[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
SOCIAL SECURITY PROGRAM INTEGRITY ACTIVITIES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
MARCH 30, 2000
__________
Serial 106-38
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
66-238 CC WASHINGTON : 2000
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 Social Security
E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
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C O N T E N T S
__________
Page
Advisory of March 23, 2000, announcing the hearing............... 2
WITNESSES
Social Security Administration:
Hon. William A. Halter, Deputy Commissioner of Social
Security................................................... 6
Hon. James G. Huse, Jr., Inspector General, Office of the
Inspector General; accompanied by Steve Schaeffer,
Assistant Inspector General for Audit...................... 33
SUBMISSIONS FOR THE RECORD
National Association of Disability Examiners, Lansing, MI, Terri
Spurgeon, statement and attachment............................. 49
TREA Senior Citizens League, Alexandria, VA, Michael F.
Ouellette, statement........................................... 51
SOCIAL SECURITY PROGRAM INTEGRITY ACTIVITIES
----------
THURSDAY, MARCH 30, 2000
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:12 a.m., in
room B-318, Rayburn House Office Building, Hon. E. Clay Shaw,
Jr. (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
FOR IMMEDIATE RELEASE
March 23, 2000
No. SS-13
Shaw Announces Hearing on Social Security Program Integrity Activities
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced a
hearing on Social Security Administration (SSA) program integrity
activities designed to prevent waste, fraud and abuse in Social
Security programs. The hearing will take place on Thursday, March 30,
2000, in room B-318 of the Rayburn House Office Building, beginning at
9:00 a.m.
Oral testimony at this hearing will be from invited witnesses only.
Witnesses will include the Deputy Commissioner of Social Security and
the Social Security Inspector General. 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:
In 1999, SSA paid benefits to about 45 million retired and disabled
workers and their families and to more than 6 million Supplemental
Security Income recipients, totaling almost $400 billion dollars and
making it the largest expenditure in the Federal budget. Any spending
of this magnitude is a ripe target for fraud and abuse. As America
enters the 21st Century, SSA will also face rapidly increasing
workloads within the next decade as the huge Baby Boom generation
begins to qualify for benefits.
Accordingly, one of SSA's goals is to bring program management up
to the highest standards, with zero tolerance for fraud and abuse.
Agency objectives to support this goal include making accurate benefit
payments, reducing the backlog of continuing disability reviews,
improving accuracy and timeliness in posting earnings, aggressively
deterring, identifying, and resolving fraud, and increasing debt
collection.
In announcing the hearing, Chairman Shaw stated: ``No time is more
important than now to ensure Social Security is insulated against
waste, fraud and abuse. We need to be certain Social Security is doing
everything it can to protect taxpayer funds--especially before massive
numbers of Baby Boomers start to qualify for benefits. This hearing is
part of our ongoing oversight effort to ensure Social Security has
smart, aggressive efforts in place to prevent fraud and abuse and is
efficiently managing critical Social Security programs.''
FOCUS OF THE HEARING:
The Subcommittee will review the adequacy of the Social Security
Administration's and Social Security Inspector General's current
policies to combat fraud and abuse and prevent wasteful spending in
Social Security programs.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect or MS Word format, with their name, address,
and hearing date noted on a label, by the close of business, Thursday,
April 13, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways
and Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Social Security office, room B-316
Rayburn House Office Building, by close of business the day before the
hearing.
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noted above.
Chairman Shaw. Good morning. Today's hearing is on a very
important topic, one that we have touched on and talked about
for some time now, and that's how to make sure that Social
Security is protected against waste and fraud.
This is no small issue and no small challenge for the
Social Security Administration. This year, Social Security will
provide about $400 billion in benefits to 45 million Americans.
Just getting these payments right is a huge task for the
agency.
Then there's fraud. As the author of the federalist Papers
put it, if men were angels, no government would be necessary.
The same goes for fraud. We wouldn't need to combat it if
people were angels. Unfortunately, people are not angels. So we
must have smart, aggressive measures to prevent fraud and to
recover money that's misspent.
In recent years, this Subcommittee has worked closely with
SSA to combat waste and fraud in Social Security programs,
including the SSI Program. For example, we passed landmark
legislation ensuring checks are not going to the wrong people,
preventing prisoners from getting cash benefits, and helping
the SSA better recover overpayments. Those efforts are saving
literally billions of dollars, contributing to our budget
surplus, but more importantly, boosting taxpayers' confidence
that their money is being spent as it should.
This hearing will help us assess these efforts and, more
specifically, I have four main questions I hope today's hearing
will answer: What is Social Security doing to ensure the right
benefits go to the right people; what is Social Security doing
to prevent fraud; what could Social Security do to improve
these efforts; and how can we here on the Committee help?
We have the right people here to help us answer those
questions and probably many more questions. With us today is
Bill Halter, the Deputy Commissioner of the Social Security
Administration, who is making his first appearance before this
Subcommittee. We also are pleased to welcome back Jim Huse,
Social Security's Inspector General.
We look forward to your testimony. I should also note that
we expect to hold hearings exploring in greater detail two
issues touched on today: Fraud involving representative payees,
and issues relating to Social Security numbers and their
misuse. That is an area that I'm very concerned about. As so
many people now are asking for your Social Security number, you
wonder what they're doing with them or what could possibly
happen, but we'll leave that for another day.
Mr. Matsui.
Mr. Matsui. Thanks very much, Mr. Chairman.
In view of the fact that we ran until about one o'clock
last night, I'm going to show mercy on everyone in this room
and submit my statement for the record and welcome Mr. Halter
and obviously the Inspector General.
I do want to commend you for holding these hearings.
Undoubtedly, we hope to get a lot of information out of this,
and perhaps, work on a bipartisan basis in terms of assisting
the administration in coming up with some solution on how they
can solve their problems.
So again, I look forward to hearing the testimony.
[The opening statement of Mr. Matsui follows:]
Opening Statement of Hon. Robert T. Matsui, a Represenative in Congress
from the State of California
Thank you, Mr. Chairman for holding this important hearing
today.
As we have been discussing in recent hearings, the Social
Security Administration faces huge challenges in the coming
decades to handle the increase in workload due to the
retirement of the baby boom generation. Today's hearing will
examine ways in which SSA can prevent fraud and abuse in order
to make the most of its resources to serve the public.
I want to welcome Deputy Commissioner Halter and Inspector
General Huse and congratulate both of them on their
confirmations last fall. This is the first time that either of
them has testified before our Subcommittee since they were
confirmed and I want to express my hope that their
relationships with the Subcommittee will be long and
productive.
Of course, neither Mr. Halter nor Mr. Huse are new to
Congressional hearings-Mr. Huse has appeared before Congress on
several occasions in the past and Mr. Halter is a former
staffer of the Finance and Joint Economic Committees.
In addition, Mr. Halter is no stranger to the Congressional
budget process. Prior to his confirmation, he served as a
Senior Advisor in the Office of Management and Budget. Given
his budgetary experience, I hope he will be able to explain to
the Subcommittee how the Republican budget resolution will
affect SSA's efforts to meet future service delivery challenges
and to maintain program integrity.
The budget resolution that House Republicans passed by a
narrow margin last week cuts non-defense discretionary spending
by $20 billion in FY 2001 and by $135 billion over the next
five years relative to the current services baseline. This is
tantamount to a 6.4 percent cut in purchasing power for FY
2001. By FY 2005, this cut exceeds 11 percent in real terms.
This budget resolution leaves one to wonder how SSA will
have the administrative resources necessary to combat fraud and
abuse and, at the same time, maintain current levels of
service, prepare for future workload increases, and train and
hire the employees necessary to replace the impending wave of
retiring workers at SSA.
I only hope that this year's Republican budget resolution
does not lead to a repeat of last year's appropriations
process. For FY 2000, the Congress provided $6.57 billion for
SSA's Limitation on Administrative Expenses (LAE), a level of
funding below that requested by both the President and by the
Commissioner of Social Security.
As a result, this year SSA will be able to process a
quarter of a million fewer disability, retirement, and
survivors claims than previously projected and will be unable
to conduct over 200,000 Supplemental Security Income (SSI)
redeterminations.
If Congress follows the same course of action this year, it
would not only impair customer service at SSA in the short-run,
but would greatly set back SSA's long-run efforts as well.
Some may argue that SSA can compensate for real cuts in its
administrative budget by eliminating wasteful administrative
practices. It should go without saying that we should do all
that we can to ensure that not a single dime of the federal
budget is wasted. Yet, given the magnitude of the cuts in the
Republican budget resolution, SSA would have to do more than
just trim the fat from its budget. The Republican budget
resolution would force SSA to compromise its service to the
public.
Clearly we should do all that we can to ensure that only
those people who are entitled to Social Security benefits
receive Social Security benefits and that the benefits they
receive are in the correct amounts.
Maintaining program integrity is a vital part of sound
public administration and a major factor in determining the
public's view of its government. More importantly, maintaining
program integrity means protecting those who may not be able to
protect themselves.
For instance, beneficiaries who rely on representative
payees to complete financial transactions on their behalf with
their Social Security benefits represent some of the most
vulnerable members of our society. They are the young, the
sick, and the old.
So, when representative payees misuse the funds that have
been entrusted to their care, they are not simply defrauding
the Social Security Trust Funds -they are harming the very
people that Social Security was designed to help.
Consequently, I look forward to hearing from Mr. Halter
about the steps SSA is taking to prevent fraud and from Mr.
Huse about some of the changes that could be made in the law to
improve the Office of the Inspector General's ability to deter,
detect, and prosecute those who engage in fraudulent
activities.
Thank you, Mr. Chairman.
Chairman Shaw. OK. Mr. Huse, I apologize, I mispronounced
your name in my statement.
Mr. Halter.
STATEMENT OF HON. WILLIAM A. HALTER, DEPUTY COMMISSIONER OF
SOCIAL SECURITY
Mr. Halter. Thank you, Mr. Chairman, and thank you for the
welcome. As you noted, this is my first time to appear before
this Subcommittee, and I'm tremendously happy about doing that.
Earlier in my career, I was fortunate to work for the
counterpart Committee in the other body, and over the course of
that time developed an extraordinary amount of respect for the
Ways & Means Committee. So I'm delighted to be here.
Chairman Shaw. You will find us much more friendly.
[Laughter.]
Mr. Halter. I intend to take you up on that, Mr. Chairman.
Thank you, Mr. Chairman, for inviting me to discuss the
integrity and the stewardship of the Social Security program.
As you noted in your opening statement, in Fiscal Year
2000, Social Security will pay almost $400 billion to 45
million beneficiaries, almost one of every four Federal budget
dollars spent.
On average, each workday about 100,000 people visit one of
our 1,300 field offices and over 240,000 people call our 800
telephone number. Each workday, we process an average of 20,000
initial claims and hold 2,400 hearings before administrative
law judges. Each year, we ensure that over 250 million earnings
items are correctly credited to workers' accounts.
In the field of financial management, Social Security has
been a leader. Syracuse University's Maxwell School gave Social
Security the only ``A'' awarded to government agencies for
financial management, and we were one of only two Federal
agencies to receive an ``A'' grade overall for management. In
addition, Social Security was recently issued the sixth
consecutive clean audit opinion on our financial statements by
our Inspector General.
Since Social Security became an independent agency--and
coincidentally, that occurred 5 years ago tomorrow--we have
devoted significant resources to strengthening program
integrity. One out of every four dollars in Social Security's
administrative budget is for program stewardship and integrity.
Since March 1995, Social Security has sent Congress 35
legislative proposals, most of which addressed program
integrity issues. Some of these proposals are still before
Congress. Those which you have enacted have given us additional
tools to improve program accuracy, to detect, prevent, and
collect overpayments, and to prevent fraud. We appreciate very
much the efforts of the Ways & Means Committee in this regard.
While always striving for continuous improvement, our
payment accuracy is high and our administrative costs low. In
fact, the administrative cost of paying retirement benefits is
less than 1 percent of yearly benefits paid, and the overall
accuracy rate of those payments is 99.8 percent. The
administrative cost of paying all Social Security benefits is
less than 2 percent of benefit payments in any given year. Of
the $1.8 billion Social Security overpayments identified last
year, most occurred because individuals have difficultly in
predicting their earnings for the retirement earnings test.
Fortunately, the President will soon sign H.R. 5, the
Senior Citizens' Freedom to Work Act of 2000. This historic
legislation that began in this Subcommittee ends the retirement
earnings test for individuals aged 65 and older, thus
eliminating approximately $450 million annually--that is two-
thirds of the retirement earnings test-related overpayments.
While helping individuals remain active and productive might be
a more important policy goal, eliminating the leading cause of
erroneous Social Security benefit payments is also
extraordinarily beneficial.
We would appreciate your support for the President's $35
million Fiscal Year 2000 supplemental appropriation request to
fund one-time costs necessary for the implementation of this
legislation, H.R. 5. These funds are necessary to cover a
number of different categories of costs, and to pay out $6
billion in benefits to 900,000 Americans this year as quickly
and as efficiently as possible.
The second leading cause of Social Security overpayments is
disability cessation, with two major contributors to that type
of overpayment.
First, overpayments may result from individuals with
disabilities working but not reporting their earnings to the
Social Security Administration timely. About $294 million of
the total $441 million in disability cessation payments last
year involved work, and we're taking corrective action. We are,
for example, establishing an employment support representative
under the Ticket to Work legislation, and we've also increased
the monthly amount the disability beneficiary can earn from
$500 to $700 per month without affecting benefits.
Second, disability cessation overpayments also occur if
Social Security, through a continuing disability review, or
CDR, finds that a medical condition has improved and a person
elects to continue receiving disability benefits during their
appeal.
If the appeal is denied, these continued benefits are
overpayments, which last year totaled nearly $147 million. We
do, however, have a recovery rate on those overpayments of
approximately 46 percent. These overpayments that occur because
an individual exercises his right to continue disability
benefits during appeal are in essence unpreventable.
Our annual CDR reports to Congress showed that CDRs
undertaken in the first 3 years of the 7-year plan are
estimated to have saved the disability insurance, SSI, Medicaid
and Medicare Programs nearly $6 billion by the end of 2002,
with the overall savings-to-cost ratio of about 12 to 1. Of
those savings, $3.2 billion are in Social Security's Title II
program.
Further, it is estimated that over the life of our 7-year
plan, the overall savings-to-cost ratio will be at least 6 to
1, and, in fact, we believe it will be significantly better
than that.
Another area of overpayments concerns incarcerated
individuals not entitled to receive benefits. Today, the Social
Security Administration gets reports of prisoner confinements
covering 99 percent of inmates. We have made substantial
progress in ensuring that incarcerations are reported timely
and that benefits are suspended promptly. We estimate that
resulting savings to Social Security and SSI will total more
than $3.5 billion during Fiscal Years 1995 to 2001, and of this
amount, $2.3 billion are savings to Social Security.
Last fiscal year, we detected $84 million in overpayments
due to death. About 95 percent of our death reports come from
funeral homes, family members, postal authorities, and
financial institutions. For the remaining 5 percent, we rely on
information from the States. Last year, we began to develop a
national electronic death registry to obtain death information
within 24 hours of receipt at the States' individual
repositories.
Social Security is also required to offset disability
benefits for worker's compensation benefits to the same
individual. Overpayments can occur when a final decision on
worker's compensation is not made until after Social Security
benefits begin. We have ongoing periodic computer matches with
Federal agencies to obtain information regarding Federal
worker's compensation payments, and we now have limited online
access with nine States to check initial claims and,
importantly, we are pursuing matching agreements with other
States.
In addition to our efforts to detect overpayments, we have
also concentrated on recovery of those overpayments. Our goal
is an annual average increase of 7 percent in debt collections.
Last fiscal year, we collected over $1.2 billion in Title II
debt, an 8-percent increase and, thus, achieved our goal.
Now I would like to shift to a discussion of program fraud.
Fraud, as opposed to the previously described overpayments, is
an intentional act of deception such as knowingly making a
false statement in order to obtain benefits.
One of Social Security's five strategic goals is making our
program management the best in the business with a zero
tolerance for fraud. We are devoting $1.7 billion to program
integrity and antifraud initiatives in this fiscal year, and
this includes funding for our Office of the Inspector General,
continuing disability reviews, SSI redeterminations,
representative payee monitoring, annual earnings posting, and
debt collection. All of these activities are extraordinarily
resource-intensive. Reductions in the resources budgeted for
Social Security would affect our program integrity plans, and
likely would result in unprevented and undetected fraud and
overpayments.
I want to emphasize that Social Security and Disability
Determination Services employees are our biggest assets in the
fight against fraud. A recent survey found that 96 percent of
Social Security employees viewed having zero tolerance for
fraud and abuse to be a very important job responsibility for
them.
Again, we would like to thank the Subcommittee for its
efforts to maintain integrity of the Social Security program.
We are committed to our role as stewards of the trust fund and
look forward to this Subcommittee's support to ensure that
Social Security is adequately funded in order to maintain
quality program management.
I want to thank you for the opportunity to testify today,
and I would certainly be happy to take any questions that you
may have.
[The prepared statement follows:]
Statement of Hon. William A. Halter, Deputy Commissioner of Social
Security
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to discuss the integrity of
the Social Security program and the Social Security
Administration's (SSA) stewardship of the program. Since SSA
became an independent agency--5 years ago tomorrow
coincidentally--we have devoted significant resources and
attention to strengthening and maintaining the integrity of the
Social Security program.
I'd like to briefly outline the size and scope of the
Social Security program. In Fiscal Year 2000, Social Security
will pay almost $400 billion to 45 million beneficiaries,
almost one of every four federal budget dollars. On average,
each workday about 100,000 people visit one of our 1,300 field
offices and over 240,000 people call our 800-telephone number.
Each workday we process an average of 20,000 initial claims and
hold 2,400 hearings before Administrative Law Judges. Each
year, we ensure that over 250 million earnings items are
correctly credited to workers' accounts.
In the field of financial management information, SSA has
long been a leader among the Federal Government community. The
Government Performance Project, administered by the Syracuse
University's Maxwell School of Citizenship and Public Affairs,
gave us the only ``A'' awarded to government agencies in the
area of financial management. SSA has also earned an overall
grade of ``A,'' only one of two agencies to do so. In addition,
SSA was issued another clean unqualified audit opinion on its
financial statements for 1999 from the Office of the Inspector
General for the sixth year in a row.
The public's trust in the Social Security program is
absolutely critical. Even a perception of program integrity
problems can threaten this trust. Because of the importance of
this issue, $1 out of every $4 in SSA's administrative budget
is dedicated to program stewardship and program integrity. We
must remain vigilant if we are to fulfill our role as capable
stewards of the public trust but SSA's ability to do so is
dependent on a number of factors, one of which is adequate
resources.
This testimony provides an overview of how accurate we are
in Title II payments, the major causes of errors, our
overpayment recovery successes and the many initiatives we've
undertaken to improve payment accuracy. Our efforts currently
underway to enforce a zero tolerance for program fraud and
abuse are also briefly described.
Overview
Since March 1995, SSA has sent Congress 35 legislative
proposals, most of which address program integrity issues.
While some of these proposals are still before Congress, those
that have been enacted have given SSA additional tools to
improve program accuracy, to detect, prevent, and collect
overpayments, and to deter fraud.
I thank the Subcommittee and the full Ways and Means
Committee for your efforts in providing SSA the tools for this
vital job. We will continue to seek Congress' help in providing
us with additional tools and sufficient resources to maintain
public confidence in the Social Security program, which
protects virtually all Americans in their retirement or in the
event of disability, or loss of a family wage earner.
Overall Payment Accuracy
The administrative cost of paying Social Security benefits
is less than 2 percent of benefit payments in a year. The
payment accuracy rate for the retirement and survivors
insurance benefits was 99.9 percent for Fiscal Year 1999. When
we include the disability insurance program, the accuracy rate
is 99.8 percent. That is, for every $100 in program benefits,
only twenty cents is either overpaid or underpaid. The accuracy
rate for Social Security benefits has remained consistent over
the past 10 years generally at 99.8 percent to 99.9 percent.
Another way to look at our effective and efficient
management of the Social Security program is the consistency
with which we detect overpayments. Over the past 10 years, the
percentage of overpayment detection has consistently run
between 0.4 and 0.5 percent of Social Security benefit outlays.
Leading Causes of Overpayments
In fiscal year 1999, SSA detected $1.8 billion in Social
Security program overpayments-$1 billion in the retirement and
survivors program, and $800 million in the disability insurance
program. Nearly two-thirds of this total overpayment amount
occurs for two reasons--the retirement earnings test and
disability cessations.
Retirement Earnings Test
The largest portion of Social Security overpayments is
caused by the difficulty that individuals have in accurately
predicting their earnings for purposes of the retirement
earnings test. In Fiscal Year 1999, overpayments related to the
retirement earnings test totaled $670 million.
The President will sign shortly, H.R. 5, the Senior
Citizens' Freedom to Work Act of 2000. This historic piece of
legislation, which began in this Subcommittee, eliminates the
earnings test for individuals at or above the normal retirement
age, currently 65 years. The enactment of H.R. 5 will eliminate
two-thirds, approximately $445 million annually, of the
overpayments presently caused by the retirement earnings test.
While certainly not as important a policy goal as helping
individuals remain active and productive, eliminating the
leading cause of erroneous Social Security benefit payments is
a beneficial side effect of the legislation.
Social Security will implement this legislation as quickly
as possible after the President signs the legislation. However,
with the passage of this legislation, SSA will have one-time
costs in Fiscal Year 2000 to make benefit adjustments, respond
to inquiries, process additional claims, and modify our
computer systems. We are working on a priority basis to ensure
individuals receive all benefits due them as quickly as
possible. In addition, our goal is to send benefits
automatically so that beneficiaries do not have to take action
on their own to receive higher payments. We would appreciate
your support for the President's $35 million Fiscal Year 2000
supplemental appropriation request to fund one-time costs for
implementation of the Senior Citizens' Freedom to Work Act of
2000. These funds are necessary to cover SSA's one-time costs
to implement this important legislation and to pay out $6
billion in benefits this year as quickly and efficiently as
possible.
Disability Cessations
The second leading cause of Social Security overpayments is
disability cessation. Two events related to disability
cessation can cause overpayments. The first has to do with
disability beneficiaries going to work, and the second involves
cases in which disability beneficiaries medically recover.
Overpayments due to individuals with disabilities working
are often caused by their not reporting earnings to SSA timely.
By the time the earnings are recorded, they may be past the
point at which their benefits should have stopped, resulting in
overpayments. About $294 million of the total $441million in
disability cessation overpayments last year involved work. We
are taking a number of actions to make sure that beneficiaries
know the importance of reporting their earnings and that the
earnings are posted timely to their SSA record.
Under the recently enacted Ticket To Work and Work
Incentives Improvement Act of 1999, we are establishing a new
position in our field offices called the Employment Support
Representative. Among other duties, this individual will be
responsible for explaining to beneficiaries with disabilities
who are working or want to work how earnings will affect their
benefits. In addition, employees in this new position will
monitor the earnings of working disability beneficiaries to
ensure that adjustments in benefits are timely thereby avoiding
or at least reducing overpayments. Additionally, SSA will fund,
in part, community-based planners who will assist disability
beneficiaries in understanding the effect of work on their
benefits and the requirements to report work and earnings to
SSA timely.
Last summer, SSA increased the amount a disability
beneficiary could earn from $500 to $700 a month without
affecting their monthly benefit. Although it is too early to
say with certainty that this higher amount will result in fewer
overpayments caused by work, we anticipate that this will be
the case.
The second primary cause of disability cessation
overpayments is medical recovery. A provision in the 1984
disability amendments provides that if SSA determines through a
continuing disability review (CDR) that an individual's medical
condition has improved, he or she may elect to continue
receiving disability benefits during appeal of a medical
cessation determination. If the appeal is subsequently denied,
these continued benefits are overpayments subject to recovery.
Last year we estimated disability cessation overpayments due to
benefit continuation totaled nearly $147 million. All
overpayments that occur because an individual exercises his or
her right for continued disability benefits during appeal are
unpreventable.
SSA is required by law to conduct periodic Continuing
Disability Reviews. The CDR process allows SSA to ensure the
integrity of the disability insurance program by detecting
beneficiaries' medical improvements and preventing benefit
payments to individuals who are no longer disabled. In 1996,
with the support of the Administration, Congress authorized an
adjustment to the cap on discretionary spending for processing
CDRs. As a result of this cap adjustment, SSA was able to
implement a 7-year CDR plan covering 1996-2002. It is important
to note that the growth in the amount of disability benefit
overpayments is due almost wholly to our increased CDR efforts
that actually result in future program savings.
As detailed in our annual CDR reports to Congress, the CDRs
undertaken in the first 3 years of the 7-year plan are
estimated to result in total savings to the disability
insurance, SSI, Medicaid, and Medicare programs of nearly $6
billion by the end of 2002. The ratio of program savings to the
administrative costs of CDRs is very impressive. It is
estimated that over the first 3 years of the CDR plan, the
overall savings to cost ratio was about 12 to 1. Further, it is
estimated that over the life of our 7 year plan, the overall
savings to cost ratio will be at least 6 to 1.
Other Major Causes of Overpayments
In addition to our stewardship efforts involving CDRs, SSA
has undertaken significant initiatives over the past several
years to prevent and detect Social Security program
overpayments due to incarceration or death of beneficiaries.
SSA has been involved in efforts employing data matches with
prisons and States. In addition, the data collected are being
shared with other Federal benefit-paying programs to help
reduce their program costs.
Another area of data matching for detecting and preventing
Social Security overpayments involves workers' compensation
payments. As you know, Mr. Chairman, this is an extremely
complicated provision of the Social Security program, and we
are working to improve our administration of this issue.
Although these data matches are not yet as extensive as those
involving prisons and State death records, we anticipate that
such matches will help us with our program stewardship
responsibilities.
Prisoner Matches
Social Security benefits are not payable to certain persons
incarcerated as a result of a conviction of a crime and certain
other confined individuals (for example, those found not guilty
by reason of insanity).
SSA began matching information with prisons as early as
1974 to prevent the payment of Supplemental Security Income
(SSI) benefits to any individual in a public institution and,
in 1986, the matching program was extended to prisoners who
were Social Security beneficiaries. However, these early
matches did not produce information quickly enough to prevent
significant amounts of overpayments.
Beginning in 1994, SSA expanded its efforts to find ways in
which we could obtain data from State and local entities to
quickly identify prisoners whose benefits should be suspended.
By the end of 1995, SSA had established reporting agreements
with more than 3,500 incarceration facilities.
Since 1995, SSA has consistently supported legislation for
incentive payments to prisons, and in May 1996, SSA sent a
draft bill to Congress, which included a provision for
incentive payments. Such incentive payments for SSI cessations
were included in the welfare reform legislation that was
enacted in 1996. With the support of this subcommittee last
year, under the Ticket To Work and Work Incentive Improvements
Act of 1999, the requirement that confinement stem from a crime
punishable by imprisonment for more than 1 year was eliminated.
Also, the incentive payment provisions for prisons reporting
incarcerations of beneficiaries that have been applicable in
the SSI program were extended to the Social Security program.
These provisions are effective for incarcerations that begin on
or after April 1, 2000. Under these incentive payments, prisons
that report the incarceration of beneficiaries within the first
30 days of confinement can receive $400 per report, and if they
report between the 30th-90th day of confinement, they can
receive $200 per report.
Today, SSA gets reports of prisoner confinements from 95
percent of correctional facilities, including the Federal
Bureau of Prisons, all State prison systems, and county and
local jails. These reports cover 99 percent of the inmate
population in the United States. With the support of these
Federal, State, and local entities, SSA has made substantial
progress in ensuring that incarcerations are timely and
accurately reported and that benefits are suspended promptly.
In December 1999, there were approximately 45,000 individuals
who were not receiving Social Security benefits because they
were incarcerated. We estimate that savings to the Social
Security and Supplemental Security Income program resulting
from these efforts will total more than $3.5 billion during
fiscal years 1995-2001. Of this total, $2.3 billion are savings
to the Social Security program.
SSA is the Federal focal point for sharing prisoner
information. This allows for more efficient use of Government
resources and assists all Federal benefit paying agencies in
enforcing statutory requirements to reduce, suspend, or
terminate these benefits. SSA is already sharing prisoner data
with the Department of Agriculture and will have matching
agreements in effect with the Departments of Veterans Affairs
and Education next month. In addition, we are in the process of
completing an agreement with the Department of Labor.
Death Data Matches
In Fiscal Year 1999, we detected $84 million in
overpayments due to death. We get about 95 percent of our death
reports from funeral homes, family members, postal authorities
and institutions. For the remaining 5 percent, we rely on
information from the States. Under SSA-State agreements, States
provide death information within 90 to 120 days after the month
of death. When SSA receives a report of a previously unreported
death from the State, an alert is issued to the field office to
independently verify that the individual is, in fact, deceased,
before benefits are stopped.
Two legislative proposals that were in the Supplemental
Security Income Program Integrity Act of 1998, which SSA sent
to Congress in May 1998, were designed to facilitate and speed
up States' reporting of deaths. The first provision, which was
enacted in the Foster Care Independence Act of 1999, deems
SSA's data privacy standards to meet all State standards for
purposes of sharing data. The second provision would have
required States to provide death data within 30 days of its
receipt. Congress did not adopt this provision.
In 1999, SSA entered into a contract with the National
Center for Health Statistics and the National Association for
Public Health Statistics and Information Systems to start
developing a national electronic death registry. The objective
of this initiative is to obtain death information from the
States within 24 hours of receipt at the State's repository.
SSA expects 10 States per year to implement electronic State
death registries based on States' readiness to adopt electronic
processing.
Workers' Compensation Matches
A difficult and often error prone feature of Social
Security's disability insurance program involves the provision
that requires disability benefits to be offset by workers'
compensation benefits also being paid to the beneficiary.
Overpayments frequently occur when a final decision on
workers' compensation payments is not made until after Social
Security disability benefits begin. In addition, the allocation
of the offset due to a lump-sum workers' compensation payment
involves a manual calculation, which is time consuming and
labor intensive.
SSA has ongoing, periodic computer matches with Federal
agencies to obtain information regarding Federal workers'
compensation payments. For purposes of checking initial claims,
SSA now has on-line access, at least on a limited basis, with
nine States. This on-line capability allows us to get correct
workers' compensation information immediately when adjudicating
the claim. We are also pursuing matching agreements with other
States that will allow us to get both current and historical
data about workers' compensation amounts for individual
beneficiaries. Unfortunately, one of the issues associated with
matching data is that not all States have the workers
compensation data in a single database. A large portion of
workers' compensation payments is made through insurance
companies.
While we have not yet been as successful in matching
workers' compensation data as we have with, for example, prison
data, we will continue to explore data matches as a way to
detect and prevent Social Security overpayments caused by
workers' compensation payments.
While we rely on such data matches to protect the integrity
of our programs, nothing is more important in the operation of
our programs than ensuring that the public has confidence that
the information placed in our trust is secure. This is a
cornerstone of our philosophy. In fact, the very first
regulation is issued by the new SSA in 1935 dealt with the
confidentiality of its records.
SSA uses state-of-the art encryption software that protects
data sent to us and systems firewalls that protect access to
our databases. We are constantly reevaluating the security
features necessary to protect the information we receive and
maintain.
Overpayment Collections
In addition to detecting the causes of overpayments, we
have also concentrated on recovery of those overpayments. In
Fiscal Year 1999, SSA collected $1.2 billion in overpayments--
$900 million in the retirement and survivors insurance program
and $300 million in the disability insurance program. Based on
a study conducted in the 1990's, we estimate that 60 percent of
the overpayments in any given year will be recovered within 7
years. And, I would note that we recover more than 90 percent
of overpayments owed by individuals who continue to be entitled
to benefits. Our stewardship responsibilities require that we
recover as much of the debt owed as possible. Our goal is to
achieve an annual average increase of 7 percent in debt
collections over the 5-year period from Fiscal Years 1998-2002.
In Fiscal Year 1999, we met our goal for both the Title II and
Title XVI programs. Our collections for Title II were $1.2
billion, an 8 percent increase. In the Title XVI program, we
collected $640 million, an 18.7 percent increase.
How does SSA go about recovering the debt that we are owed?
The collection process is different, depending on whether
individuals are continuing to receive benefits or not receiving
benefits.
Overpaid individuals who continue to be eligible for
benefits receive an overpayment notice informing them about the
amount of the overpayment. The notice gives the overpaid
individual appeal and waiver rights and discusses repayment
options. Options include a full refund of the overpayment
immediately, or withholding overpayments from ongoing monthly
benefits. SSA has a much higher recovery rate for debts owed by
individuals who are on the benefit rolls.
Overpaid individuals who are no longer entitled to Social
Security benefits are notified of the overpayment, provided
appeal and waiver rights, requested to repay in full, or to
contact us to negotiate an installment payment agreement. For
those who establish installment agreements, SSA sends automated
bills and notices requesting repayment. If the overpaid
individual ignores the bills and notices, SSA's debt collectors
call to arrange repayment. If the individual refuses to repay,
SSA uses other debt collection tools such as tax refund and
other administrative offsets and credit bureau reporting.
Although we believe that the provisions described above are
the most effective and productive tools for recovering
overpayments, we are planning to implement administrative wage
garnishment and federal salary offset. We also are planning to
use private collection agencies and interest charging as
methods for recovering overpayments.
Anti-Fraud Initiatives
The distinction between overpayments and fraud is very
important. Social Security overpayments occur for a number of
reasons, the majority of which have been described above.
Program fraud, on the other hand, is an intentional act of
deception, such as knowingly making a false statement in order
to obtain benefits.
In spite of our continued efforts to protect U.S. taxpayers
by ensuring that only individuals who are eligible for benefits
receive only amounts due them, some individuals attempt to
obtain benefits fraudulently. While there is no indication of
widespread fraud associated with our processes, 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.
One of SSA's five strategic goals is ``to make SSA program
management the best in the business with zero tolerance for
fraud.'' This wide-ranging zero tolerance effort is coordinated
through the National Anti-Fraud Committee, which includes SSA
senior staff and the Office of the Inspector General. In
addition to developing its own anti-fraud initiatives, the
National Committee oversees and supports Regional Anti-Fraud
Committees, which were set up to coordinate anti-fraud
strategies in each of SSA's 10 regions. The Regional Committees
include regional commissioners and other senior SSA and OIG
staff as well as managers of SSA district offices.
Independent agency status gave SSA its own Office of
Inspector General. This staff has more than doubled in size
between 1996 and 2000 and now includes over 500 employees. OIG
plays a vital role in the stewardship of the Social Security
program and has partnered with SSA on numerous program
integrity and anti-fraud initiatives.
Another provision enacted last year in the Foster Care
Independence Act of 1999 requires the Commissioner to report
annually on the funds needed for prevention of fraud. SSA's
management plan includes goals directly related to this issue.
SSA will devote $1.7 billion to program integrity and anti-
fraud initiatives in Fiscal Year 2000. These budget items
include funding for SSA's Office of Inspector General,
continuing disability reviews, SSI redeterminations,
representative payee monitoring, annual earnings posting, and
debt collection. All of these efforts are resource intensive,
and reductions in resources budgeted by SSA would affect our
program-integrity plans and likely would result in unprevented
and undetected fraud and overpayments.
Employees in 1,300 local field offices and 54 Disability
Determination Services are our biggest assets in the fight
against fraud. Their commitment in maintaining the integrity of
the Social Security program is unswerving. Often, it is field
office and DDS employees who are able to uncover suspicious or
fraudulent schemes. We will continue to train them in anti-
fraud practices and seek additional tools to make their anti-
fraud commitment more effective. As an indication of Social
Security employees dedication to the agency's anti-fraud
efforts, a recent survey found that 96 percent of the Social
Security workforce viewed having zero tolerance for program
fraud and abuse to be a very important part of their jobs.
Cooperative Disability Investigations Teams
SSA and our Inspector General have set up investigative
units--called ``Cooperative Disability Investigations'' (CDI)
teams--consisting of an IG special agent, two investigators
from a State or local law enforcement agency, and two DDS and/
or SSA personnel. The purpose of this initiative is to provide
greater investigative support to the State DDSs so that they
may make more accurate decisions on disability claims.
Fostering an exchange of information between disability
decision-makers and investigators, the CDI process enhances the
potential for identifying overpayments and denying fraudulent
initial applications, and ensures timely investigation and
termination of benefits when fraud is detected during CDRs. In
addition, the CDI teams investigate and pursue criminal
prosecution of doctors, lawyers, and other third parties who
commit fraud against the disability program. There are
currently seven CDI units operating throughout the United
States.
As of February 2000, the CDI units have processed 2,231
case referrals and developed evidence to support 699 denials
for a projected program savings of nearly $37 million. This
reflects overpayment detections, some of which include fraud.
This is more than 10 times the project's costs so far. In
addition the project has produced more than $11.7 million in
related State program savings. As a result of these efforts, we
expect to see increases in employee morale and public
confidence as SSA has another proactive tool in the fight
against fraud.
Representative Payees
SSA has broad authority to appoint representative payees
for those beneficiaries who are incapable of managing or
directing the management of their funds. In fact, direct
payment is prohibited to beneficiaries who are legally
incompetent, children under age 15 and for those disabled
beneficiaries where alcoholism or drug addiction is a
contributing factor material to the determination of
disability.
There are 4.7 million Social Security beneficiaries who
require representative payees. Family members serve as
representative payees for over 90 percent of the beneficiaries
requiring them. The remaining 10 percent are institutions,
government agencies, financial organizations, and fee-for-
service organizations. The vast majority of representative
payees provide much needed help to beneficiaries who are the
most vulnerable of our population without abusing this
responsibility. Unfortunately, there have been some instances
of misuse by representative payees. The amount of benefits
misused by payees is a small percentage of benefits paid, an
estimated $3 million per year.
To improve our ability to detect and prevent such problems,
we have developed a plan for increased monitoring of
organizational payees. Among other steps, we are visiting fee-
for-service payees 6 months after their initial appointment as
payee, requiring these payees to annually show proof of current
bonding or licensing, and conducting site reviews. The OIG has
pledged to work with us to improve all aspects of monitoring
this program.
Finally, because administrative actions alone are not
sufficient to ameliorate problems, we sent to Congress on
February 22, a set of legislative proposals for that would
provide additional safeguards for beneficiaries with
representative payees and we urge the Subcommittee to give
these prompt attention. Included in this package is a provision
that would permit SSA to reissue benefit payments in all cases
when an organizational payee is found to have misused a
beneficiary's funds. This would enable SSA to provide prompt
relief to beneficiaries victimized by unscrupulous
representative payees. On September 28, 1999, SSA sent to
Congress a draft bill entitled the Civil Monetary Penalty
Extension Act of 1999, that would extend the civil monetary
penalty provisions to representative payees that misuse
benefits.
Social Security Number (SSN) Fraud
SSA issues about 16 million new and replacement cards in a
typical year and there are nearly 300 million numbers currently
issued. The expanded use of the Social Security number (SSN) as
a personal identifier for everything from opening a bank
account to listing of newborns as dependents on tax returns has
given rise to obtaining SSN cards based on false information.
SSA has identified three basic types of fraud related to
the Social Security number -when someone illegally obtains a
new number or uses someone else's number illegally; when
someone establishes an entirely new identity using illegal
documents; or identity theft, when someone assumes another
person's identity.
To prevent issuing a new number for fraudulent purposes,
SSA maintains a ``disallowed file'' that contains information
on every person whose application for an SSN was denied because
he or she submitted fraudulent documentation. This database
currently holds over 94,000 items and grows by an average of
10,000 items a year.
SSA's Comprehensive Integrity Review Process alerts field
offices when multiple Social Security cards have been sent to
the same address over a short period. The office then
investigates to determine whether the alert reflects any
fraudulent activity.
To prevent someone from establishing a new identity using
illegally obtained birth documents, SSA links the SSN to the
birth certificate by working with hospitals and State
departments of vital statistics to facilitate enumeration at
birth facilities. We are also planning changes that will
suspend the issuance of SSN cards in cases involving children
under 18 when the parent's age is questionable until an
investigation has been conducted. Every application for an SSN
is also checked against SSA's Death Master File to ensure that
there is no death indicator on file for the individual or SSN.
To prevent identity theft, SSA employees who process SSN
applications receive ongoing training on document authenticity
that includes birth certificates and Immigration and
Naturalization Service documents. In cooperation with the
Department of State, we are developing a program of
``enumeration at entry'' which would provide SSNs at the point
that a non-citizen enters the country and is eligible for a
number.
If identity theft is discovered, SSA helps the victim
reconcile any discrepancies that may have resulted from
earnings being posted to an incorrect file. In certain cases,
we assign a new SSN to the victim in order to establish a new
credit record and stop the fraud from continuing.
While there are significant criminal penalties for SSN
fraud, there are no provisions that authorize SSA to impose
civil penalties for these offenses. The Civil Monetary Penalty
Extension Act of 1999, which I mentioned earlier, would
establish civil monetary penalties for offenses involving
fraudulent application or misuse of numbers and Social Security
cards.
Fraud Deterrence
In May 1998, SSA sent a proposal to Congress, the SSI
Program Integrity Act of 1998, that authorizes SSA to impose
specified periods of ineligibility for Social Security benefits
on any individual who knowingly provides SSA with false or
misleading information in order to qualify for benefits. This
responds to situations where criminal or civil penalties may
not be feasible. We are pleased that Congress enacted this
provision in the Foster Care Independence Act of 1999.
In addition, the Administration fully supported another
fraud deterrent provision in the Foster Care Independence Act
of 1999 that bars representatives and health care providers
from the OASDI and SSI programs if they were found to have
helped commit fraud. The penalty is for 5 years, 10 years, and
permanent exclusion for the first, second, and third offenses
respectively.
Conclusion
Again, we would like to thank the Subcommittee for its
efforts over the years to maintain the integrity of the Social
Security program. We wish to continue and build on quality
management of the Social Security program by developing new
administrative procedures to prevent and detect overpayments
and fraud. We will also continue to develop legislative
proposals to send to Congress whenever we see a situation that
cannot be remedied administratively.
We are committed to our role as stewards of the trust fund
and will strive to improve public confidence in the Social
Security program. Quality stewardship and program integrity
often involve labor intensive efforts. We look forward to this
Subcommittee's support to ensure that SSA is adequately funded
in order to maintain quality program management
Thank you for the opportunity to testify today. I will be
happy to answer any questions that you may have.
Mr. Collins [presiding]. Thank you, Mr. Halter.
Mr. Hayworth, do you have any questions?
Mr. Hayworth. I thank you, Mr. Collins.
Bill, welcome.
Mr. Halter. Thank you, sir.
Mr. Hayworth. And just one question. Let's pick up at the
end of the testimony, talking about evaluating Social Security
Administration employees and that they responded 96 percent of
them, or 96 percent of the work force view zero tolerance for
fraud as important to their jobs.
Now, there seems to be a bit of a disconnection, because we
understand an employee evaluation, taking a look at employee
performance, apparently the efforts to combat fraud don't
really count or they're not part of the formal evaluation.
Now, we're going to hear from the IG a little bit later.
His testimony, specifically on page 3 if you want to take a
look at that, discusses this issue.
Let me ask this in a positive vein. Viewing the situation,
wouldn't it be better to include efforts to combat fraud as
part of performance evaluations for employees?
Mr. Halter. Congressman, I think that's a very good idea
and one that we will certainly take back and look at. I believe
that at this point, we do consider that, but I will circle back
and make sure that, in fact, we do on an ongoing basis.
Mr. Hayworth. Well, if you could follow up, and if it's OK
with you, I would love to hear from you within say a week's
time, if you could give us either the evaluation performance
questionnaires or perhaps the proposed wording that would be
included in job performance for employees, I think that's a
positive way to start, and just to see if, in fact, it does
come up, because what we're hearing from some folks is that
apparently this has not been included in the criteria, and they
obviously feel it's important, and you in your testimony bring
that up. So if you could follow up with us in writing on that
and what steps you propose to take if, in fact, it's not
formerly part of the evaluation process, I would be very eager
to hear about that.
Mr. Halter. I would be delighted to do that.
[The following was subsequently received:]
With respect to employee performance evaluations relating
to anti-fraud efforts, we are submitting for the record an
example of the documentation used in employee evaluations. This
particular example is a position description for a generalist
claims representative position, which is a field position. One
of the many key elements to the requirements of the job and job
performance identified in the attached position description is
``[p]rotects the integrity of SSA programs through
identification, investigation, and resolution of potential
program abuse situations.'' Also note that other elements are
listed that relate to program integrity and support efforts to
prevent fraud.
Attachment
Social Insurance Specialist (Claims Representative) GS10511#3C361
Amended 2/27/78, 8/7/80, 6/24/91, 4/1/92, 3/30/95, 12/6/95
Duties
This is the keystone position in the Social Security Administration
through which the major operating objective of bringing direct personal
service to the public is achieved. The incumbent:
--Conducts interviews to obtain, clarify, and verify information
about individual applicants' initial and continuing eligibility for
retirement, survivors, disability, black lung, health insurance
benefits, and eligibility for supplemental security income payments,
including State supplements where required;
--Examines evidence to evaluate its validity and acceptability in
establishing entitlement to benefits, and, when necessary, takes the
required developmental action to insure that all available relevant
evidence has been obtained. Assists the applicant in securing evidence,
and prepares special determinations of fact to resolve evidentiary
discrepancies;
--Finally adjudicates and finally authorizes for payment, without
subsequent review, claims for benefits and eligibility to all programs
administered by SSA and finally disallows, without subsequent review, a
full range of all types of SSI claims, RSDHI claims lacking in insured
status, RSDHI claims previously denied, disabled widow's benefits
claims not meeting the prescribed period;
--Makes final reconsideration decisions on disability insurance and
disabled widows cases involving reaffirmations of initial or subsequent
denials of benefits not involving medical issues;
--Conducts interviews, develops, investigates, and resolves
postentitlement actions, including SSI redeterminations, which may
involve suspension, resumption, or termination of eligibility or
payments;
--Provides technical guidance to other employees involved in the
claims process;
--Assists individuals in filing for administrative appeals in
matters concerning entitlement to benefits or coverage under the
various programs;
--Conducts case reviews, informal and formal conferences to
reconsider initial decisions and posteligibility decisions affecting an
individual's eligibility, continuing eligibility, or amount of payment
under the supplemental security income program and makes final
decisions on nonmedical issues in SSI reconsiderations;
--Determines finally if applicants for or recipients of disability
insurance benefits and disability payments under the SSI program are
engaging in substantial gainful activity;
--Recognizes the need for and approves the selection of
representative payees for individuals unable to handle their own
benefits;
--Protects the integrity of SSA programs through identification,
investigation, and resolution of potential program abuse situations;
--Provides referral services to individuals needing the services of
other programs or organizations;
--Participates in training sessions both as student and instructor;
--Authorizes advance SSI payments and requests onetime payments as
necessary;
--As assigned and as necessary contributes to the office
informationpublic relations programs by making public speeches and
assists in public information projects; informs superiors of trends in
public reaction to social security programs;
--Protects the rights of individuals by assuring that claimants
and/or their personal representative understand the claimants' legal
rights and obligations under the Act and its relationship to other
social welfare and benefit programs;
--Develops, investigates, and resolves discrepancies in earnings
and determines amounts to be posted or deleted from individual records;
--Determines whether income is wages or selfemployment income and
whether it is covered income under the Social Security Act; and
--Performs other duties as assigned and assumes new
responsibilities dictated by legislative or policy changes.
Job Requirements
--Understanding of the philosophy, principles, objectives, and
specific provisions of all programs administered by SSA and the
relationship of these programs to others which are related.
--Knowledge of State laws involving descent, welfare payments and
social service programs, Medicaid, workman's compensation, etc., and
various Federal laws, such as parts of the Internal Revenue Code,
Railroad Retirement Act, laws concerning veterans' benefits,
Immigration and Nationality Act, and others having a relationship to
SSA programs.
--Knowledge of the SSA-integrated data processing system and the
ability to use the systems input and output methodology, forms, and
data, as well as the ability to recognize and resolve systems input
alerts, edits, and rejects.
--Ability to communicate with individuals for the purposes of
obtaining information, motivating individuals to appropriate courses of
action, and conveying an understanding of complex requirements of
particular programs. -Ability to evaluate evidence and the facts of
situations, draw sound conclusions, and explain the basis for the
conclusions.
Difficulty of Work
Assignments cover the communicative, adjudicative, final
authorization, and SSI reconsideration functions through the full range
of claims and postentitlement activities.
Subjects and issues covered in interviewing work cover the complete
range of substantive issues and procedural matters of the various
social insurance programs and the black lung and supplemental security
income programs. The development and adjudicative functions involve
quasilegal matters which must be related to the individual
circumstances of each applicant.
The incumbent must carefully evaluate all facets of the claims
being finally authorized.
Informal and formal conference interviews in SSI reconsideration
cases may be extremely sensitive. Due to the legal tenor of the
conference interview, the incumbent must be able to deal with all
issues with a high level of expertise.
The guidelines consist, principally, of the legal regulations and
procedural requirements of the various social insurance, black lung,
and supplemental security income programs. These guides are numerous,
extensive, and complex. Their application to distinctive cases and
circumstances requires judgment and insight in applying the
requirements to the needs of the individuals concerned. Work is
performed under the general supervision of a district manager,
assistant district manager, branch manager, or operations supervisor.
Responsibility
The work performed is a vital part of the functions through which
the organization directly informs members of the general public about
the concerned programs and extends benefits of these programs to them.
The communicative functions are normally not subject to review.The
technical adequacy of information provided is assured through
occasional spot checks or observations made by the supervisor, through
complaints made by claimants as to the service provided, or through a
review of applications, records, letters, or other documents originated
by the representative on an intermittent basis. Neither the interviews
conducted nor the claims adjudicated and authorized are segregated as
to type or level of difficulty.
The representative is expected to resolve, without benefit of
supervisory consultation, all but the most unusual problems; such as,
those which may be precedent setting, of a delicate public relations
nature, or unresolved policy issues. Technical assistance is available
from the supervisor, however, it is normally expected to be requested
only where precedent decisions or policy are not available.
Claims that are finally authorized are not subject to a subsequent
review. A sample of cases may be evaluated through the SSA quality
appraisal system either during processing or at the end of line after
payment is effectuated. SSI reconsideration decisions are subject to
review only through the SSA appeals process.
Personal Relationships
These relationships are important in that much of the work consists
of conducting interviews. Coverage of the programs is so general that
all segments of the general public will be encountered as potential
applicants, beneficiaries, claimants, legal representatives, employers,
and sources of information. In the interviews, the purposes include
eliciting specific items of information, explaining substantive and
procedural requirements, and interpreting program concepts. Interviews
must be conducted in a tactful and courteous manner.
Other
The incumbents' official duty station may be a district office,
branch office, or other established field facility. Duties assigned may
also be performed in contact stations, other temporary locations, or in
institutions, hospitals, or other locations as designated by
supervisors.
Let me also take this opportunity to indicate to you
several of the things that we are doing on an ongoing basis to
inform our employees about the priority of this matter.
We have, as you know, a number of internal communications
devices that we use to communicate with our employees--monthly
publications, electronic communications and so forth--and we
have incorporated a focus on fraud in each of those
publications.
We deal with it at a senior management level continuously.
I'm working with our IG and our senior staff to ensure that we
have the appropriate amount of resources devoted to this
effort. So there are a number of things that we're doing, and I
would be happy in my response to your first question to also
include those just to give you a better sense of what we're up
to.
Mr. Hayworth. And as, Bill, is often the case, when you
explain this to me, it leads to another question that----
Mr. Halter. Sure.
Mr. Hayworth.--just occurs. We had testimony from the
Commissioner the other week and, indeed, in the Full Committee
room although it was our Subcommittee meeting there,
commensurate with existing Federal law arising out of Executive
Orders and perhaps some previous Congressional measures, there
are employees within the Social Security Administration whose
central duty is do nothing but deal with collective bargaining.
Are there likewise employees within the Social Security
Administration who do nothing but handle fraud cases? Is there
a fraud task force or a protection----
Mr. Halter. Absolutely. In fact, there is. We have a
national antifraud task force which is co-chaired by the person
who is testifying after me, our Inspector General, Jim Huse,
and our Deputy Commissioner for Finance and Administration,
Yvette Jackson.
In addition to that, Congressman, we have ten regional
antifraud Committees that are co-chaired by our Regional
Commissioners. In fact, just to follow up on your question,
there are a large number of employees within the Inspector
General's Office who focus on nothing but fraud.
Mr. Hayworth. Do we have a number specifically on----
Mr. Halter. I would be happy to provide that for you, but
it is definitely in the hundreds, if not higher.
[The following was subsequently received:]
Combating fraud, waste and abuse is a key Agency initiative
in the Fiscal Year 2000 Government Performance and Results Act
Annual Performance Plan that emphasizes SSA's ongoing
responsibility and commitment to combat fraud and recover
overpayments. To ``make SSA's program management the best in
business, with zero tolerance for fraud and abuse'' is one of
SSA's five goals identified in the Agency's Strategic Plan.
Safeguarding the public's investment in the programs we
administer is a primary responsibility of SSA. For example,
nearly 520 employees in our Office of the Inspector General
(OIG) audit our programs, conduct field investigations and
staff our hotline. Another 143 employees in our operations
components have the primary responsibility of overseeing
security and investigating potential fraud. Virtually all of
the 40,000 employees who routinely intereact with the public
are actively involved in the prevention and detection of
overpayments and fraudulent activities. Their activities
support SSA's stewardship responsibilities and ensure that only
those individuals who meet eligibility requirements receive
benefits. Examples of SSA's efforts to maintain program
integrity include continuing disability reviews, SSI non-
disability redeterminations, earnings enforcement, prisoner
reporting, fugitive felon projects, and the nonagenerian
project.
Other high profile anti-fraud initiatives underway include
the establishment of a National Anti-Fraud Committee chaired by
the Inspector General and the SSA Deputy Commissioner for
Finance, Assessment and Management. We also have ten very
active Regional Anti-Fraud Committees chaired by the Regional
Commissioners and the OIG Special Agents.
We have established seven Cooperative Disability
Investigative (CDI) units across the country. These units
combine the resources and talents of our OIG agents with State
law enforcement officers and SSA and State Disability
Determination Service employees to prevent fraud from
occurring.
More importantly, we view our stewardship efforts as the
collective responsibility of all SSA employees. We will devote
an estimated $1.7 billion this fiscal year to these efforts, or
nearly 25 percent of our total administrative budget, and the
equivalent of more than 18,000 full-time employees.
SSA has a number of initiatives underway to communicate
with our employees and the general public that SSA acts
aggressively to prevent and detect fraud. These initiatives
include the dissemination of information about fraud and SSA's
position of zero tolerance for fraud through various internal
media such as the Central Office Bulletin (a newsletter for
central office employees); Commissioner's Broadcasts (e-mail
messages to all SSA employees); an anti-fraud column in OASIS
(a monthly magazine publication for all SSA employees); and
regional newsletters published by Regional Anti-Fraud
Committees in each of our ten regions. External communications
include items in the SSA/IRS Reporter (a quarterly publication
sent to employers) and Social Security Online, which provides
information on fraud issues to Internet users.
In addition, SSA and OIG have developed and distributed a
training videotape to all SSA offices that includes scenarios
depicting fraud based on real-life situations; the new fraud
referral process; an explanation of how the Anti-Fraud Hotline
works; and SSA and OIG employees who have played a role in the
fight against fraud.
Mr. Hayworth. That would be great. The Commissioner sent by
some language or sent me a letter last week, and I know we have
certainly employees who number in the hundreds who deal with
collective bargaining.
In terms of priorities, in a perfect world, Bill, do you
believe that employees dealing with no issues save collective
bargaining are as important to your process as those who deal
with fraud, or would it be better for employees to spend their
time rooting out fraud and waste and mismanagement rather than
dealing on a full-time basis with collective bargaining issues?
Mr. Halter. Well, in fact, I think as you know,
Congressman, we are under a legal mandate to have a number of
employees who are, in fact, dealing with partnership issues,
labor/management relations and so forth, so while we are
certainly focused on fraud and, as I mentioned to you, we spend
$1.7 billion on program integrity efforts each year,
approximately 25 percent of our budget, there is a much, much
smaller amount of resources that's devoted to labor/management
partnership issues and the issues that you're addressing there,
and those resources have been fairly stable. In fact, in the
last 3 years, they have come down a bit. This last year, we had
an increase, a very small increase because we were
renegotiating our contract with our labor unions, our National
contract, but the proportion is vastly more resources are
devoted to fraud efforts than they are to labor/management
partnership efforts.
We've got an extraordinary amount of continuing disability
reviews that are underway, and, of course, that is devoted to
program integrity. We have--in the last 4 years through the
efforts of the Appropriations Committee and the Congress, the
number of staff that are working in the Inspector General's
Office has more than doubled. We have received--and Jim Huse
can talk about this in great detail, but we have devoted
substantially more resources to this area in the last few
years, and we are going to continue to have it be one of our
five major strategic goals. So this is very important to the
agency.
Mr. Hayworth. Thank you, sir.
Thank you, Mr. Collins.
Mr. Collins. Thank you, Mr. Hayworth.
Now we'll go to Mr. Matsui, the Ranking Member, Democratic
side.
Mr. Matsui. Thank you, Mr. Chairman.
You need, obviously, the resources in order to cut out
fraud, abuse and waste and all that. I did notice that a few
weeks ago when the Republican budget passed, we saw essentially
a cut of about $20 billion in Fiscal Year 2001, which would
come to about a 6.4 percent cut from the baseline, and, of
course, by 2005, 5 years from now, it would be about 11 percent
cut in real terms.
How will that affect your ability to deal with the issue of
fraud, abuse, waste, which is the subject of this hearing; and
second, if, in fact, you had to make choices, and I would
imagine there is very little slack in your budget at this
particular time, where would you make the decision between
processing existing claims, to make sure that beneficiaries get
their checks in a timely fashion so they don't fall behind on
the rent payments or food, and the issue of maintaining program
integrity, again which is the subject of this hearing? How
would you make that determination of where your lack of
resources should be pulled from?
Mr. Halter. Right. Well, to answer your first question
Congressman Matsui, there would be extraordinarily deleterious
effects on our ability to engage in program integrity
initiatives if the budget cuts of that magnitude were put into
place.
As you undoubtedly know, 75 percent of our budget goes for
salary for our people, and these program integrity activities
are incredibly resource-intensive. So if we had, just to pull a
number out of the air, a 10 percent cut in our resources, it
would have a very dramatic and sharp effect on our service
levels and our program integrity efforts.
To your second question about how we would allocate these
cuts in these efforts, the magnitude of the cut that we're
talking about there would be such that we would have to cut our
efforts, I believe, in virtually every arena.
Now, as a service organization, obviously we would be
focused as much as we possibly could be on maintaining our
service levels, but the fact is, with a budget cut of that
magnitude, the cuts would have to occur in virtually every
activity.
As I mentioned earlier in my testimony, the payoff of these
program integrity efforts is measured in the 6-to-one to 10-to-
one to 12-to-one sort of benefit-to-cost ratios. So when you
pull out that amount of resources that's going into these
efforts, you can have and you can forecast a tremendous effect
on the integrity of our programs. Financially, this would be
something that, you know, if those are the cards that we are
dealt, we'd have to play them, but it's certainly not the kind
of game we would like to be in.
Mr. Matsui. Penny wise, pound foolish.
Mr. Halter. Absolutely.
Mr. Matsui. In terms of the whole issue of union
activities, I believe the Commissioner responded on March 29th
of this year when he was asked a question about Social Security
employees and their permanent full-time union activities, my
understanding is for the Fiscal Year '99, there's only 134
individuals in your entire agency that engages in full-time
union activities, which comes to .268 percent of your entire
work force, which is probably much less than the private-sector
big companies like Boeing or IBM and others.
It's also my understanding, and I was here then in 1982,
that President Reagan, a Republican President, was the one who
signed the agreement with the Social Security Administration
and the American Federation of government Employees. Jack
Svahn, who is actually from California, a friend of mine, was
the one who was the administrator at the time and actually
signed that agreement on, I believe it was June 11, 1982.
Are those facts correct in terms of what I just stated?
Mr. Halter. Congressman Matsui, they are exactly correct.
This level of engagement with our labor partners has been
codified, as you noted, since 1982, and in fact it's been going
on since 1962. So this is not new, and the number that you
mentioned of 134 full-time employees is exactly accurate.
We report this, as I'm sure you're aware, each year to the
Congress, to the Chairman of the Appropriations Committee, and
I'd be happy to provide for the record that report as well as
some other information that outlines why we're doing this and
the fact that we are, in fact, legally bound to do it. We also
can provide you information that indicates the payoff from
those sorts of activities and provide that for the record, as
well.
[The following was subsequently received:]
January 14, 2000
The Honorable C.W. (Bill) Young
Chairman
Committee on Appropriations
House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
I am writing to provide you with data on the actual expenses for
union representational activities at the Social Security Administration
(SSA) in fiscal year (FY) 1999. This information is to be provided
annually as requested by the House Appropriations Committee in Report
105-205 and is consistent with reports provided by SSA for many years.
In FY 1999, there was a slight increase in the hours of official
time spent on union activities. This increase of 3.4 percent over FY
1998 is largely due to the Agency's renegotiations of its National
Collective Bargaining Agreements with the American Federation of
Government Employees and the National Treasury Employees Union. As a
result, total expenses in FY 1999 increased by $1.1 million over the FY
1998 level. As required by the FY 1999 Appropriation Act, P.L. 105-277,
the Social Security trust funds are being reimbursed, with interest,
from the general fund of the Treasury for the portion of these expenses
attributable to the trust funds.
As a result of negotiations with our unions, for which official
time was used, SSA was able to implement on a timely basis numerous
initiatives aimed at improving customer service. These included a major
revamping of our disability hearings and appeals process; a process for
obtaining customer feedback about our service delivery; increased
emphasis on assisting beneficiaries to return to work; and an
alternative dispute resolution process to deal with Equal Employment
Opportunity complaints in a more efficient and cost-saving manner.
I hope the enclosed fact sheet is of use to you and the members of
your committee. If there are any questions about this issue, your staff
may contact Ms. Yvette Jackson at (410) 965-2910.
Sincerely,
Kenneth S. Apfel
Commissioner of Social Security
Enclosure
Social Security Administration
Report Concerning Official Time for Union Activities
The Conference Committee Report accompanying the Department
of Labor, HHS, Education and Related Agencies FY 1998
appropriations (Report 105-205) addressed the subject of
support of union activities. The Committee requested that all
departments and agencies report on expenditures for union
activities. Consistent with that report and longstanding SSA
practice, FY 1999 information for SSA is included in the table
below:
------------------------------------------------------------------------
Official Time for Union Representation Activities [Dollars Fiscal year
in millions] 1999
------------------------------------------------------------------------
Hours of official time spent on union activities........... 384,165
Employees who used official time........................... 1,739
Employees who spent 100% of their time on union activities. 134
Dollar Value of Official Time (e.g. salary and benefits)... $11.2
Travel and Per Diem........................................ 0.6
Office Space, Telephones and Supplies...................... 0.6
Arbitration Expenses....................................... \1\
Total Expenses......................................... $12.4
------------------------------------------------------------------------
\1\ Less than $50,000
Federal Service-Labor Management Relations Statute and SSA
labor contracts with the American Federation of Government
Employees (AFGE), the National Federation of Federal Employees
(NFFE) and the National Treasury Employees (NTEU) obligate the
Agency to certain costs, such as salaries, travel and per diem
expenses, office space, telephones and arbitration costs for
union representational activities conducted on official time.
Official time is not granted for internal union business (such
as soliciting membership, conducting elections, or collecting
dues). Consistent with P.L. 105-277 and P.L. 106-113, the
Social Security trust funds are being reimbursed, with
interest, from the general fund of the Treasury for the portion
of these expenses attributable to the trust funds.
Union Official Time at the Social Security Administration
Federal law specifically addresses payment of
official time by Federal agencies. SSA is in full compliance
with these laws, which have been in existence for over 20
years. Authority to pay for official time derives from Section
201(g)(1) of the Social Security Act and the Federal Labor-
Management Relations Statute (5USC7131).
In 1962, President John F. Kennedy issued an
Executive Order that established a framework for Federal
agencies to bargain with unions over working conditions and
personnel practices. This and subsequent Executive Orders were
codified in the ``Civil Service Reform Act of 1978,'' which
established official time as an integral part of Federal-labor
management relations and the Federal sector collective
bargaining process.
The first national collective bargaining agreement
that covered official time was the June 11, 1982 agreement
between SSA and the American Federal of Government Employees
during the Reagan Administration. The bargaining agreement
recognized agency payment of official time from both the trust
funds and general revenues
SSA--like other Federal agencies and many firms in
the private sector--pays the salaries of employees who
participate in SSA related official union activities. Such
labor-management relations activities include bargaining and
grievance procedures. SSA does not pay for the following
activities under any circumstances: internal union activities,
such as soliciting membership, conducting elections, collecting
dues, or partisan political activities.
All SSA administrative expenses are allocated from
the trust funds and general revenues under the law. Official
time is allocated in the same proportion as other
administrative expenses. As required by the FY 1999
Appropriations Act, P.L. 105-277, the Social Security trust
funds are being reimbursed, with interest, from the general
fund of the Treasury for the portion of these expenses
attributable to the trust funds. Union represented employees
work on all SSA administered programs, including Social
Security and Supplemental Security Income, as well as Medicare.
Currently, 134 employees perform full-time
official union duties, which equates to 0.268 percent of the
represented workforce.
In March 1998, SSA released a report (attached) on
the effects of the union/management partnership on
organizational performance. The report identified over 1,500
initiatives that were initiated or enhanced through partnership
efforts. Many of these initiatives have been tied to
improvements in customer service (e.g., SSA's 800-number
service); improvements in the quality of work life for
employees (e.g., developmental programs); and decreases in
operational cost through the reduction of formal litigation
(e.g., the decrease in unfair labor practice charges--167 in
1999, down from 467 in 1990).
The reduction in unfair labor practice charges
saves taxpayer dollars. The Government Accounting Office
previously estimated the cost to the Federal Government to
fully process one unfair labor practice as in excess of
$28,000. For example, the reduction in charges from 467 in 1990
to 209 in 1995 represents a potential savings of over $7
million per year.
A recent survey identified about 400 new
initiatives undertaken through SSA's union/management
partnership, bringing the total to almost 2,000. The survey
established that the current partnership focus continues to be
on operational efficiency, customer service, quality of work
life and employee empowerment.
Mr. Matsui. Mr. Chairman, if I may just follow up with one
last question. Thank you.
In terms of the union activities, I would imagine, and you
may not have these numbers on hand right now, but most of these
activities are to help the employees in terms of perhaps
benefits that the employees may feel that he or she was
entitled to and didn't receive, or perhaps disciplinary type
actions, and so you would be able to go through a due-process.
Mr. Halter. That's correct.
Mr. Matsui.--We're talking about what the daily activities
are about, is that correct,----
Mr. Halter. That is correct, sir.
Mr. Matsui.--in terms of ensuring that the integrity of the
work force remains in place.
Mr. Halter. That is absolutely correct, sir. Also, helping
us and working with us to improve the management of the Social
Security Administration. That is to say we seek and we work
with our labor partners to put together management and
administrative improvements and to get those implemented as
timely as we possibly can, and this obviously has the effect of
improving our service levels over time, and also delivering a
higher quality product to the American people at lower cost.
Mr. Matsui. Thank you.
Thank you, Mr. Chairman.
Mr. Collins. Thank you, Mr. Matsui.
Mr. Halter, I noticed in your statement about the Syracuse
University's Maxwell School gave you an ``A'' rating. I would
concur with them for the agency that I've dealt with as a
Member of Congress.
Mr. Halter. Thank you, sir.
Mr. Collins. And I think it comes, too, from the efforts by
the Commissioner and you and others on this staff, as he
reported to us in the previous hearing we had about a week or
so ago about how he has had to make decisions, leadership
decisions and to set priority, and I think that is the reason
you're graded and awarded such a high rating, and also in the
area of financial management.
Now, in reference to the reduction in budget, the
Commissioner also stated that by eliminating or repealing the
earnings limit, that it would probably free up somewhere around
800 employees. I'm sure that he will make again leadership
decisions that will set priorities as to how those 800
employees will be better service to the agency. Do you not
agree with that?
Mr. Halter. Absolutely, sir.
Mr. Collins. In reference to the number of union members
today, how does that compare or do you have the numbers to
compare that to five, 10 years ago?
Mr. Halter. I would be happy to submit those to you for the
record, sir. My understanding with respect to the last several
years is that, again, with the exception of this past year when
we were renegotiating the national contract, that the amount of
resources devoted to this area has actually trended down.
But we would be happy to provide you for the record with
those numbers. I don't have the 10-year figures with me today.
[The following was subsequently received:]
For each year during 1990-1993, there were approximately 80
SSA employees working full time on union activities. In 1994
and 1995, the number increased to 145 employees. In 1996, there
were 148 employees working full time on union activities. And,
in 1997, 1998, and 1999, the numbers were 141, 131, and 134,
respectively.
Mr. Collins. If I recall, some of the previous years of the
last few years, the last three or 4 years, it was kind of a
peak in that cost and a lot of resources, extra resources were
required to meet the obligations for the union participation.
A couple of questions, one in particular dealing with
fugitives, felons or parole/probation violators, the IG
recommends that they be prohibited from receiving Social
Security checks as we have done with SSI. What is your opinion
on that?
Mr. Halter. We would be delighted, Congressman, to work
with this Committee on that proposal. It certainly seems to
have a tremendous amount of merit, and I would be anxious to
see if we could work something out with this Subcommittee as we
roll forward.
Mr. Collins. Very good.
You, in your opening portion of your statement, you
mentioned that the agency has actually sent about 35
legislative proposals to Congress. What do you recommend in
prioritizing those that haven't been adhered to? How would you
prioritize the other proposals?
Mr. Halter. I'm very glad that you asked that question,
Congressman, because I don't want to leave the impression that
the Congress has left that many around unenacted. In fact,
there are only a couple of provisions from the previous
Congress, and then there are several proposals that we sent up
this year with respect to representative payees.
So I think each of these has merit, and there are just a
few provisions that are left to enact. We would be happy to
work with you on a bipartisan basis. I think, not to be
presumptuous here, but I think you will find that these
proposals have a great deal of support on both sides of the
aisle, and I think it's just a question of getting it done.
[The following was subsequently received:]
I appreciate your interest in the legislative proposals that SSA
has sent to Congress since we became an independent agency on March 31,
1995. Most of the proposals have been enacted, and many of them provide
additional means for SSA to maintain and improve the integrity of both
the Social Security and Supplemental Security Income (SSI) programs.
We thank the Ways and Means Committee for its support of these
significant and valuable legislative provisions, most recently those
enacted in the ``Foster Care Independence Act of 1999'' and the
``Ticket to Work and Work Incentives Improvement Act of 1999.'' One
provision that was sent to Congress on May 4, 1998, in the
``Supplemental Security Income Program Integrity Act of 1998'' that was
not enacted, but is still needed, would require States having contracts
with SSA for provision of death data to provide the data within 30 days
of its receipt. This provision would prevent overpayments and eliminate
potential fraud situations in both the Social Security and SSI
programs.
While Congress and the Administration have done much to improve the
integrity of the Social Security and SSI programs over the past 5
years, we still have more to do. To this end, we have sent two bills to
Congress that address the issues of Social Security number misuse and
misuse of benefits by representative payees. Copies of the draft bills
are being submitted for the record (attached).
On September 28, 1999, SSA sent to Congress the draft bill, the
``Civil Monetary Penalty Extension Act of 1999.'' Under the provisions
in the bill, civil monetary penalties would be imposed on individuals
for offenses involving fraudulent application for or misuse of Social
Security numbers and Social Security cards, and on individuals who
misuse the funds paid on behalf of beneficiaries while serving as
representative payees.
SSA sent another draft bill to Congress on February 22, 2000,
designed to provide additional safeguards for beneficiaries with
representative payees. SSA's proposal would provide for immediate
reissuance of benefit payments in all cases when an organizational
payee is found to have misused the benefits. The proposal also would
require certain bonding and licensing for non-governmental
organizational payees. In addition, the draft bill would provide that a
fee-for-service organizational payee would not be eligible for a fee
for months in which the individual's benefits were misused, and provide
that misused benefits would be considered overpayments subject to
current SSA overpayment recovery authority against the organizational
representative payee.
I hope that you and other members of the Ways and Means Committee
will agree that these proposals have merit and would provide important
program integrity improvements. We urge Congressional action on the
proposals during this session.
Attachment
The Honorable J. Dennis Hastert
Speaker of the House
United States House of Representatives
Washington, D.C. 20515
Dear Mr. Speaker:
Enclosed for the consideration of the Congress is a draft bill to
provide additional safeguards for Social Security and Supplemental
Security Income beneficiaries with representative payees.
Currently, about 6.5 million Social Security and Supplemental
Security Income program beneficiaries rely on representative payees to
manage their monthly benefits. A representative payee can be either an
individual, such as a parent, or an organization. Certain qualified
organizations, known as ``fee-for-service'' organizations, are
permitted to charge a fee from the beneficiary's payment for their
representative payee services. In most cases the amount of the monthly
fee can be no more than $28.
When any payee has been determined to have misused an individual's
benefits, the Social Security Administration (SSA) can reissue the
benefits only in cases where negligent failure on SSA's part to
investigate or monitor the payee resulted in the misuse. In virtually
all other cases, the individual loses his or her funds unless SSA can
obtain restitution of the misused benefits from the payee. Currently,
SSA can seek restitution only through civil processes if the
representative payee refuses to return the misused funds.
One provision in this bill would require SSA to reissue benefit
payments (including any respective fees) in all cases when an
organizational payee is found to have misused a beneficiary's funds
without either a finding of negligence or restitution from the
organizational payee. Requiring re-issuance of such misused benefit
payments, including fees, would provide additional protection to the
most vulnerable of beneficiaries--those who have no family or friends
willing or able to be a payee.
This new authority would enable SSA to restore promptly benefits
that have been misused by a beneficiary's representative payee, thereby
avoiding the hardship that can be caused by such a loss. And while no
longer necessary to restore the lost benefits, SSA would, through all
available avenues of legal recourse, continue to seek restitution of
the misused funds from the former representative payee.
In addition to this change, the legislative proposal would include
other provisions designed to increase the safeguards for beneficiaries
with representative payees:
Require non-governmental fee-for-service organizational
payees to be bonded and licensed, provided that licensing is available
under State or local law. (The requirement under current law is bonding
or licensing.) This proposed requirement would add further safeguards
to a beneficiary's funds. State licensing provides some oversight by
the State into the organization's business practices, and bonding
provides some assurance that a surety company has investigated the
organization and approved it for the level of risk associated with the
bond. The proceeds from redeemed bonds would reduce the costs to the
program when re-issuing benefits in cases of representative payee
misuse.
Provide that when an organization has been found to have
misused an individual's benefits, the organization shall not qualify
for the fee from that individual's benefits for months the payee
misused the funds.Requiring payees to return the fees charged for
periods of misuse is reasonable because the payee was clearly not
properly performing the service for which the fee was paid. Permitting
the organization to retain the fees is tantamount to rewarding the
payee for violating his or her responsibility to use the benefits for
an individual's current and future needs.
Provide that misused benefits (including any respective
representative payee fees) would be treated as an overpayment to the
payee and, therefore, subject to current SSA overpayment recovery
authority.Although SSA has been given expanded authority in the
recovery of overpayments (such as tax refund offset, referral to
contract collection agencies, notifying credit bureaus, and
administrative offset of future federal benefit/payments), these tools
cannot be used to recoup benefits misused by a representative payee.
Providing that benefits misused by any representative payee would be an
overpayment to the payee would provide SSA with additional means for
recouping the misused payments. The proposal would also permit re-
issuance of the benefits to the beneficiary (unless already re-issued
by SSA). This change would improve the protection of all beneficiaries
with payees, not just those with organizational payees.
This package of changes would bolster other efforts that SSA is
initiating to help prevent misuse by organizational payees--including a
program that provides for triennial ongoing onsite reviews of all fee-
for-service payees, onsite reviews of randomly selected fee-for-service
payees and other volume payees, annual verification that bonding or
licensing continues to be met, and a review after 6 months for all new
fee-for-service payees.
An enclosure to this letter provides a section-by-section summary.
We urge the Congress to give the enclosed draft bill its prompt and
favorable consideration.
We estimate that the draft bill would affect direct spending and
receipts; therefore, it is subject to the pay-as-you-go requirement of
the Omnibus Budget Reconciliation Act of 1990. We estimate that the
draft bill's effects on direct spending would be negligible.
We have been advised by the Office of Management and Budget that
there is no objection to the submission of this draft bill to the
Congress from the standpoint of the Administration's program.
I am sending an identical letter to the Honorable Al Gore,
President of the Senate.
Sincerely,
Kenneth S. Apfel
Commissioner of Social Security
Enclosures
A BILL
To amend the Social Security Act to provide additional safeguards
for beneficiaries with representative payees under the Old-Age,
Survivors, and Disability Insurance program or the Supplemental
Security Income program.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
Section 1. Authority to Re-Issue Benefits Misused by Organizational
Representative Payees.
(a) OASDI Amendment.--Section 205(j)(5) of the Social Security Act
is amended by inserting after the first sentence the following new
sentence: ``In any case in which a representative payee that is an
organization (regardless of whether it is a 'qualified organization'
within the meaning of paragraph (4)(B)) misuses all or part of an
individual's benefit paid to such representative payee, the
Commissioner of Social Security shall certify for payment to the
beneficiary or the beneficiary's alternative representative payee an
amount equal to the amount of such benefit so misused. The provisions
of this paragraph are subject to the limitations of paragraph
(6)(B).''.
(b) SSI Amendment.--Section 1631(a)(2)(E) of such Act is amended by
inserting after the first sentence the following new sentence: ``In any
case in which a representative payee that is an organization
(regardless of whether it is a 'qualified organization' within the
meaning of subparagraph (D)(ii)) misuses all or part of an individual's
benefit paid to such representative payee, the Commissioner of Social
Security shall make payment to the beneficiary or the beneficiary's
alternative representative payee of an amount equal to the amount of
such benefit so misused. The provisions of this subparagraph are
subject to the limitations of subparagraph (F)(ii).''.
(c) Effective Date.--The amendments made by this section shall
apply to any case of benefit misuse by a representative payee with
respect to which the Commissioner makes the determination of misuse
after December 31, 1999.
Sec. 2. Bonding and Licensing Requirements Applicable to
Nongovernmental Organizational Representative Payees.
(a) OASDI Amendment.--Section 205(j)(4)(B) of such Act is amended
by striking ``is bonded or licensed in each State in which it serves as
a representative payee'' and inserting ``provides a bond that meets the
requirements specified by the Commissioner of Social Security and is
licensed in each State in which it serves as a representative payee
(provided that licensing is available in such State).''
(b) SSI Amendment.--Section 1631(a)(2)(D)(ii)(I) of such Act is
amended to read as follows:
``(I) provides a bond that meets the requirements specified by the
Commissioner of Social Security and is licensed in each State in which
it serves as a representative payee (provided that licensing is
available in such State); and.''
(c) Effective Date.--The amendments made by this section shall take
effect on the first day of the thirteenth month beginning after the
date of the enactment of this Act.
Sec. 3. Fee Forfeiture in Case of Benefit Misuse by Representative
Payees.
(a) OASDI Amendment.--Section 205(j)(4)(A)(i) of such Act is
amended----
(1) in the first sentence, by striking ``A'' and inserting ``Except
as provided in the next sentence, a''; and
(2) by inserting immediately before the second sentence the
following new sentence: ``A qualified organization may not collect a
fee from an individual for any month with respect to which the
Commissioner of Social Security or a court of competent jurisdiction
has determined that the organization has misused all or part of the
individual's benefit, and any amount collected by the qualified
organization for such month shall be treated as a misused part of the
individual's benefit for purposes of paragraphs (5) and (6).''.
(b) SSI Amendment.--Section 1631(a)(2)(D)(i) of such Act is
amended----
(1) in the first sentence, by striking ``A'' and inserting ``Except
as provided in the next sentence, a''; and
(2) by inserting immediately before the second sentence the
following new sentence: ``A qualified organization may not collect a
fee from an individual for any month with respect to which the
Commissioner of Social Security or a court of competent jurisdiction
has determined that the organization has misused all or part of the
individual's benefit, and any amount collected by the qualified
organization for such month shall be treated as a misused part of the
individual's benefit for purposes of subparagraphs (E) and (F).''.
(c) Effective Date.--The amendments made by this section shall
apply to any month involving benefit misuse by a representative payee
in any case with respect to which the Commissioner makes the
determination of misuse after December 31, 1999.
Sec. 4. Liability of Representative Payees for Misused Benefits.
(a) OASDI Amendment.--Section 205(j) of such Act is amended by
redesignating paragraphs (6) and (7) as paragraphs (7) and (8),
respectively, and inserting after paragraph (5) the following new
paragraph:
``(6)(A) If the Commissioner of Social Security or a court of
competent jurisdiction determines that a representative payee that is
not a State or local government agency has misused all or part of an
individual's benefit that was paid to such representative payee under
this subsection, the representative payee shall be liable for the
amount misused, and such amount (to the extent not repaid by the
representative payee) shall be treated as an overpayment of benefits
under this title to the representative payee for all purposes of this
Act and related laws pertaining to the recovery of such overpayments.
Subject to subparagraph (B), upon recovering all or any part of such
amount, the Commissioner shall certify an amount equal to the recovered
amount to such individual or the individual's alternative
representative payee.
``(B) The total of the amount certified to such individual or the
individual's alternative representative payee under subparagraph (A)
and the amount certified under paragraph (5) cannot exceed the total
benefit amount misused by the representative payee with respect to such
individual.''.
(b) SSI Amendment.--Section 1631(a)(2) of such Act is amended by
redesignating subparagraphs (F), (G), and (H) as subparagraphs (G),
(H), and (I), respectively, and inserting after subparagraph (E) the
following new subparagraph:
``(F)(i) If the Commissioner of Social Security or a court of
competent jurisdiction determines that a representative payee that is
not a State or local government agency has misused all or part of an
individual's benefit that was paid to such representative payee under
this paragraph, the representative payee shall be liable for the amount
misused, and such amount (to the extent not repaid by the
representative payee) shall be treated as an overpayment of benefits
under this title to the representative payee for all purposes of this
Act and related laws pertaining to the recovery of such overpayments.
Upon recovering all or any part of such amount, the Commissioner shall
make payment of an amount equal to the recovered amount to such
individual or the individual's alternative representative payee.
``(ii) The total of the amount paid to such individual or the
individual's alternative representative payee under clause (i) and the
amount paid under subparagraph (E) cannot exceed the total benefit
amount misused by the representative payee with respect to such
individual.''.
(c) Effective Date.--The amendments made by this section shall
apply to benefit misuse by a representative payee in any case with
respect to which the Commissioner makes the determination of misuse
after December 31, 1999.
A Bill to Provide Additional Safeguards for Beneficiaries with
Representative Payees
Section-by-Section Summary
Authority to Re-issue Benefits Misused by Organizational
Representative Payees
Section 1 would require the Commissioner of Social Security
to re-issue title II and title XVI benefit payments (including
any fees paid to the representative payee) when an
organizational payee is found to have misused a beneficiary's
funds. This re-issuance would be without regard to whether
there has been negligent failure by the Commissioner to
investigate/monitor the payee. (Current law requires the re-
issuance of benefits in cases of misuse by an individual or
organizational payee when there has been negligent failure by
the Commissioner to investigate/monitor the payee.) This change
would be effective for any case in which the Commissioner makes
a misuse determination after December 31, 1999.
Bonding and Licensing Requirements Applicable to
Nongovernmental Fee-for-Service Organizational Representative
Payees
Section 2 would require non-governmental fee-for-service
organizational payees to be bonded and licensed, provided that
licensing is available. The bonding/licensing requirements
would be promulgated in regulations issued by the Commissioner.
(Current law requires bonding or licensing.) This change would
be effective on the first day of the thirteenth month after the
date of enactment.
Fee Forfeiture in Case of Benefit Misuse by Representative
Payees
Section 3 would provide that in cases in which the
Commissioner or a court of competent jurisdiction determines
that an organization has misused an individual's benefits, the
organization shall not qualify for the fee from that
individual's benefits for months the payee misused the funds.
This change would be effective for any case in which the
Commissioner makes a misuse determination after December 31,
1999.
Liability of Representative Payees for Misused Benefits
Section 4 would provide that for all non-governmental
representative payees, any misused benefits (including any
respective representative payee fees, but excluding any amount
repaid by the representative payee) would be treated as an
overpayment to the payee and, therefore, subject to current
overpayment recovery authorities. Any amounts recouped through
overpayment recovery actions would be reissued to the
beneficiary or his/her alternative payee (unless already re-
issued under the provisions of section 1 or under the
restitution provisions relating to negligent failure). This
change would be effective for any case in which the
Commissioner makes a misuse determination after December 31,
1999.
The Honorable J. Dennis Hastert
Speaker of the House
United States House of Representatives
Washington, DC 20515
Dear Mr. Speaker:
Enclosed for the consideration of the Congress is a draft bill ``To
Authorize Application of the Civil Monetary Penalty Authority to
Representative Payees who Convert Benefits and Other Individuals Who
Misuse Social Security Cards or Numbers.'' Upon enactment, the bill
would be cited as the ``Civil Monetary Penalty Extension Act of 1999.''
In addition to paying benefits to eligible individuals under the
Social Security and Supplemental Security Income (SSI) programs, the
Social Security Administration (SSA) also maintains a record of wages
and self-employment earnings earned by all workers since the beginning
of the program in 1937. This record contains the employment history of
about 300 million individuals, including the 150 million individuals
currently in the active workforce.
Fundamental to the integrity of this record is the assignment of
Social Security numbers (SSN). In order to be assigned an SSN, an
individual now must provide SSA with evidence of citizenship or lawful
immigration status, proof of age, and evidence that satisfactorily
establishes the individual's identity.
While there are significant criminal penalties for SSN fraud, there
are no provisions that authorize the Commission or Social Security
impose civil penalties for these offenses. The purpose of this
legislative proposal is to establish civil monetary penalties, which
the Commissioner can impose, for offenses involving fraudulent
application for or misuse of SSNs and Social Security cards.
In addition, the proposed bill would provide for civil monetary
penalties for individuals who, while serving as a Social Security or
Supplemental Security Income beneficiary's representative payee,
misuses the funds paid on behalf of the beneficiary. While such misuse
is subject to criminal penalties, this legislative proposal would
provide SSA with an additional means for dealing with misuse by
representative payees. As with the criminal penalty, the civil monetary
penalty would be in addition to SSA's recovery of the misused funds.
An enclosure to this letter provides a section-by-section summary.
We urge the Congress to give the enclosed draft bill its prompt and
favorable consideration.
This draft bill would affect direct spending and receipts;
therefore, it is subject to the pay-as-you-go requirement of the
Omnibus Budget Reconciliation Act of 1990. We estimate that the draft
bill's effects on direct spending and receipts would be negligible.
We are advised by the Office of Management and Budget that there is
no objection to the submission of this draft bill to the Congress, and
its enactment would be in accord with the program of the President.
I am sending an identical letter to the Honorable Al Gore,
President of the Senate.
Sincerely,
Kenneth S. Apfel
Commissioner of Social Security
Enclosures
A BILL
To amend the Social Security Act to authorize application of the
civil monetary penalty authority to representative payees who convert
benefits and other individuals who misuse social security cards or
numbers.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
Section 1. Short Title.
This Act may be cited as the ``Civil Monetary Penalty Extension Act
of 1999.''
Sec. 2. Extension of The Civil Monetary Penalty Authority.
(a) In General.--Section 1129(a) of the Social Security Act is
amended----
(1) by striking ``(A)'' and ``(B)'' and inserting ``(i)'' and
``(ii),'' respectively;
(2) by striking ``(a)(1)'' and inserting ``(a)(1)(A)'';
(3) by striking ``(2)'' and inserting ``(B)''; and
(4) by adding at the end the following new paragraph:
``(2) Any person (including an organization, agency, or other
entity) who----
``(A) having received, while acting in the capacity as
representative payee pursuant to section 205(j) or section 1631(a)(2),
a payment under title II or title XVI for the use and benefit of
another individual, converts such payment, or any part thereof, to a
use that such person knows or should know is other than for the use and
benefit of such other individual; or
``(B) uses a social security account number that such person knows
or should know has been assigned by the Commissioner of Social Security
(pursuant to an exercise of authority under section 205(c)(2) to
establish and maintain records) on the basis of false information
furnished to the Commissioner of Social Security by any individual; or
``(C) falsely represents a number to be the social security account
number assigned by the Commissioner of Social Security to any
individual, when such person knows or should know that such number is
not the social security account number assigned by the Commissioner of
Social Security to such individual; or
``(D) knowingly alters a social security card issued by the
Commissioner of Social Security, or possesses such a card with intent
to alter it; or
``(E) knowingly buys or sells a card that is, or purports to be, a
card issued by the Commissioner of Social Security, or possesses such a
card with intent to buy or sell it; or
``(F) counterfeits a social security card, or possesses a
counterfeit card with intent to buy or sell it; or
``(G) discloses, uses, or compels the disclosure of the social
security account number of any person in violation of the laws of the
United States
shall be subject to, in addition to any other penalties that may be
prescribed by law, a civil money penalty of not more than $5,000 for
each such violation.''.
(b) Conforming Amendments.----
(1) Section 1129(b)(3)(A) of such Act is amended by striking
``charging fraud or false statements.''
(2) Section 1129(c)(1) of such Act is amended by striking ``and
representations'' and inserting ``, representations, or actions.''
(3) Section 1129(e)(1)(A) of such Act is amended by striking
``statement or representation referred to in subsection (a) was made''
and inserting ``violation occurred.''
(4) Section 1129(l) of such Act is amended by inserting
``assignment of a social security account number or'' after
``application of an individual for.''
(c) Effective Date.--The amendments made by this section shall be
effective with respect to violations committed after the date of the
enactment of this Act.
Civil Monetary Penalty Extension Act of 1999
Section-by-Section Summary
Short Title
Section 1 would provide that the Act may be cited as the ``Civil
Monetary Penalty Extension Act of 1999.''
Application of Civil Monetary Penalty Authority to Misuse of Social
Security Numbers and Cards and to Misuse of Benefits by a
Representative Payee.
Section 2 would expand the authority for imposing civil monetary
penalties to offenses involving fraudulent application for or misuse of
the Social Security Number and Card and misuse of Social Security or
Supplemental Security Income benefits received by a representative
payee on behalf of another individual.
Mr. Collins. Good. I would concur.
Another question in the area of the administrative law
judge. I have heard from several and their concern and
dissatisfaction with the way things are handled through the
administrative law judge procedures I think is what has led
them to do what they have done most recently in organizing, and
that seems to be where, in the area of disability, where you
have quite a bit of payments that are overpaid or fraudulently
paid or expensive.
What are we looking at toward helping administrative law
judges in fulfilling their duties and requiring those who
counsel applicants to perform timely and in a way that would
help not only the applicant, but would also help the agency?
Mr. Halter. Let me answer that question broadly first and
then come back to the specifics.
With respect to the hearings and appeals process generally,
we have initiated a number of reforms. We are prototying some
reforms at this point. We have, in addition, just in recent
weeks, made a managerial decision to devote additional
resources to the appeals process.
So this is certainly an area, Congressman, where we're
devoting a good amount of senior management attention, trying
to get the performance in this arena in line with what you
would like and certainly with what we would like in the way of
performance.
With respect to the specifics, which you and I briefly
talked about before the hearing, I would like to come back to
you and work with you and your staff on what your ideas are in
that area and see if there are things that we can do
administratively to help.
Mr. Collins. Good, because it is an area, you know, that
many have voiced concern about, the lack of assistance in their
office, the lack of necessary equipment in their office. Some
have even had to go out and buy their own PCs. You know,
there's just a lot of concern, and I think that's what's led to
the organizing.
Commissioner, we thank you. Pass our regards on to the
Commissioner himself. Thanks for the job you do, and I again
say that in the Georgia and the Atlanta region, we couldn't ask
for better service. They respond, they respond timely, and we
appreciate that.
Mr. Halter. Congressman, I am delighted to hear that, and
you can be assured that this afternoon, I will pass that along
to our regional office in Atlanta. Thank you very much.
Thank you, Congressman.
Mr. Collins. Thank you. And my only concern is in the area
of the administrative law judge.
Mr. Halter. Thank you, sir. We'll work with you on that.
Mr. Collins. Next we will hear from the Inspector General,
Hon. James G. Huse, Jr.
Welcome, Mr. Huse. Your testimony will be--the full
testimony will be entered into the record, and we would be glad
to take your opening remarks.
STATEMENT BY HON. JAMES G. HUSE, JR., INSPECTOR GENERAL, OFFICE
OF THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTATION;
ACCOMPANIED BY STEVE SCHAEFFER, ASSISTANT INSPECTOR GENERAL FOR
AUDIT
Mr. Huse. Thank you, sir.
Good morning, Mr. Chairman and Members of the Subcommittee.
Thank you for the opportunity to address you on Social Security
program integrity issues. Today, I want to briefly summarize my
statement for the record.
Since 1995, actually 5 years this week, since independence,
we have made great strides in preventing fraud, waste and abuse
with the support of the agency and this Subcommittee. It is
with great pride that I state that every year since Fiscal Year
1996, our investigative accomplishments and audit
recommendations have far surpassed the dollar amount of our
appropriation.
We continue to focus our efforts on innovative projects
that address SSA's program integrity. One example is our
cooperative disability investigations project, which combines
the resources and talents of our special agents with state law
enforcement officers and SSA and State Disability Determination
Service employees to prevent fraud from occurring.
Last fiscal year, our five original CDI teams returned
about ten dollars for every dollar invested. There is some
effort underway to devolve this process to local control, and I
feel strongly that this project needs to remain under Federal
authority and become a permanent baseline activity because of
the huge Federal dollars at risk.
Another successful venture is our fugitive felon project.
We have taken the lead in implementing the provisions of the
Personal Responsibility and Work Opportunity Reconciliation Act
of 1996. This law made fugitives ineligible to receive SSI
benefits when fleeing justice or violating probation or parole.
In Fiscal Year 1999, we identified over 7,000 fugitives
receiving SSI payments illegally, with estimated savings of $27
million to the United States.
Under current law, fugitives are entitled to receive old-
age, survivors, and disability insurance benefits, which sends
an inconsistent message to the public. Even though fugitives
have paid into the Social Security trust funds, we believe that
SSA should not pay benefits to them because these funds could
finance a dangerous fugitive's flight from justice.
We are also seeking ways to assist SSA in balancing world-
class service imperatives to its customers while enforcing its
zero tolerance for fraud.
In some instances, the implementation of these goals can
conflict with each other. SSA employees are often faced with
difficult situations as they come in contact with the public.
Our experience has shown that some employees instinctively know
when they are presented with false documents or other evidence,
but may be reluctant at times to question individuals because
of fear of violence or retaliation.
We have determined that as a Federal law enforcement
organization, we need to improve our ability to address threats
made against SSA employees and we have initiated projects in
this area.
I do not believe that I can testify today on program
integrity without mentioning Social Security number misuse. Our
office appreciates that this Subcommittee has recognized how
large the problem of SSN misuse is, and that you will hold
separate hearings on this matter.
There are several other areas that we continue to monitor
in our work at SSA. These include the Agency's efforts to
improve its representative payee program, efforts to reduce the
size of its earnings suspense file, and other efforts to
improve payment accuracy and improve access to online data. We
are also working in partnership with the agency to ensure that
appropriate safeguards are in place to protect SSA's critical
infrastructure and address system security issues. I have
provided you with more details on these areas in my statement
for the record.
I would like to take this opportunity to thank this
Subcommittee for its commitment to excellence in overseeing
SSA's programs. I am confident that with your continued
support, we will be able to continue to not only protect the
integrity of SSA's programs, but improve them as well.
I'll be happy to answer any questions now or provide you
with any additional information at a later date.
[The prepared statement follows:]
Statement of the Hon. James G. Huse, Jr., Inspector General, Office of
the Inspector General, Social Security Administration; accompanied by
Steve Schaeffer, Assistant Inspector General for Audit
Good morning Chairman Shaw and members of the Subcommittee,
thank you for the opportunity to address you on Social Security
Program Integrity Issues. Since 1995, the Office of the
Inspector General (OIG) has made great strides in preventing
and detecting fraud, waste, and abuse with the support of the
Agency. It is with great pride that I can state that every year
since Fiscal Year (FY) 1996, our investigative accomplishments
and audit recommendations surpassed the dollar amount of our
appropriation. In FY 1999 alone, two of our investigative
projects identified over $64 million in overpayments and
projected savings to the Government which when coupled with our
audit work and other investigative results exceeded our
appropriations by over $300 million.
Today, I would like to present instances where: 1) our work
has been extremely effective and with your help we can achieve
even greater results; 2) areas where the Social Security
Administration (SSA) needs to strengthen the oversight of its
programs and operations; and 3) an update on other stewardship
areas that are of interest to this Subcommittee.
Cooperative Disability Investigations Projects--Disability
fraud is a major focus of our work and we continue to identify
individuals whose actions undermine the integrity of this
program. As part of our aggressive program to attack fraud, we
joined with SSA in a cooperative effort to pilot Cooperative
Disability Investigations (CDI) projects in FY 1998. These
teams combine the resources and talents of our special agents
with State law enforcement officers and SSA and State
Disability Determination Service (DDS) employees in order to
combat disability fraud. Currently, we have seven investigative
units operating in Atlanta, Baton Rouge, Chicago, New York
City, Oakland (California), Salem (Oregon), and St. Louis. This
innovative project has proven to be an effective means of
preventing fraud from occurring. In FY 1999, with a budget of
less than $2 million, the five original CDI pilots produced an
estimated savings to the Agency of over $20 million, making our
return on investment close to $10 to $1. There is some effort
underway to devolve this process to local control. I am very
concerned that these projects become a permanent baseline
activity and remain under Federal control, since huge Federal
benefit expenditures are at risk.
Fugitive Felon Program--Our office provides the lead in
implementing the Fugitive Felon Program under the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996,
Public Law (P.L) 104-193 that was enacted on August 22, 1996.
Section 202(a) of this law amended the Social Security Act to
make a person ineligible to receive SSI benefits during any
month in which the recipient is:
fleeing to avoid prosecution for a crime which is
a felony under the laws of the place from which the person
flees;
fleeing to avoid custody or confinement after
conviction for a crime which is a felony under the laws of the
place from which the person flees; or
violating a condition of probation or parole
imposed under Federal or State law.
In Fiscal Year 1999, we identified over 7,000 fugitives
receiving SSI payments illegally with estimated savings of $27
million to the Government. However, delays in establishing
computer matching agreements and problems with data
compatibility have impeded our ability to reach the program's
full potential.
Under current law, fugitives continue to be entitled to
receive Old-Age, Survivors, and Disability Insurance (OASDI)
benefits under title II of the Social Security Act. Even though
the OASDI program is an entitlement program, we believe that
SSA should not pay OASDI benefits to fugitive felons because
these funds may finance a potentially dangerous fugitive's
flight from justice. Additionally, we believe that the
expansion of fugitive non-payment provisions to the OASDI
program would allow SSA to present a consistent message to the
public that fugitives will not receive any type of benefit from
SSA.
The following important areas deal with programs and
operational issues where the OIG will work closely with the
Agency to ensure progress and success.
Representative Payee Program--The representative payee program
provides benefits to the most vulnerable members of society--
the young, the elderly, and the disabled. For those individuals
that are incapable of directing or managing their benefits, SSA
has the authority to appoint representative payees. It is
important to recognize that most representative payees are
family members of beneficiaries, and do not abuse the
responsibilities entrusted to them. However, given the extreme
vulnerability of some of SSA's customers, it is imperative that
SSA provide appropriate safeguards to ensure that
representative payees meet their responsibilities and use funds
appropriately.
Since 1996, our audits have identified numerous weaknesses
in the monitoring and accountability of representative payees,
and our ongoing investigative work provides examples of
representative payees who have taken advantage of vulnerable
individuals. Recent media attention has also highlighted
alleged wrongdoings of institutions that serve as
representative payees, such as the Aurora Foundation that was
the subject of a television news magazine segment in January
2000, entitled ``When Nobody's Looking.''
To address this issue, SSA has proposed legislation to
provide additional safeguards for beneficiaries with
representative payees, particularly in cases when
representative payees have misused benefits.
SSA has also asked us to assist them in addressing prior
audit findings and the other longstanding issues in order to
make improvements to the representative payee program. I
pledged my full support, and will assist SSA by:
Providing our expertise and guidance to SSA staff
during on-site reviews of select representative payees;
Conducting periodic audits of the representative
payee program, including Agency and representative payee
compliance with policies and procedures; and
Evaluating, on an ongoing basis, the need for
revised policies and procedures and recommending improvements
to the representative payee program.
Also, to strengthen our ability to meet this pledge, there
are legislative enhancements that can be made to our Civil
Monetary Penalty (CMP) authority. The Commissioner of Social
Security has delegated to the OIG authority under section 1129
of the Social Security Act to impose administrative penalties
and assessments against individuals, to including
representative payees, who make false statements to obtain or
retain benefits. This improves our ability to ensure that
individuals who commit this type of fraud against SSA are
penalized, even if such individuals are not prosecuted
criminally. Our investigative work has revealed that gaps exist
with our CMP authority. SSA has proposed legislation that OMB
has submitted to Congress that would enhance this effort. I
believe this legislation can be broadened to further strengthen
the effectiveness of the CMP program.
Fraud Prevention and the Impact on Employees--SSA has a
difficult balance to maintain between providing ``World Class
Service'' to its customers and enforcing its ``Zero Tolerance
for Fraud'' commitment. In some instances, the implementation
of these goals can conflict with each other. Although SSA
employees are trained in fraud prevention and are required to
comply with certain procedures designed to prevent fraud, their
performance is measured in terms of customer service. This is
an issue that the Agency will continue to deal with as it
recognizes customers expect service to be the top priority.
Further, SSA employees are often faced with difficult
situations as they come into contact with the public each day.
Our experience has shown that some employees instinctively know
when they are presented with false documents. However,
employees are sometimes reluctant to question individuals
because of fear of violence or retaliation by the individual.
In light of this, we initiated Employee Threat pilots to assess
the need for OIG involvement in such matters.
Our efforts so far have revealed that as a Federal law
enforcement organization, we need to improve our ability to
address threats made against SSA employees. This would instill
in SSA's employees a vastly improved peace of mind, and
strengthen the OIG's ability to protect these employees.
Finally, I would like to briefly highlight the following
areas that have been of interest to this Subcommittee.
Social Security Number Misuse--Our office appreciates that this
Subcommittee has recognized how large a problem Social Security
Number (SSN) misuse and identity theft are and that you will
hold separate hearings on the matter. Given the inherent
connection between SSN misuse and fraud, I do not believe that
I can testify on SSA stewardship without mentioning our
increased focus on identifying controls to prevent and detect
SSN misuse. The expanded use of the SSN as a personal
identifier has given rise to the practice of counterfeiting SSN
cards; obtaining SSN cards based on false information; and
using a SSN belonging to another to obtain benefits and
services from Federal programs, credit card companies,
retailers, and other businesses. Our audits and investigations
to date have identified trends in SSN misuse, and I look
forward to providing more details on our SSN misuse initiatives
and our overall approach for combating identity theft at a
future hearing.
Systems Security and Critical Infrastructure Protection--As
agencies become more dependent on electronic data, special
consideration must be given to protect the transmission,
storage, and processing of this sensitive data from cyber and/
or physical threats. SSA's systems are critical to customer
service delivery. Technology is rapidly changing in this new
electronic age, especially in the use of the Internet to
conduct business. As technology and its use advances, we need
to be sure that the appropriate safeguards are in place to
protect SSA's critical infrastructures, and to ensure that SSA
can continue to serve its customers by using technology to its
advantage. Recognizing that this mission goes far beyond our
traditional audit and investigative roles, I established a
Critical Infrastructure Division within the OIG and entered
into a partnership with SSA to focus on its critical
infrastructure protection program. Within a few months this
partnership resulted in the development of incident response
procedures that include immediate referrals to OIG of any
systems penetrations or inappropriate activity. We will
continue to support the Agency's critical infrastructure
initiatives, as well as continue our audits and investigations
aimed at identifying vulnerabilities in SSA's control
structure, establishing preventive measures, and investigating
perpetrators.
Suspense File--Each year, SSA receives about 216 million wage
reports from about 6.5 million employers. One of the long-
standing issues at SSA has been the large number of wage
records that are posted to the ``Suspense File'' because the
records cannot be associated with a valid SSN. This file has
accumulated 212 million wage items representing about $265
billion in reported wages since 1937 when the file was created.
Since 1990, this file has grown by an average of 5 million wage
items representing $17 billion, annually.
This file affects SSA's operations in that wages that
cannot be associated with an employee's earnings record can
affect the employee's future Social Security benefits. This
suspense file also affects SSA's operating costs. SSA estimates
that it costs less than 50 cents to post a correctly submitted
wage item to an individual's earnings record, but it costs an
average of $300 to correct an item once it is in the suspense
file.
To aid the Agency in gleaning insight on any patterns or
trends that may identify the root cause of wage reporting
problems, we conducted an audit in FY 1999 entitled Patterns of
Reporting Errors and Irregularities by 100 Employers with the
Most Suspended Wage Items. We identified several patterns and
reporting errors including unassigned SSNs, duplicate mailing
addresses, SSNs used two or more times, and consecutively
numbered SSNs. The Agency noted in its comments to our report,
that SSA has no compliance authority in these matters and
relies on the efforts of the Internal Revenue Service (Internal
Revenue Service) for its cooperation and support. Indeed, the
main thrust of SSA's key initiative in this area is dependent
on the IRS.
We recently issued another report entitled The SSA's
Earnings Suspense File Tactical Plan and Efforts to Reduce The
File's Growth and Size. In this report, we recommend that SSA:
1) place a higher priority on efforts to reduce the size and
growth of this file; and 2) examine the file for potential
indicators of fraud, waste and abuse. In the future, we are
planning to analyze the overall contents of the Suspense File
in the hope of providing more definitive information and
recommendations to SSA management and the Congress.
Workers' Compensation--Some individuals who qualify for
disability insurance (DI) benefits under title II of the Social
Security Act may also be eligible for cash benefits under State
Workers' Compensation (WC) programs. By law, SSA offsets WC
benefits from individuals' DI benefits with the intent to
prevent a situation in which disabled individuals could receive
more in total disability benefits than they were earning prior
to becoming disabled. We have completed a series of audits in
this area and have found this offset provision to be extremely
error-prone and difficult to administer. These offset cases are
complex in nature and administratively burdensome. They often
require manual computations and frequent follow-up because of
changes in WC payments or status. Also, similar to the SSI
program, the current process is heavily reliant on voluntary
reporting by beneficiaries.
Our audits recommended a number of procedural changes to
improve SSA's control over WC offset cases as well as a
proactive approach by SSA to obtain State WC data. We noted
there were problems with compatibility of State data and, in
some instances, State laws prohibited the release of data. SSA
acknowledged that WC cases are error prone, and in response,
SSA has agreed to pursue WC data matches in the States where it
currently has on-line access and in other States concentrating
on the ten largest WC States. In addition, SSA established a WC
workgroup that is devising a comprehensive plan to improve
payment accuracy. Thus far, SSA has obtained on-line access to
State WC data in nine States.
Deceased Beneficiaries--Each year, SSA terminates benefits
for about 1.9 million individuals because of death. Relatives,
friends, and funeral homes report about 90 percent of all
deaths. The other deaths are reported by States and Federal
entities (5 percent), postal authorities (4 percent) and
financial institutions (1 percent). Our investigations
involving deceased beneficiaries have steadily increased from
336 in FY 1997 to 552 in FY 1999. This year we have already
logged in over 320 investigations at the halfway point for the
year. Our Office of Audit initiated reviews of our
investigative data to determine if systemic weaknesses exist in
SSA's current death reporting processes. In this work, we will
explore ways that SSA can improve its ability to obtain timely
death information.
I would like to take this opportunity to thank the
Subcommittee for its commitment to excellence in overseeing
SSA's programs, and recognize the support that we receive from
SSA for our anti-fraud efforts. I am confident that with your
continued support we will be able to forge ahead to protect the
integrity of SSA's programs which are so vital to so many
Americans.
I will be happy to answer any questions now, or provide you
with any additional information at a later date.
Chairman Shaw [presiding]. Mr. Huse, I have two staff-
prepared questions that I would like to ask you. The first one
is, what is the role of the SSA employee in preventing the
waste, fraud and abuse? Are SSA employees engaged in the battle
to prevent waste, fraud and abuse? And to follow up on that,
what changes do you suggest to help them become more involved?
Mr. Huse. Thank you, Mr. Chairman.
The SSA employee is our frontline in this war on fraud,
waste and abuse. They are at the point where fraud is detected,
they bring these allegations back to us for resolution. Without
their commitment, without their zeal, we wouldn't even have an
antifraud program that had any substance to it.
But SSA's employees also have tremendous, as you all know,
customer service imperatives that weigh on these. These drive,
in times of diminished resources, their efforts. As we ask them
to conduct these antifraud activities, we need to be sure that
these workloads are measured and are included into the
calculations of the agency's workload measurement system, and I
believe that this is an area that needs some improvement.
Second, as we ask our employees, especially in these days,
to go out and deal with those who may be cheating or stealing
from the United States, we need to protect them with the same
protections that other Federal employees have in other service
organizations, such as the Internal Revenue Service. Under
current law, SSA's employees do not have any protection for
threats or intimidation made to them in the conduct of their
duties.
Last, I think that when you take both of these together,
there needs to be some type of manner in personal performance
assessment where employees are recognized for their integrity
activities as well as their customer service activities.
Whether this takes the form of monetary rewards, which some may
find troubling in terms of quotas, or in other types of
employee recognition, I think it's important to
institutionalize those things.
Chairman Shaw. Yes. It would be kind of tough to do this.
It's kind of like giving the policeman a percentage of the
traffic ticket he writes. That would be a very bad thing to do.
But it is troubling.
I think there should be some accountability and recognition
of employees that do a good job; however, the ones that are
denying benefits that are actually due, those people are not
good, either, because they're dealing with the most fragile
among us.
Mr. Huse. Right. I don't suggest that. What I'm----
Chairman Shaw. No, I know you're not.
Mr. Huse. All right.
Chairman Shaw. I know you're not. I know you're not
suggesting that, but it's sort of a fine line that they have to
walk.
The second question I have is, what additional tools do you
need to better combat the fraud and abuse? You spoke in your
testimony of the amount that is returned for the amount spent.
You're suggesting that we might spend more and stop more fraud?
Mr. Huse. Well, that would be a quick and easy answer, but
I'll try to make it a little bit more correct.
Certainly some more investment in these activities would
help us. First of all, I think that what would help us a great
deal is that the top priority is to improve our ability to
address these threats against our frontline employees in
conducting their vigilant activities and rooting out fraud,
waste and abuse.
For our Office of the Inspector General, to move us from
our present authority to conduct investigations to statutory
law enforcement authority inside the Social Security Act I
think would be a key step in recognizing that we're an abiding
process and a key function within Social Security. To expand
some of our civil monetary penalty authorities that we have now
and that are very robust and are paying off where we would
include omissions from statements, representative payee misuse,
and false statements made in the enumeration business process,
the process of getting Social Security numbers, I think these
would be big incentives and tools that we could use to better
shore up the integrity.
One area that is difficult for us, and as Bill Halter
explained earlier, we have a world of diminishing human
resources--I mean, that's the nature of government today. We in
the Office of the Inspector General, when we have received
resources from this Subcommittee and from appropriators, we
have to compete for those FTE within the agency ceilings, so
that for every criminal investigator or auditor that stands up
to this fraud, waste and abuse effort, SSA loses a resource
that they truly need, too, to provide better customer service
and vigilance in the context of their work. Perhaps if we were
freed from the, you know, the obligation of being within the
agency's FTE caps, that would help us.
We need to strengthen and increase these cooperative
disability investigation teams, these little task forces we
have across the United States. We have seven of them up and
going now in critical locations. The return on investment on
these is tremendous. For every dollar we spend, we save ten.
What these teams do is they knock ineligible and
inappropriate applicants for disability benefits away prior to
establishing the--prior to effectuation of the benefit, so all
of the later costs that accrue are, you know, are saved,
especially in terms of the appellate process and all of the
other problems that are imbedded in the disability benefit.
These are a terrific savings, and they're rather innovative in
the sense that we're in a preventative role rather than in an
enforcement role.
We need to make some minor adjustments to existing law to
allow the Social Security Administration legal authorities to
have restitution as a piece that the courts can order in
adjudicating our fraud cases.
Some effort could be made to exempt us from the
restrictions of the Computer Matching Act as we try to create
computer matching agreements with the States in executing our
fugitive felon projects and other matching projects that focus
on those people who are cheating.
Chairman Shaw. Could you expand on that fugitive felon
provision? Run over that again for us, please.
Mr. Huse. Well, in the Welfare Reform Act, it made it
illegal for anyone fleeing from justice to continue to receive
the Supplemental Security Income benefit.
Chairman Shaw. Yes, sir. But you spoke of the old-age
benefit.
Mr. Huse. Well, that's another piece of that, and thank you
for bringing it because I might have forgotten that. We would
like to see that extended to Title II also, as well as Title
XVI. Now, I know that that's a different issue because----
Chairman Shaw. It's a current benefit, yes.
Mr. Huse. These are people who, you know, receive that
benefit after earning the right to that, but perhaps even if
the law only included suspending their benefits while they're
in a fugitive status--anything--we believe that there is some
significant savings in there.
Chairman Shaw. Well, being a fugitive, it would imply that
they're on the run.
Mr. Huse. Exactly.
Chairman Shaw. What, do they tell you guys where to send
the check?
Mr. Huse. Well, in today's real criminal justice system,
you don't even have to be on the run. Most local, state and
even Federal law enforcement is so overloaded that fugitives
tend to stay outside of the system until some imperative----
Chairman Shaw. Still walk out to the mailbox, right?
Mr. Huse. That's right. That's right.
But we have had some success with this program, and it does
benefit local and state law enforcement as well as the Social
Security Administration in cleaning up some of these, you know,
fugitive indices which, you know, they go on for forever.
I don't know if I answered your question, but----
Chairman Shaw. I think so.
Mr. Huse. OK.
Chairman Shaw. Mr. Matsui.
Mr. Huse. The last tool I wanted to ask for was that the
Office of the Inspector General be granted an independent
Freedom of Information Act authority. Right now, our Freedom of
Information authority is vested in the agency rather than in
our own, and this makes it difficult sometimes for us to feel
that we truly are independent. People who bring us information
and bring us cases always have to keep in mind that at some
point, the agency might release that information back to
whomever. So it's an issue that isn't only unique to Social
Security.
Chairman Shaw. But you have independence within the agency
to go where you want to go and study what you want to study,
don't you?
Mr. Huse. I do, but once that is done and there is a
record, that record can be released by the agency if it so
chooses, which is a--there's kind of a contradiction in law
there, and I think it does impinge somewhat on the true
intention for independence in the conduct of investigative and
audit activities, but it's one of these anomalies, but it still
exists.
Chairman Shaw. Mr. Matsui?
Mr. Matsui. Thank you, Mr. Chairman.
Thank you, Mr. Huse.
I want to discuss the representative payee issue. I have
some familiarity with this because we had the notorious case in
Sacramento of Dorothea Puente. I don't know if you have heard
of her. But this goes back to the mideighties, I believe, or
the early 'eighties, and she was a representative payee for a
number of tenants living in kind of a group housing situation
in downtown Sacramento. In fact, she came to our office
complaining that she wasn't getting Social Security disability
checks on time once, and I think our staff even may have helped
her, then we got a Christmas card from her. So we have a
relationship with this situation. But unfortunately, they found
about I think six or eight bodies that were buried in the
backyard of her home.
I think, subsequent to that, we then kind of cleaned up the
law a little bit by the bonding requirements and a few other
things, and we had discovered through the hearing process when
this and other problems had arisen in the early 'eighties that
bartenders were representative payees to people that were
frequenting the bars, and so it was pretty much out of control,
and we have tightened it up, but obviously the problem still
exists, and you referred to one such situation in your
testimony, the Aurora Foundation.
I guess, you know, if it's a nursing home, it might make
sense, the administrator of the nursing home, because there's
some benefit that's received, and at least you can maintain
that. There's a reporting requirement now. An individual
generally, unless it's a parent-child situation, can't be a
representative payee in most cases.
But how do we really deal with this issue, because I think
it's still out there, it's an ongoing problem. Aurora
apparently defrauded, what, 146 beneficiaries. They had been
operating without a bond or a state charter since the
midnineties, and the total amount, we understand, is $213,000
that was obviously taken from the 146 beneficiaries.
One question I have is were these beneficiaries made whole
or did the Social Security Administration thereby lose out, or
how did this all come together? And perhaps you can make some
recommendations on how we really deal with this kind of
ongoing, continuous problem.
Mr. Huse. I will be glad to do that. I think, if I could
just start with setting the representative payee situation in a
broad context and then narrow it down to some specifics, this
is one of these great workload issues at Social Security. I'm
going to make a general statement here. After being the IG, if
you add in my acting time, for a couple years, there is more
work at Social Security than there are resources to accomplish
it. That's a fact. So there are tradeoffs.
The rep payee area is one where we get into a deferred
workload situation. In other words, these reports that come
from these individual rep payees that indicate their individual
stewardship over their duties, which are mostly voluntary,
aren't probably reviewed in as timely a manner in the context
of a business process, and that allows some of the situations
to develop.
As a result of the notoriety with some of these very
provocative cases, Aurora being the most recent example--it's
been in the national media--Social Security, the administration
itself, is reviewing the entire rep payee system, and I have
pledged the Office of the Inspector General to join with the
agency in that effort, which is kind of an extraordinary
setaside from our normal role.
We are going to target the different institutional rep
payees that look like they need a review and from this learn if
there isn't a better way to manage this process. So that's on
the positive side.
On the investigative side, we have made any kind of a
report or allegation of any kind of a rep payee issue an
instant top priority, and we have seen over the existence of
this Office of the Inspector General, the last 5 years, a
growing increase in the numbers of these cases. Part of the
weakness in that is that we absolutely need rep payees to take
care of these needy beneficiaries. There is no other way to
manage dispensing these benefits. But there really isn't a
robust process of determining exactly whether people are fit to
do this or not because these people are for the most part
volunteer----
Mr. Matsui. If I may just interrupt, one of the problems is
that the beneficiary usually isn't as capable as most people,--
--
Mr. Huse. That's correct.
Mr. Matsui.--so they don't even know how----
Mr. Huse. No.
Mr. Matsui. They don't even know how to make a complaint to
anyone.
Mr. Huse. They don't. And all of the current review work
and the work we'll do with the agency focuses in on how we can
better manage this process of actually determining who does
this work and how do we keep some kind of level of review over
how they're accomplishing it.
But the bottom line is, we absolutely need to have rep
payees. I mean, there's no way, without these people--and for
the most part, 96 percent of them are good people who do good
things for others.
In any case, we're pledged to the effort of trying to find
some solution to this, and I would be pleased to come back and
report on our progress any time you wanted us to do that.
Mr. Matsui. I don't want to take too much time, but last
is, will you make--and maybe SSA--some legislative
recommendations to the Chairman of the Committee?
Mr. Huse. The Commissioner has some--well, first of all, we
have a minor legislative suggestion that we be given some civil
money penalty authority to go after those rep payees who fail
us but whose conduct falls short of a criminal prosecution. But
the Commissioner, I believe, has advanced some proposed
legislation that I think would be very helpful also,
particularly in the issue--in the area of making the victims
whole when one of these situations occurs.
Right now, without a finding of negligence, there's no way
to, for example, for the Aurora Foundation beneficiaries, for
them to receive the benefits that were taken from them. Yet,
finding agency negligence is a difficult issue for us because
automatically, if the agency declares itself negligent, we
obviate any possibility of a criminal prosecution of the people
involved or seriously damage the possibility of a criminal
prosecution. So you're in a very difficult area there. That
legislative proposal is crucial that the Commissioner is
advancing.
Chairman Shaw. Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman.
Mr. Matsui, I believe those who are buried in the backyard
should be denied benefits, but let's not mess with their right
to vote, let's continue to send them absentee ballots.
[Laughter.]
Mr. Collins. You had some figures, I believe, on the issue
of fugitives, felons and SSI. Do you have any figures of how
much the Social Security Administration can save on benefits in
that same area by denying benefits to fugitives, felons or
parole or probation violators?
Mr. Huse. For Title II their, the old-age and survivors
disability insurance, we have a rough estimate. We're doing
some audit work now that will bring specificity to your
question, but right now, had we had the same authority for
Title II that came out of the Welfare Reform Act as we did for
Title XVI, we believe there's about $60 million in there that
we would have been able to save over the last 3 years, and
that's rough, and we're trying to bring that down to a better
figure. I'll be pleased to report that when that work is done,
but about $60 million dollars.
Mr. Collins. You mentioned too efforts to work with States
on matching lists. I believe in the welfare reform and the
child support recovery provisions, we did put in provisions
that would allow batching of lists for those who are
incarcerated. Is this something in the same area you're talking
about, a matching list of felons----
Mr. Huse. It's pretty much the same issue. What happens,
though, is while the law mandates the matching to take place,
we get involved with trying to overcome the difficulties that
are imbedded in the Computer Matching Act, which requires all
kinds of negotiation and process, which, if you're familiar
with the Computer Matching Act, that means the state entity and
the Federal agency have to agree on a process, then that
process is cleared that to the Office of Management and Budget,
and this is very time consuming, and very administratively
intense.
Now, there are reasons for that, because, you know, the
Congress intended that there not be willy nilly--you know, a
wholesale electronic big brother in this country, but I think
you----
Mr. Collins. No, the big brother is the computer over at
the White House. [Laughter.]
Mr. Huse. But the intent of these antifraud efforts I think
are very different, and if we could carve those away from the
requirements of the Computer Matching Act, we would save all
kinds of dollars in getting these things done. We're doing
them, but the process of ramping up takes forever. I mean, it's
really a slow process. And the savings are so palpable, you
just hope you can get it done timely.
Mr. Collins. Well, do you have any recommendations of how
we could simplify that and yet not violate the intent of the
law?
Mr. Huse. I would be happy to provide a better answer to
that on the record as a follow-up to this.
Mr. Collins. Very good.
One other area that I have some interest in reading your
report is in the suspense file and how the suspense file over
the years has grown, especially in the last 10 years, by the
number of items that have been entered into the suspense file
at a rate of 5 million items a year, representing about $17
billion annually, and the difference in cost of entering and
then correcting.
I see where you're hopefully going to do something in the
future about this. Will you explain that?
Mr. Huse. We have some critical audit work that's nearly
done where--and we have done a considerable amount of work the
last 2 years in this particular area. But we have taken the top
100 companies, business entities that have improper wage and
earnings records entered into the suspense file and we have
gotten underneath those reasons why they add that data to the
suspense file, and we'll project from that a much better
picture of what's going on there.
We have some suspicions that will be borne out by this
work. I think in recent years some of this are the effects of
the underground economy and illegal workers. There are also
other reasons, such as the different systems of keeping these
records. But essentially, the driver today, with all that the
Social Security Administration has done to make wage and
earning reporting easier, there has to be, you know, an
identity fraud issue underneath this, quite frankly. We're
going to talk more about that at the later hearing.
Mr. Collins. Do you see any relation between the invalid
Social Security numbers in relation to the EITC? There seems to
be a lot of problem in EITC.
Mr. Huse. Exactly.
Mr. Collins. Those kind of go together.
Mr. Huse. They do go together. In fact, we had a very
provocative case in Los Angeles several years ago where an
individual obtained 1,400 separate identities with 1,400
fraudulently obtained Social Security numbers just so he could
get the earned income tax credit as part of his fraudulent
scheme.
Mr. Collins. I know I have a friend that works in a small
town bank in south Georgia, and it was about this time last
year that one Friday, they almost had to shut the doors of the
bank because of the number of people coming in cashing EIC
checks. Some of them were children. And there is a lot of
concern there.
Well, good luck with that. I think that's an area that
really needs to be cross-checked with each other.
Thank you, Mr. Chairman.
Chairman Shaw. Yes. I just want to follow up. I think
you've raised a point, but I want to raise it with an
exclamation point.
Is there any tie-in between the Internal Revenue Service
checking to see that FICA taxes had been paid upon the claimed
wages by EITC beneficiaries? I ask that because one of the
problems that we have is that the Internal Revenue Service is
set up in such a way to catch people for underpaying, not for
overreporting, and the EITC fraud is caused by overreporting
one's income, getting the earned income tax credit.
Does the Internal Revenue Service talk to the Social
Security Administration to compare to be sure that FICA taxes
have properly been paid on those wages?
Mr. Huse. I'm going to look to my staff here. Steve?
Chairman Shaw. Come up to the table.
Mr. Huse. This is Steve Schaeffer. He's our Assistant
Inspector General for Audit.
Chairman Shaw. OK.
Mr. Schaeffer.
Mr. Schaeffer. The IRS and SSA exchange data between the
941s, which are prepared by--which come into IRS from
businesses, and the W-2s which come into SSA, and they do a
matching and try to reconcile the differences between those two
amounts. But IRS by statute, has the responsibility to collect
all taxes, whether they're FICA taxes or Federal income taxes,
and by law, the Social Security Administration receives the
amount of FICA taxes that should be collected whether or not
IRS actually collects those taxes or not. So from Social
Security's perspective, the moneys are going into the trust
funds whether or not IRS actually collects those taxes or not.
To my knowledge, there is no interplay between SSA and IRS
as to whether or not the amount of FICA tax that is actually
collected for this EITC credit is correct.
The Office of the Actuaries and the Office of Tax Analysis
in Treasury, you know, periodically go over their modelling
estimates of how much taxes are going to be generated by the
economy to make sure that their modeling scheme is correct in
what they're estimating as the appropriate amount of FICA taxes
to be collected is correct.
Chairman Shaw. Unfortunately, the earned income tax credit,
which is a very good law in many regards, it's also the area
where we have the highest instances of fraud, and it's really
too bad because it's giving the whole program a very bad, and
unless we can get to it and nip this stuff in the bud.--I think
maybe we should make this a part of a future hearing, is to see
where that connection is and whether we do need legislation in
this area or whether we just need common sense of two agencies
cooperating with each other to go after this stuff.
Mr. Huse. Mr. Chairman, I think some of the work we'll do
on the suspense file will actually clear some of this up,
because, you know, really, as you know, the suspense file isn't
about money, it's about wage and earnings items, and the trust
funds have already been replenished or added to. Inside why
this growth occurs in these erroneous wage and earnings records
is a lot of stories, and I think this will come out as we
deliver this report.
Chairman Shaw. Yes?
Mr. Collins. As a follow up, Mr. Chairman, do I hear any
kind of recommendation here that there should be a verification
of the FICA taxes being collected prior to any EIC payments?
Mr. Huse. You know, that would be probably a recommendation
that should come from IRS rather than from the IG at Social
Security. I think I would feel safe just allowing our reports
to speak for themselves there.
Mr. Collins. You don't deny that should be a
recommendation?
Mr. Huse. I don't deny it, but I'm not going to make it,
either. [Laughter.]
Mr. Collins. Thank you.
Chairman Shaw. An EITC amendment could be just simply
inserting a phrase in the existing statute, ``FICA wages''
rather than just ``earned income''.
Mr. Huse. Right.
Chairman Shaw. And that could be what should do. But I
think we really need to look into this, because I think that
whole EITC is a little bit in danger because of the fraud, and
it's going to get worse because people are learning more and
more how to game the system.
Mr. Huse. The electronic world will make it much easier,
Mr. Chairman. It already does, you know, to make false
identity----
Chairman Shaw. Well, but even with electronics, you've got
to ask the right questions.
Mr. Huse. That's true.
Chairman Shaw. Ben, did you have something?
Mr. Cardin. Thank you, Mr. Chairman.
As this hearing is taking place on the floor of the House,
we're taking up the supplemental appropriation bill. It's
interesting to point out it started at $4 billion. By the time
it got out of the Appropriations Committee, it grew to $8
billion. Today, by the time it gets out of the House, it will
be $12 billion, and by the time it gets out of the U.S. Senate,
it will be much more than $12 billion, and by the time it gets
out of conference, it will be even more than that.
I mention that because I just want to emphasize some of
your testimony where you indicated that because of limited
resources, you've got to make very difficult decisions. We have
the limitation on administrative expense that has restricted
not only the IG's work, but also the ability to provide service
at SSA, which does affect the integrity of the system. There's
no question about it, that if we had more resources in
administration, we would have less fraud, and if you had more
resources, you could do a better job with the integrity of the
system.
Mr. Chairman, I mention that because I would hope that our
Subcommittee, in a bipartisan way, would work with the
appropriators and with our colleagues at every opportunity we
have, whether it's during the normal appropriation process or
during the supplemental appropriation process, work with the IG
and come up with reasonable requests that can improve the
integrity of the system, because I do think our colleagues on
the Appropriations Committee in the House look to this
Committee for guidance as to where resources should be placed
in order to improve the integrity of the system.
So my question is basically if you had some more resources,
where would your priorities be? Where do you think are the most
important areas that you would like to be able to be more
aggressive, but because of the choices you have to make, it's
difficult to have those services performed?
Mr. Huse. First of all--and I thank you for that question--
I would like to expand our work on this, these cooperative
disability teams, because I think it's a common sense approach
to a problem in terms of fraud in the disability programs area
that makes dollar sense in terms of diminishing resources.
Here you combine the good effects from local law
enforcement, the State Disability Determination Services, our
people in the OIG, and then the professionals from the agency,
in little task forces that save dollars rather than ending up
with complicated cases to prosecute or difficult appellate
issues in the disability appeals area. We push those cheats
away from the benefit on the front end. That, to me, is smart
government.
So I would like to expand those. I would like to have one
of those in every one of our States, and I really believe that
that would save us all kinds of money.
I would also like to take some resources and do some more
work in the SSN misuse area as it relates to identity fraud.
Those Social Security Administration business processes that
deal with issuing those numbers need to be safeguarded, and we
have to make difficult choices, and right now we're only able
to deal with the most provocative and difficult cases that
mostly come to us from the Congress. We don't have the
resources to spend a lot on this particular area.
We have a government Performance and Results Act charge
that easily indicates to me to bring the kind of information
that Congress needs to make timely decisions. We need to find a
more timely way of getting these reports done and up here, and
I need to resuscitate then evaluation and inspection process
that does that. If GPRA is important, we need to put more into
it.
Those are pretty much the major changes I would make.
Mr. Cardin. I thank you for that response.
Mr. Chairman, I would hope that we could work and try to--
it's our responsibility to make sure you have the resources and
you use the resources properly. I would hope that this
Subcommittee would be more aggressive and more active in this
area.
Thank you, Chairman.
Chairman Shaw. Yes, Mr. Collins.
Mr. Collins. In reference to Mr. Cardin's question and your
answers toward disability and these small task forces that
preview these applicants looking for those who are fraudulent--
when I say fraudulent, it's not--they're not qualified for the
benefits. Is there any way or do you do any of those type
investigations on those who are on workmen's comp and are
shifting to disability?
I know in your testimony, in one of the testimonies--it
must have been the Commissioner--that part of the funds that
they find each year are after someone shifts from workman's
comp to disability, and then they find out that they're really
not eligible. Is there any way of doing that prior to the
shift? Because I have a sense that sometimes the workman's comp
insurer would rather they be on Social Security disability than
on their workman's comp disability.
Mr. Huse. Well, the worker's comp--we've done a lot of
audit work on the overpayments----
Mr. Collins. Is that after the fact or before?
Mr. Huse. Well, the problem is that we end up making a
tremendous amount of overpayments because of worker's comp
issues, and really, the problem is one of receiving data timely
from the States. Now, the agency has many efforts to try and
improve this exchange of data, but quite frankly, those goals
are still out ahead, and we've seen over time that some of
these--the connectivity of these local worker's comp databases
with ours--it's a bridge that still has to be built.
Mr. Collins. What incentives do the States have to provide
this timely?
Mr. Huse. Well, there isn't really much benefit to the
States; it's more of a benefit to the Federal Government so
that the--and that's part of the issue, too. A lot of Social
Security's data isn't really returned and exchanged because
it's guarded by the Privacy Act. So it's a real negotiating
position that it puts SSA in to try and get States interested
in exchanging this data anyway, because it helps us. But what
it results in is the right payment at the right time if you had
the data to make the decision. It doesn't get there at the
right time, and as a result, we have a very complicated process
where these benefits, because they're supposed to be
administered timely, are paid, and then later adjusted.
It really begs the question whether worker's comp ought to
be figured into the equation at all, whether the costs of
administering this over the long-term are worth it, whether you
should just disconnect the two. And I think we--our future work
will speak more to this issue, because the overpayment
situation is a difficult one.
Mr. Collins. Well, the real benefit is to the insurer
because if they can shift them from their benefit program to
the Federal benefit program,----
Mr. Huse. Right.
Mr. Collins.--then it is a cost to the benefit program, to
Social Security, but----
Chairman Shaw. But the insurer is on the hook regardless of
what SSI does.
Mr. Collins. Once they shift them, the benefit comes from
Social Security.
Mr. Huse. Well, that's true. I think the insurer pays the
worker's comp either way. You know, where the adjustment comes
is on the Federal side. Our benefit shrinks depending upon the
size of the worker's compensation payment. So we hold all the
cards, but we don't have the data to make--what we're doing now
is we're making some very costly collection situations, debt
collection situations and adjustment situations.
Mr. Collins. But oftentimes the insurer will get a
settlement from the injured if they are able to shift them to
disability.
Mr. Huse. That's true, over time. But----
Mr. Collins. And saves a lot of money in the long run if
they would have had to stay on their program.
Mr. Huse. True.
Chairman Shaw. Well, you found a way to collect from the
prisoners, so have at it. [Laughter.]
Mr. Collins. I've seen those same insurers shift it back to
the employer, too.
Mr. Huse. Yes.
Mr. Collins. Thank you.
Chairman Shaw. Mr. Huse, thank you very much.
Mr. Huse. Thank you, Mr. Chairman.
Chairman Shaw. And thank you all for being with us this
morning. Thank you.
The hearing is adjourned.
[Whereupon, at 10:35 a.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Terri Spurgeon, President, National Association of
Disability Examiners
Chairman Shaw and members of the Subcommittee, thank you
for this opportunity to present the viewpoint of the National
Association of Disability Examiners (NADE) on the Social
Security Administration's program integrity activities. We
appreciate your vigilant oversight of the Social Security
program and willingness to obtain input from our Association
and others with expertise in, experience with, and
understanding of the issues facing the Social Security and
Supplemental Security Income (SSI) programs at this time.
NADE is a professional association whose purpose is to
promote the art and science of disability evaluation. Our
members, whether they work in the state Disability
Determination Service (DDS) agencies, the Field Offices, SSA
Headquarters, OHA Offices or in the private sector, are deeply
concerned about the integrity of the Social Security and
Supplemental Security Income(SSI) disability programs. Simply
stated, we believe that those who are entitled to disability
benefits should receive them; those who are not, should not.
As we have stated in previous testimony presented to this
Subcommittee -and again quoting Robert J. Myers, former Chief
Actuary and Deputy Commissioner of Social Security, ``. .
.Proper administration of an insurance system--whether social
insurance or private insurance-requires that administrative
expenses should be neither too low nor too high. In the latter
case, the funds available for benefits would be eroded. In the
former case, inadequate service would be provided. In fact, in
some instances weak administration could mean improperly
excessive benefit payments due to fraud and abuse.'' (emphasis
added). We continue to urge the Congress to work with the
Social Security Administration to provide sufficient resources
to effectively administer the disability program, including
appropriate staffing levels, ongoing training (for all
components) and clear and complete instructions when program
changes are promulgated. All of these are essential if we are
to effectively administer the disability program and minimize
fraud, waste and abuse.
Our members have a unique opportunity to observe and assist
in the process of detecting fraud and abuse within the system.
For years our members have been concerned with the growing
public perception that there was rampant abuse. All too often
we dealt with the phone call from a member of the public
pointing out that their next door neighbor was collecting
disabilitybenefits while they were able to do all kinds of
things, such as fixing up their houses or working on their cars
and so on.
For too long that was a phone call we would listen to and
try to provide the person with an outlet for their concern by
directing them to the nearest Social Security field office even
though we knew there was little, if anything, that would or
could be done about it.
We strongly support SSA's joint efforts with the Office of
Inspector General (OIG) and the DDSs to create a growing number
of program integrity/anti-fraud units that are focused on
disability program issues. Such initiatives combine the
knowledge and talents of OIG, SSA and DDS staff for a more
visible and effective front-line defense for program integrity.
While the vast majority of applicants for disability benefits
are not out to defraud the program every disability examiner is
aware of at least some level of questionable activity on the
part of some applicants and/ or their representatives. Chairman
Shaw has pointed out that, ``We wouldn't need to combat fraud
if people were angels. Unfortunately, they're not.'' Our
members have worked directly with staff from the OIG to report
situations in which we believe there is an attempt to defraud
SSA. We have also found the OIG very receptive to those calls
that used to just frustrate our members and staff at the SSA
field offices. The fraud hot-line is a great place to refer the
phone callers that we talk with who have concerns about the
activities of other members of the public who are receiving
benefits illegally.
Individuals applying for Social Security or Supplemental
Security Income disability benefits are among the most
vulnerable of this country's population. Many are poorly
educated, do not speak English or have poor life coping skills.
These individuals are often victims of those who are out to
defraud the program. OIG and the anti-fraud units are not only
cost-effective, they provide valuable protection to the victims
of those who are defrauding the program.
While the anti-fraud units are an invaluable tool in
identifying and combating fraud, program integrity also
requires consistent and accurate disability decisions at all
levels in the adjudication process. This has been an issue of
ongoing concern for our members. There is a pervasive public
perception that ``everyone'' is denied disability benefits
twice and their claim is allowed only when they reach the
Administrative Law Judge (ALJ) level. The Disability Process
Redesign plan issued in 1994, with its emphasis on ``Process
Unification'' and the ``One Book'' initiative, was intended to
simplify the adjudication process and to address the growing
disparity between DDS and ALJ decisions; to bring DDS decisions
and ALJ decisions closer; to allow more claims earlier in the
process (at the DDS level) and reduce the number of ALJ
reversals. The ``One Book'' initiative specified that all
policies were to be issued as Rulings, binding on both the DDSs
and the ALJs. Extensive joint training was conducted in an
effort to increase communication between the DDSs and the
Hearing Offices and to assure that all adjudicators would hear
the same message. Unfortunately, this joint training, necessary
to maintain the process unification effort, has not been
continued.
Various elements of the Disability Process Redesign plan
were piloted across the country and in March 1999 Commissioner
Apfel announced that a new process, combining several elements
of that plan, would be prototyped in 10 states. This new
process includes the elimination of the reconsideration level
of appeal; increased claimant contact with the DDS decision
maker; a claimant conference (contact with the claimant--
generally by telephone-to complete the record and explain the
process if a fully favorable decision can not be made on the
claim) and increased emphasis on subjective complaints such as
pain and fatigue. Except as mandated by law (mental impairment
claims being denied and SSI childhood claims) physician sign-
off is not required. Although DDS staff physician input is
available, it is the disability examiner who is responsible for
assessing credibility and determining the claimant's ability to
perform work related activity. The precepts of Process
Unification are an integral part of this new process.
While NADE fully supports the principle that a claim should
be allowed (if appropriate) as early in the process as possible
we do have some concerns about the increased reliance on self
reported subjective complaints when assessing an individual's
ability to return to work.
Pain and fatigue are legitimate restrictions and must be
considered in any disability decision. However, assessing these
complaints, and the extent to which they limit an individual's
ability to function, assessing credibility, and assuring
uniform and consistent decisions, requires trained and
experienced staff and a strong, nationally consistent quality
assurance review process. Unfortunately, the reality is that
nearly 50% of all disability examiners have less than two years
of program experience. This increasing lack of experience
creates many problems for the DDS's and SSA, not the least of
which is that efforts to combat fraud are often limited by the
lack of sufficient resources to train new personnel in anti-
fraud issues. The training budgets for most DDS's are pushed to
the limit just to keep up with their increasing number of new
hires as more and more experienced DDS personnel leave. The
combination of inexperience and lack of resources to maintain
an efficiently trained staff is magnified by SSA's fragmented
and inconsistent quality assurance review process. This
Association has commented previously regarding the quality
assurance issue and we have also addressed our concerns to SSA,
offering the expertise of our members should the Commissioner
agree with our position that SSA's quality assurance review
process should be revised. To date, SSA has disagreed with our
position, maintaining that their quality assurance review
process does not need any revision or refinement.
Unfortunately, SSA's position is unrealistic and contributes to
a growing lack of confidence in the program. DDS decisions are
not reviewed consistently across Regions and DDS and ALJ
decisions are not reviewed under the same standard. This
subcommittee has asserted in its own prior comments that,
``Maintaining program integrity is a vital part of sound public
administration and a major factor in determining the public's
view of its government. More importantly, maintaining program
integrity means protecting those who may not be able to protect
themselves.'' We wholeheartedly agree with this assessment.
However, we wish to make clear the central point that program
integrity cannot be maintained without extensive, ongoing
training for all adjudicators and clear and consistent messages
from the quality assurance review process.
Securing the medical, vocational and lay evidence to assess
credibility, fully document subjective complaints and
accurately evaluate functional restrictions is currently a
complex, time-consuming process. It will be even more so in the
future as SSA continues its revision of the medical listings
that will place more emphasis on the claimant's functional
abilities, and proceeds with a national roll out of its new
disability claims process. These two events will increase the
responsibility on disability examiners to devote more of their
time and energy to address these very subjective issues of pain
and claimant credibility. Congress and SSA must realize that
these increases in time and resources that must be devoted to
each case must be matched with increases in personnel and
financial resources to adequately and accurately address such
issues.
We are including an attachment with our testimony that
serves to highlight the problem with claimant initiated fraud.
In this case, the CE provider to the DDS, quite by accident,
discovered the claimant was a fraud. This example does
highlight one of the problems that will become even more common
as the public's perception that committing fraud is easy and
carries little or no risk of punishment. Again, we commend SSA
and its OIG staff for their initiatives to combat fraud. It is
real and the problem will only get bigger unless we invest
sufficient time and resources to combat the problem now. The
public must be made to perceive that fraud will be detected and
will be punished. Cuts in SSA's administrative budget will not
help this situation. A poorly trained and inexperienced DDS
staff will not help this situation.
Consistent and accurate initial disability decisions are
essential to restoring and maintaining program integrity and
public confidence in the disability program. Equally important
are the continuing disability reviews (CDRs). Individuals who
are no longer disabled should not be receiving benefits simply
because resources are not available to conduct reviews. We
commend Congress and SSA for the progress made in reducing the
backlog of CDRs. This initiative has resulted in significant
program savings. It makes sound financial sense for Congress to
continue to appropriate resources so that the CDR backlog can
be brought up to date and kept current.
We believe that SSA is taking a number of positive actions
to address the issues of fraud and abuse. There are other areas
within the system where we believe additional actions could be
pursued. Unfortunately, budget cuts and downsizing of SSA staff
in recent years will make it extraordinarily difficult to
pursue these actions without additional resources.
Thank you for the opportunity to present this statement for
the record. We remain committed to assist in any effort to
improve the Social Security and Supplemental Security Income
programs.
[An attachment is being retained in the Committee files.]
Statement of Michael F. Ouellette, Director of Legislative Affairs,
TREA Senior Citizens League
TSCL Members
[In District]
Representative E. Clay Shaw Jr., Chairman........... 4,000
Representative Robert T. Matsui, Ranking Member..... 2,980
Representative Sam Johnson.......................... 1,842
Representative Michael Collins...................... 2,133
Representative Rob J. Portman....................... 3,070
Representative J. D. Hayworth....................... 5,247
Representative Jerry Weller......................... 3,776
Representative Kenny C. Hulshof..................... 3,549
Representative Jim McCrery.......................... 1,713
Representative Sander M. Levin...................... 3,480
Representative John S. Tanner....................... 2,357
Representative Lloyd Doggett........................ 1,944
Representative Benjamin L. Cardin................... 2,915
Mr. Chairman, The TREA Senior Citizen League (TSCL)
appreciates the opportunity to submit testimony to your
committee concerning Social Security Administration (SSA)
program integrity designed to prevent waste, fraud and abuse in
SSA programs. In this regard, TSCL appreciates the opportunity
to offer a number or insights and recommendations for the
subcommittee's consideration. In doing so, TSCL will present a
number of specific proposals intended to provide cost savings
within selective SSA programs in order to provide funding that
may offer Social Security recipients a number enhancements
currently proposed in legislation.
TSCL is a nonprofit, issues advocacy organization
representing over 1.5 million members and supports and is
dedicated to serving its members by defending and protecting
their earned retirement benefits. The League is registered to
conduct grassroots fundraising, public education and lobbying
activities in nearly every state, an does not solicit nor
accept any money from the federal government. For your
information, over 39,006 of our members are constituents of
this subcommittee's members. TSCL sincerely thanks the members
of this subcommittee on the decision to hold an oversight
hearing designed to identify and rectify any policies or
procedures associated with SSA programs either are or
potentially may be targets of waste, fraud and abuse. Savings
achieved by the resolution of identified problem areas will be
of significant benefits to SSA as it attempts to meet the
increasing workloads and economic demands, within the next
decade as the ``baby boom'' generation begins to qualify for
benefits. Additionally, achieved savings could very well assist
the SSA to face up to the challenges posed by legislative
efforts to provide Social Security ``Notch'' Reform and create
a fairer senior COLA based on the Consumer Price Index-Elderly
(CPI-E) calculation method.
Introduction
Mr. Chairman, approximately 45 million Social Security
recipients and 6 million Supplemental Security Income (SSI)
recipients depend on benefits paid by SSA. Benefits from both
programs totaled about $400 billion in 1999. Spending of this
magnitude makes it a prime target for fraud and abuse.
The exact scope of the problems of inaccurate and improper
payment of benefits is not known. Inaccurate Social Security
retirement benefit payments can result from errors in an
individual's work/earnings record especially when wages fail to
be recorded properly. This can result in lower benefit
payments, which may be difficult if not impossible to correct
by the time a worker retires. Failing to correct mistakes has
been estimated to cost $10 to $15 per month per mistake in lost
benefits. Over the years this mounts to a substantial amount of
money.
Waste, fraud and abuse, particularly within the Social
Security Disability (SSDI) and Supplemental Security Income
(SSI) programs results in billions in improper payment to
ineligible individuals, while the truly needy go without. The
General Accounting Office has estimated that each individual
who obtains SSI benefits improperly costs the federal
government an estimated $122,000 in SSI and Medicaid benefits
over the next 10 years. By weeding out the improper payments,
SSDI and SSI financial resources can be directed to helping
those truly in need. Studies show that only 40 percent of
eligible elderly Americans currently receive SSI. This fact
negatively impacts particularly on women and minorities who are
more likely to have received lower earnings over their working
years. While such benefit abuse goes on, the financial
hardships being reported and faced today by truly needy older
Americans remain.
Accurate Benefit Payments
TSCL applauds the SSA's new policy of mailing Personal
Earnings and Benefits Estimate Statements to all workers. This
practice gives individuals the opportunity to check the
accuracy of work and earnings credited to their record and
allows the opportunity to correct errors in a timely manner.
TSCL supports the ongoing provision of funding to continue the
mailings of these statements.
TSCL also recognizes the steps the SSA has taken to make it
easier to correct records when an individual has evidence of
covered earnings. The process however remains very slow, due in
part by the increase in corrections generated by the statement
mailings. TSCL supports the funding of adequate administrative
staff and information technology to facilitate more timely
correction and updates of worker earnings records.
Improper Payments Due To Waste Fraud and Abuse
The importance of reducing improper payments due to waste
fraud and abuse can be illustrated by Medicare's example. The
Health Care Financing Agency (HCFA) has been able to reduce
their improper payment rate from 14 percent to 8 percent over
three years. This positive action has resulted in billions of
dollars in savings to the Medicare Trust Fund. In order for SSA
to achieve similar targeted and maintain the momentum establish
by HCFA, TSCL readily supports:
Elimination of the backlog of continuing
disability reviews to ensure that only those who are eligible
receive benefits. Billions of dollars in disability payments
too often go to people who earn too much or are too healthy to
qualify for benefits.
Improvement in information technology used by the
SSA to verify that economic eligibility data of disability
applicants and beneficiaries is up-to-date and accurate.
Measures to Combat Fraud and Abuse
What TSCL finds most troubling is the failure to halt
certain recurring patterns of fraud and abuse with the SSI
program. For example:
(1) In 1998 more than half of the 180 members of one huge
Georgia family were removed from SSI after collecting more than
$1 million in benefits. An analysis of those terminations found
that 88 percent had ``medically improved,'' although it was not
clear if their conditions actually improved or if there was
nothing medically or physically wrong in the first place.
Psychological evaluation showed one in three recipients faked a
disability during the review. Those cases cost $431,000 in SSI
benefits over three years. More than half of the cases related
to mental retardation with 33 percent showing physical and
emotional disorders and 14 percent attention deficit or
hyperactivity disorders. The Inspector General for SSA put part
of the blame on a local doctor saying he approved dubious
disability claims and the SSA for using him as a qualifying
physician.
(2) In June 1998, police in Washington state arrested
``Uncle'' Nairith Kong who is believed to have helped at least
50 refugees from South East Asia to fraudulently obtain at
least $1 million in SSI benefits, while pocketing $3,000 in
bribes from each.
(3) Investigations along Mexican and Canadian borders
confirm that foreign nationals are collecting SSI payments
through post office boxes on the U.S. side of the borders. In
one El Paso, TX, case, 165 Mexican residents were crossing the
border about $3 million in SSI payments until cut off.
(4) In September 1999, the General Accounting Office (GAO)
reported that SSI remains vulnerable to fraud and abuse by
unscrupulous medical providers and middlemen who coach
applicants to fake disabilities to become eligible for
benefits. TSCL is particularly concerned that SSA is not doing
enough to combat this type of fraud. TSCL is also disturbed by
GAO reports, which state that SSA initiates to combat
potentially fraudulent cases are limited by staff reluctance to
routinely implement them. SSA staff is reported to perceive
that these actions conflict with other agency performance goals
or are not convinced of their effectiveness. Still other staff
believes that certain procedures expose them to potential legal
liability.
The Inmate Bounty Program
TSCL points to the success of the bounty system that pays
city, county and state jail systems to report inmate
information. The efforts of the program have been extremely
successful. So far correctional facilities have received about
$10 million from the program and the government have saved
$75.4 million in benefit payments.
Conclusion
In closing, TSCL wishes to thank the member of this
subcommittee for holding hearing on this extremely important
oversight responsibility. Nothing infuriates older Americans
who are dependent on the solvency of the Social Security
program more than widespread reports of waste, fraud and abuse
within a system that has its shortcoming and on which they hold
such a high level of dependency. TSCL believes that successful
attempts at combating waste fraud and abuse would send a strong
message that such efforts must be continued an the future of
Social Security could very well depend on continued success and
the implementation of additional mechanisms to protect the
program. Continued combative efforts may give the Congress the
levels of funding needed to pass legislation that would.
Provide relief to a group of Social Security
recipients who were born in 1917 through 1926 who have been
receiving less in their retirement benefit due to the changes
that were made in 1977 to the Social Security benefit formula.
These ``Notch'' babies, as they are referred to, consequently
have less in disposal income than many of their contemporaries
and are facing much more sever financial hardships than others.
The passage of H.R. 148 or H.R. 568 could greatly assist these
``Notch'' victims by providing a $5,000 settlement paid at a
rate of $1,200 annually for 4 years.
Provide Social Security recipients with an annual
Cost-of-Living Adjustment (COLA) based on CPI-E calculations
that accurately reflect or take into account the buying habits
of seniors. Senior citizens are affected differently than other
consumers by changes in the cost of certain goods or services.
Passage of H.R. 1422, The Consumer Price Index for Elderly
Consumers Act, would be another major step in the right
direction to help ease the financial devastating situations
older Americans currently face.
Provide for the expansion of the SSI outreach
program to make it possible for older Americans to be able to
take advantage of this important program and compensate for
their limited Social Security benefit.
Mr. Chairman, TSCL suggests that the insecurity caused by
program integrity shortfalls that spawn practices of waste,
fraud and abuse within the Social Security system creates an
environment of stress than take a real toll on the health and
welfare of older Americans. Seniors simply must be given
assurances that their earned retirement benefits will remain
intact instead of living in constant dread and fear of loss.
The very fact that the subcommittee is moving to protect their
benefits in order to meet their needs, means a great deal to
older Americans and their families. Again, TSCL appreciates the
opportunity to present a number of views on behalf of its over
1.5 million members and supporters to this subcommittee.
Thank You.
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