historically SSA was an agency that for decades dealt with the
Social Security and Disability Insurance Programs, where people
earned the right to those benefits and were entitled to those
benefits. And when they were eligible to receive those
benefits, particularly in the case of Social Security, it is a
fairly straightforward determination if they've kept their
records correct.
With the SSI Program coming under SSA's purview in the
early seventies, that's a different kind of program, being a
means-tested program. With that comes added requirements to
look at income verification and to keep track of that and to
continue to look at income eligibility. It is that area that
SSA really historically has not put an adequate focus on
relative to the emphasis on as quickly as possible getting
checks out to people.
And what we've been emphasizing is that SSA needs to
maintain and strike a better balance between those two.
Clearly, getting the checks out are important, but they have to
make sure it's the right amount of money to the right people.
Chairman Johnson of Connecticut. Mr. Jefferson.
Mr. Jefferson. Thank you.
Mr. Lachica, I want to just thank you for your testimony. I
don't have a question for you, but it's a very rare opportunity
that this Subcommittee and the government gets a chance to do
the right thing and save money at the same time. In that
regards, your testimony is extremely eloquent and timely, and I
thank you for it. And I hope this Subcommittee will take you up
on the opportunity you've given us.
Mr. Lachica. Thank you.
Mr. Jefferson. I want to follow with a line of questioning
that was pursued by Phil English before he left, he's not here
anymore, and the most recent inquirer on this issue of high
risk. What do you mean by that really? Is there some objective
criteria or standards that are used to determine when a program
is high risk as essentially used here?
Ms. Fagnoni. We designated SSI as high risk because of its
vulnerability to fraud and abuse, as well as what we have found
as longstanding management inattention. The objective measure
of that we used was the level of overpayments in the SSI
Program, particularly relative to the size of the benefits
being paid out, and the fact that overpayments had been
increasing over time, and that historically SSA has not been
able to recover much of those overpayments.
So that's really in general why we put programs, agencies,
and areas on the high-risk list, is concerns about
vulnerability. But specifically for SSI, it was the concern
about not only vulnerabilities, but also the lack of management
oversight historically.
Mr. Jefferson. There is some concern about--some testimony
about the increase in payments which because of an increasing
population that is asking for them, requiring them, and the
fact that not all the payments come out to fraud anyhow. And I
am just trying to see if you have a whole lot of overpayments
and they aren't fraudulent, you can't conclude that they are
vulnerable to fraud if they aren't fraudulent payments in the
first place.
Ms. Fagnoni. Well, as I said, it's not just vulnerabilities
to fraud and abuse, but also lack of management attention.
Overpayments can result from a number of different reasons, one
of which would be fraud. But others might have to do with
people not knowing what the rules are adequately, SSA is not
being active and proactive enough in quickly checking income
and resources of people to prevent people from going into an
overpayment status. So, it's a combination of reasons that have
to do both with management as well as more abusive type
practices that make the program integrity a question and things
need to be tightened.
Mr. Jefferson. I ask you these questions because I was
concerned about the line in your testimony that Phil read that
talks about the culture of the system placing a greater value,
is the word used in your testimony, on quickly processing and
paying claims and on controlling costs. Well, now, I can't
believe you mean that there shouldn't be a greater value on
paying, on timely paying claims and processing claims. I can
understand if you say there ought to be adequate attention paid
to controlling costs. But you don't mean these ought to be
equal missions of the----
Ms. Fagnoni. We do believe SSA needs to strike a better
balance between quickly processing payments and making sure
that the payments that are processing are the correct payments
to the correct people. And in our work, we continually strive
to look for ways that SSA can use tools and tap into databases
that will allow it to quickly verify income, for example, so
that it can both verify and protect the program while, at the
same time, quickly processing people's claims.
Mr. Jefferson. I was going to ask you for some specific
ways that you see that this can be accomplished without
compromising the issue of quickly processing claims, because as
our Chairlady points out, you talk about people are themselves
extremely vulnerable. You don't want to have a high set of
bureaucratic rules that make it difficult for people to get
payments on the idea that you have to be precise in every case
about how it works out, particularly if you have some other
measures and standards to correct the errors if they are made.
Do you have some specifics on how the agency ought to be
doing its work so that it can strike this balance better, as
you describe it?
Ms. Fagnoni. Well, some of the legislative tools and
proposals that are being considered by this Subcommittee, many
of which we have highlighted and recommended in our reports
would be one way. As I said, we continually look for ways that
SSA could tap into online, get online access to information.
For example, online access to some new databases that will get
SSA information on new hires and those sorts of information,
where they could quickly check people's income online, so they
can do the verification while not slowing down the claims
processing.
So in trying to strike a better balance, the goal is for
SSA to seek ways to quickly and efficiently ensure that it's
making the correct payments. It's a combination of better
legislative tools, as well as some of the online access and
quicker access to different kinds of information to be able to
verify the income information.
Mr. Jefferson. My time is up. I thank you, Madam Chair. I
have other questions I could ask. Thank you.
Chairman Johnson of Connecticut. Thank you, Mr. Jefferson.
Mr. Foley.
Mr. Foley. Thank you very much. I am empathetic to the
people who work in the Social Security offices. I have visited
many times and watched the stress that they work under in
trying to approve applications. But in watching some of the
flow of people coming through, clearly in Florida, my State of
representation, we have a great deal of stress in both dealing
with the illegal population that's there and the new law that
was passed denying benefits after a date certain.
I wondered if either could answer how do we come to grips
with this arbitrary date, when we set it August 26, 1996? How
do we, in fact, determine whether the people may be potentially
illegal and that they entered prior to or after that date,
since we have no way of determining when they may have arrived
to begin with? Has that been fleshed out as far as a procedure
from the Social Security Administration?
Mr. Huse. Are you speaking in terms of residency, sir?
Mr. Foley. Residency for entitlement to benefits under the
act, whether it's SSI or any other benefits of a public nature.
Mr. Huse. I may need some help here from my legal staff,
but I believe the act is specific that it doesn't look back. It
just goes forward from August 1996.
Mr. Foley. Right. I guess my problem is we set that date
and, now thinking about it, anyone coming to the SSI office to
make a claim will say I've been here 7 years. I mean, how do we
actually determine the date of entry to begin with?
Mr. Huse. From whatever documentation that they can
provide. I am probably not the best person to answer the
question as to what the claims processing might be. But again,
this is where there is some potential for fraud if the
documentation is counterfeited, which is a huge national issue
anyway. But other than that, I don't know the answer to your
question.
Mr. Foley. Another issue is--and I've noticed this in
several cases that I've helped to process for people with
significant physical impairment--they seem to struggle to get
access to the needed assistance from the system. And then when
there are complaints and reported complaints about people who
are, in fact, taking advantage of disability benefits--that
they are physically able but receiving benefits--how do we go
back and check that fraud and abuse provisions from the General
Accounting Office? Have you seen in place systems and
procedures in order to flush out complaints that are lodged
against potential abusers of this system?
Ms. Fagnoni. Well, SSA has the continuing disability
reviews that would look at an individual's disability status,
and, if there's something that sort of got through initially,
they could doublecheck the circumstances under which the person
was deemed eligible for disability benefits. That's one
example. They also do redeterminations where they, of course,
have to check for the income eligibility piece of it.
But as you've heard from the IG in terms of really trying
to target and go after people who may be abusers, it can be a
fairly labor-intensive effort to really ferret out who's doing
the abusing.
Mr. Foley. Well, and that seems to be a bigger problem,
because it's labor intensive. But we don't seem to target the
fraud with enough of the emphasis to get after the fraud. And
so ultimately, we penalize those with significant disabilities
because they can't make a claim, because everybody is
suspicious of their claim. So we somewhat disadvantage people
who have real material physical impairments by making them go
through all of these various trials and tribulations. But then
we make a copout by saying, no, we simply don't have the
resources in order to ferret out the fraud. That seems to be
the quickest response.
I am not targeting that negativity at you, but it seems to
be one of our quickest responses. We will, we can find out
about food stamp fraud, so let's not pursue it. We will just
add another 10 percent to the equation and hopefully--yes, sir?
Mr. Huse. If I might, sir, to answer that question. We are
trying some new things. We have two really wonderful tools now
that we didn't have 3 years ago. One is our fraud hotline,
which is the largest hotline in government. We have 54
operators who take calls all day. And this is a place where a
lot of anecdotal, early warning information about people's
perception of fraud comes to us. And we're able to digest that
as an agency, as the OIG, and work along with the
administrative sanctions perhaps that's in this new legislation
to really do some good.
Second, these new cooperative disability investigative
teams that we have will actually work on the front end of these
before enrollment, before these people are actually put on the
rolls, to knock away people who are trying to cheat the system.
So, we've really tried to find that solution to your question.
Mr. Foley. Would you be willing to submit that to us?
Mr. Huse. Absolutely. I would be glad to provide you a lot
of detail about that.
[The following was subsequently received:]
The first is our expanded Fraud Hotline, which is currently
the largest in Government. Our Hotline started with a staff of
9 operators in 1995 and now has a staff of 54 operators who
answer our 800-number telephone and process other incoming
fraud allegations that are sent to OIG via fax or mail. Our
Hotline provides a valuable service to our investigative
operations by managing the large number of incoming allegations
and filtering these allegations to the appropriate OIG field
offices, SSA components, or other Government organizations that
can take appropriate action.
The second are our cooperative disability investigations
(CDI) teams. The CDI teams, composed of staff from OIG, SSA,
State Disability Determination Services and local law
enforcement agencies, focus on preventing ineligible applicants
from getting on the roles. In FY 1998 the teams received 518
allegations and confirmed 53 cases of fraud. They documented
$41,508 in restitution and scheduled recoveries to SSA as a
result of suspended benefits and $2,855,250 in SSA program
savings. The results of the first quarter of FY 1999 are even
more promising since the teams have received 292 allegations,
confirmed 48 cases of fraud, and documented $59,615 in
scheduled recoveries and restitution and $3,948,506 in savings
to SSA.
These CDI teams also enrich our investigative process by
providing additional intelligence on third party facilitators.
As fraudulent applications are denied as a result of the
efforts of these teams, our investigators are provided
information that helps to identify patterns of criminal
activity and to identify doctors, lawyers, interpreters, and
other service providers who facilitate and promote disability
fraud. A narrow focus on these third party facilitators can
have a significant deterrent effect.
Mr. Foley. Right. Thank you.
Chairman Johnson of Connecticut. Thank you.
Mr. McInnis.
Mr. McInnis. Thank you Madam Chairwoman. Ms. Fagnoni, is
that the correct pronunciation?
Ms. Fagnoni. Fagnoni.
Mr. McInnis. Fagnoni. OK, I too reference the statement on
the organizational culture, but, contrary to my respected
colleague, I think it's absolutely of equal value to me,
because if the system, much like a bank, if a bank does not
take the time to verify the withdrawals on account, even if the
person pulling out the money owns the account, if they don't
take time to verify, the bank would not be in business very
long.
The integrity of this system is absolutely imperative for
the people that need the money out of this system. And for us
to say, Well, it's more important that we rush the money out
the door, that's not what my colleague said, but some would say
it's more important to rush it out the door in an
organizational culture based on values than have accounting.
So I just want you to know there are some of us who feel
very strongly that this integrity of the system is important.
Standing out like a bear in a cave to me is a statement that
you made later, at least in your written comments, that you
reported the SSA only began using tax refund offsets in 1998.
For 14 years, 14 years they had this tool available, and they
didn't use it.
My question would be would you supply to my office or do
you have information available of any other tools or systems
you have recommended on this report or previous reports or
subsequent reports to this, and then could you let me know if
those are, in fact, if they are in place. I don't know whether
that exists, but they missed it here.
Ms. Fagnoni. We can do that.
[The information is being retained in the Committee files.]
Ms. Fagnoni. Although I will say that a number of the tools
that both SSA put forth in its legislative proposals last
spring as well as what's before the Subcommittee now address a
number of the areas that we have either highlighted or
recommended in previous reports. So, to some extent, we could
say SSA is playing catchup on some of these, including that tax
refund offset.
Mr. McInnis. And that information would be helpful too.
Mr. Huse.
Mr. Huse. Yes.
Mr. McInnis. Mr. Huse, if you have a fraud--I was
interested in your hotline, the fraud hotline. Do you have
available your statistics on exactly how many cases of fraud
were filed, actually filed last year and how many convictions
resulted from those case filing?
Mr. Huse. I do. As I said earlier, we're 3 years old, and
in our first year of existence we took 802 fraud calls over our
hotline at the time. To give you an idea----
Mr. McInnis. Well, let me do this because we're going to be
limited on time. Would you supply the material for me? I would
like to review it, but not just based on the hotline. I would
like to know how many cases of fraud through your system, not
just the hotline, but other cases have been filed, what the
prosecution rate is, and what the conviction rate is. I would
like to put that in proportion to the amount of money that is
going out of this, which you believe is going out of the system
through fraud or overpayment. If you could provide some of that
information for me so that I could look at that, I think that
would be very helpful.
Mr. Huse. You want any of that now?
Mr. McInnis. No, I am afraid.
Mr. Huse. Separate. OK, sure.
Mr. McInnis. I don't want to take the time, and because I
need----
[The following was subsequently received:]
Q. How many cases of fraud (were processed) through your
system, not just the Hotline, but other cases have been filed?
The total number of allegations received by our office in
FY 1998 was 29,218. In FY 1998, we opened 6,291 criminal
investigations.
Q. What is the prosecution rate?
In FY 1998, our agents presented 2,224 cases to the Office
of the United States Attorney. Of those, 1,420 or 63.8 percent
were accepted for prosecution. The U.S. Attorneys declined to
prosecute 724 cases mainly because the dollar amount of the
fraud did not meet a minimum threshold. The remaining 80 cases
are still under review by federal prosecutors.
Q. What is the conviction rate?
In FY 1998, we reported 2,762 criminal convictions. This
number includes the number of illegal aliens and fugitives
apprehended as a result of our investigations. Those convicted
solely for violations that related more closely to SSA program
fraud totaled 1,027.
Q. What is the total amount of money going out of the system
through fraud or overpayment?
The statistics that we have relate to the actual
investigations we conduct. In FY 1998, our agents reported over
$61.6 million in restitution, fines, recoveries, and program
savings as a result of their investigations. This figure
represents money from SSA's programs. Those we investigated
also defrauded other Government programs, businesses, and
credit card companies of more than $32.5 million. Together,
those figures equal over $94 million for FY 1998.
Chairman Johnson of Connecticut. I think it is important
for the rest of the Subcommittee if you could give us just a
brief summary. But I think a larger question that Mr. McInnis
asks also needs to be answered. But I think if you could very
briefly, in a couple of sentences, just give us a sense of your
success or failure in this area.
Mr. Huse. Just to give you an idea of our success, we're up
now to where we took in 29,214 allegations last year. We had
2,762 criminal convictions last year. We opened 6,291 full
criminal investigations and closed 5,448. And that's with an
investigative staff of 253 special agents, so I think we're
really out there and effective.
Mr. McInnis. And let me finally, let me ask you. In your
investigative process are you under pressure from management to
follow the organizational culture that may have been adopted
that places a greater value on quickly processing paying the
claims and controlling program costs?
Mr. Huse. No. But we serve a criminal investigative
function in a social insurance agency, so we know that there
are a tremendous number of people who are in need of these
benefits. So we keep that in front of us. But we're there to
root out the fraud.
Mr. McInnis. Thank you, Madam Chairman.
Chairman Johnson of Connecticut. I just want to pursue a
couple of things. First of all, you say in your testimony, Mr.
Huse, that representative payees received $41 million in
overpayments, payments made after the death of the beneficiary.
And you only recovered $13 million of those. Now, it does seem
to me that in that specific instance, where you have a
representative payee, and you've paid them and you have the
death certificate and everything that it might, it ought to be
fairly easy to collect those overpayments. So $13 million of
$41 million, leaving $28 million uncollected doesn't seem
terrific.
Mr. Huse. It is a significant number. I am probably not the
person to speak to the policy. We do report what's extant with
the policy. I believe there's a needed legislative remedy for
that.
Chairman Johnson of Connecticut. Well, in the bill, we do
hold the representative payee accountable.
Mr. Huse. Exactly.
Chairman Johnson of Connecticut. And we also I think
provide you with better ability to cross check death records.
Mr. Huse. Correct. But we need to hold representative
payees----
Chairman Johnson of Connecticut. This is not really such a
rocket science here, yes.
Mr. Huse [continuing]. Representative payees accountable
themselves, and that's--there's been some difficulty in doing
that because obviously these people, in a sense, provide a
service for those who can't manage their own affairs.
Chairman Johnson of Connecticut. Right. Well, that's why
since they are deemed to be responsible entities by the
government, it seems to me we ought to be able to collect more
than $13 million out of $41 million from them.
Mr. Huse. We agree with those sentiments.
Chairman Johnson of Connecticut. So, we certainly will be
looking to see some improvement in that area.
Also, I do want to ask you, do beneficiaries receive a
notice of overpayment? And are they given, if they respond
promptly, and the overpayment is clearly not motivated by an
intent to defraud the government, a timeframe that says if you
respond promptly, there will be no penalty?
Mr. Huse. Correct. You mean, before the OIG comes after
them?
Chairman Johnson of Connecticut. Right.
Mr. Huse. Of course.
Chairman Johnson of Connecticut. I mean, is it the policy
of the department that if you notify someone of overpayment and
they respond promptly that there's no penalty?
Mr. Huse. I am not sure what you mean by a penalty, but I
know that there's certainly no----
Chairman Johnson of Connecticut. I really should have asked
that.
Mr. Huse. Jeopardy from law enforcement or prosecution.
Chairman Johnson of Connecticut. Ms. Ford, would you have
any comment on that?
Ms. Ford. Well, I am not sure of the exact answer to that,
but I do know that the letters are very confusing.
Chairman Johnson of Connecticut. I think we need to look at
this because frankly, in fairness, people ought to receive a
notification. And if they respond promptly and there was no
intent to defraud, at least my experience as Chairman of
Oversight was that a lot of the problems with the IRS were
really rather minor. Had they been attended to promptly and had
the agency been able to sort of waive penalties, that this
would have been the right thing to do, and a mark of good
administration rather than of fraud and abuse. So you mentioned
that in your testimony, and we would like to look at that with
you in more depth.
Mr. Huse. There is some considerable emphasis on the part
of the agency to improve the notices themselves so that they
are in plainer English and easier to understand which would
help.
Chairman Johnson of Connecticut. I would say that we've
made tremendous progress on that issue in the IRS, and I would
hope you really would work on that. We'd like to say when you
do do a letter, we would very much like to see the old letter
and the new letter so that we have some sense of how you are
communicating with the public, because it is really, truly
appalling that the government can't communicate more directly
and simply.
Yes, Ms. Ford.
Ms. Ford. Could I add that it might be helpful if we didn't
see overpayments as wrong. An overpayment, as was described
earlier by Mr. Dyer, I believe, occurs if you receive SSI
today, and you begin working tomorrow, you're in overpayment
status beginning tomorrow. It's not wrong, and in fact the SSI
Program encourages people to go to work and to attempt to work
and get off the system.
It's just that a benefit adjustment has to be made 2 to 3
months down the road. And it's this issue of making that
adjustment, when the earnings report is made, that becomes the
big issue for people with disabilities.
Chairman Johnson of Connecticut. I think it is important to
describe these things accurately. And I think we ought to look
at this problem and make sure that in talking about it between
ourselves and the beneficiary, who clearly knows that there
will be a benefit adjustment that we look at that, and I'd like
to look at that soon enough to be able to see if there's any
need for statutory changes. I do think we ought to
differentiate between benefit adjustments and fraud. And so if
we can look at that more closely, I would appreciate it. And
also, we certainly are interested in your comments about the
18-year-old redetermination. And we'll look at that, but then
more in the future.
If there are no further questions? I thank the panel for
your testimony, and it was very thoughtful and very useful to
us. And we will look forward to working with all of you.
Thank you.
[Whereupon, at 4:45 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Hon. Tom Campbell, a Representative in Congress from the
State of California
Honorable Chairwoman Nancy Johnson, Members of the House
Human Resources Subcommittee, it is an honor to join my
colleagues, and co-sponsors again in expressing support of
legislation that is very important to me: The Filipino Veterans
Equity Act.
We must pass the Filipino Veterans Equity Act, it's an
important means of preserving our national honor by recognizing
the contribution of the thousands of brave Filipinos who served
in the United States Armed Forces during World War II. These
American allies are split into two critical groups:
Commonwealth Army Veterans (CAVS) who are former members of the
Philippine Commonwealth Army with service in the U.S. Armed
Forces during the War, and Special Philippine Scouts who
enlisted in the U.S. Armed Forces between 1945 and 1947 to
assist in occupation duty in the Pacific theater of the war.
According to the Department of Veterans Affairs (VA),
approximately 100,000 Commonwealth Army veterans and Special
Scouts survive today.
Soon after the Second World War broke out, President
Franklin Delano Roosevelt issued an Executive Order drafting
the soldiers of the Philippine Commonwealth Army to serve in
the United States Armed Forces. These freedom fighters served
with great distinction and honor under the American flag in the
hard-fought but lost battles of Bataan and Corregidor against
incredible odds. Alongside their American comrades, thousands
of Filipino soldiers valiantly gave their lives in battle and
as prisoners of war during the more than three years of brutal
occupation of the Philippine Islands by the Imperial Japanese
Army.
After the liberation of the Philippine Islands by U.S.
Armed Forces, dedicated Filipino personnel continued their
service to America. Special Philippine Scouts enlisted in the
U.S. Armed Forces between 1945 and 1947 to assist in occupation
duty throughout the Pacific, an important contribution to the
restoration of order and democracy in this region.
Despite their distinguished record of brave service during
and after World War Two, and despite the assurances of our
government to the contrary, the 79th Congress in 1946 voted to
deny full veterans benefits to Filipino personnel serving in
the U.S. Armed Forces. Over fifty years have passed, and
Congressional correction of this injustice is long over-due.
The Filipino Veterans Equity Act would rightly entitle
Commonwealth Army Veterans and Special Scouts to full veterans
benefits, including the National Service Life Insurance
program, medical care through all Veterans' Administration
facilities, including the Veterans Memorial Medical Center in
Manila in the Philippines, and veterans' compensation.
Survivors would be eligible for full dependency and indemnity
compensation (DIC) benefits. Currently, compensation and DIC
paid to Commonwealth Army Veterans, Special Scouts, and
survivors are half the rate paid to veterans and survivors in
the United States.
The bravery, honor, and distinguished service of the
Filipino men and women who served during and after World War
Two must be recognized. I urge all of my colleagues to
cosponsor this important legislation. We should pass the
Filipino Veterans Equity Act promptly; it is not too late to
restore our honor as a nation in this small but significant
way. Thank you so much for your kind attention today.
U.S. Congressman Tom Campbell is a Republican representing the
San Jose area and a member of the Banking and International
Relations Committees.
Statement of Gerald R. Tarutis, National Alliance for the Mentally Ill,
Arlington, Virginia
Chairwoman Johnson, Representative Cardin and members of
the Human Resources Subcommittee, I am Gerald R. Tarutis of
Seattle, Washington. In addition to serving on the Board of the
National Alliance for the Mentally Ill (NAMI), I am also an
attorney in private practice. I am pleased to have the
opportunity to share NAMI's views on the SSI Fraud Prevention
Act of 1999. NAMI believes that there is much to be gained from
an on-going dialog that allows different perspectives to be
brought to the table in discussions of any potential changes to
the laws and regulations governing the Supplemental Security
Income (SSI) program.
In over 25 years of practicing law, I have represented many
clients with severe disabilities who have been claimants for
Social Security cash benefits. While some of my clients' cases
before Social Security were dealt with in a fair and
straightforward manner, many others found the experience of
endless appeals, examinations and bureaucratic delays
frustrating and in many cases, humiliating. This is especially
true for adults with severe mental illnesses and other
disabilities that are not readily apparent to the staff of
Social Security Administration (SSA) field offices.
Too many adults with severe mental illnesses find their
dealings with the SSA on matters ranging from appeals for
denial of eligibility, to reporting wages, to seeking a
straight answer regarding an alleged overpayment to be
intimidating. Beyond the laudable goal of preventing fraud in
the SSI program, NAMI also believes that this Subcommittee
should closely examine ways that SSA could improve its
performance as a customer service agency, from simplifying its
correspondence with beneficiaries to upgrading its
retrospective wage reporting systems.
SSI is a means-tested income supplement program intended to
help people with severe disabilities who meet specific income
and assets tests. The federal government provides a base amount
of income that states are allowed to supplement. In nearly
every state, eligibility for Medicaid is tied to the receipt of
SSI cash benefits. The federal government's eligibility
standards for disability for the SSI program are among the
toughest in the world--total disability based upon an inability
to work at any job in the national economy. For adults with
serious brain disorders--including schizophrenia, manic-
depression, major depression and severe anxiety disorders--SSI
serves as a critical federal safety-net program that is
essential to meeting the most basic needs for food, clothing
and shelter.
At the outset, I would like to make clear that NAMI is very
concerned about the impact of fraud and abuse on both the SSI
and SSDI programs. Improper overpayments, manipulation of
existing benefit standards and lax oversight of the eligibility
rules are issues that the NAMI membership believes both
Congress and SSA should pay more attention to. NAMI is troubled
by reports from agencies such as the General Accounting Office
and the Office of Inspector General at SSA that fraud continues
to occur in both the SSI and SSDI programs.
Because so many people with the most severe and disabling
mental illnesses rely on SSI and SSDI for basic support to live
in the community, NAMI believes that every effort should be
made to ensure that cash benefits go only to those who meet the
program's rules governing eligibility and benefits. Fraud and
abuse in these programs only serves to undermine the integrity
of SSI and SSDI and thereby endanger the future of a critical
piece of the safety net for the most vulnerable people in our
society. From NAMI's perspective both as taxpayers, and as
people with severe disabilities who must rely on the SSI and
OASDI programs, it is critical that precious funding not be
wasted on fraud or abuse. NAMI applauds the Subcommittee's
efforts both to root out existing fraud and abuse and to change
the law to prevent such fraud and abuse in the future.
However, NAMI would also like to urge members of the
Subcommittee to measure both these proposals as well as all
future fraud and abuse prevention efforts against a standard of
how they target documented patterns of fraud and abuse.
Proposals that are unrelated to fraud and abuse should, in
turn, be left for future reform efforts for SSI and SSDI. More
importantly, NAMI urges the Committee to be careful to ensure
that policy changes do not unfairly target beneficiaries who
legitimately receive benefits and rely on these programs for
basic needs. Again, NAMI would like to caution that not all
errors in the system are caused by people acting with
fraudulent intent; therefore, statutory provisions should be
carefully crafted to ensure that they do not harm innocent
people who are the intended beneficiaries of the program.
NAMI would like to respond to a number of provisions in a
draft of the SSI Fraud Prevention Act of 1999 that were made
available to us by the Subcommittee last week.
Overpayments to Beneficiaries and Recovery of Overpayments by SSA
Before making some specific recommendations regarding
overpayments and collection of overpayments, we would like to
note that NAMI and many of our colleague organizations in the
disability community have been concerned about overpayments for
quite some time. However, we view the overpayment problem from
a different point of view, seeing it as less a problem of fraud
and more of a problem of inadequate reporting and recording
systems in the SSA structure.
First, given the retrospective accounting that takes place
in SSI, it is to be expected that a certain number of
overpayments and corrections would take place on a regular
basis. This is particularly true given SSI provisions (such as
Sections 1619(a) and (b)) that encourage work often cause
fluctuations in monthly benefits that must be reconciled after
the fact with fluctuating monthly earnings.
Adults with severe mental illnesses struggle with the
inability of SSA's reporting and recording systems to keep pace
with the fluctuating income of beneficiaries. There is no
specific way in which SSA requires earned-income reports to be
made. They can be made in writing, by calling the 800 number,
or by stopping in to report at an SSA field office. There is no
particular form to file and no official record for the
beneficiary to use to prove the report was made. In addition,
there appears to be no effective internal system for recording
the income that beneficiaries report. Finally, as I note above,
the program rules and formulas are so complex that when an
individual reports income and there is no change in the benefit
amount, the individual may not be aware that an overpayment is
occurring. As a result of the system's inefficiencies and the
consequences to the individual of an unexpected overpayment,
NAMI views the potential for overpayments as a strong
disincentive to employment for many consumers.
In my personal experience, beneficiaries will report
monthly earnings on or about the first month when they are
paid. At best, this information will be processed by SSA some 2
or 4 months later. This means that earnings from, say January
of a given year will result in a reduction in benefits the
following May. At this point in time, an individual with a
severe episodic mental illness, e.g. schizophrenia, may not be
employed and will likely not have sufficient income to survive.
Additionally, even with timely and accurate reporting, many of
my clients continue to receive SSI or SSDI checks for months to
years after finding full-time work. Unbelievably, mailing or
returning the checks does not cure the problem, payments
continue to be made. Even the most strong willed and honest
find themselves tempted to spend this money when faced with the
types of economic crises that are all too often experienced by
adults with severe disabilities.
A nightmare that occurs often for adults with severe mental
illnesses is when they receive a notice from SSA stating the
existence of an overpayment that amounts to thousands, if not
tens of thousands, of dollars that accumulated over several
years. Even for those people on SSI who are savvy enough to
realize that an overpayment is occurring, it may be hard to
fix. Perhaps the biggest problem is that reports to SSA and
requests to adjust benefits often go unheeded by SSA. Yet,
because they are on SSI, beneficiaries cannot ``save'' the
excess for ultimate pay-back to SSA without risking excess
``resources'' and loss of basic SSI eligibility. An additional
nightmare can be the request from SSA to produce pay-stubs and
receipts going back many years.
NAMI and a number of colleague organizations in the
disability community have raised these issues with SSA. We
recognize that SSA is operating under certain limitations, such
as the fact that certain reports are only available to SSA on
an annual basis. While there are some administrative
improvements that SSA can make, we believe that it is critical
to make some statutory changes to help solve the problem. SSA
should be required to make improvements in its reporting and
recording systems to ensure that beneficiaries are notified of
overpayments in a timely manner. A reasonable time period
should be allowed for SSA to notify the beneficiary and correct
the overpayment. Where there is no suggestion of fraud,
overpayments that are not corrected and about which
beneficiaries are not notified within the time limits should be
waived.
We are pleased that you have included a study in this
legislation (Section 17 of the bill) that addresses measures to
improve processing of reported income changes by beneficiaries.
In reviewing GAO reports, I have not found any discussion of
what actually happens, or does not happen, to the earnings
reports that beneficiaries make. NAMI believes that this is
where the real crux of the problem lies. Until systems
inadequacies are minimized, it will be difficult to ferret out
cases of true fraud. Streamlining SSA's procedures to ensure
that the information received is acted upon immediately could
eliminate many overpayments (or substantially reduce the amount
of overpayments), reduce the administrative hassle involved in
overpayments for SSA and recipients, and prevent the disastrous
personal circumstances that arise when SSA withholds much-
needed funds. Since NAMI views the majority of large
overpayments as the result of SSA's administrative practices,
our comments (below) on other overpayment issues reflect that
perspective.
Increased Collection of Certain SSI Overpayments
NAMI believes that the 50-percent minimum for collection of
overpayments from lump sum payments may be too high. Often
people awaiting receipt of their benefits go without basic
necessities and/or incur debts that need to be repaid (i.e.,
the landlord waits for the rent, the corner grocer extends a
little more credit, the telephone company hasn't been paid and
is about to terminate service). A lower minimum (such as 20
percent) with statutory language requiring SSA to consider
these types of circumstances would help people in these
difficult circumstances.
Increased Collection of SSI Overpayments to Convicted Criminals
NAMI believes that it is important to protect people with
severe mental illnesses who are currently, or have been,
incarcerated and who may not fully understand the complex SSI
rules. Thus we believe there is a need for a requirement in
which SSA specifically asks for information about past
overpayments on the application and records the individual's
answer. SSA should have an affirmative responsibility to
inquire about the needed information and to assist people in
understanding the request.
In addition, NAMI urges you to consider giving the
Commissioner discretion to waive the penalty when the
Commissioner finds that the individual's impairment itself is
part of the reason for the individual's failure to properly
report. Finally, NAMI believes that any attempt to impose a
stiff sanction such as 10-year bar on eligibility for failure
on the part of prisoner to notify SSA of an overpayment or
agree to a repayment plan, should include some minimal
protections. For example, SSA should be required to prove that
a beneficiary either knew of a previous overpayment, or
knowingly refused to repay or meet obligations of a repayment
agreement.
Further, NAMI is concerned about the potential impact on a
prisoner's family of the requirement that SSA continue debt
collection while the individual is incarcerated. The
Commissioner appears to have some flexibility in this
legislation and we urge that such flexibility remain.
Otherwise, we can imagine scenarios where SSA would be required
to attach resources or assets that other family members are
dependent upon, such as a home or car.
Added Debt-collection Tools
While we understand the need for SSA to have debt-
collection tools for situations in which a beneficiary has left
the program, we urge that notice and an opportunity to contest
the overpayment be given to the individual before the matter is
turned over to a collection agency. Given the view that people
with disabilities hold in regard to SSA's in the occurrence of
overpayments, it would be particularly harsh for people to
discover an overpayment and action against them in the normal
course of conducting their personal business, such as applying
for a first mortgage or a car loan.
Treatment of Assets Held in Trust and Preventing the Disposal of
Resources for Less Than Fair Market Value
Adults with severe mental illnesses and their families
typically face many varied and complicated decisions regarding
long-term planning for supports and housing. Congress has spent
a great deal of time in recent years ensuring that
beneficiaries (both current and future) do not game the system
by either hiding or transferring assets solely for the purpose
expediting eligibility for SSI and Medicaid. Most recently,
Congress tightened the rules governing transfers of assets and
trusts for Medicaid eligibility as part of the OBRA 1993
legislation. NAMI would like to thank the Subcommittee for its
work in incorporating those Medicaid transfer of asset and
trust exceptions into the corresponding SSI provisions included
in this bill.
Regarding the prohibition on transfers of assets, we
believe that the penalty period formulation in the bill (time
barred from benefits as related to the value of the transfer)
should be limited to no more than the former two-year statutory
bar. However, since even this two-year bar could be life-
threatening for many people who are severely disabled, we
applaud the inclusion of authority for SSA to waive the bar in
cases of undue hardship. Further, if assets incur a penalty
period in both SSI and Medicaid, there should be coordination
of the penalty periods to prevent the same amount of funds from
being ``double-counted'' as if the person could have covered
his/her own SSI and Medicaid expenses with the same finite
amount of money. We appreciate your consideration of this
issue.
Administrative Sanctions Process
In the section addressing the sanctions for criminal
conviction for fraud, we urge that the loss of benefits period
for a beneficiary be made consistent with that for the
attorneys' and physicians' first conviction (five years) rather
than the ten years now included in the draft.
Annual DDS Evaluation of Performance of Consultative Examiners
NAMI believes that one additional performance criteria
should be included for evaluation of consultative examiners by
SSA and the Disability Determination Service: evaluation of the
performance of consultative examiners for the ``completeness of
exams'' they perform. Too often, the exams are so cursory as to
be meaningless, resulting in needless administrative waste.
Computer Matches with Medicaid and Medicare Data
While there is certainly the need for better data matching,
we believe that some protections need to be incorporated since
data may not be accurate or up-to-date. For example, when
someone has a very short stay in a psychiatric hospital,
nursing home, or other institutional setting, the matched data
may not reflect more recent events, such as discharge. NAMI
therefore urges that SSA be required to corroborate and verify
any information before it relies upon it for changing benefits.
Referrals of Fraud to the OIG and Authority to Contract Out
NAMI believes that this provision should be limited to
cases in which there is a strong suspicion that fraud is an
issue. NAMI advises against allowing numerous private
investigators, working on commission, disrupting the lives of
innocent, law-abiding citizens.
Evaluation of 18-year-olds
Finally, we urge the Subcommittee to consider a provision
to correct an application of the law that encourages 18-year-
olds to leave school before completion of secondary-level
education. Current law requires a redetermination of an 18-
year-old's SSI eligibility under the adult standard. For those
young people who need to remain in school due to their
disability, application of the work-based adult standard is
inappropriate. We urge the Subcommittee to consider delaying
the application of the adult standard until the young person
has completed secondary-level education.
Conclusion
Mr. Chairman, thank you for the opportunity to share NAMI's
views on this important legislation.
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