[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





      SOCIAL SECURITY ADMINISTRATION SERVICE DELIVERY BUDGET PLAN

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 24, 2003

                               __________

                           Serial No. 108-37

                               __________

         Printed for the use of the Committee on Ways and Means


97-734              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
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
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                    Allison H. Giles, 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                 BENJAMIN L. CARDIN, Maryland
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri           XAVIER BECERRA, California
RON LEWIS, Kentucky                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________
                                                                   Page
Advisory of July 17, 2003 announcing the hearing.................     1

                               WITNESSES

Social Security Administration, Hon. Jo Anne B. Barnhart, 
  Commissioner...................................................     6
U.S. General Accounting Office, Robert E. Robertson, Director, 
  Education, Workforce, and Income Security Issues...............    37
U.S. General Accounting Office, Linda D. Koontz, Director, 
  Information Management Issues..................................    50

                                 ______

Consortium for Citizens with Disabilities, Work Incentives 
  Implementation Task Force, and Paralyzed Veterans of America, 
  Susan Prokop...................................................    62

                       SUBMISSIONS FOR THE RECORD

National Association of Disability Examiners, Madison, WI, 
  Theresa Klubertanz, statement and attachments..................    90
National Council of Social Security Administration Field 
  Operations Locals, and American Federation of Government 
  Employees, Social Security General Committee, Witold 
  Skwierczynski, statement.......................................    96
Social Security Administration, Office of Hearings and Appeals, 
  and National Treasury Employees Union, James A. Hill, statement   102
Tubbs Jones, Hon. Stephanie, a Representative in Congress from 
  the State of Ohio, statement...................................   105

 
      SOCIAL SECURITY ADMINISTRATION SERVICE DELIVERY BUDGET PLAN

                              ----------                              


                        THURSDAY, JULY 24, 2003

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:00 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

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
July 17, 2003
SS-4

 Hearing on Social Security Administration Service Delivery Budget Plan

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing on the Social Security 
Administration's (SSA) Service Delivery Budget Plan. The hearing will 
take place on Thursday, July 24, 2003, in room B-318 of the Rayburn 
House Office Building, beginning at 10:00 a.m.
      
    Oral testimony at this hearing will be from invited witnesses only. 
Also, any individual or organization not scheduled for an oral 
appearance may submit a written statement for consideration by the 
Committee or for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    The SSA Service Delivery Budget Plan is a 5-year plan submitted to 
the Office of Management and Budget with the Agency's fiscal year 2004 
request. Integrated with the 5-year Strategic Plan, the plan provides a 
comprehensive framework to address the challenges facing the Agency, 
and improve public service. For fiscal year 2004, the President's 
Budget requests $8.5 billion for administrative expenses of the SSA, an 
increase of 8.2 percent from last year. These funds will be used to 
deliver almost $525 billion in benefits for the following programs: 
Old-Age and Survivors Insurance, Disability Insurance (DI), and 
Supplemental Security Income (SSI).
      
    The Service Delivery Budget Plan calls for the SSA's 63,000 
employees nationwide to continue to provide a high level of service to 
Americans by paying benefits to more than 50 million people each month, 
processing more than 5 million claims for benefits, issuing 16 million 
new and replacement Social Security cards, posting 265 million earnings 
items to workers' earnings records, and handling 54 million phone 
calls. These core workloads continue to grow each year and will 
increase significantly with the aging of the baby boom generation.
      
    In addition to keeping up with growing core workloads, the Agency 
faces several other major challenges including:

         Improving the DI and SSI Disability Claims Process. These 
        programs face tremendous backlogs to the point where the SSA 
        estimates that individuals who pursue their disability claim 
        through all levels of Agency appeal wait an average of 1,153 
        days for a final decision. The Service Delivery Budget Plan 
        aims to eliminate backlogs altogether and also includes the 
        Commissioner's plans to move to an electronic disability 
        folder. Use of an electronic folder would help to reduce 
        backlogs by eliminating time spent locating, mailing, and 
        organizing paper folders as a disability case moves through the 
        system. In addition, the Service Delivery Budget Plan calls for 
        the Commissioner to provide additional recommendations this 
        year to improve the timeliness and accuracy of the disability 
        process.

         Furthering Implementation of the Ticket to Work Program. The 
        Service Delivery Budget Plan supports activities authorized by 
        the Ticket to Work and Work Incentives Improvement Act of 1999 
        (P.L. 106-170) with the goal of increasing the number of 
        persons with disabilities who work.

         Improving Payment Accuracy. The Service Delivery Budget Plan 
        reaffirms the SSA's commitment to protecting the integrity of 
        the trust funds and the general fund by avoiding erroneous 
        payments, combating fraud, and seeking efficiencies. The 
        President's Budget request supports this commitment by 
        earmarking not less than $1.4 billion for continuing disability 
        reviews and overpayment actions.

         Combating Social Security Number Misuse. The Service Delivery 
        Budget Plan provides for the strengthening of enumeration 
        policy and procedures to prevent those with criminal intent 
        from obtaining and using Social Security numbers and cards.
      
    In announcing the hearing, Chairman Shaw stated, ``Each payday, 
America's workers send a portion of their hard-earned wages to Social 
Security. In return, they are promised income protection for themselves 
and their families in the event of retirement, disability, or death. 
Workers rightly expect and deserve a responsive SSA. This hearing will 
highlight the amount of investment needed to effectively run the Agency 
and expected returns.''
      

FOCUS OF THE HEARING:

      
    The Subcommittee will examine the key challenges facing the SSA, 
and how the Agency's Service Delivery Budget Plan addresses those 
challenges.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Thursday, August 7, 2003. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Social Security in room 
B-316 Rayburn House Office Building, in an open and searchable package 
48 hours before the hearing. The U.S. Capitol Police will refuse 
sealed-packaged deliveries to all House Office Buildings.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in WordPerfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                                 

    Chairman SHAW. Good morning. We're in good moods today, 
having been up until about 3:00 a.m. this morning, so be 
patient with all of us. Today our Subcommittee welcomes once 
again the Commissioner of Social Security, Jo Anne Barnhart, to 
review the agency's Service Delivery Budget Plan. This plan is 
a welcomed result of the Commissioner's comprehensive review of 
the Social Security Administration (SSA). The 5-year Service 
Delivery Budget Plan was submitted to the Office of Management 
and Budget (OMB) with the agency's fiscal year 2004 budget 
request. Integrated with the 5-year strategic plan, the Service 
Delivery Budget Plan provides a framework to address the 
challenges facing the SSA and to improve public service. In 
fiscal year 2004, the agency expects to process more than 5 
million claims for benefits, issue 16 million new and 
replacement Social Security cards, process 265 million earnings 
items for workers' earnings records, answer 54 million 
telephone calls, and pay monthly benefits to more than 50 
million people. You did volunteer for this job, didn't you? To 
date, the 77,000 employees of the SSA and State disability 
determination services have worked to process these growing 
workloads expeditiously and with care. The agency's continued 
commitment to providing a high level of service is evidenced 
through the Service Delivery Budget Plan. Social Security's 
disability programs pose a great challenge. Backlogs have 
reached the point where individuals who pursue their disability 
claims through all level of agency appeal wait for their final 
decision an average of 1,153 days. That is over 3 years. We all 
agree, this is quite unacceptable.
    As summarized in this Service Delivery Budget Plan, the 
Commissioner plans to improve service provided to individuals 
with disabilities by eliminating the backlog at all initial and 
appeals levels by the end of fiscal year 2008. This will reduce 
the average processing time from the said 1,153 days to about 
700 days for individuals going through all appellate levels. A 
key to achieving these goals is the Accelerated Electronic 
Disability (AeDib) Initiative which moves the agency from a 
paper folder to an electronic disability folder by as early as 
January 2004. Other challenges addressed in the Service 
Delivery Budget Plan include improving program stewardship by 
eliminating billions of dollars in erroneous program payments, 
strengthening the integrity of the Social Security Number, and 
continued implementation of the Ticket to Work Program. The 
President's commitment to the SSA is clear. His request for 
$8.5 billion for agency expenses reflects an increase of 8.2 
percent from last year, among the highest increases, for all 
Federal agencies; but for the SSA to implement this much-needed 
program improvement, Congress must enact the President's budget 
request. Today, we will also hear from the U.S. General 
Accounting Office (GAO), which will provide its perspective on 
the agency's progress in accelerating the Electronic Disability 
Initiative and on the importance of continuing disability 
reviews. Last, we will hear from Susan Prokop of the Social 
Security Task Force of the Consortium of Citizens with 
Disabilities. She will comment on program improvements needed 
to ensure a fair and timely process so that individuals with 
disabilities receive the benefits that they desperately need. 
Each payday our Nation's workers send a portion of their hard-
earned wages to Social Security in return for future promised 
benefits. Today we will learn how their investment will be used 
to provide the responsive service they rightly expect and 
deserve. Ms. Barnhart, welcome once again to the Committee. We 
will, of course, as you know, have your full statement made a 
part of the record. At this point, we will hear from Mr. 
Pomeroy.
    [The opening statement of Chairman Shaw follows:]

 Opening Statement of the Honorable E. Clay Shaw, Jr., Chairman, and a 
          Representative in Congress from the State of Florida

    Good morning. Today our Subcommittee welcomes the Commissioner of 
Social Security, Jo Anne Barnhart, to review the agency's Service 
Delivery Budget Plan. This Plan is a welcome result of the 
Commissioner's comprehensive review of the Social Security 
Administration.
    The five-year Service Delivery Budget Plan was submitted to the 
Office of Management and Budget with the agency's fiscal year 2004 
budget request. Integrated with the 5-year Strategic Plan, the Service 
Delivery Budget Plan provides a framework to address the challenges 
facing the Social Security Administration and to improve public 
service.
    In fiscal year 2004, the agency expects to: process more than 5 
million claims for benefits; issue 16 million new and replacement 
Social Security cards; process 265 million earnings items for workers' 
earnings records; answer 54 million phone calls; and pay monthly 
benefits to more than 50 million people.
    To date, the 77,000 employees of the Social Security Administration 
and State Disability Determination Services have worked to process 
these growing workloads expeditiously and with care.  The agency's 
continuing commitment to providing a high level of service is evidenced 
through the Service Delivery Budget Plan.
    Social Security's disability programs pose great challenges. 
Backlogs have reached the point where individuals who pursue their 
disability claim through all levels of agency appeal wait for their 
final decision an average of 1,153 days--that's over 3 years. We all 
agree this is unacceptable.
    As summarized in the Service Delivery Budget Plan, the Commissioner 
plans to improve service provided to individuals with disabilities by 
eliminating backlogs at all initial and appeals levels by the end of 
fiscal year 2008. This will reduce the average processing time from 
1,153 days to about 700 days. A key to achieving these goals is the 
accelerated electronic disability initiative, which moves the agency 
from a paper folder to an electronic disability folder by as early as 
January 2004.
    Other challenges addressed in the Service Delivery Budget Plan 
include improving program stewardship by eliminating billions of 
dollars in erroneous program payments, strengthening the integrity of 
the Social Security number, and continued implementation of the Ticket 
to Work program.
    The President's commitment to the Social Security Administration is 
clear.  His request for $8.5 billion for agency expenses reflects an 
increase of 8.2 percent from last year, among the highest increase for 
all Federal agencies. But for the Social Security Administration to 
implement these much needed program improvements, Congress must enact 
the President's Budget request.
    Today, we will also hear from the General Accounting Office, who 
will provide its perspective on the agency's progress in accelerating 
the electronic disability initiative and on the importance of 
Continuing Disability Reviews.
    Lastly, we will hear from Susan Prokop of the Social Security Task 
Force of the Consortium of Citizens with disabilities. She will comment 
on program improvements needed to ensure a fair and timely process so 
that individuals with disabilities receive the benefits they so 
desperately need.
    Each payday, our nation's workers send a portion of their hard-
earned wages to Social Security in return for future promised benefits. 
Today we will learn how their investment will be used to provide the 
responsive service they rightly expect and deserve.

                                 

    Mr. POMEROY. Mr. Chairman, thank you. I make these comments 
on behalf of myself and our Ranking Member, Mr. Matsui. I thank 
you, Mr. Chairman, for the series of hearings you have 
conducted as Chairman, helping us understand the administrative 
complexities and difficulties they face in terms of making this 
program work. It certainly has impressed upon me the critical 
need for adequate resources of the SSA. I also want to join you 
in commending Commissioner Barnhart for her 5-year Service 
Delivery Budget Plan targeted at getting rid of the disability 
backlog. It is, as you mentioned, absolutely unconscionable 
that we are having severely disabled workers wait months to 
years before receiving benefits. I congratulate the 
Commissioner because getting that 8 percent funding increase 
through the OMB in the fiscal year 2004 budget was an 
extraordinary accomplishment. We have seen a lot of 
disappointed agency heads that have come out the OMB process 
short of what they thought they needed, and whether or not you 
got exactly what you were shooting for, this is a substantial 
budget commitment by the Administration. Unfortunately, often 
Congress is trying to add back to avoid disruption of services. 
This is a case where Congress is dropping the ball, cutting 
$168 million from the Commissioner's request in the 
appropriations mark. These funds are desperately needed if we 
are going to continue to reduce the waiting time for disability 
applicants and keep ahead of the growing workloads. As I have 
learned through the Chairman's hearings, I am concerned about 
where we are going in terms of the impending retirement of the 
baby-boomers.
    In addition, with adequate funding, the whole workforce 
adequacy in terms of do we have enough people to get the job 
done has been a real question that has been made clear through 
the series of hearings. You put forward 1,300 new positions in 
your budget. I believe it is absolutely essential, we are 
blowing up some big bureaucracy, we are trying to bring this 
back to what we need in order to do the task the agency has 
been assigned. We have a choice. We can increase staff, 
increase capacity to handle the workload; or we have people 
that qualify for benefits who need the benefits, deserve the 
benefits, not getting the benefits because they are lost in the 
adjudication backlog. I appreciate also that you have looked at 
your business processes and are always trying to eke out that 
greater level of efficiency. I am pleased to see that is a 
component of your budget plan. We have got to work in 
partnership, Congress, and you as Commissioner, everyone in the 
administration of the Social Security program, including the 
disability component of the program, and so we will certainly 
work to try to get that additional funding as this bill 
continues to go through the appropriations process. I look 
forward to your testimony and the testimony of the next panel. 
Thank you again, Mr. Chairman, for convening this hearing.
    Chairman SHAW. Thank you. Ms. Barnhart.

 STATEMENT OF THE HONORABLE JO ANNE B. BARNHART, COMMISSIONER, 
                 SOCIAL SECURITY ADMINISTRATION

    Ms. BARNHART. Thank you, Mr. Chairman, and Members of the 
Subcommittee. Thank you very much for inviting me today to have 
this opportunity to discuss the SSA's initiatives to improve 
our service delivery, as well as the challenges that continue 
to face our programs. When I appeared before this Committee as 
the new Commissioner of the SSA, I outlined my priorities for 
the agency, what we call the four S's inside the agency: 
stewardship, solvency, staff, and service. As you have 
discussed, SSA's Service Delivery Budget Plan establishes 
ambitious, but I believe attainable, goals to faithfully serve 
the American people. As you know, the plan was developed in 
large part based upon the analysis that we did during our 
comprehensive review of the disability determination process. 
As you have both said, with adequate resources, as provided for 
in the President's fiscal year 2004 budget, SSA can accomplish 
the service delivery plan which is keeping up with growing core 
workloads, eliminating backlogs, processing special workloads, 
making service and stewardship investments to build a 
technology infrastructure for the 21st century, and maintaining 
program integrity through dedicated funding for that purpose. I 
would like to take this opportunity to thank you, Mr. Chairman, 
Mr. Matsui in his absence, and the other Members of the 
Subcommittee for your help, advice, and support during the past 
year. I thank you, not only on behalf of myself, but all of the 
men and women of the SSA who are striving daily to provide the 
kind of service that every claimant, every beneficiary, every 
member of the American public expects and deserves.
    After 20 months on this job, I want Members to know that I 
continue to be impressed by the dedication of the employees of 
the SSA. Mr. Chairman, I would like to go on record at this 
point to say, when I discuss SSA employees, I consider this a 
collective term, and it includes not only our Federal Social 
Security employees, but also the State disability determination 
service workers who work providing service, making disability 
determinations, and conducting Continuing Disability Reviews 
(CDRs) throughout this country. Our Disability Determination 
Services (DDSs) are an integral part of the SSA team, and I 
want to make sure that their efforts are recognized, too, as we 
move ahead. Because of the hard work of our employees, last 
year we received a 5-percent increase in productivity. It was 
actually 5.2 percent. For anyone who has ever tried to increase 
productivity in a large organization, they would tell you that 
is a pretty remarkable productivity increase in 1 year. From 
the removal of the Social Security Income (SSI) program from 
GAO's high-risk list to scoring a green on the President's 
management agenda, to lowering the average time that it takes 
to get a decision on an appeal of a hearing decision by 157 
days as of May 2003, the people of SSA are working hard to meet 
their responsibilities as good public stewards. The average 
processing time for an initial disability decision is down, 
initial claims pending are fewer, despite an increase in 
receipts that we experienced in fiscal year 2002 and continue 
to experience this year, and I am pleased to say that we are 
completely caught up with transcription and copying of cases, 
which enables us to transmit case materials to the Federal 
courts in a timely manner. The agency has received numerous 
awards recognizing our leadership in computer security, 
financial management, and ethics programs.
    I believe our progress over this past year is significant. 
Yet I realize, and all of the employees of SSA realize, we 
still have a lot of work to do to get where we would like to 
be. The third and final phase of the Ticket to Work Program 
will roll out this fall, and at this point we have not achieved 
the hopes that we hoped for, but we remain optimistic about the 
program's potential. I know the Chairman has particular 
concerns related to employment networks. I assure you I have 
the same concerns, and I and the staff are working to address 
those concerns regarding employment networks, and make the 
process more user-friendly. We have taken steps to strengthen 
the integrity of our enumeration process, and we are on 
schedule to begin rolling out our electronic disability system. 
We are also continuing our service delivery assessment. 
Currently our service delivery team is examining operational 
workloads that are other than disability claims. Last year, I 
spoke about disability claims, this year the assessment is 
continuing into other operational workloads, and that is no 
small task as the charts to my left show. You have paper 
handouts of this, Mr. Chairman. For the audience, I wanted them 
to see what we are talking about.
    [The information follows:]

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               Performance Indicators and FYTD Performance
------------------------------------------------------------------------
                                                         Through May FY
                Performance Indicator                         2003
------------------------------------------------------------------------
Initial disability claims processed                            1,677,146
------------------------------------------------------------------------
Hearings processed                                               364,174
------------------------------------------------------------------------
RSI claims processed                                           2,212,397
------------------------------------------------------------------------
800 number calls handled                                      35,800,000
------------------------------------------------------------------------
SSI non-disability redeterminations                            1,637,192
------------------------------------------------------------------------
Periodic CDRs processed                                          954,084
------------------------------------------------------------------------
Annual earnings items processed                              219,158,793
------------------------------------------------------------------------
SSN requests processed                                        11,553,535
------------------------------------------------------------------------
Initial disability claims average processing time (in               99.2
 days)
------------------------------------------------------------------------
Hearings average processing time (in days)                           341
------------------------------------------------------------------------
Decisions on appeals of hearings average processing                  319
 time (in days)
------------------------------------------------------------------------
Initial disability claims pending                                574,073
------------------------------------------------------------------------
Hearings pending                                                 572,928
------------------------------------------------------------------------


               Performance Indicator Comparison 2001-2003
------------------------------------------------------------------------
                                                               FY 2003
      Performance Indicator          FY 2001      FY 2002        Goal
------------------------------------------------------------------------
Initial disability claims            2,166,623    2,376,572    2,498,000
 processed
------------------------------------------------------------------------
Hearings processed                     465,228      532,106      602,000
------------------------------------------------------------------------
RSI claims processed                 3,092,743    3,265,473    3,229,000
------------------------------------------------------------------------
800 number calls handled            59,300,000   51,800,000   55,000,000
------------------------------------------------------------------------
SSI non-disability                   2,315,856    2,311,499    2,455,000
 redeterminations
------------------------------------------------------------------------
Periodic CDRs processed              1,762,517    1,586,091    1,129,000
------------------------------------------------------------------------
Annual earnings items processed    274,427,394  266,777,009  260,000,000
------------------------------------------------------------------------
SSN requests processed              18,179,115   17,679,490   16,000,000
------------------------------------------------------------------------
Initial disability claims average        106.1        104.0          104
 processing time (in days)
------------------------------------------------------------------------
Hearings average processing time           308          336          352
 (in days)
------------------------------------------------------------------------
Decisions on appeals of hearings           447          412          300
 average processing time (in
 days)
------------------------------------------------------------------------
Initial disability claims pending      578,524      592,692      593,000
------------------------------------------------------------------------
Hearings pending                       435,904      500,757      587,000
------------------------------------------------------------------------


               Performance Indicator Comparison 2001-2003
------------------------------------------------------------------------
     Performance                                  FY 2003    Through May
      Indicator         FY 2001      FY 2002        Goal       FY 2003
------------------------------------------------------------------------
Initial disability      2,166,623    2,376,572    2,498,000    1,677,146
 claims processed
------------------------------------------------------------------------
Hearings processed        465,228      532,106      602,000      364,174
------------------------------------------------------------------------
RSI claims processed    3,092,743    3,265,473    3,229,000    2,212,397
------------------------------------------------------------------------
800 number calls       59,300,000   51,800,000   55,000,000   35,800,000
 handled
------------------------------------------------------------------------
SSI non-disability      2,315,856    2,311,499    2,455,000    1,637,192
 redeterminations
------------------------------------------------------------------------
Periodic CDRs           1,762,517    1,586,091    1,129,000      954,084
 processed
------------------------------------------------------------------------
Annual earnings       274,427,394  266,777,009  260,000,000  219,158,793
 items processed
------------------------------------------------------------------------
SSN requests           18,179,115   17,679,490   16,000,000   11,553,535
 processed
------------------------------------------------------------------------
Initial disability          106.1        104.0          104         99.2
 claims average
 processing time (in
 days)
------------------------------------------------------------------------
Hearings average              308          336          352          341
 processing time (in
 days)
------------------------------------------------------------------------
Decisions on appeals          447          412          300          319
 of hearings average
 processing time (in
 days)
------------------------------------------------------------------------
Initial disability        578,524      592,692      593,000      574,073
 claims pending
------------------------------------------------------------------------
Hearings pending          435,904      500,757      587,000      572,928
------------------------------------------------------------------------


                                 

    These charts list 282 operational actions, separate 
actions, that are currently being analyzed. The differences 
between our previous assessment of the disability process, 
which was a step-by-step analysis of a linear process, and 
looking at the nondisability claim workload is enormous. 
Operational workloads, as you can see, are not linear. They are 
individual, isolated, diverse processes that are done, 
hundreds, thousands, and in many cases, millions of times a 
year. The list of actions that you see there today consist 
primarily of what we call post-entitlements actions, actions 
that need to be taken after someone is determined for a benefit 
of one kind or another at Social Security. They are not all 
post-entitlement actions. The workload on the chart comprises 
45 percent of the work in the field offices and almost 100 
percent of the work done in our processing centers. As you can 
imagine, with a list of 282 items, there is a tremendous range 
and complexity of these workloads. It can be something as 
simple as an address change, or something more difficult and 
complex like redeveloping a SSI recipient's income and 
resources. Our employees deal with this diverse workload, 
changing gears, moving from one thing to another, handling 
multiple, multiple demands, every single day.
    I believe the assessment of these actions--just as our 
analysis of the disability process has helped us do a better 
job of targeting improvements in disability, the assessment of 
these actions can allow us a way to figure out how to better 
manage these workloads. In some cases, it may make sense to 
combine certain kinds of workloads with certain employees. I do 
not know. We have not reached those conclusions yet, but that 
is the kind of thing that we are looking at in the next phase 
of our service delivery assessment. In an agency that touches 
over 95 percent of the people in this country at some point in 
their lives, we know what we do on a daily basis is important 
and we know how we do it is important. We know that the folders 
at our desks represent real people and the work we do has a 
direct effect on their lives, and for that reason I join the 
men and women of Social Security in pledging to you that we 
will continue to work to meet our goals and do our very best to 
the meet the challenges of the agency. Again, I appreciate your 
holding this hearing. I would like to thank you again for your 
support and the support of the entire Subcommittee, and I look 
forward to continuing what I consider to be our excellent 
working relationship. I would be happy to answer any questions 
you or other Members might have.
    [The prepared statement of Ms. Barnhart follows:]

 Statement of the Honorable Jo Anne B. Barnhart, Commissioner, Social 
                        Security Administration

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me today to discuss the Social Security 
Administration's (SSA) initiatives to improve service delivery in the 
Social Security and Supplemental Security Income (SSI) programs. 
Although it hardly seems possible, it has been more than a year since I 
appeared before you as a new Commissioner, and I appreciate the 
opportunity to share with you some of our accomplishments in improving 
service delivery and discuss how we're addressing the challenges that 
face us.
    Before I begin, however, I would like to thank you, Mr. Chairman, 
Mr. Matsui, and the other members of this Subcommittee, for your help, 
advice, and support during the past year. Your support has been vital 
in helping us to develop a plan that will improve service and 
stewardship. I thank you not only on behalf of myself, but also on 
behalf of the men and women of SSA, who strive daily to provide the 
kind of service that every claimant, beneficiary, and member of the 
public expects and deserves.

Commitment to Service
    SSA faces great challenges in providing that service, and as I told 
you last year, those challenges are my priorities for action. I remain 
committed to meeting the objectives of:

      Giving the American people the service they deserve;
      Improving program integrity through sound financial 
stewardship;
      Ensuring the program's financial solvency for future 
generations; and
      Maintaining the quality staff SSA needs to provide the 
service and stewardship.

    The people of America, who fund the Social Security program through 
their payroll tax contributions, and fund SSI through their income tax 
payments, expect and deserve well-managed programs providing accurate 
payments that safeguard their trust. With adequate planning and 
resources, SSA can prepare for the baby boomers by addressing current 
backlogs, building a technology infrastructure for the 21st century, 
and continuing to develop what I believe to be the best workforce in 
government.
    Last year, I appeared before you to discuss the many challenges 
facing the agency. And I have to tell you today that we still face many 
challenges. But, before I discuss the challenges, I'd like to talk 
about some of our accomplishments:

      In FY 02, it took an average of 412 days to get a 
decision on a hearing appeal. In May, that time had dropped to 255 
days.
      The average processing time for an initial 
decision dropped from 106.1 days in 2001 to 99.2 days this year.
      At the end of FY 2002, there were 593,000 initial 
claims pending. Now there are 18,000 fewer despite an increase in 
receipts. We had expected that level to rise to 695,000.

    Let me give you another example of the concrete results we've seen. 
We must specially prepare cases that are filed in the Federal District 
Courts. Because of processing delays, some of our attorneys were being 
held in contempt of court. More importantly, claimants couldn't proceed 
with their appeals. Our preparation time for these cases has decreased 
from 120 days in January 2003 to 29 days for June.
    A major part of the problem was the large backlog in hearings case 
files waiting for transcription. As of April 14 this year, we were 
totally caught up with transcription and copying of cases, and have 
processes in place to ensure that we do not allow new backlogs to 
accumulate. I recently received a letter from Guy A. Lewis, Director of 
the Executive Office for U.S. Attorneys in the U.S. Department of 
Justice, recognizing our improvements in this area. Mr. Lewis applauded 
our efforts to improve our litigation support and timely transmission 
of case materials, which has resulted in a marked decrease in the 
number of extensions sought in Social Security cases.

Service Delivery Plan
    I am proud of our accomplishments. But, we still have a long way to 
go.
    The service delivery plan SSA developed last year was in large part 
based on a comprehensive analysis of every step in the disability 
determination process, an analysis that had never been done before. The 
plan outlined very specific, ambitious goals over a five-year period:

      Keeping up with growing core workloads;
      Processing special workloads;
      Working down backlogs;
      Maintaining program integrity through dedicated 
funding; and
      Preparing for the future through service and 
stewardship investments.

    We're making a start this year, and the increase in the President's 
budget request for FY 2004 puts us firmly on the path to meet these 
goals.
    I am continuing with our service delivery assessment. The current 
phase entails thoroughly examining operational workloads other than 
disability claims. The difference between disability claims and our 
operational workloads is significant. The disability workload analysis 
yielded a 25-foot chart mapping out the process. Lengthy as it is, the 
disability determination process is linear. But the operational 
workloads are many diverse processes. There are 282 other operational 
actions, and each of these is done hundreds, thousands and even tens of 
millions of times each year.
    The list of the activities consists primarily of post-entitlement 
actions that comprise virtually the entire workload in SSA's Processing 
Centers and at least 45% of the work in field offices. This workload is 
comparable to the initial claims workload in terms of time spent on 
task. And there is a tremendous range in the complexity of these 
workloads. Our dedicated employees have to deal with this range and 
variety every day--doing a simple change of address in minutes and then 
perhaps spending hours completely redeveloping a Supplemental Security 
Income (SSI) recipient's income and resources. We are conducting our 
service delivery assessment to develop and implement changes to best 
manage this complex and varied workload. These changes will include 
both small and incremental improvements as well as changes that are 
broader in scope. Collectively, they will help us eliminate backlogs 
and improve timeliness and efficiency.
    I'd like to turn now to a discussion of some of the areas where we 
continue to face challenges.

Improve Disability Process
    As I said when I appeared before you last year, there is no single 
change that will reduce the time it takes to process disability claims 
to an acceptable level. More efficient processing will require many 
improvements to achieve the level of service that the public expects 
and deserves.
    We've already taken a number of short-term actions to reduce the 
delays in the hearings process. These include:

      Including ALJs in early screening for on-the-record 
decisions;
      Creating a law clerk (Attorney Intern) position;
      Deploying speech recognition technology to hearing 
offices;
      Ending the practice of rotating hearing office 
technicians among different positions;
      Contracting out copying and assembly of case files;
      Using scanning technology to track and retrieve folders;
      And as I mentioned earlier eliminating the tape 
transcription backlog;
      And eliminating delays in presenting cases to the U.S. 
District Courts.

    We are in the process of implementing two other initiatives:

      Allowing ALJs to issue decisions from the bench 
immediately after a hearing; and
      Expanding video teleconference hearings.

    And we are preparing to implement an initiative to digitally record 
hearings.
    I'd like to give a couple of examples of the effects of some of 
these changes. In June 2003, the processing time for cases where a 
hearing decision was drafted using speech recognition software was 25 
days less than the processing time for other case dispositions in that 
month. And using scanning technology in the Office of Appellate 
Operations' MegaSite to control incoming folders reduced the processing 
time for coding and filing a tub of cases from 4= hours to 30 to 45 
minutes.

Reducing Backlogs
    It is clear that to significantly improve disability processing 
times we must reduce backlogs so that a manageable and appropriate 
number of cases are in the pipeline at each stage of appeal. The delays 
in the process fall into two basic categories--those that occur because 
there is no one available to move the case to the next step, and those 
that occur because of delays built into the system. The funding 
included in the President's budget for FY 2004 would put us on a path 
to eliminate the backlogs through additional staff resources as well as 
the means to streamline the process through technological improvements.
    As you know, Mr. Chairman, SSA has also been hampered in our 
efforts to speed up the appeals process by our inability to hire new 
administrative law judges (ALJs). I want to thank you and the other 
members of this subcommittee for your efforts in this area. Had it not 
been for your efforts to allow us to hire an additional 126 ALJs in 
September 2001, our hearing backlogs would be far worse than they are 
now. It is our hope that our ability to hire ALJs will be restored 
soon.

Accelerating the Electronic Disability Initiative (AeDib)
    One major barrier to improving efficiency in the disability 
determination process is SSA's continuing reliance on paper folders--
folders that must be located, organized and mailed at every step of the 
process. We are well into implementation of the accelerated electronic 
disability process, or AeDib. AeDib is a major initiative to move all 
SSA components involved in disability claims adjudication or review to 
an electronic business process through the use of an electronic 
disability folder. This will help eliminate lost folders and repetitive 
data entry, because the electronic information can be viewed and used 
by other case processing systems in the medical determination and 
appeals process.
    We will begin rolling out the new electronic process nationally in 
January. Next week, we will begin a pilot project in the Raleigh, N.C. 
DDS. Pilots also are scheduled to begin in Illinois in August and 
California in October. We have already been conducting training at all 
three sites. We also are working with the medical community to obtain 
universal acceptance of an electronic version of our authorization to 
release medical records. This support is crucial if we are to obtain 
full advantage of both the automated request for data and the 
electronic receipt of medical evidence.

Improvements to the Disability Determination Process
    When I appeared before you last year, I told you that we would be 
developing longer term proposals for improving the disability 
determination process. These would require regulatory or administrative 
action. I know that the members of this Subcommittee are awaiting these 
proposals, and I hope to be able to present them to you very soon.

Return to Work
    The Ticket to Work program to help disability recipients return to 
work has been implemented in two-thirds of the states, and we will 
begin the third and final phase this fall. We are optimistic about the 
program's potential. But, I must tell you that we have not yet achieved 
the results we had hoped for. This is not unexpected--any new program 
of this magnitude is evolutionary and is likely to encounter 
difficulties in the early stages. We are looking at ways to address 
some of these difficulties.
    For example, we have received feedback from employment networks 
(ENs) describing their difficulties in obtaining evidence of work and 
earnings after a beneficiary is no longer receiving Federal disability 
cash benefits. Based on that feedback, we have developed a new process 
for paying employment networks (ENs) that significantly relieves ENs 
from the burdens associated with collecting pay stubs.
    We also are working with other Federal agencies to promote these 
programs that support the employment of people with disabilities.
    We have a long way to go. Based on our experience, we will be 
making adjustments and modifications as necessary.
    Mr. Chairman, the Ticket to Work program would not exist were it 
not for the support of you and the other Subcommittee members. I want 
to assure you that I remain committed to making the program work 
effectively.

The Men and Women of SSA
    I started my testimony by telling you some of the things we've 
achieved in the past year. We have an excellent workforce, and we could 
not have done as much as we have if the men and women of SSA were not 
so dedicated to public service. Since I became Commissioner, I've 
visited 49 of our local field offices, teleservice centers, hearings 
offices and program service centers, and am halfway through a second 
set of annual visits to each of our 10 regional offices.
    During each visit, I make it a point to meet with employees to get 
their perspective and ideas, communicate my vision for the agency, and 
make clear my expectations. Each time I have this opportunity, I am 
impressed with the talent in our workforce and moved by their 
commitment to serving the American people.
    Most recently, I've had a series of meetings with all of the 
managers in headquarters and as many of the managers from our field 
facilities as possible. As part of our plan to handle the agency's 
retirement wave, we are engaged in development programs at all levels 
of management. These programs will help maintain the leadership 
necessary to meet the challenges of the 21st century.
    The dedication and commitment of SSA's workforce including, the 
state DDS agencies, enabled the agency to achieve a 5% increase in 
productivity in 2002, processing thousands more claims than expected. 
This put us in a much better position at the beginning of this current 
fiscal year, and has helped compensate for funding below the 
President's FY 03 budget request.
    Even though we have not had the resources to fund the Special 
Disability Workload this year, we've made a good start in addressing 
the workload. But as the President's FY04 budget provides for having 
additional resources to devote to the task, this will allow us to 
complete processing these cases much faster than it would otherwise 
take.
    I have taken steps to shift resources from headquarters to the 
front lines, transferring nearly 300 staff positions to direct service 
positions and I will continue to redirect additional staff to front 
line positions. We also will continue to look for ways to use our 
resources more effectively.
    But, I must tell you that there are very real consequences when we 
have reduced resource levels. For example, while we have kept our 
commitment to keep up with initial disability claims this year, to do 
that, we had to cut back on the number of continuing disability 
reviews--CDRs--which we will conduct this year. Are CDRs important? 
Yes, they are, but I had to make a choice. And, with the resources in 
the President's 2004 budget request, we can get CDRs back on track next 
year.
    I've referred several times to the President's 2004 budget request. 
I think it's important to note that the size of the increase in 
administrative funding included in the budget reflects not only the 
President's commitment to ensuring that SSA is able to provide quality 
service to the American people, but also his confidence in the agency's 
ability to meet its service goals. We earned that confidence through 
the hard work and dedication of the men and women of Social Security.
    Backed by our quality workforce and sufficient resources, we will 
be able to provide the level of service the American people deserve. 
The President's FY 2004 budget request would give us 2,275 more work 
years which would fund--1,000 more employees in the field, 300 more in 
DDS offices, and significantly more overtime for both the field and the 
DDS's.
    Before I close, I'd like to take just a moment to tell you about 
some of our other successes during the past year.

Strengthening the Enumeration Process
    The terrorist attacks of September 11, 2001 reinforced the need for 
a concerted long-term effort to address Social Security Number (SSN) 
misuse and identity theft. We have taken many steps to strengthen our 
capability to prevent those with criminal intent from getting SSN 
cards.
    We have greatly reduced the number of non-work SSNs provided to 
non-citizens who are not authorized to work but who need SSNs to 
receive drivers' licenses. We are working on a regulation to end 
issuance of non-work numbers for that purpose.
    Beginning June 1, 2002, SSA began verifying birth records with the 
issuing agency for all U.S. born SSN applicants age one or older. 
(Under former rules, we verified birth records for all applicants age 
18 and older.)
    We are expanding our pilot online SSN verification system for 
employers from the original 9 employers to 100 employers. This system 
holds great promise, but, as you would expect, we are proceeding 
carefully to ensure that the system is secure as well as user friendly.
    SSA now only assigns SSNs to non-citizens if their documents have 
been verified with the Bureau of Citizenship and Immigration Services 
(BCIS). Under a new Enumeration at Entry (EaE), SSA assigns SSNs and 
issues SSN cards based on data collected by the Department of State 
(DoS) as part of the process of entry into the U.S. for non-citizens 
admitted as ``immigrants.'' (Non-citizens admitted as immigrants are 
authorized to work in the U.S.) All consular sites now have the 
software for this process.
    We also opened a Social Security Card Center in Brooklyn NY in 
October, 2002. The Center represents a joint effort of SSA, SSA's 
Office of the Inspector General and BCIS to strengthen SSN application 
procedures. As of June 2003, the Center has successfully served over 
80,000 visitors.

e-Government
    SSA has made great strides in the area of e-Government. The number 
of wage reports filed electronically instead of through paper W-2 forms 
has increased from 68.5 million to 125 million over a period of 2 
years. I've already described our progress in moving to an electronic 
disability determination process.
    Expanding e-Government is one of the five areas included in the 
President's Management Agenda. SSA is the lead agency for the federal 
government's ``e-Vital'' project. This new e-Government project will 
reduce the cost and time it takes to verify birth and death 
information. At the E-Gov 2003 Conference and Exposition last month, 
SSA received the Pioneer Award in the area of e-Government for the e-
Vital program.
    SSA also is providing and encouraging the use of more services on 
the internet. Of course, internet services will not replace the in-
person and telephone service for which SSA is so widely known. But it 
will provide an alternative for the increasing numbers of Americans who 
are doing business via the internet.

Getting to Green
    In addition, the Office of Management and Budget has recognized 
SSA's work on the five elements of the President's Management Agenda 
(PMA). In the most recent PMA scorecard, issued this month, OMB 
upgraded our financial management current status from ``yellow'' to 
``green.'' SSA also was rated ``green'' in all 5 PMA ``progress'' 
categories.

Recognition of SSA's Accomplishments
SSI Off High Risk List
    The SSI program was put on GAO's ``high risk'' list in 1997. Thanks 
to a great deal of work by SSA staff, under the leadership of Deputy 
Commissioner James B. Lockhart III, SSA developed and implemented a 
corrective action plan to address the problems that led to the ``high 
risk'' designation. As you know, GAO removed SSI from the list this 
year. But I can assure you that we are continuing to implement the 
corrective action plan's ongoing initiatives designed to better manage 
SSI and maintain explicit executive accountability for results.
    SSA's efforts have been recognized by a number of other groups. We 
recently received the 2003 Outstanding Ethics Program Award from the 
U.S. Office of Government Ethics.
    For the second time in three years, the Social Security 
Administration's (SSA's) computer security efforts earned the top grade 
for all Federal agencies in an annual Congressional report card. This 
report card is issued by the House Government Reform Subcommittee on 
Government Efficiency, Financial Management and Intergovernmental 
Relations.
    SSA has received unqualified opinions on its financial statements 
since 1994, an ``A'' in financial management in 2002 from the Federal 
Performance Project, and the highest financial management grade, a 
``B'', on the 2001 report card from the House Government Reform 
Subcommittee on Efficiency, Financial Management and Intergovernmental 
Relations. We have also received the AGA Certificate for Excellence in 
Accountability Reporting (CEAR) for the past five years.
    SSA executives have received individual awards from the Association 
of Government Accountants, the Joint Financial Management Improvement 
Program, the General Services Administration, the American Society for 
Public Administration, and the National Academy of Public 
Administration.

Conclusion
    In summary, Mr. Chairman, SSA is a great agency. It's gratifying to 
see our work recognized by others, and even more gratifying to witness 
the progress we've made in the past year towards meeting our goals.
    But we know we have a long way to go.
    Social Security is so important for so many people's lives that we 
must continue to work to provide better service: I have talked a lot 
about progress we've made, positive trends, and improved numbers, but I 
and everyone at SSA understand that every claim, every benefit payment 
represents an individual. Therefore;

      As long as one person has to wait 1,100 days to 
have a disability claim move through the entire appeals process, we 
won't be satisfied;
      As long as even one person's case is delayed 
because we've lost a folder, we aren't going to be satisfied; and
      As long as even one person's benefit amount is 
wrong, we won't be satisfied.

    I join the men and women of Social Security in pledging to you that 
we will pursue our goals of service, stewardship, solvency and 
staffing. In the past year, we've built the foundation. The service 
delivery plan, with its specific goals and milestones, gives us the 
blueprint we need to meet the challenges of the 21st century.
    In closing, I would like to thank this Subcommittee again for your 
continuing help and support. I look forward to continuing our wonderful 
working relationship, and I will be happy to answer any questions you 
may have.

                                 

    Chairman SHAW. In my opening statement, I said that the 
average time to process claims was 1,153 days. My question--is 
this an accurate figure? In a typical clear-cut case of SSI, 
how long does it take to process that claim?
    Ms. BARNHART. In a typical clear-cut case, Mr. Chairman, 
our DDSs, I am pleased to say, are making determinations in 
99.2 days, as of last month. That is 40 percent, roughly, of 
all applicants approved at the DDS stage.
    Chairman SHAW. That means the toughest cases are going way 
beyond 3 years?
    Ms. BARNHART. Absolutely. You are absolutely right. That is 
one of the problems with an average. One of the things I often 
point out is if you are the person--very few cases are average. 
It is just that average is the best measure, giving a general 
idea of progress. The charts that I provide show the trend 
lines. You are absolutely right, in some cases they are going 
well beyond the 3 years. Even though it is a relatively small 
portion of cases, if you look at it from a numbers point of 
view, it is not a large number, but if you are that person or a 
member of that person's family, and you are waiting the 6 or 7 
years I have heard about to have your situation resolved, 
obviously it can have a very devastating effect.
    Chairman SHAW. I know you cannot give this information off 
the top of your head, but could you break it down as to how 
many cases are decided the first 100 days and how many are 
decided the second 100 days. If 90 percent of your cases are 
decided within 100 days, which is approximately 3 months--which 
is too long, but at least that is certainly better than 3 
years--if that 90 percent of your caseload is decided within 
that time, then there has to be something terrible happening to 
the other cases in order to get that average up to 3 years.
    Ms. BARNHART. That is one of the things that I am proudest 
of at the agency, where the agency has made great strides, the 
appeals council. Once an administrative law judge makes a 
decision, if the claimant doesn't agree with the decision and 
chooses to appeal it, they appeal to the appeals council. When 
I became Commissioner, it took 447 days, on average, to get a 
case through the appeals council. As of May 2003, we were at 
280 days. Our goal for this fiscal year is to be at 300 days. 
We are averaging 319 days for the year so far. We have been 
gaining ground every month, and we believe we are going to make 
300 days, and maybe below. That is a reduction of 147 days, if 
we make that 300-days goal. If you look at where we were last 
year in terms of service, we have changed it for people. Today 
it is an even larger difference.
    Chairman SHAW. Let me correct the record. Staff just put a 
note in front of me saying that 40 percent of cases are allowed 
at the first step. Which cases are dropped at that period? When 
someone comes in, and you say no, do they go on their way?
    Ms. BARNHART. Absolutely. We do have what we call the 
waterfall chart, and I would be happy to provide that for the 
record. We have the typical version that the agency uses, and 
then we have the version that I created because I didn't think 
the typical version was easy to understand. So, I will send 
both. It shows the diminished number of cases going forward at 
each step, and percentage of cases.
    Chairman SHAW. That would be helpful. Also give us an 
indication of how many of those cases at certain points, say 
beyond 3 years, end up being found favorable to the client. I 
would assume in some cases it would mean that at the hearing 
level the initial decision was reversed and the applicant is 
paid disability benefits.
    [The information follows:]

    In fiscal year (FY) 2001, 75% of all disability claims were finally 
decided at the initial level, with an average processing time of 106 
days. In FY 2002, 79% of all disability claims were finally decided at 
the initial level with an average processing time of 104 days. The 
attached charts depict this information graphically for FY 2002. 
(Percentages derived from the two charts may differ due to rounding.) 
It is important to remember that the figure of 1153 days is an average 
only for claims that go through all four levels of our decisionmaking 
process, after three separate appeals, and includes the periods allowed 
to claimants before they have to file an appeal. Around 95% of all 
disability claims receive a final decision before this last 
administrative step.
    As shown on the accompanying FY 2002 waterfall chart, 72% of those 
cases that did go through all four levels of our decisionmaking and 
appeal process were denied or dismissed, and 25% were remanded for the 
administrative law judge to take another look. Only 3% were allowed at 
this last step.

              FLOW OF CASES THROUGH THE DISABILITY PROCESS
                         Fiscal Year 2002 Data

    In FY 2002, most allowances were made at the initial level (38 out 
of 55 that are allowed overall for every 100 cases). Only about 5 cases 
out of 100 go beyond the administrative hearings level, and less than 1 
per 100 are pursued in Federal court.

[GRAPHIC] [TIFF OMITTED] T3734N.001

[GRAPHIC] [TIFF OMITTED] T3734O.001


                                 

    Ms. BARNHART. You are making another important point, and 
that is the longer it takes to get through the process, the 
more likely it is that the circumstances of the individual 
could change if they have a deteriorating condition. It may 
well be that the decision initially made to deny was a correct 
one under the law and regulations, but if it is 5 or 6 years 
later, we are talking about a different person.
    Chairman SHAW. Who would buy disability insurance if they 
thought that it was going to take 3 to 5 years to get the 
relief they need? Wage earners do not have any choice other 
than to pay into Social Security, which is, in part, a 
disability program. Mr. Pomeroy.
    Mr. POMEROY. Commissioner, your testimony reveals an 
urgency that you feel to get these administrative processes 
working as well as possible and backlogs down as much as 
possible. I commend you for that. It also reflects a real focus 
on management. There is no silver bullet to working these 
backlogs down. You just have to evaluate what you are doing and 
reevaluate the priorities and bring your resources to tasks and 
try to work better. I commend you. It is very impressive 
testimony. You mentioned the reduction in the determination of 
claims, and yet that is achieved in a very difficult 
environment relative to your ability to hire additional 
administrative law judges. Can you give us some information 
where that is at today? This government-wide freeze on hiring, 
how does that work for an agency?
    Ms. BARNHART. I am glad you asked me that question. If you 
asked me yesterday, it would be a different answer than today.
    I got a phone call from my general counsel after I arrived 
here this morning, that the U.S. Circuit Court of Appeals has 
ruled in favor of the U.S. Office of Personnel Management and 
they will begin working that register, and we should be able to 
begin hiring administrative law judges within 6 months on the 
outside. That is very important.
    Mr. POMEROY. That is a big deal.
    Ms. BARNHART. That is a big deal.
    Mr. POMEROY. Mr. Chairman, things happen when you convene 
these hearings.
    Ms. BARNHART. We have been frozen over 2 years--almost 3 
years. Let me take an opportunity--that is one place this 
Subcommittee was extremely helpful to the agency. As I was 
coming into the agency in the fall of 2001, Members on this 
Subcommittee worked very hard to get the U.S. Merit Systems 
Protection Board to lift the stay so we were able to hire 126 
judges. Had we not hired those judges 2 years ago, we would be 
in much worse shape than we are now. This is a huge plus for us 
that this decision has been made.
    Mr. POMEROY. How many have you lost by attrition?
    Ms. BARNHART. We lose about 65 a year, and I asked for the 
number for last year. In 2002, 33 were due to retirements, 14 
were due to going to other jobs, and 4 were due to judges 
accepting administrative law judge positions in other Federal 
agencies. The typical factors one would think of, the four 
going to other Federal agencies is the sort of raiding that 
goes on because we have the largest corps of administrative law 
judges.
    Mr. POMEROY. You have more administrative law judges than 
any other agency in government, so when there is a freeze on 
new administrative law judges, people poach yours?
    Ms. BARNHART. That is exactly right.
    Mr. POMEROY. I have this vivid picture in my mind of how 
management deals with the hiring freeze, and you need everyone 
you have, and you are chasing them down the hall like the 
little boy at the end of the movie Shane, ``Don't go, don't 
go.'' Now you don't have to do that.
    Ms. BARNHART. Exactly.
    Mr. POMEROY. How many do you think within a year you might 
add back to your staff?
    Ms. BARNHART. Right now we have over a thousand 
administrative law judges. I believe we have 1,065 
administrative law judges; but at any given point in time that 
translates into about 960 who are available. We do not count 
the managers, the regional chief judges. Also we have a certain 
number of judges that are on special assignments and working on 
task forces and those kinds of things. We have about 960 or so 
that are actually available each day. By my calculations, the 
way that I have looked at this is to say if I would really like 
to eliminate this growing hearing backlog that we have, and 
look at getting it under control in the next 2 years and 
eliminating it under 5 years, I have calculated I need 200 more 
administrative law judges; and then there are the associated 
positions that go with those. In the President's budget, with 
the additional workers we have there, if the hearings get 
transferred to Medicare eventually--and we are working on a 
memorandum of understanding to accomplish that, we in the 
President's budget--we get to keep those work years. They 
actually left those for us to use to redirect other disability 
workloads.
    Mr. POMEROY. So, if Congress funds the Administration's 
request, which is going to take some fund restoration on the 
Senate side, holding that number in conference, but if we get 
that done, you will be able to make some real progress?
    Ms. BARNHART. That's correct. Not only would we have 1,300 
additional work years to put in the field, and I would put 
1,000 in our field offices and 300 in the DDSs, I would also be 
able to redirect approximately 350 workyears that are currently 
used for Medicare hearings to other SSA workloads. If we get 
the full funding level, I still would have these additional 
workyears for disability because the OMB and the President did 
not take the funds for Medicare hearings. That is a very 
important point for us because typically if a function moves so 
do the funds--but there is a great appreciation and commitment 
to getting this disability backlog down. I want to mention 
there are approximately 1,000 additional workyears I would use 
for increased overtime provided in the President's budget. It 
is critically important for us. It would make a huge 
difference.
    Mr. POMEROY. Thank you.
    Chairman SHAW. Mr. Cardin.
    Mr. CARDIN. Thank you, Mr. Chairman. This Committee has 
consistently supported additional administrative support for 
your agency. We have had problems with the Committee on 
Appropriations and the Committee on the Budget, but over the 
years, on a bipartisan basis, we have believed that you need 
the resources necessary to do the job that you have been 
mentioning today. I also particularly appreciate you mentioning 
the dedication of the workforce. I have an opportunity to visit 
frequently, and you have a very dedicated group of public 
servants, and I think sometimes they are not really as 
appreciated as much as they should be for the hard work that 
they do under very difficult circumstances. My question is that 
the U.S. Department of Labor-U.S. Department of Health and 
Human Services appropriation bill that passed was $165 million 
less than the Administration requested, and I certainly hope 
that Mr. Pomeroy is correct that we will see some restoration 
of that as it moves through the process, but I think it is 
important for this Committee to know what would happen if that 
budget becomes law.
    Ms. BARNHART. If that budget becomes law--I will give some 
examples. I imagined that somebody would ask that question 
today. It translates into performing 300,000 less initial 
claims decisions in disability, or 150,000 less disability 
hearings a year. It is significant in terms of very real 
workloads. Instead of just under 600,000 disability claims 
pending at the end of 2004, we would actually have almost a 
million pending. That is what it means. Or, it means that, 
instead of having somewhere around 500,000 hearings pending, we 
would have roughly 750,000 hearings pending. I can provide the 
precise numbers for the record. It is very significant in real 
terms.
    [The information follows:]

    In passing its version of the FY 2004 Departments of Labor, Health 
and Human Services, and Education, and Related Agencies appropriation 
bill, the House of Representatives reduced the President's budget 
request for the Social Security Administration's (SSA) Limitation on 
Administrative Expenses (LAE) by $168.2 million. The following examples 
are illustrative of the magnitude of the impact of this reduction on 
our operations, should it be enacted into law.

      If applied to initial disability claims, a reduction of 
$168.2 million would result in 300,000 fewer claims processed in FY 
2004 and therefore an increase in claims pending at end of year. Thus, 
at the end of FY 2004, SSA would have 893,000 initial disability claims 
pending in the Disability Determination Services, as opposed to 593,000 
projected in the President's budget.
      If applied to hearing workloads, a reduction of $168.2 
million would result in 150,000 fewer hearings processed in FY 2004 and 
therefore an increase in hearings pending at the end of the year. Thus, 
at the end of FY 2004, SSA would have 707,000 SSA hearings pending in 
the Office of Hearings and Appeals, as opposed to 557,000 projected in 
the President's budget.

                                 

    In addition, as I am sure Members of this Committee are 
aware, due to the cutback that we had this year, the last-
minute across-the-board cutback that all government agencies 
experienced and the absorption of the higher pay raise that we 
were not counting on having to cover, we had a reduction of 
approximately $80 million this year. What that necessitated was 
my making a choice between our CDR workload and our commitment 
to conduct disability reviews or processing initial claims. I 
made a decision that we were going to do both, but put more 
emphasis on processing claims and not let the level of pending 
claims grow. Which meant that we were going to do about 200,000 
less CDRs than we would like to do. If the $168 million 
reduction in funding continues, if we are not able to restore 
those funds as the appropriation bill moves through the 
process, it means we will not be able to get back on track with 
CDRs as quickly as we would like. We would not be able to start 
getting back on track. I know this is very important to this 
Committee. We had a 7-year plan. We worked and got current with 
CDRs. We were not interested in getting back in the hole on 
CDRs for the long term. I was doing this as a 1-year situation.
    Mr. CARDIN. First, if you increase the disability 
determinations, number of cases pending by two-thirds, Mr. 
Chairman, I would think that we should let the Committee on 
Appropriations know they should increase our budget so we can 
put additional caseworkers on in our offices, because we are 
going to get a lot more complaints. That is one impact if we do 
not restore those funds. Second, I have been on this Committee 
long enough to know about the CDR issue, and this is a good 
government issue, an issue to make sure that the people who are 
entitled get the money. It has been an issue for this Committee 
for a long, long period of time. It has been difficult to get 
started, and I regret we have had this additional problem 
because of resources. It just does not make any sense for us 
not to give you the resources that you need in this area to 
implement this plan so we have a system that is fair to the 
people who really need the help. Thank you, Mr. Chairman.
    Chairman SHAW. Thank you. Mr. Hayworth.
    Mr. HAYWORTH. Mr. Chairman, thank you. I was going to begin 
with a word of praise for the gentleman from North Dakota. I 
thought his rendition of the final scene of Shane was 
remarkable this morning. With rumors abounding about Jack 
Valenti leaving the Motion Picture Association--North Dakota 
meets Hollywood, that could be interesting. Not that I 
necessarily suggest a change of occupation for my friend from 
North Dakota. Commissioner Barnhart, we weren't in a movie, but 
it was kind of like Hope and Crosby, On the Road to Tempe, 
Arizona, within the last 18 months, if memory serves. Your 
visit to Arizona was very much appreciated, as my State was one 
of the first States to roll out the Ticket to Work Program. We 
have a lot of folks who strongly support the program and 
obviously want it to be a success. In your testimony you talk 
about a new process for paying employment networks that will 
relieve those networks from the burdens associated with 
collecting pay stubs. That concern has been brought to my 
attention by several of my local employment network providers, 
so I am very interested in what you have been doing on this 
issue. Could you please elaborate on what the new process is?
    Ms. BARNHART. Yes. Specifically, the problem for the 
employment networks has been the requirement that they must 
provide pay stubs during the beneficiaries' and the 
participants' ongoing participation in the labor force and 
employment. This is a real issue for the employment networks 
because it requires the individual to send them a copy of the 
pay stub and then to get it into us, and I guess it is very 
time-consuming from an administrative perspective. We looked at 
the situation, and what we have come up with is the following. 
It will require the employment network to submit one pay stub 
at the time the individual goes to work, and then on an going 
basis to certify that they know the person is still working. We 
will then, through the records we get in terms of wage reports 
that are posted every year to people's Social Security numbers, 
take the responsibility for reconciling the fact that funds 
were paid that actually match what the employment network said. 
We are still working out the in-house process, but we are going 
to start it, and that way we can do it really through 
automation. I think we can use the automated information that 
we get and take a great burden off the employment networks. 
Quite frankly, this has been a disincentive for employment 
networks to enroll in the program. It is my understanding that 
as we are trying to market and get more organizations to become 
employment networks, they are being told don't do it because 
this is a huge administrative burden and look at what you will 
be getting into. So, I am trying to remove the disincentive 
from participation.
    Mr. HAYWORTH. That will help reassure a lot of my folks. I 
appreciate you updating us on that. One concern of many 
beneficiaries about returning to work is that if they report 
their earnings to the SSA, the agency may not accurately keep 
track of them, thus leading to overpayments. This fear of 
having to repay potentially hundreds or thousands of dollars in 
overpayments is a real concern that prevents many individuals 
with disabilities from taking that step to return to work. 
Again, I would be interested, Commissioner--what steps is the 
agency taking to improve how it tracks earning reports and to 
reduce incidents of overpayments?
    Ms. BARNHART. That has been a huge issue in the agency. 
Quite frankly, the lag time between individuals willingly 
reporting income that they are earning and it getting posted 
into their accounts so we know we need to make adjustments in 
benefits--and it does result in these enormous overpayments, 
sometimes after a year or 2, and the individual is required to 
pay that back through overpayment collection efforts unless we 
grant a waiver. I would say that the major factor contributing 
to that delay has been a need for additional resources, because 
that workload that you have just described is on that list. 
That is one of those 282 items that is competing with 281 other 
things to get done. I am not saying that it is more important 
because it does have a higher priority than many items there, 
but for employees who are attempting to get the job done when 
there are not enough hours in the day, everything cannot be a 
priority. I am not making excuses, but simply explaining. I 
think it has been a workload issue for the agency. We are 
making it a priority. We are starting to make strides in that 
area. I have to tell you, if we do not get the President's 
budget request and we are not able to hire 1,300 more people 
and have 1,000 more hours in overtime beyond that, it is going 
to be difficult for us to get current. That is going to be 
looked at in this continuing assessment to figure out how best 
to handle that workload. I have asked, is that a workload that 
we can do in a centralized fashion? Can we have all those go 
one place and somebody just enters them in one place? We are 
looking at different ways to handle that.
    Mr. HAYWORTH. Commissioner Barnhart, I salute your 
enthusiasm, your energy, and your sense of purpose you bring to 
your job; thank you very much for your testimony today.
    Ms. BARNHART. Thank you. If I may say, our first three 
Ticket to Work employees were three individuals from Arizona.
    Mr. HAYWORTH. Yes, ma'am, we are very proud of the folks, 
and had a chance to visit and follow up with them. The program 
is working, and we want to keep it. Work is what it is all 
about.
    Chairman SHAW. Thank you, Mr. Hayworth. For the record, the 
cut that you are concerned about is in the House-passed U.S. 
Department of Health and Human Services appropriations bill, 
but the Senate Committee-reported bill fully funds the SSA. So, 
the cut is all subject to being replenished at this particular 
point. Mr. Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman. I think the 
Chairman's remarks are very important because one side of 
Congress has fully funded the President's request and your 
request, and hopefully we can get to that point as well in the 
House where we will reinstate those $168 million that have been 
requested. Commissioner Barnhart, thank you very much. You have 
always been very incisive and your folks have been very 
responsive in responding to our concerns. I thank you and all 
of the folks who work at the SSA. Sometimes we forget to say 
thank you. The volume of work you do is tremendous. If people 
knew exactly how many cases you have to deal with, and we are 
talking about folks who really do depend on this assistance, if 
we do not say thank you enough, we do think it. Give me a sense 
of what your timeframe is and when we and the advocacy groups 
can expect to hear from you on these reforms that you are 
continuing to implement. I know you are going to be submitting 
something in the fall?
    Ms. BARNHART. My hope and intent is to actually brief your 
staffs in the very near future. I would like to say a couple of 
things if I may. I intend to have a very open process when I 
present my recommendations for reforming the process. It is 
going to be very important to have all parties involved in the 
process from start to finish. That includes the DDSs, our 
staff, our field staff, our administrative law judges, our 
quality review people, the efficacy community--all interested 
parties involved. I intend to do briefings for all those 
groups, and also allow time for them to come in and present 
their reaction to the proposal. I will start, of course, with 
this Committee in Congress, to do that. As I am looking at 
these reforms, and as I say, I am very close to being able to 
provide the information to you. The driving factor for me is 
making the right decision as early in the process as possible. 
That is the overriding goal. I like to have a goal when I 
start--the theme, the idea. What we are working toward is the 
right decision as early in the process as possible, to make 
sure, first of all, that people who are obviously disabled get 
benefits and are not part of the group waiting for the 1,153 
days--and hopefully nobody is waiting 1,153 days. An example of 
that would be an action that I am taking right now to change 
the regulations related to individuals with Amyotrophic Lateral 
Sclerosis (ALS), basically to change our listing to say that 
individuals who have ALS, if they cannot work and if they have 
a doctor who says that they have ALS, they will be found and 
determined disabled at the initial stage of the process as 
opposed to having to go all of the way through it, and we will 
not be getting into functional capacity issues. That is one of 
the goals of my reform.
    Mr. BECERRA. Commissioner--and I don't mean to cut you off, 
and I would like to hear and have in writing some of those 
different reforms--but my time is going to expire if I don't 
get a couple of my questions out. If I could ask you about the 
electronic disability folder, I know we are going to hear 
testimony from the GAO that says we should be cautious in how 
we proceed. I think most of us agree that automation does make 
us more productive, and we want to help make sure that whatever 
automation that we institute within SSA, that it gets us toward 
the goal of accelerating the process of completing these 
claims. The GAO will point out some concerns that we may be 
moving too quickly to send this system nationally for 
electronic filing, and I wonder if you can give us your 
comments.
    Ms. BARNHART. I am very committed to rolling out electronic 
disability as soon as possible. When I came into the agency, 
electronic disability was on a 7-year plan, and I said we 
cannot wait 7 years. When we look at the 1,153 days, it would 
be irresponsible to wait 7 years. I said if resources were not 
an issue, how long would it take? They said, 23 months. That is 
the process that we are working on. It is not that electronic 
disability just started being developed a year and a half ago; 
they were already doing it. It is simply that I made the 
commitment that we would provide the resources and make it a 
priority within the agency. I said when I took this job that I 
didn't take it to manage the status quo. Clearly as we look 
ahead to the future, there are two approaches. One is to 
continue doing what we are doing and wait until we have a 
system that has been tested for several years and is all tied 
up with a bow and delivered. If we do that, then you will be 
talking to the next Commissioner of Social Security about why 
we do not have an electronic disability program.
    Mr. BECERRA. You will make sure that you include the 
advocacy groups when going through the process of implementing 
the electronic filing program?
    Ms. BARNHART. One of the things that I need to make clear 
is that we have what I consider a very reasoned rollout 
schedule. If I can take just a moment to address that, we are 
starting a pilot in North Carolina next week; we are starting a 
pilot in Illinois in August; and in California, just outside of 
Sacramento, in October. The point of those pilots is a very 
specific focus, to test our document management architecture, 
which means the scanning of records that will go into the 
electronic folder. The rollout of electronic disability 
actually is scheduled to begin next January, and we are going 
to start in one region, the Atlanta region. We are going to do 
one or two States at a time, and we are not going to bring 
additional States on until we have worked out the issues. 
Anytime you implement a system, there are going to be problems 
and issues and glitches. I am trying to structure this so that 
they will be manageable so we will hit all of the potential 
issues we possibly can hit in our first region rollout. It is a 
condensed area; we can have a system SWAT team on the ground to 
go out and respond to those issues. We are working very closely 
with our DDSs in providing training. I was not aware of GAO's 
concerns until I got a fax last night. They had a conference 
call with people on my staff informing them what their concerns 
were related to the AeDib, so I have not had a chance to look 
at it in any great detail. I assure you I will review those 
concerns. The one point I want to get across is I think we are 
not in a position where we can afford to make a decision to do 
nothing. I think our decision is a reasoned, ``yes, there is 
some risk,'' but in an agency that touches 95 percent of 
Americans, that issues 50 million benefits a year, to the tune 
of $450 billion each month, there is risk in everything we do, 
every time we walk into our offices and sit down at our desk. I 
think this is a calculated risk. I have very talented and 
knowledgeable people that have been working for years to begin 
this process. I think everybody in the agency is excited about 
it. The DDSs have some issues, and we are trying to work 
through those. I have made myself personally available and have 
set up a system where the head of the National Council of 
Disability Determination Directors (NCDDD) has direct access to 
someone in my front office, my senior adviser, who is head of 
the service delivery budget team. We are trying to make this a 
real team effort. I think everyone understands how important it 
is for us for the future.
    Mr. BECERRA. Thank you.
    Chairman SHAW. Mr. Ryan.
    Mr. RYAN. Ms. Barnhart, I am from Wisconsin so you probably 
now know who I am. We have some real problems. We continue to 
see these news articles illustrating the real problems in 
certain Social Security offices. Most recently, we learned of 
1,400 cases yet to be docketed or entered into the computer 
system for case tracking; 700 pieces of incoming mail that had 
not been placed in the appropriate case file. Just a few days 
ago we were reading about the Chicago regional office where I 
think the number is 1,200 cases where you had contractors who 
were hired to organize the files were throwing away critical 
claimant documents in the recycling bin and then were still 
processing these cases. A lot of those people come from 
Wisconsin. A lot of those people come from Illinois, all of the 
areas the Chicago region tracks. My question is: one, what is 
going on? Number two, are we just scratching the surface here? 
Is it just 1,200 people who had their claimant pieces of 
information thrown away? Were these people denied disability 
claims? Were they denied disability claims because of the 
missing information? Are we violating people's privacy rights 
when we allow these workers to take home this sensitive 
information to work on them in their homes without any kinds of 
control? My fear is that just this one incident of 1,200 people 
may be a sign of a fact that this is systematic. It is a lot 
more than 1,200 people where, for one reason or another, you 
have contractors throwing away information that is critical to 
determining the validity of people's claims or not, whether or 
not you have workers taking this sensitive information home, 
violating privacy rights. I worry that this one article that we 
got from the Chicago regional office last week and a series of 
articles that we have gotten about the Milwaukee office are 
just the tip of the iceberg. You have a letter from me and our 
delegation. It is a fairly lengthy letter, and I will not go 
into all of the points that we include in that letter, but I 
would appreciate your comments.
    Ms. BARNHART. I have the letter, and I am familiar with it. 
Let me say first of all, I appreciate your passion and anger 
about the situation. What happened in Milwaukee in relation to 
the contractors that were performing case files for us was 
nothing short of outrageous. Those contracts were immediately 
suspended upon learning of it, and I terminated the contracts 
once I was able to follow the law in terms of being able to 
document the problems and the nonperformance. Actually, I asked 
our inspector general to look into that to see if there are any 
fraud issues. We are taking action to stop the contract and we 
may be taking action against the contractor, whatever we are 
legally allowed to do. There were 1,200 cases total, and I have 
read all of the press articles several times. One of the things 
that has not come out in the press articles is that the 
discovery of the 1,200 files where documents were put in the 
recycling bin, as well as the incidents that were reported, the 
deficiencies in the management of the Milwaukee hearing office, 
what did not come out is that we are the ones that found it 
out. In every case it was described as an audit. It was not an 
outside audit looking at what we were doing, uncovering 
something; it was the SSA employees looking, doing checks, to 
make sure we are providing the kind of service that we need to 
provide. I appreciate having this opportunity to get that on 
the record. We are policing ourselves, and I think we deserve 
some credit for that. Am I happy that we found the situations 
that we found in the management of the Milwaukee hearing office 
and the nonperformance and malperformance on the part of 
contractors? Absolutely not. I made sure we responded in both 
cases. In the Milwaukee hearing office, we sent a team of 35 
individuals, 7 on a team for weeks at a time to go in, and we 
immediately corrected the issues, the association of the 1,400 
documents and getting those files up to speed. We are 
absolutely up to date. We are conducting unannounced spot 
checks in that office now. I have made a commitment to you and 
other members of the delegation that I am going to do a 
thorough review of the office on the 1-year anniversary from 
our office.
    Mr. RYAN. We need your involvement. Originally it was the 
Chicago regional office was going to oversee the Milwaukee 
office, and now we see all these problems in the Chicago 
office.
    Ms. BARNHART. You have my involvement and commitment that 
we are going to fix the situation. Just yesterday I had a 
notice put out to people in the agency indicating that Martin 
Gerry, my Deputy Commissioner for Disability and Income 
Security Policy, will now have direct supervisory 
responsibility for overseeing the Milwaukee hearing operation. 
That ensures that there is only one step between that office 
and me in terms of knowing what is going on. In terms of the 
1,200 cases--there are 1,200 cases the contractors worked. 
There were two contractors.
    Mr. RYAN. Right.
    Ms. BARNHART. There were 1,200 cases that they actually 
worked. We don't know at this point, in all candor, if they put 
documents for all 1,200 cases in the recycling bin or not. We 
are going back looking at every single case. I was just having 
a meeting a few days ago on the notices that we are going to 
send out to every single claimant, every folder that they 
touched.
    Mr. RYAN. You are going to contact them?
    Ms. BARNHART. Yes, twice. We are going to contact them and 
tell them, first of all, if they had a claim moving through at 
that time, they need to go back, if they had a hearing, and 
make sure that they were satisfied with the result. If not, we 
are going to provide an additional hearing opportunity.
    Mr. RYAN. Give them an opportunity to re-file the record?
    Ms. BARNHART. Absolutely. Anyone who had a hearing and was 
denied, we are going to contact them and let them know. We are 
assuming that people who had a hearing and were allowed, are 
not going to be interested in being contacted. They are going 
to be in the initial mailing, saying there may have been a 
problem with your folder, but we are not going to contact them 
as a result of the decision that they got. I am determined that 
we are going to make sure that no claimant is injured as a 
result of the outrageous situation that occurred there. As I 
say, we have taken steps, we have fired, ended the contract. We 
are going to pursue whatever legal action we can. I do want to 
say this: that we had quality measures in place. We are going 
to reevaluate them. We thought we had good quality measures in 
place. The employees of the Milwaukee office as well as the 
employees of the regional office are very upset, and they are 
just as determined and dedicated. Most of the ideas of how we 
fix this problem are coming from them.
    Mr. RYAN. You obviously do not have good quality measures 
in place, because this happened. We have all this evidence 
about shredding of documents and these things. My big concern 
is, is it more than 1,200? It is my understanding that it is 
1,200 because Social Security employees found these documents 
in the recycling bin. Did they throw them away in other trash 
bins, and is it 2,500? We do not know the answer to these 
questions.
    Ms. BARNHART. The information I have is the contractor only 
was given 1,200 cases, so the universe for the contractors of 
potential cases is 1,200.
    Mr. RYAN. Did you have other contractors doing other cases?
    Ms. BARNHART. We had some individual contractors but they 
were former Social Security employees who were working under 
individual contracts. We do quality checks on them as well, but 
we haven't had problems there. These were larger contractors.
    Mr. RYAN. What about people taking sensitive documents home 
with them?
    Ms. BARNHART. The reason that was allowed is because we 
have, in our bargaining agreement, the ability--it was 
negotiated before they came to the agency--the ability for 
employees to take folders home. In my personal opinion? I am 
not sure that ever should have been allowed. Yet it was. It was 
negotiated with the union. It is something, quite frankly, that 
I intend to revisit when the union contract is up for renewal. 
In the meantime since these individuals are going to be 
performing the same responsibilities, the same job as our 
employees were, they have to sign agreements of confidentiality 
and so forth. So, the determination was made that since they 
were doing the same job as the employees who take work home, 
because we have employees who take folders home and work at 
home as well, that we would do it. Based on this situation, I 
said, no longer. We are no longer going to allow contract 
workers to take any folders home. As I say, I am going to be 
revisiting the whole issue of anybody taking official documents 
out of a government office once we renegotiate our contract.
    Mr. RYAN. I look forward to seeing your response to all the 
other questions in writing as soon as possible. Thank you.
    Chairman SHAW. Thank you, Mr. Ryan. There are a couple 
other things, the GAO recently added Social Security disability 
programs to their high-risk list, based upon what they referred 
to as outdated concepts of disability. What is an example of an 
outdated concept of disability? What is being done to remove 
the disability programs from GAO's high-risk list?
    Ms. BARNHART. I think that is a really important point, Mr. 
Chairman. In fact, when GAO decided to take that action, I met 
with the Comptroller General, with David Walker, precisely to 
discuss that issue. He indicated that he was really looking 
more in terms of all Federal disability programs. So, the high-
risk list--not only did our disability program move on the 
high-risk list, but so did the Veterans Administration and 
other disability-related issue programs in the Federal 
government. As the Comptroller General explained it to me--and 
I do think that there is definitely a point to be made here--we 
operate in an environment now that is very different than when 
the disability law was originally passed. When disability 
benefits first came into being, quite frankly, there was very 
little expectation that people with disabilities would go to 
work or would want to work. That is--the Americans With 
Disabilities Act (P.L. 101-336), I think we celebrate the 10th 
anniversary this week, changed all that. It changed it in terms 
of the minds of the people with disabilities as well as 
employers and people in society. So, I think what the GAO was 
suggesting is that within that context, within that framework 
that we are operating now, sort of a dynamic time in 
disability, we need to relook at how we have constructed our 
programs, how we define disability, the kinds of benefits we 
offer. It was stressed to me by the Comptroller General that we 
were not being placed on the high-risk list as a result of 
management. This was not a high-risk management situation like 
SSI had been for us. It was really more a wake-up call for the 
entire Federal government to say you really need to look at how 
your disability programs are structured as you are moving into 
the future with people of my generation, the boomers moving 
into the disability-prone years particularly.
    Chairman SHAW. Speaking of your generation, the baby 
boomers, we also have a situation which we looked into a couple 
years ago--I don't think we have revisited it in probably 2 or 
3 years, the situation is the aging of the Social Security 
staff itself. I know that many professions have a problem with 
aging. I know in the teaching profession there is a problem. 
What are we doing in order to get a better cross-section in age 
of the Social Security workers to ensure that when we do have 
the baby boomers coming into the program, the agency will be 
adequately staffed. This is to say, a little scary.
    Ms. BARNHART. It is a very important issue for us. We 
anticipate we are going to lose 3,500 people a year for the 
next 10 years due to retirements. The average age of the Social 
Security employee is 47. The average age of our recruits when I 
came into the agency was 36. Last year it was 34. So, we are 
actually recruiting some younger people in the agency. We are 
working really hard to do that. We completely revamped our 
recruitment display materials pitch that we are taking out to 
colleges and universities. We are making a real effort to bring 
in young people through the Outstanding Scholars Program. I 
think we are really being very successful in getting some of 
the best and brightest young people coming out of colleges.
    Chairman SHAW. Does the agency still have an early 
retirement program?
    Ms. BARNHART. We have had an active early retirement 
program for years at Social Security. I have continued that 
practice, absolutely. The one thing I have not done is buyouts, 
because I didn't really think that we needed to do buyouts. We 
had enough people participating in early out. Frankly, buyouts 
cost money, and I have been trying to take every spare penny 
and direct it toward additional resources. Yes, we do early 
outs. In fact, the use of early outs is what has really 
flattened the retirement wave. If we had not allowed early outs 
in the last several years in the agency we would have lost a 
huge number of people at one time. I call it the retirement 
tsunami, this giant wave. As it is, 3,500 people a year is 
manageable in terms of recruiting.
    Chairman SHAW. Okay. Commissioner Barnhart, thank you so 
much for spending this time with us. We always learn a lot. It 
is always a treat to have you come and visit with us, exchange 
views and ideas, and answer questions of the Congress. Thank 
you very much.
    Ms. BARNHART. Thank you, Mr. Chairman. I just want to say I 
always enjoy coming before the Committee. I enjoy the 
discussions we have. I appreciate your support. Many nice 
comments were made today--I want to thank all Members of the 
Subcommittee for those.
    Chairman SHAW. You certainly have support on both sides of 
the aisle, I am glad to say. In the atmosphere that is 
presently hovering over the Congress, this is a breath of fresh 
air. Thank you.
    Ms. BARNHART. Thank you, Mr. Chairman.
    Chairman SHAW. We now are going to combine the next two 
panels. We have Robert E. Robertson who is the Director of 
Education and Workforce and Income Security Issues, at the GAO. 
We have Linda D. Koontz who is the Director of Information 
Management Issues, at the GAO, and we have Susan Prokop, who is 
a member of the Task Force on Social Security, Consortium for 
Citizens With Disabilities. Again, as with the previous 
witness, your full statement will become a part of the record. 
We would ask each of you to summarize as you see fit. Also, I 
have a request to insert an opening statement into the record 
by a Member unable to be here. So, without objection, any 
Member of this Committee may insert an opening statement. Mr. 
Robertson.

    STATEMENT OF ROBERT E. ROBERTSON, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING 
                             OFFICE

    Mr. ROBERTSON. Good morning. Do we have a live mike here? I 
think we do. It is great to be here this morning to talk about 
our examination of SSA's continuing disability review process. 
As you are all aware, medical conditions can and do change over 
time, and SSA uses these particular reviews to determine 
whether or not beneficiaries continue to remain eligible for 
the benefits they are receiving. If SSA, for example, finds 
that the medical conditions have improved then they are able to 
take actions to cease benefits to those individuals. So, it 
goes without saying that these particular reviews are a very 
important part of SSA's efforts to ensure program integrity, 
and it is important that they conduct these reviews in a timely 
and efficient manner. What I am going to do is just briefly 
summarize four points based on the work that we just completed, 
and then I will be ready to answer questions at the appropriate 
time. I better put my glasses on as a concession to age here. 
First, while SSA recently has worked its way out of a large 
backlog of CDRs, in part through targeted funding, it faces a 
possibility of yet another backlog in 2003 and beyond. More 
specifically, in 1996 the Congress reacted to an enormous 
backlog of 4.3 million CDRs by authorizing specific funds to 
conduct these reviews over a 7-year period. By 2002, which was 
the end of the targeted period of funding, SSA reported that it 
was current on its reviews. However, with the expiration of 
targeted funds, SSA is at risk of generating another backlog 
starting in 2003. One of the factors hampering SSA's ability to 
conduct all planned CDRs for this fiscal year was its decision 
to reduce the number of reviews it processed pending fiscal 
year 2003 funding decisions. This is something the Commissioner 
mentioned earlier this morning. Other factors related to the 
workload capacity is lower priority given to processing CDRs 
relative to processing initial claims. In the coming years, a 
CDR backlog could grow due to an expected increase in the 
number of initial claims, as well as potential difficulties 
with replacing disability examiners who leave through 
retirement or attrition. Again, some things that we talked 
about earlier this morning.
    The second point I would like to make is a very simple and 
short point, but I think it is an important one. You got a 
sense of that through the Commissioner's testimony earlier 
today, and that is that the SSA does take the CDR process very 
seriously. It has, for example, refined its statistical 
formulas for determining what review method to use, a costly 
full medical review or a relatively inexpensive mailer. It has 
done a number of other things to increase the cost 
effectiveness of the CDR processes; so it does take it 
seriously. My third point is that there are opportunities to 
further improve the cost effectiveness of the CDR process. For 
example, SSA's process for deciding when beneficiaries should 
undergo a CDR is not based on a systematic quantitative 
evaluation of available information. As a result, some CDRs may 
not be performed at the optimal time. Additionally, SSA's 
process for determining which method to use in conducting a 
CDR--a mailer or full medical review--is not always based on 
the best available information. For example, SSA requires a 
full medical review for all beneficiaries who, upon entering 
the program, are expected to medically improve even if the 
current information on certain of those beneficiaries indicates 
that improvement is unlikely and that CDR would be better 
handled through a much less expensive mailer. Finally, while 
the exact magnitude of the problem is unknown, many of the 
State DDSs reported that missing or incomplete data hinders 
their ability to determine whether medical improvement has 
occurred. This, of course, makes it difficult to cease benefits 
to individuals who no longer meet eligible standards.
    My fourth and final point, which is more of an observation 
than anything else, has to do with the relationship of the CDR 
process to the Ticket to Work Program, a program that this 
Subcommittee is very familiar with. My observation is this: SSA 
delays the issuance of tickets to those beneficiaries expected 
to medically improve based on the rationale that they will 
regain their capacity to work without SSA assistance. However, 
this rationale is not very well supported by actual program 
experience. In fact, the majority of these beneficiaries are 
not found to have medically improved upon the completion of a 
CDR. Now, the consequences of this are that some the 
beneficiaries who might benefit from return-to-work assistance 
have to wait up to 3 years to access services to the ticket 
program. The SSA has acknowledged the need to reexamine this 
policy and is in the process of doing so. In reexamining the 
policy, SSA will have to consider alternatives to better 
balance the agency's program stewardship and return-to-work 
goals. That concludes my summary statement. I will be happy to 
answer questions at the appropriate time. Actually, I should 
have mentioned at the outset, that my statement is based on a 
report that we have done for you, Mr. Chairman, and it is going 
to be released today. A little bit of marketing at the end 
here. Thank you.
    [The prepared statement of Mr. Robertson follows:]

 Statement of Robert E. Robertson, Director, Education, Workforce, and 
         Income Security Issues, U.S. General Accounting Office

    Mr. Chairman and Members of the Subcommittee:
    I am pleased to be here today to discuss SSA's continuing 
disability review (CDR) process. The Disability Insurance (DI) and 
Supplemental Security Income (SSI) programs are the largest federal 
income programs for disabled individuals, paying about $86 billion to 
about 10 million disabled beneficiaries in 2002. These programs have 
been growing in recent years and are poised to grow further as the baby 
boom generation ages. To help ensure that only eligible beneficiaries 
remain on the rolls, the Social Security Administration (SSA) is 
required by law to conduct CDRs for all DI beneficiaries and some SSI 
disability recipients to determine whether they continue to meet the 
disability requirements of the law. In addition, to assist 
beneficiaries who want to return to work and leave the disability 
rolls, SSA began implementing the Ticket to Work and Self-Sufficiency 
Program in 2002. Under this program, beneficiaries are issued a 
``ticket,'' or voucher, which they can use to obtain vocational 
rehabilitation, employment, or other return-to-work services from an 
approved provider of their choice.
    Both the CDR process and the ticket program are key aspects of 
SSA's effort to improve its service to the public. SSA's Fiscal Year 
2004 Service Delivery Budget Plan highlights the importance of CDRs in 
achieving the agency's program stewardship objective of improving 
payment accuracy in its disability programs. In particular, the plan 
discusses the cost-effectiveness of CDRs and the need to keep current 
with the CDR workload. The plan also notes SSA's efforts to fully 
implement the ticket to work program in order to achieve its objective 
of increasing the number of people with disabilities who obtain 
employment.
    My testimony today focuses on the results of our recently completed 
review of SSA's CDR process and of the relationship of this process to 
determinations of beneficiary eligibility for assistance under the 
ticket program. (In a report issued today,[1] we discuss the 
results of our review in greater detail and provide several 
recommendations to the Commissioner of SSA for improving CDR cost-
effectiveness.) More specifically, this testimony discusses: (1) the 
impact that expiration of targeted funding for CDR processing could 
have on SSA's ability to remain current with the CDR caseload, and the 
level of funding that would be needed over the next 5 years to keep the 
workload current; (2) opportunities that exist for SSA to improve the 
cost-effectiveness of the CDR process; and (3) whether SSA's rationale 
for delaying return-to-work and vocational services under the ticket 
program for beneficiaries who are expected to medically improve is 
supported by program experience. To examine these issues, we reviewed 
SSA documents, including the agency's budget request and estimates of 
the cost and savings from conducting CDRs. Also, we surveyed 52 
Disability Determination Services (DDS) [2] directors to 
assess the potential effect of the expiration of CDR-targeted funding 
on DDS operations. Moreover, we analyzed SSA data on CDR outcomes, 
reviewed SSA-contracted studies of the CDR process, examined 
legislation, regulations, and SSA policy guidance related to CDRs and 
the ticket program, and interviewed SSA officials.
---------------------------------------------------------------------------
    \[1]\ U.S. General Accounting Office, Social Security Disability: 
Reviews of Beneficiaries' Disability Status Require Continued Attention 
to Achieve Timeliness and Cost-Effectiveness, GAO-03-662 (Washington, 
D.C.: July 24, 2003).
    \[2]\ SSA contracts with state DDS agencies to determine whether 
applicants are disabled.
---------------------------------------------------------------------------
    In summary, with the expiration of CDR-targeted funds at the end of 
fiscal year 2002, SSA is at risk of generating another CDR backlog. As 
of March 2003, SSA was on track to complete about 200,000 less CDRs 
than needed to keep its workload current. The expected shortfall is 
attributable to several factors, including SSA's decision to reduce the 
number of CDRs it processed pending fiscal year 2003 funding decisions. 
Based on SSA's cost and workload projections, it would cost a total of 
about $4 billion or more over the next 5 years to complete its CDR 
workload. Other factors that could affect SSA's ability to keep current 
with its CDR workload include DDS staffing difficulties and the lower 
priority given to CDRs relative to initial claims. If another large CDR 
backlog is generated, SSA is at risk of foregoing cost savings and 
compromising the integrity of its disability programs.
    While SSA has taken a number of actions over the past decade to 
significantly improve the cost-effectiveness of the CDR process, 
opportunities remain for SSA to better use information in deciding when 
beneficiaries should undergo a CDR and which method to use in 
conducting a CDR--a mailed-out questionnaire (``mailer'') or a full 
medical review. For example, SSA has not fully studied and pursued the 
use of medical treatment data on beneficiaries available from the 
Medicare and Medicaid programs despite the potential of these data to 
improve SSA's decisions regarding whether to use a mailer or full 
medical review to complete a CDR. Also, SSA continues to be hampered in 
its CDR decisions by missing or incomplete information on 
beneficiaries' case history.
    In addition, SSA's rationale for delaying issuance of a ticket to 
beneficiaries expected to medically improve, based on the premise that 
they will regain their capacity to return to work without SSA 
assistance, is not well-supported by program experience. As a result, 
some beneficiaries who might otherwise benefit from potentially 
valuable return-to-work assistance have to wait up to 3 years to access 
services through the ticket program. As SSA reexamines this policy, it 
will need to consider alternatives that better balance the agency's 
program stewardship and return-to-work goals.
Background
    The DI and SSI programs are the two largest federal programs 
providing cash assistance to people with disabilities.[3] In 
addition to cash assistance, DI beneficiaries receive Medicare coverage 
after they have received cash benefits for 24 months, and in most 
cases, receipt of cash benefits makes SSI beneficiaries eligible for 
Medicaid benefits. In 2002, SSA paid about $60 billion to 5.5 million 
disabled workers.[4] In addition, about 5.5 million people 
with disabilities received about $26 billion in federal SSI cash 
benefits.[5]
---------------------------------------------------------------------------
    \[3]\ The DI and SSI programs use the same statutory definition of 
disability. To meet the definition of disability under these programs, 
an individual must have a medically determinable physical or mental 
impairment that (1) has lasted or is expected to last at least 1 year 
or to result in death and (2) prevents the individual from engaging in 
substantial gainful activity (SGA). Individuals are considered to be 
engaged in SGA if they have countable earnings above a certain dollar 
level. For 2003, SSA considers countable earnings above $800 a month to 
be substantial gainful activity for persons who are not blind and above 
$1,330 a month for persons who are blind.
    \[4]\ Included among these 5.5 million beneficiaries are about 1.2 
million beneficiaries who were dually eligible for SSI benefits because 
of the low level of their income and resources. In 2002, the DI program 
also paid about $6 billion in cash benefits to about 1.7 million 
spouses and children of disabled workers.
    \[5]\ About 3.9 million of these individuals were working age 
adults aged 18 to 64.
---------------------------------------------------------------------------
CDR Process
    At the time beneficiaries enter the DI or SSI programs, DDSs 
determine when beneficiaries will be due for CDRs on the basis of their 
potential for medical improvement. Based on SSA regulations, DDSs 
classify individuals into one of three medical improvement categories, 
called ``diary categories:'' ``medical improvement expected'' (MIE), 
``medical improvement possible'' (MIP), or ``medical improvement not 
expected'' (MINE). Based on the diary categories, DDSs select a ``diary 
date'' for each beneficiary, which is the date that the beneficiary is 
scheduled to have a CDR. The diary date is generally within 6 to 18 
months if the beneficiary is classified as MIE; [6] once 
every 3 years if classified as MIP; and once every 5 to 7 years if 
classified as MINE. Upon completion of a CDR, DDSs reassess the medical 
improvement potential of beneficiaries who remain eligible for benefits 
to determine the most appropriate medical improvement category and time 
frame for conducting the next CDR. Beneficiaries classified as MIE are 
not eligible to receive Ticket to Work services until either the 
completion of their first CDR, or until they have received benefits for 
3 years.
---------------------------------------------------------------------------
    \[6]\ Although SSA's policy guidance indicates that CDRs for MIE 
beneficiaries should generally be scheduled at intervals of 6 to 18 
months, the guidance provides DDS personnel with flexibility to 
establish a diary date for any time period between 6 and 36 months.
---------------------------------------------------------------------------
    While SSA uses diary categories to determine the timing of CDRs, it 
has developed another method, called profiling, to determine the most 
cost-effective method of conducting a CDR. Profiling involves the 
application of statistical formulas that use data on beneficiary 
characteristics contained in SSA's computerized records--such as age, 
impairment type, length of time on disability rolls, previous CDR 
activity, and reported earnings--to predict the likelihood of medical 
improvement and, therefore, of benefit cessation. Through its profiling 
formulas, SSA assigns a ``score'' to beneficiaries indicating whether 
there is a high, medium, or low likelihood of medical improvement. In 
general, beneficiaries with a high score are referred for full medical 
reviews--an in-depth assessment of a beneficiaries' medical and 
vocational status--while beneficiaries with lower scores are, at least 
initially, sent a questionnaire, known as a ``mailer.'' [7] 
The mailer consists of a short list of questions asking beneficiaries 
to report information on their medical conditions, treatments, and work 
activities. If beneficiaries' responses to a mailer indicate possible 
improvement in medical condition or vocational status, SSA may refer 
these individuals for a full medical review. However, in most cases, 
SSA decides that a full medical review is not warranted and that 
benefits should be continued.
---------------------------------------------------------------------------
    \[7]\ While SSA uses mailers primarily for beneficiaries with low 
profile scores, the agency has recently expanded its use of mailers to 
some beneficiaries with medium and high profile scores.
---------------------------------------------------------------------------
    In contrast to mailers, full medical reviews are labor intensive 
and expensive. These reviews generally involve an interview of 
beneficiaries at SSA field offices, a review of beneficiaries' medical 
records by DDS personnel, and, if necessary, medical or psychological 
examinations with consulting physicians outside the DDS.[8]
---------------------------------------------------------------------------
    \[8]\ SSA field offices perform the initial processing of CDRs to 
determine if beneficiaries meet nonmedical requirements. They then 
transfer the cases to DDSs for medical determinations.
---------------------------------------------------------------------------
CDR Backlog
    As of fiscal year 1996, about 4.3 million CDRs were due or overdue. 
In response, the Congress, in the Contract with America Advancement Act 
of 1996 (Pub. L. No. 104-121), authorized a total of about $4.1 billion 
to fund a 7-year plan to eliminate the CDR backlog. In addition, the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(Pub. L. No. 104-193) required SSA to conduct CDRs on several 
beneficiary groups, such as low birth weight babies and authorized an 
additional $250 million for CDRs in fiscal years 1997 and 1998. The 
actual amount appropriated during the 7-year period, about $3.68 
billion, was less than the amount authorized in 1996.
    SSA reported to the Congress in its fiscal year 2000 CDR report 
that in that year, the agency became current with the backlog of CDRs 
for all DI beneficiaries. SSA officials indicated to us that although 
they are in the midst of preparing the final statistics for its fiscal 
year 2002 CDR report, it became current with the backlog of CDRs for 
all SSI beneficiaries by the end of fiscal year 2002.

CDR Cost-Effectiveness
    Since first implementing the profiling and mailer processes in the 
early 1990s, SSA has continued its efforts to improve the cost-
effectiveness of the CDR process. Most notably, SSA has refined the 
statistical formulas used in profiling to identify which method--mailer 
or full medical review--should be used to conduct the CDR. According to 
SSA officials and studies of the profiling process, these improvements 
have led to some beneficiaries receiving a mailer who otherwise would 
have received a full medical review, thereby allowing SSA to reduce the 
overall cost of the CDR process. Conversely, by improving SSA's ability 
to identify beneficiaries who are likely to medically improve, these 
refinements have also helped the agency better ensure that it is 
conducting full medical reviews--and ceasing benefits--when 
appropriate.[9] In addition to improvements in its profiling 
process, SSA has also implemented other CDR process improvements such 
as introducing an automated review of mailers.
---------------------------------------------------------------------------
    \[9]\ According to SSA's study of its profiling model, the agency's 
recent improvements in statistical profiling have resulted in hundreds 
of millions of dollars in annual savings from being better able to 
identify and cease the benefits of individuals who have a relatively 
high likelihood of medical improvement.
---------------------------------------------------------------------------
End of Targeted Funding and Other Issues Could Contribute to Another 
        Backlog, Threatening Cost Savings
    In the midst of its first year following the cessation of CDR-
targeted funds, SSA appears to be developing another CDR backlog. By 
the end of fiscal year 2003, on the basis of SSA's current projections, 
the agency will likely face a backlog of 200,000 CDRs. SSA attributes 
the mounting backlog to the management decisions it made at the 
beginning of the fiscal year during budget deliberations, as well as 
the need to process a larger than expected workload of initial 
disability applications. SSA has estimated that it will need a total of 
about $4 billion to process its projected CDR workload over the next 5 
years, although an updated estimate, expected to be available later 
this year, will likely show a higher cost as the disability rolls 
continue to expand. Aside from funding issues, DDSs reported that 
challenges associated with processing initial disability applications 
and maintaining enough disability examiners could jeopardize their 
ability to stay current with the CDR workload over the next few years. 
If another large CDR backlog is generated, SSA is at risk of foregoing 
cost-savings, thereby compromising the integrity of its disability 
programs.

CDR Backlog Likely to Reemerge
    At the end of March 2003--six months after the expiration of 
separate authorized CDR funding--SSA was on a pace to generate a CDR 
backlog by the end of the current fiscal year. In its fiscal year 2003 
budget justification, SSA indicated that it needed to process about 
1.38 million CDRs during fiscal year 2003 to stay current with its CDR 
workload. Yet, SSA expects to process a total of 1.18 million CDRs, if 
not more, by the end of the fiscal year.[10] By the end of 
March 2003--the midpoint of the fiscal year--SSA had processed about 
539,000 CDRs. To reach the 1.18 million end-year revised total, SSA 
will need to process CDRs during the second half of the fiscal year at 
a pace similar to that achieved during the first 6 months of the fiscal 
year.[11] Nevertheless, while it appears that SSA should be 
able to achieve this outcome, by the end of fiscal year 2003, it will 
have accumulated a backlog of 200,000 CDRs. However, according to SSA 
officials, most of the backlogged claims will consist of SSI adult 
CDRs, which lead to lower long-term savings than DI CDRs and do not 
have the same stringent statutory requirements that apply to DI CDRs.
---------------------------------------------------------------------------
    \[10]\ On May 14, 2003, SSA released its revised final performance 
plan for fiscal year 2003. The plan projects that SSA will process 
1,129,000 CDRs during fiscal year 2003. SSA also expects to process an 
additional 20,000 CDRs initiated for reasons other than maturation of 
the scheduled diary date (e.g., a third party reports that the 
individual may no longer be disabled).
    \[11]\ SSA indicated that 710,000 CDRs had been processed nearing 
the end of April 2003. This year-to-date completion rate positions SSA 
to complete all 1.18 million CDRs.
---------------------------------------------------------------------------
    SSA officials attributed the delay in obtaining a fiscal year 2003 
budget as the main factor in hampering their ability to conduct all of 
the planned CDRs for the fiscal year.[12] Because of 
concerns that the fiscal year 2003 appropriations would not support CDR 
activity at the fiscal year 2002 level, SSA reduced the number of CDRs 
it sent to DDS officials for processing as well as froze DDS hiring and 
overtime pay. SSA officials recognize that a hiring freeze can have a 
longer-term impact because it disrupts the normal replacement of 
disability examiners lost through attrition. SSA officials explained 
that disability examiners generally do not increase overall 
productivity when first hired and could, in fact, initially decrease 
productivity because experienced examiners may devote some of their 
time to training these new examiners. SSA officials noted that it 
generally takes 1 to 2 years before disability examiners become 
proficient.
---------------------------------------------------------------------------
    \[12]\ The federal government had operated under a series of 
continuing resolutions from the beginning of the fiscal year through 
February 20, 2003. A continuing resolution is legislation that may be 
enacted to provide budget authority for agencies to continue in 
operation when the Congress and the President have not completed action 
on appropriations by the beginning of the fiscal year.
---------------------------------------------------------------------------
    SSA's management strategy to cut back on the number of CDRs it 
processed during the delays in the fiscal year 2003 budget process 
reflects the agency's higher priority for processing of initial 
applications for disability benefits. Specifically, while SSA cut back 
on the number of CDRs, no similar action was reported with DI and SSI 
initial eligibility decision making. SSA officials indicated that the 
application rate for disability benefits increased during the beginning 
months of fiscal year 2003, further affecting its ability to stay 
current with CDRs. SSA officials told us that although SSA sets a goal 
to process all CDRs and initial applications, initial eligibility 
decisions are given highest priority due to political pressure for 
getting disability benefits to people in a timely manner. DDSs, 
likewise, place a greater priority on processing initial applications. 
Three-fourths (75 percent) of directors said processing initial 
disability claims were a top priority relative to CDRs, whereas far 
fewer directors (23 percent) said that processing initial claims and 
CDRs were equal priorities.
    SSA has recently proposed an approach to avoid this competition 
between CDRs and initial claims. In SSA's fiscal year 2004 budget 
request, the Commissioner requested that almost $1.5 billion be 
earmarked for three activities that could provide a return on 
investment--CDRs, SSI nondisability redeterminations,[13] 
and overpayment workloads. While we did not review the sufficiency of 
the level of this request, the earmarking of funds for activities such 
as CDRs could help SSA keep current with these activities. For example, 
if the number of initial applications for disability benefits continues 
to increase over the next several years, holding apart the necessary 
funds for CDRs could be a prudent measure.
---------------------------------------------------------------------------
    \[13]\ To determine whether beneficiaries remain financially 
eligible for SSI benefits after the initial assessment, SSA conducts 
nondisability redeterminations to verify eligibility factors such as 
income, resources, and living arrangements. Beneficiaries are reviewed 
at least once every 6 years, but reviews may be more frequent if SSA 
determines that changes in eligibility are likely.
---------------------------------------------------------------------------
    SSA has indicated in its annual CDR reports, as well as in its 
performance and accountability report, that its ability to complete all 
CDRs as they become due in the future is dependent upon adequate 
funding. In 2000, SSA estimated that a total of about $4 billion was 
needed to process the CDR workload during the 5-year period between 
fiscal year 2004 and 2008 (see table 1). SSA based these ``rough 
estimates'' on cost and workload projections available at that time. 
SSA expects to release updated workload and cost projections in the 
summer of 2003. The updated numbers for the fiscal year 2004 to 2008 
period will likely be higher than the past estimate for this time 
period because of the recent growth in the disability rolls.

         Table 1: Estimated CDR Activities, Fiscal Year 2004-08
------------------------------------------------------------------------
                     CDRs to be
                  processed during     CDR expenses     Cessations a (in
  Fiscal year         year (in         (dollars in         thousands)
                     thousands)         millions)
------------------------------------------------------------------------
2004                         1,637               $716                 61
------------------------------------------------------------------------
2005                         1,682               $729                 59
------------------------------------------------------------------------
2006                         1,632               $787                 61
------------------------------------------------------------------------
2007                         1,769               $896                 65
------------------------------------------------------------------------
2008                         1,793               $857                 62
------------------------------------------------------------------------
Source: SSA's Office of the Chief Actuary, May 2000 estimates.
a Estimated ultimate cessations after all appeals.

DDS Directors Expressed Concerns about Their Ability to Meet Future CDR 
        Workload
    Several of the issues that have contributed to the pending fiscal 
year 2003 CDR backlog will also appear, in the views of DDS directors, 
in the future. First, nearly all directors expect the number of initial 
disability claims to exceed those in the past. Most DDS directors have 
a strategy in place to deal with this rising initial claims workload, 
but all expect increased initial claims to negatively affect their 
ability to process their CDR workload (see table 2). Second, most 
directors expect to experience difficulties in maintaining an adequate 
level of staffing, caused by many examiners leaving and difficulties 
finding replacements. Most DDSs who anticipate facing these staffing 
challenges reported that they have strategies in place to manage them. 
Nevertheless, nearly all believe that these staffing issues will 
negatively impact their ability to stay current with their expected CDR 
workloads.

 Table 2: DDS Directors' Reported Likelihood, If Any, of Experiencing an
 Event That Jeopardizes Meeting CDR Workload During Fiscal Year 2004 and
                                  2005
------------------------------------------------------------------------
                           Numbers in percent
-------------------------------------------------------------------------
                                    Not at all    Somewhat
              Event                   likely       likely    Very likely
------------------------------------------------------------------------
Higher number of initial                     2           35           63
 disability claims than in past
 (n=51)
------------------------------------------------------------------------
State budget shortfalls causing             25           29           47
 constraints (e.g., personnel
 restrictions) (n=49)
------------------------------------------------------------------------
Difficulties hiring disability              28           31           41
 examiners (n=51)
------------------------------------------------------------------------
High turnover of disability                 35           51           14
 examiners due to reasons other
 than retirement (n=51)
------------------------------------------------------------------------
Large number of disability                  39        39 22
 examiner retirements (n=51)
------------------------------------------------------------------------
Source: GAO survey of DDS directors, February 2003.

Cost Savings and Program Integrity Could Be Jeopardized If CDR Backlog 
        Grows Again
    To the extent that funding, staffing, and other issues limit SSA's 
ability to process its CDR workload, the full realization of CDR cost 
savings could be in jeopardy. SSA maintains that the return on 
investment from CDR activities is high. In fact, SSA's most recent 
annual CDR report to the Congress summarizes its average CDR cost-
effectiveness during fiscal year 1996 to 2000 at about $11 returned for 
every $1 spent on CDRs.[14] SSA has noted, however, that 
such rates of return are unlikely to be maintained because as SSA works 
down the backlog and beneficiaries come up for their second and third 
CDRs, the agency does not expect as many cessations and, therefore, the 
cost-benefit ratio could decline. Nevertheless, since the Congress' 
provision of dedicated CDR funding starting in fiscal year 1996, SSA 
has reported completing millions of CDRs that will lead to long-term 
savings ranging from about $2 billion to $5.2 billion.[15]
---------------------------------------------------------------------------
    \[14]\ SSA calculated its annual cost-effectiveness ratios by 
dividing the estimated present value of total lifetime benefits saved 
with respect to CDR cessations (including Old Age, Survivors, and 
Disability Insurance, SSI, Medicare, and Medicaid savings) by the 
dollar amount spent on periodic CDRs in a given year. SSA points out 
that the ratios should be considered an approximation because, for 
example, costs do not include the costs of appeals processed after the 
end of a given year. However, SSA officials also noted that the 
administrative costs for CDRs in a given year include the costs of 
appeals of CDR cessations in prior years which are processed in that 
year.
    \[15]\ Although we did not independently verify these savings 
estimates, we discussed how SSA made its calculations and believe its 
approach is reasonable. To estimate long-term savings, SSA calculated 
the value of the reduction in both cash and medical insurance coverage 
that otherwise would have been provided to individuals whose benefits 
were ceased following the completion of a CDR. SSA factored in the 
effect of appealed cases: SSA did not count savings from those 
beneficiaries who were initially found ineligible for continued 
benefits but whose cessations were later successfully appealed. 
Moreover, SSA officials told us that to estimate savings over 10 years, 
they took into account the likelihood that some individuals whose 
benefits were ceased through a CDR would likely have left the 
disability rolls through death, retirement, and other reasons 
pertaining to eligibility.
---------------------------------------------------------------------------
    In addition to a favorable return on investment, SSA's CDR 
activities help protect DI and SSI program integrity. Keeping current 
with the CDR workload can help build and retain public confidence that 
only qualified individuals are receiving disability benefits. In 
addition, it helps protect the programs' fiscal integrity and allows 
SSA to meet its financial stewardship responsibilities. To the extent 
the agency falls behind in conducting CDRs, a CDR backlog undermines 
these positive outcomes.

Further Opportunities Exist for SSA to Improve CDR Cost-Effectiveness
    While SSA has taken a number of actions over the past decade to 
significantly improve the cost-effectiveness of the CDR process, 
opportunities remain for SSA to better use program information in CDR 
decision making. While DDS personnel study available information on 
beneficiaries to decide when they should undergo a CDR, they do not 
conduct a systematic analysis of this information. As a result, CDRs 
may not be conducted at the optimal time. Also, SSA's process for 
determining what method to use for a CDR--mailer or full medical 
review--is not always based on the best information available. In 
addition, SSA has not fully studied and pursued the use of medical 
treatment data on beneficiaries available from the Medicare and 
Medicaid programs despite the potential of these data to improve SSA's 
selection of the most appropriate CDR method. Finally, SSA continues to 
be hampered in its CDR decisions by missing or incomplete information 
on beneficiaries' case history, which may prevent SSA from ceasing 
benefits for some individuals who no longer meet eligibility standards.

Decisions on Timing of CDRs Are Not Based on Systematic Analysis of 
        Available Information
    While DDS personnel review available information on beneficiaries 
to establish a diary date indicating when beneficiaries should undergo 
a CDR, they do not conduct a systematic analysis of this information. 
Diary decisions are inherently complex because DDS personnel must 
assess a beneficiary's likelihood of medical improvement and how such 
medical improvement will affect that person's ability to work. Based on 
these judgments, beneficiaries are placed in a diary category 
indicating either that medical improvement is ``expected,'' 
``possible,'' or ``not expected.'' DDS personnel then assign a diary 
date that corresponds with the diary category; the more likely a 
beneficiary is to medically improve, the earlier the diary date.
    Although SSA has established guidance for DDS personnel on diary 
date decisions, SSA officials told us that, ultimately, such decisions 
are difficult to make and are based on the judgment of the DDS staff. 
An SSA contracted study of the diary process found that this process is 
often subjective and that the setting of diary categories and dates is 
``almost an afterthought'' once the case file is developed and a 
disability determination has been made. SSA's study identified 
shortcomings in the diary date process. For example, most beneficiaries 
assigned to the diary category indicating they are expected to 
medically improve are not found to have improved when a CDR is 
conducted. Our analysis of SSA data indicates that between 1998 and 
2002, only about 5 percent of beneficiaries in the MIE category 
[16] were found to have medically improved to the point of 
being able to work again.
---------------------------------------------------------------------------
    \[16]\ This figure includes all MIE beneficiaries--those who have 
already undergone a CDR as well as those who have not yet had a CDR.
---------------------------------------------------------------------------
    SSA's diary process study indicated that diary predictions of 
medical improvement could be substantially improved through the use of 
statistical modeling techniques similar to those used in the CDR 
profiling process that SSA uses to determine whether a mailer or a full 
medical review is needed. The study noted that this systematic, 
quantitative approach to assigning diary categories and dates would 
likely enhance disability program efficiency by reducing the number of 
CDRs that do not result in benefit cessation.[17] Another 
benefit derived from a more systematic approach to diary 
categorization, according to SSA's study, is improved integrity of the 
diary process resulting from more timely CDRs and from actual medical 
improvement rates that more closely correlate with the diary categories 
that SSA assigns to beneficiaries. For example, SSA's study indicates 
that the actual medical improvement rate for beneficiaries assigned to 
the MIE diary category would increase to about 29 percent under this 
improved process.
---------------------------------------------------------------------------
    \[17]\ The study recommended that DDSs continue to assign diary 
categories because this process is useful for indicating the severity 
of an impairment. The statistical formula would then factor in this DDS 
diary category in developing an ultimate diary determination.
---------------------------------------------------------------------------
    SSA officials told us that, in response to the diary study 
recommendations, the agency has begun to revise its diary process to 
introduce a more systematic approach to selecting a CDR date. In 
particular, SSA is developing a process that will use beneficiary data 
collected at the time of benefit application, such as impairment type 
and age, in a statistical formula to help determine when a CDR should 
be conducted. While this change is likely to result in some 
improvements in the timing of CDRs, the fundamental diary 
categorization process used by DDSs will remain the same. Despite the 
study's findings and recommendations, SSA officials told us that they 
will not replace SSA's current process for assigning diary categories 
with a statistical process because of what they believe would be 
significant costs involved in changing this system across DDSs. 
However, SSA's study acknowledged the potential cost of implementing a 
new process in DDSs, and instead recommended that a revised diary 
process be centrally administered in order to avoid such high costs. 
The officials also said that such fundamental changes in the diary 
process would require a change in regulations.

SSA's Process for Determining CDR Method Not Always Based on Best 
        Information Available
    SSA's process for determining what method to use for a CDR is not 
always based on the best information available. In the 1990s, SSA 
introduced a system that develops a ``profile score'' for each 
beneficiary, which indicates the beneficiary's likelihood for medical 
improvement based on a statistical analysis of beneficiary data. The 
purpose of the profile score is to allow SSA to determine whether it is 
more cost-effective to send a mailer or to conduct a full medical 
review. SSA's own contracted studies indicate that profiling results 
provide the best available indication of whether a beneficiary is 
likely to medically improve. Nevertheless, for some beneficiaries, SSA 
continues to use the diary category that was judgmentally assigned by 
DDS personnel as the basis for their decision about whether to senda 
mailer or conduct a full medical review.
    SSA requires a full medical review for all beneficiaries whose 
diary category indicates that medical improvement is expected (MIE) and 
who have not yet undergone a CDR.[18] This is the case even 
when the profile score indicates that improvement is unlikely. In 
fiscal year 2002, about 14 percent of beneficiaries in the MIE diary 
category were assigned to the ``low'' profile category, which indicates 
that medical improvement is not likely. SSA officials acknowledged that 
their policy requiring full medical reviews for all beneficiaries in 
this diary category departs from their usual practice of using mailers 
for beneficiaries in the low profile category, but they believe that 
this policy is reasonable given that these beneficiaries are more 
likely to medically improve than those assigned to other diary 
categories. However, SSA's data from 1998 to 2002 shows that most 
beneficiaries in this category--about 94 percent--do not medically 
improve to the point of being able to work.
---------------------------------------------------------------------------
    \[18]\ SSA applies a different process for MIE beneficiaries who 
have undergone one or more CDRs. These beneficiaries may receive a 
mailer if their CDR profile score indicates that they have a low 
likelihood of medical improvement. However, most beneficiaries assigned 
to the MIE category have not yet undergone a CDR; in fiscal year 2002, 
about 88 percent of all beneficiaries in this diary category had not 
had a CDR. When referring to MIE beneficiaries in the remainder of our 
discussion in this section, we are describing only those beneficiaries 
who have not yet had a CDR.
---------------------------------------------------------------------------
    For other CDR cases, SSA may require that a mailer be sent even 
when the profile score indicates that conducting a full medical review 
would be most cost-effective. Specifically, SSA's policy is to send a 
mailer to all beneficiaries who were assigned a diary category that 
indicates medical improvement is not expected (MINE),[19] 
even if the profile score indicates a relatively high likelihood of 
medical improvement.[20] Whether or not these beneficiaries 
subsequently receive a full medical review will be based on the results 
of their mailer. SSA officials said that MINE beneficiaries with a high 
profile score are more likely to receive a full medical review based on 
their mailer responses because SSA conducts a more stringent review of 
their mailer responses.[21] However, it is not clear that 
sending mailers to beneficiaries in the high profile category is the 
most cost-effective approach. SSA studies of the mailer process have 
indicated that, while this process is effective, it does not provide 
the same assurance as full medical reviews that medical improvement 
will be identified. As a result, the use of mailers for beneficiaries 
whose profile scores indicate a high likelihood of improvement could 
result in SSA identifying fewer benefit cessations.[22]
---------------------------------------------------------------------------
    \[19]\ SSA officials told us that while it is their intention to do 
mailers for all MINE beneficiaries, they may be unable in some years to 
send mailers to all of these beneficiaries if their overall funding for 
mailers is insufficient.
    \[20]\ In addition to sending mailers to high profile beneficiaries 
in the MINE diary category, SSA has recently begun to send mailers to 
some high profile beneficiaries in the MIP diary category.
    \[21]\ SSA also sends mailers to medium profile beneficiaries in 
the MINE diary category. However, SSA has some evidence from its 
profiling studies indicating that issuing mailers to medium profile 
beneficiaries is likely to be cost-effective. No similar evidence 
exists regarding high profile beneficiaries.
    \[22]\ Although a relatively small proportion of beneficiaries have 
their benefits ceased based on a CDR, the savings from these benefit 
cessations are substantial, as noted earlier in this testimony.
---------------------------------------------------------------------------
SSA Has Not Fully Studied and Pursued the Use of Medical Treatment Data 
        from Medicare and Medicaid
    SSA has not fully studied and pursued the use of medical treatment 
data on beneficiaries available from the Medicare and Medicaid programs 
despite the potential of these data to improve SSA's decisions 
regarding whether to use a mailer or full medical review to complete a 
CDR. In 2000, an SSA contracted study found that the use of Medicare 
data from the Center for Medicare and Medicaid Services (CMS)--such as 
data on hospital admissions and medical treatments--resulted in a 
significant improvement in SSA's ability to assess potential medical 
improvement through CDR profiling. Based on these results, SSA, in 
fiscal year 2003, implemented a process that uses CMS Medicare data in 
CDR profiling to determine if DI beneficiaries who are initially 
identified as candidates to receive a full medical review should 
instead receive mailers.[23] SSA expects that this will 
result in administrative savings due to the reduced number of full 
medical reviews the agency must conduct. SSA has also initiated a study 
to assess whether CMS Medicaid data can be used in the same way to 
decide if SSI beneficiaries, scheduled to receive full medical reviews, 
could instead be sent mailers.
---------------------------------------------------------------------------
    \[23]\ SSA is using CMS Medicare data to reassess the prospects of 
medical improvement for beneficiaries who, based on their initial CDR 
profiling results, are considered to have a high or medium likelihood 
of medical improvement. Typically, SSA would conduct full medical 
reviews for these beneficiaries. However, SSA's reassessment may 
indicate that some of these beneficiaries instead have a low likelihood 
of medical improvement and therefore should receive mailers.
---------------------------------------------------------------------------
    But SSA's efforts to obtain and use CMS Medicare or Medicaid data 
are incomplete because the data will only be used to reclassify full 
medical reviews to mailers but not to reclassify mailers to full 
medical reviews. SSA officials told us that they have no plans to 
pursue this additional use of the data because they believe their 
current profiling system is sufficient for identifying beneficiaries 
who have a low likelihood of medical improvement. While they agreed 
that the CMS data could potentially be useful for reclassifying mailers 
to full medical reviews, they noted that they would need to first study 
this particular use of the data and would need to develop another 
interagency agreement with CMS to authorize and obtain data for this 
purpose. Also, they said that any action to reclassify mailers to full 
medical reviews would require SSA to publish a Federal Register notice 
describing this action.
    SSA could potentially achieve substantial program savings from 
conducting additional full medical reviews in cases where CMS data 
indicate that beneficiaries originally identified as mailer candidates 
have a relatively high likelihood of medical improvement. Using CMS 
Medicare data for this purpose would be consistent with the results of 
an SSA study that recommended that these data be used whenever it 
improves the agency's ability to accurately predict medical 
improvement. For example, the study noted that the CMS data would be 
useful for enhancing SSA's profiling of beneficiaries with mental 
impairments, including those with a low likelihood of medical 
improvement for whom SSA would usually send a mailer. To the extent 
that CMS data improves SSA's ability to identify beneficiaries for full 
medical review, the program savings from reduced lifetime benefit 
payments to those beneficiaries whose benefits are ceased could easily 
exceed any increased administrative costs resulting from additional 
full medical reviews.

Missing or Incomplete Case Folders May Result in Fewer Benefit 
        Cessations
    SSA continues to be hampered in its CDR decisions by missing or 
incomplete information on beneficiaries' case history, which may 
prevent SSA from ceasing benefits for some individuals who no longer 
qualify for benefits. To cease benefits based on a CDR, SSA must 
determine if the beneficiary has improved by comparing information 
about the beneficiary's current condition to information from the 
agency's previous decision regarding the beneficiary's medical 
condition. This previous decision and the evidence supporting it are 
recorded by SSA and maintained in case folders that are usually stored 
in SSA records storage facilities. However, in conducting CDRs, DDSs 
sometimes have difficulty retrieving the case folders or the key 
medical evidence that is maintained in these folders.
    Without the information contained in case folders, DDSs cannot 
establish a comparison and, therefore, cannot determine if medical 
improvement has occurred. As a result, SSA is legally required to keep 
the beneficiary on the disability rolls even though the beneficiary may 
have been judged to no longer qualify for benefits had the DDS been 
able to establish a comparison. SSA's inability to cease benefits in 
cases where folders are missing or incomplete could result in a 
substantial cost to the federal government arising from continued 
payments of benefits--cash and medical--to people who no longer meet 
eligibility standards.[24]
---------------------------------------------------------------------------
    \[24]\ Missing or incomplete case folders may also result in 
additional administrative costs to the extent that SSA and DDS 
personnel spend time attempting to locate or reconstruct missing 
information.
---------------------------------------------------------------------------
    Our discussions with SSA officials, survey of DDSs, and review of 
SSA studies indicate that missing or incomplete folders present an 
obstacle to effective processing of CDRs. However, evidence on the 
extent of this problem is mixed. In responding to our survey on CDRs, 
about 72 percent of DDSs informed us that missing or incomplete 
information from case folders negatively impacted the quality or timing 
of CDR decisions to a moderate or great extent. Recent SSA studies have 
also identified problems with missing or incomplete case folders. For 
example, a study contracted by SSA identified problems with disability 
case folder management, such as misrouted or missing folders, and 
recommended that SSA ``analyze the reasons for missing folders and 
provide recommendations for process and systems improvements.''
    SSA headquarters officials we spoke with said that SSA has examined 
the incidence of missing or incomplete case folders and found that the 
problem is not as significant as claimed by DDSs. For example, in 
fiscal year 2000, SSA investigated allegations of substantial numbers 
of missing case folders in two DDSs. SSA officials told us that they 
were able to locate many of the folders that had been reported as 
missing. The officials attribute the discrepancy between their findings 
and the allegations of DDSs, in part, to staff shortages and workload 
pressures at field offices, which result in a failure of these offices 
to take further steps to look for folders. However, our survey of DDSs 
indicates that regardless of SSA's ability to locate many case folders 
upon further investigation, DDSs are still having difficulty obtaining 
the information they need to make CDR decisions.
    In a 2002 memorandum to SSA's Inspector General, the SSA 
Commissioner acknowledged that missing or incomplete case folders are a 
problem in the CDR process, but noted that the problem had been 
overstated. The memorandum cited data indicating a lost folder rate of 
about 0.5 percent for DI CDRs and about 3 percent for SSI 
CDRs.[25] The Commissioner also said that SSA had taken a 
number of actions in recent years to reduce the incidence of lost 
folders, such as issuance of additional guidance and training on this 
issue. In addition, the Commissioner noted that the agency was 
committed to building a system of electronic folders [26] 
that will ``virtually eliminate the incidences of lost folders.'' While 
electronic folders may be a key initiative in resolving SSA's problems 
with missing or incomplete case folders, SSA does not plan to fully 
implement this system until mid-2005.[27] In addition, these 
electronic folders will be established only for new disability cases; 
cases established prior to implementation of electronic folders will 
remain in a paper format. Therefore, problems in handling these older 
case folders will likely continue.
---------------------------------------------------------------------------
    \[25]\ Data are based on CDRs conducted from 1997 to 2001.
    \[26]\ SSA is currently developing a Disability Electronic Folder 
(EF) which, when completed, will be the repository of all information 
used in the disability process and should eventually replace the paper 
folders. As a result, processing components should not have to rely on 
a paper folder to take adjudicative actions. The EF is planned to be 
linked to all existing and future systems that support the disability 
case process. Information will be captured electronically during the 
case intake process and transmitted to the EF. Documentation and forms 
received from external sources (e.g., claimants, medical providers, 
third parties, etc.) will be converted to an electronic format (e.g., 
scanning and imaging) and added to the EF. Electronic documents 
received from medical providers will be indexed and added to the EF.
    \[27]\ SSA plans to begin rollout of electronic disability folders 
in January 2004 and plans to achieve national implementation over an 
18-month period.
---------------------------------------------------------------------------
SSA's Rationale for Postponing Return-to-Work Services to Some 
        Beneficiaries Is Not Well-Supported by Program Experience
    SSA's rationale for postponing issuance of a ticket to 
beneficiaries expected to medically improve--those who are assigned an 
MIE diary category--is not well-supported by program experience. In 
issuing regulations implementing the ticket act, SSA decided to 
postpone issuance of tickets to MIE beneficiaries who have not yet had 
a CDR based on the premise that these beneficiaries could be expected 
to regain their capacity to work without SSA assistance.[28] 
However, our analysis of SSA data indicates that the vast majority of 
MIE beneficiaries in the DI and SSI programs--about 94 percent--are not 
found to have medically improved upon completion of a CDR. As a result, 
some beneficiaries who might otherwise benefit from potentially 
valuable return-to-work assistance must wait up to 3 years to access 
services through the ticket program.[29]
---------------------------------------------------------------------------
    \[28]\ The Ticket to Work Act gave the SSA Commissioner authority 
to determine which disabled beneficiaries would be eligible to 
participate in the ticket program.
    \[29]\ SSA's policy on ticket eligibility states that any MIE 
beneficiary who has been on the disability rolls for at least 3 years 
will be eligible for a ticket, even if they have not yet had a CDR.
---------------------------------------------------------------------------
    Some disability advocacy groups and SSA's own Ticket to Work and 
Work Incentives Advisory Panel have questioned SSA's policy of delaying 
the issuance of tickets to MIE beneficiaries. In particular, they have 
commented that delaying tickets to all MIE beneficiaries when only a 
small proportion of these beneficiaries return to work underscores the 
inherent weakness of relying upon the MIE category as a basis for 
granting access to ticket services. In our prior work examining DI and 
SSI return-to-work policies, we noted that delays in the provision of 
vocational rehabilitation services can diminish the effectiveness of 
such return-to-work efforts.[30] Delaying services to some 
disability beneficiaries, therefore, undermines SSA's recent efforts to 
increase its emphasis on helping these beneficiaries return to work.
---------------------------------------------------------------------------
    \[30]\ U.S. General Accounting Office, SSA Disability: Program 
Redesign Necessary to Encourage Return to Work, GAO/HEHS-96-62 
(Washington, D.C.: Apr. 24, 1996).
---------------------------------------------------------------------------
    SSA officials told us that they are examining the current policy of 
issuing tickets to MIE beneficiaries to identify possible alternatives 
but they are not sure when this assessment will be 
completed.[31] However, they noted that their policy of 
limiting ticket issuance reflects congressional interests in striking 
an appropriate balance between program stewardship and encouraging 
return to work. Moreover, they explained that reversing the current 
policy would be costly. SSA's actuaries have estimated that issuing 
tickets to all MIE beneficiaries would cost an additional $822 million 
over 10 years because the ticket law prohibits SSA from conducting CDRs 
on beneficiaries who are using a ticket. Therefore, SSA would continue 
to pay DI and SSI benefits to some beneficiaries who might have 
otherwise had their benefits terminated.
---------------------------------------------------------------------------
    \[31]\ In May 2003, SSA announced in the Federal Register (Social 
Security Administration: Semiannual Regulatory Agenda, 68 Fed. Reg. 
31,240, May 27, 2003) that its long-term plans include a proposal to 
revise its rules to allow the immediate issuance of tickets to MIE 
beneficiaries. However, SSA's Associate Commissioner responsible for 
reviewing the ticket policy for MIEs told us that SSA has not made a 
final decision regarding any changes to the current policy and that the 
agency's review has not been completed.
---------------------------------------------------------------------------
    The drawbacks of SSA's current policy of postponing issuance of 
tickets to MIE beneficiaries and the potential costs associated with an 
alternative policy that would allow immediate issuance of tickets to 
these beneficiaries highlights the need for SSA, as part of its policy 
reexamination, to consider other policy alternatives that might better 
balance the agency's program stewardship and return-to-work objectives. 
While we did not conduct an in-depth assessment of potential 
alternatives to SSA's current policy,[32] our review of the 
CDR program and ticket provisions indicate that other options may exist 
that would achieve a better balance among SSA's program objectives. For 
example, SSA could develop a better means of identifying beneficiaries 
who are expected to medically improve. Earlier in this testimony, we 
noted that an SSA-contracted study of the diary process recommended 
implementation of an improved system that, among other things, would 
better identify MIE beneficiaries through statistical modeling of diary 
decisions. One effect of such improved identification, according to the 
study, would be to substantially reduce the proportion of beneficiaries 
with an MIE diary category. For instance, the study found that although 
SSA, over the past decade, has assigned the MIE diary category to about 
9 percent of DI beneficiaries, a statistically-based diary process 
would result in about 3 percent of DI beneficiaries being assigned to 
the MIE category. This would potentially minimize the number of 
beneficiaries initially denied tickets and may also provide more 
assurance, within and outside SSA, that such beneficiaries can truly be 
expected to improve.
---------------------------------------------------------------------------
    \[32]\ Given the recent implementation of the ticket program, 
insufficient data were available during the period of our review to 
conduct the analysis necessary to fully evaluate such options.
---------------------------------------------------------------------------
    SSA might also consider an option that provides for the issuance of 
tickets to all MIE beneficiaries while allowing CDRs to be conducted as 
scheduled for these beneficiaries. This policy would require a 
legislative change because, as we noted earlier, the Ticket to Work Act 
currently prohibits SSA from conducting a CDR while a person is using a 
ticket.[33] While the ticket program's prohibition on CDRs 
for ticket users was intended to remove a potential disincentive for 
beneficiaries to return to work, MIE beneficiaries currently get 
neither a ticket nor protection from a CDR. A policy allowing CDRs to 
be conducted on these beneficiaries while they use a ticket would at 
least give these beneficiaries immediate access to return-to-work 
services offered under the ticket program. In addition, SSA will still 
be able to achieve the cost savings that are derived from CDRs for 
beneficiaries that it considers most likely to medically improve.
---------------------------------------------------------------------------
    \[33]\ However, the prohibition on CDRs for all other ticket users 
could remain in effect.
---------------------------------------------------------------------------
Conclusions
    CDRs are a vital component of SSA's efforts to strengthen the 
integrity of its disability programs, an objective that will only 
increase in importance as the disability rolls continue to grow in the 
years ahead. As such, it is important that SSA pursue and implement 
initiatives to prevent the recurrence of CDR backlogs. SSA's recent 
proposal for targeted funding of program activities, including CDRs, 
that provide a return on investment as well as efforts to further 
improve the cost-effectiveness of the CDR process could positively 
contribute to SSA's efforts to improve service delivery. As SSA pursues 
such initiatives, it should also examine options for better balancing 
its need to conduct CDRs with its responsibility for providing return-
to-work assistance under the ticket to work program to beneficiaries 
who are expected to medically improve.
    Mr. Chairman, this concludes my prepared statement. I will be happy 
to respond to any questions you or other Members of the Subcommittee 
may have.

GAO Contacts and Staff Acknowledgements
    For information regarding this testimony, please contact Robert E. 
Robertson, Director, or Shelia Drake, Assistant Director, Education, 
Workforce, and Income Security at (202) 512-7215. Individuals making 
contributions to this testimony include Brett S. Fallavollita, Mark 
Trapani, Melinda L. Cordero, and Corinna A. Nicolaou.

                                 

    Chairman SHAW. Ms. Koontz.

STATEMENT OF LINDA D. KOONTZ, DIRECTOR, INFORMATION MANAGEMENT 
             ISSUES, U.S. GENERAL ACCOUNTING OFFICE

    Ms. KOONTZ. Mr. Chairman, Members of the Subcommittee, I am 
pleased to be here to participate in your hearing on the SSA's 
service delivery capability. My testimony focuses on a critical 
aspect of SSA's overall goal, its ongoing initiative to achieve 
an electronic disability claims process. As you know, one of 
SSA's most vital obligations is paying cash benefits to 
disabled individuals under the Disability Insurance and SSI 
Programs. In 2002, the agency paid approximately $86 billion to 
about 10 million disabled beneficiaries. Yet, over the years, 
it has been increasingly difficult for SSA to ensure an 
acceptable level of service, both in terms of quality and 
timeliness. During testimony before this Subcommittee in May 
2002, the Commissioner voiced concerns about the length of time 
that the current disability process can take and promised 
immediate improvements. Among these improvements, she announced 
plans to accelerate SSA's initiative to develop an electronic 
disability claims process by late January 2004 rather than late 
2005, as originally planned. The SSA's refocused project is 
known as the AeDib Initiative. At your request, we are 
currently assessing the strategy for automating the electronic 
disability claims process. My testimony will discuss our key 
observations to date regarding the initiative including the 
accelerated approach, the risks associated with this approach, 
and consultation with and support from key stakeholders. We 
plan to discuss more fully the results of our ongoing review in 
a subsequent report to you.
    The SSA's goals of achieving an electronic disability 
claims process represents an important positive direction 
toward more efficient delivery of disability payments to an 
increasing beneficiary population. In undertaking this 
initiative, SSA's immediate focus is on developing the 
capability to allow claimant information and large amounts of 
medical images files and other documents that are currently 
maintained in paper folders to be stored in electronic folders, 
and then accessed, viewed, and shared by the disability 
processing offices. Since announcing the accelerated 
initiative, SSA has made progress toward attaining this 
capability, including implementing initial automated claims 
intake functions in its field offices. Nonetheless, substantial 
work remains. The most crucial of which is developing document 
management and scanning and imaging capabilities that are 
fundamental to establishing the electronic folder. The SSA's 
current strategy, however, involves risks that could jeopardize 
its successful transition to an electronic disability system. A 
pilot test that would determine whether technology supporting 
the electronic folder will work as intended is not expected to 
be completed until late December at least, just one month 
before SSA plans to be begin implementing the electronic folder 
in the disability offices, leaving the agency little time to 
incorporate test results. The agency also does not currently 
plan to perform end-to-end testing to demonstrate prior to 
national implementation how successfully the multiple 
components will operate together to electronically process 
disability claims. Further adding to the system's vulnerability 
is that SSA has not yet performed a comprehensive assessment to 
identify and establish strategies for mitigating project risks 
that could result in cost schedule and performance shortfalls.
    Finally, SSA has not yet successfully resolved certain 
concerns among key disability stakeholders regarding the 
accelerated strategy. The SSA officials maintain that they have 
involved stakeholders in developing the system. They are 
including them in working groups and steering Committee 
meetings. However, State disability determination officials, in 
particular, have significant concerns about how the system is 
being developed and implemented, and do not believe that their 
offices have been effectively involved with SSA in making key 
decisions about the initiative. They further question whether 
the strategy will effectively support their business processes. 
The SSA's consultations with the medical community have also 
thus far been limited, and their representatives have concern 
about electronically submitting evidence for disability 
determinations. Until SSA can assure itself and stakeholders 
the concerns have been effectively considered and addressed, 
the agency risks not having full acceptance and use of this 
delivery tool. To summarize, in moving forward on an electronic 
disability process, SSA has undertaken a very positive and very 
necessary endeavor, and we commend the Commissioner's 
determination and proactive pursuit of this service delivery 
enhancement. Nonetheless, SSA's accelerated strategy may 
involve risks of delivering a system that may not sufficiently 
meet its needs. Given the importance of this project, it is 
essential that the agency satisfy itself that the electronic 
disability initiative will perform as intended before it is 
deployed nationwide. We will continue to monitor progress on 
this initiative as part of our ongoing review. That concludes 
my statement. I would be happy to answer questions at the 
appropriate time.
    [The prepared statement of Ms. Koontz follows:]

Statement of Linda D. Koontz, Director, Information Management Issues, 
                     U.S. General Accounting Office

    Mr. Chairman and Members of the Subcommittee:
    I am pleased to be here today to participate in your continuing 
dialogue on the Social Security Administration's (SSA) service-delivery 
capability. My testimony focuses on a critical aspect of SSA's overall 
goal--its ongoing initiative to achieve an electronic disability claims 
process. As you know, one of SSA's most vital obligations is paying 
cash benefits to disabled individuals under the Disability Insurance 
and Supplemental Security Income programs. In 2002, the agency paid 
approximately $86 billion to about 10 million disabled beneficiaries. 
Yet, over the years, it has become an increasing challenge for SSA to 
ensure an acceptable level of service--both in terms of quality and 
timeliness. This past January, in fact, we reported SSA's disability 
programs as high-risk.[1]
---------------------------------------------------------------------------
    \[1]\ U.S. General Accounting Office, Major Management Challenges 
and Program Risks: Social Security Administration, GAO-03-117 
(Washington, D.C.: January 2003).
---------------------------------------------------------------------------
    During testimony before this Subcommittee in May 2002, the 
Commissioner of Social Security voiced concerns about the length of 
time that the current disability process can take, and promised 
immediate improvements. Among these improvements, she announced plans 
to accelerate SSA's initiative to develop an electronic disability 
claims process by late January 2004 rather than late 2005 as initially 
planned. SSA's refocused project is known as the accelerated electronic 
disability initiative--AeDib.
    At your request, we are currently reviewing AeDib to assess SSA's 
strategy for developing the electronic disability claims process. My 
testimony will discuss our key observations to date regarding the 
initiative, including SSA's (1)accelerated approach for and progress 
toward completing the electronic disability system, (2) actions for 
ensuring the system's successful operations and protection against 
risks, and (3) consultation with and support from key stakeholders. We 
plan to discuss more fully the results of our ongoing review in a 
subsequent report to you.
    In conducting this work, we analyzed relevant documentation 
describing SSA's plans and strategies for developing and implementing 
the AeDib system and its progress in doing so. We reviewed technical 
documents pertaining to the system development and interviewed 
appropriate SSA officials to determine the extent to which the agency 
has followed its software development guidance. We supplemented our 
analysis with interviews of SSA officials in the Offices of disability 
Programs, Operations, Systems, and Hearings and Appeals. In addition, 
we visited SSA field offices in Delaware and Texas to observe 
disability claims intake operations and obtain staff perspectives on 
the AeDib project. We also conducted site visits at the Delaware, New 
York, Texas, and Wisconsin Disability Determination Services (DDS) 
offices to observe disability system pilot tests and discuss these 
offices' involvement in planning and implementing AeDib. Further, we 
surveyed staff in six other DDS offices, and interviewed 
representatives of state and SSA employees and the medical community. 
These included the National Council of Disability Determination 
Directors, the American Federation of Government Employees, and the 
American Health Information Management Association. We performed our 
work to date in accordance with generally accepted government auditing 
standards, from December 2002 through July of this year.

RESULTS IN BRIEF
    SSA's goal of achieving an electronic disability claims process 
represents an important, positive direction toward more efficient 
delivery of disability payments to an increasing beneficiary 
population. In undertaking AeDib, SSA's immediate focus is on 
developing the capability to allow claimant information and large 
volumes of medical images, files, and other documents that are 
currently maintained in paper folders to be stored in electronic 
folders, and then accessed, viewed, and shared by the disability 
processing offices. Since announcing the accelerated initiative in May 
2002, SSA has made progress toward attaining this capability, including 
implementing initial automated claims-intake functions in its field 
offices. Nonetheless, substantial work remains--the most crucial of 
which is developing document management and scanning and imaging 
capabilities that are fundamental to achieving the electronic folder.
    SSA's current strategy, however, involves risks that could 
jeopardize its successful transition to an electronic disability 
process. A pilot test that would determine whether technology 
supporting the electronic folder will work as intended, is not expected 
to be completed until at least December--just 1 month before SSA plans 
to begin implementing the electronic folder to the disability offices--
leaving the agency little time to incorporate test results. The agency 
also does not currently plan to perform end-to-end testing to 
demonstrate, prior to the national implementation, how successfully the 
multiple components will operate together to electronically process 
disability claims. Adding to the system's vulnerability is that SSA has 
not yet performed a comprehensive assessment to identify and establish 
strategies for mitigating project risks that could result in cost, 
schedule, and performance shortfalls.
    Finally, SSA has not yet successfully resolved certain concerns 
among key disability stakeholders regarding the AeDib strategy. SSA 
officials maintain that they have involved stakeholders in developing 
AeDib through including them in working groups and steering committee 
meetings. However, state DDSs in particular, have significant concerns 
about how the system is being developed and implemented, and do not 
believe that their offices have been effectively involved with SSA in 
making key decisions about the initiative; they question whether this 
strategy will effectively support their business processes. Further, 
although physicians and other providers of medical evidence are 
critical to the disability process, SSA's consultations with the 
medical community have thus far been limited and their representatives 
have concerns about electronically submitting evidence for disability 
determinations. Until SSA can ensure itself and all stakeholders that 
the concerns have been effectively considered and addressed--and the 
stakeholders view themselves as fully engaged in the initiative--the 
agency risks not having full acceptance and use of this vital service-
delivery tool.

BACKGROUND
    The Disability Insurance and Supplemental Security Income programs 
are the nation's largest providers of federal income assistance to 
disabled individuals, with SSA making payments of approximately $86 
billion to about 10 million beneficiaries in 2002. The process through 
which SSA approves or denies disability benefits is complex and 
involves multiple partners at both the state and federal levels in 
determining a claimant's eligibility. Within SSA, these include its 
1,300 field offices, which serve as the initial point of contact for 
individuals applying for benefits, and the Office of Hearings and 
Appeals, which, at the request of claimants, reconsiders SSA's 
decisions when benefits are denied.
    SSA also depends on 54 state Disability Determination Services 
(DDS) offices to help process claims under its disability insurance 
programs.[2] State DDSs provide crucial support to the 
initial disability claims process--one that accounts for most of SSA's 
workload--through their role in determining an individual's medical 
eligibility for disability benefits. DDSs make decisions regarding 
disability claims in accordance with federal regulations and policies; 
the federal government reimburses 100 percent of all DDS costs in 
making disability determination decisions. Physicians and other members 
of the medical community support the DDSs by providing the medical 
evidence to evaluate disability claims.
---------------------------------------------------------------------------
    \[2]\ DDSs are located in all 50 states, the District of Columbia, 
Guam, Puerto Rico, and the Virgin Islands.
---------------------------------------------------------------------------
    The process begins when individuals apply for disability benefits 
at an SSA field office, where determinations are made about whether 
they meet nonmedical criteria for eligibility. The field office then 
forwards the applications to the appropriate state DDS, where a 
disability examiner collects the necessary medical evidence to make the 
initial determination of whether the applicant meets the definition of 
disability. Once the applicant's medical eligibility is determined, the 
DDS forwards this decision to SSA for final processing.
    Claimants who are initially denied benefits can ask to have the DDS 
reconsider its denial. If the decision remains unfavorable, the 
claimant can request a hearing before a federal administrative law 
judge at an SSA hearings office, and, if still dissatisfied, can 
request a review by SSA's Appeals Council. Upon exhausting these 
administrative remedies the individual may file a complaint in federal 
district court. Each level of appeal, if undertaken, involves multi-
step procedures for the collection of evidence, information review, and 
decision making. Many individuals who appeal SSA's initial decision 
will wait a year or longer--perhaps up to 3 years--for a final 
decision.
    To address concerns regarding the program's efficiency, in 1992 SSA 
initiated a plan to redesign the disability claims process, emphasizing 
the use of automation to achieve an electronic (paperless) processing 
capability. The automation project started in 1992 as the Modernized 
Disability System, and was redesignated the Reengineered Disability 
System (RDS) in 1994. RDS was to automate the entire disability claims 
process--from the initial claims intake in the field office to the 
gathering and evaluation of medical evidence at the state DDSs, to 
payment execution in the field office or processing center, and 
including the handling of appeals at the hearings offices. However, our 
prior work noted that SSA had encountered problems with RDS during its 
initial pilot testing.[3] For example, systems officials had 
stated that, using RDS, the reported productivity of claims 
representatives in the SSA field offices dropped. They noted that 
before the installation of RDS, each field office claims representative 
processed approximately five case interviews per day. After RDS was 
installed, each claims representative could process only about three 
cases per day. As a result, following an evaluation by a contractor, 
SSA suspended RDS in 1999 after approximately 7 years and more than $71 
million reportedly spent on the initiative.
---------------------------------------------------------------------------
    \[3]\ U.S. General Accounting Office, Social Security 
Administration: Technical and Performance Challenges Threaten Progress 
of Modernization, GAO/AIMD-98-136 (Washington, D.C.: June 19, 1998).
---------------------------------------------------------------------------
    In August 2000 SSA issued a management plan with a renewed call for 
developing an electronic disability system by the end of 2005. The 
strategy was to incorporate three components: an electronic disability 
intake process that would include (1) a subset of the existing RDS 
software, (2) the existing DDS claims process, and (3) a new system for 
the Office of Hearings and Appeals. The management plan also provided 
for several pilot projects to test the viability and performance of 
each project component. SSA's work on this effort occurred through the 
spring of 2002, at which time the Commissioner announced that she had 
begun an accelerated initiative to more quickly automate the disability 
claims process. The agency anticipated that, with technologically 
advanced disability processing offices, it could potentially realize 
benefits of more than $1 billion, at an estimated cost of approximately 
$900 million, over the 10-year life of the accelerated initiative.

AeDib's STRATEGY CALLS FOR DEVELOPING AND INTEGRATING MULTIPLE 
        DISABILITY SYSTEM PROJECTS
    In undertaking AeDib, SSA has embarked on a major initiative 
consisting of multiple projects that are intended to move all partners 
in its disability claims adjudication and review to an electronic 
business process. SSA envisions that AeDib will allow its disability 
components to stop relying on paper folders to process claims and to 
develop new business processes using legacy systems and information 
contained in an electronic folder to move and process all of its work. 
In so doing, SSA anticipates that AeDib will enable disability 
components to achieve processing efficiencies, improve data 
completeness, reduce keying errors, and save time and money.
    The AeDib strategy focuses on developing the capability for 
claimant information and large volumes of medical images, files, and 
other documents that are currently maintained in paper folders to be 
stored in electronic folders, and then accessed, viewed, and shared by 
the disability processing offices. SSA is undertaking five key projects 
to support the strategy:

      An Electronic Disability Collect System to provide the 
capability for SSA field offices to electronically capture information 
about the claimant's disability and collect this structured data in an 
electronic folder for use by the disability processing offices;
      A Document Management Architecture that will provide a 
data repository and scanning and imaging capabilities to allow claimant 
information and medical evidence to be captured, stored, indexed, and 
shared electronically between the disability processing offices;
      Internet applications that will provide the capability to 
obtain disability claims and medical information from the public via 
the Internet;
      DDS systems migration and electronic folder interface 
that will migrate and enhance the existing case processing systems to 
allow the state disability determination services offices to operate on 
a common platform and prepare their legacy systems to share information 
in the electronic folder; and
      A Case Processing and Management System for the Office of 
Hearings and Appeals that will interface with the electronic folder and 
enable its staff to track, manage, and complete case-related tasks 
electronically.

    According to SSA, the Electronic Disability Collect System and the 
Document Management Architecture are the two fundamental elements 
needed to achieve the electronic disability folder. By late January 
2004, SSA plans to have developed these two components. It also expects 
to have completed five Internet disability applications, enhanced the 
DDS legacy systems, and developed the software that will allow existing 
SSA and DDS systems to interface with the electronic folder. However, 
SSA will not yet have implemented the scanning and imaging capabilities 
and the interface software to enable each disability processing office 
to access and use the data contained in the electronic folder. SSA 
officials explained that, at the end of next January, the agency plans 
to begin an 18-month rollout period, in which it will implement the 
scanning and imaging capabilities and establish the necessary 
interfaces. SSA has drafted but not yet finalized the implementation 
strategy for the rollout.

SSA Has Completed Important AeDib Tasks, But Much Work Remains
    SSA has performed several important project tasks since beginning 
the accelerated initiative in 2002. For example, it has implemented 
limited claims-intake functionality as part of the Electronic 
Disability Collect System, and begun additional upgrades of this 
software. In addition, it has developed two Internet applications for 
on-line forms to aid claimants in filing for disability benefits and 
services. Further, to support electronic disability processing, SSA is 
in the process of migrating and upgrading hardware and case processing 
software to allow all of the 54 state DDSs to operate on a common 
platform,[4] and has begun developing software to enable the 
DDS systems to interface with the electronic folder. SSA has also 
performed some initial tasks for the Document Management Architecture, 
including developing a system prototype, establishing requirements for 
the scanning capability, and drafting a management plan and training 
strategy.
---------------------------------------------------------------------------
    \[4]\ Thirty of the 54 state DDSs previously operated on a platform 
consisting of Wang hardware and iLevy disability processing software. 
SSA is now moving all DDSs to an IBM series platform in an attempt to 
achieve consistency among all DDS systems in processing disability 
claims.
---------------------------------------------------------------------------
    Nonetheless, the agency still has a significant amount of work to 
accomplish to achieve the electronic disability folder by the end of 
next January. While substantial work remains for each of the AeDib 
components, primary among SSA's outstanding tasks is completing the 
Document Management Architecture's development, testing, and 
installation at the agency's National Computer Center. Table 1 
illustrates SSA's progress through last June in accomplishing tasks 
included in the AeDib initiative, along with the many critical actions 
still required to develop and implement the electronic disability 
processing capability.

                            Table 1: Status of Tasks Involved in Developing the AeDib
----------------------------------------------------------------------------------------------------------------
                                                                                              Key tasks to be
                   Tasks completed as of   Tasks to be completed   Planned January 2004    completed during 18-
 AeDib component       June 30, 2003        by January 30, 2004       project status      month national rollout
                                                                                              (2/2004-7/2005)
----------------------------------------------------------------------------------------------------------------
Electronic        Developed EDCS release  Develop electronic      EDCS software v.6       None reported
 Disability        4.2.3.                  folder interface        operational in all
 Collection       Developed EDCS release   requirements for        SSA field offices. It
 System (EDCS)     5.0.                    AeDib legacy systems.   will automate the
                  Developed EDCS release  Develop software for     disability interview
                   5.1.                    version 6.X.            process. Data will be
                  Drafted training        Complete design and      propagated to EDCS
                   strategy.               legacy system support   and/or the electronic
                                           for v6.0.               folder from SSA
                                           Complete        mainframe systems and
                                           validation for V.6.01.  disability Internet
                                           Compete         applications.
                                           validation for V6.02.
                                           Complete
                                           design, legacy system
                                           support, and
                                           integration and
                                           environmental testing
                                           for V6.1.
                                           Validate
                                           software.
                                           Conduct
                                           integration and
                                           environmental testing.
                                           Release
                                           software to
                                           production.
                                          Train users...........
----------------------------------------------------------------------------------------------------------------
Document          Developed document      Develop procurement     DMA infrastructure      Ensure site
 Management        imaging and             strategies.             established in the      preparation for DMA
 Architecture      management system      Conduct performance      SSA National Computer  Roll out DMA
 (DMA)             prototype.              engineering and         Center.                 infrastructure (e.g.,
                  Provided technical       tuning.                                         casual scanning
                   training to DMA staff. Conduct validation....                           equipment, object
                  Developed management    Conduct integration                              repository servers,
                   approach and plan.      and environmental                               scanning and imaging
                  Developed DMA            testing.                                        servers, and fax
                   requirements.          Install pilots........                           servers)
                  Acquired AeDib pilot    Conduct pilot testing.                          Conduct process
                   infrastructure.        Evaluate pilot results                           evaluation
                  Drafted training        Address any pilot
                   strategy.               issues.
                                          Setup production
                                           environment.
                                          Procure AeDib
                                           infrastructure.
                                          Establish object
                                           management system.
                                          Contract with
                                           outsourced scanning
                                           vendors for national
                                           scanning support.
                                          Finalize training
                                           strategy.
----------------------------------------------------------------------------------------------------------------
Internet          Developed and released  Complete Internet form  Public will have        None reported
 disability        into production         3820 (child).           Internet access to
 applications      Internet form 3368      Validation...   disability
                   (disability report).    Integration     applications a.
                  Developed and released   testing.                i3368
                   into production         Pre-release     (disability report).
                   Internet form 827       tasks.                  i827
                   (authorization to      Complete Internet form   (authorization to
                   release information).   3369 (work history).    release information).
                  Drafted training         Construction    i3820 (child)
                   strategy.               including hardware,     i3369 (work
                                           capacity management,    history).
                                           security support        i3441
                                           activities.             (appeals).
                                           Software       Data will be
                                           development.            automatically
                                           Software        generated to EDCS
                                           validation.             from the i3368
                                           Integration     (disability report),
                                           testing.                i3820 (child), i3369
                                           Pre-release     (work history), and
                                           tasks.                  i3441 (appeals)..
                                          Complete Internet form
                                           3441 (appeals).
                                           Construction
                                           including hardware,
                                           capacity management,
                                           security support
                                           activities.
                                           Software
                                           development.
                                           Validation...
                                           Integration
                                           testing.
                                           Pre-release
                                           tasks.
----------------------------------------------------------------------------------------------------------------
DDS AS/400        Contracted for AS/400   Complete migration of   Enhanced legacy         Install DMA
 migration and     migration and           iLevy software.         systems prepared to     infrastructure based
 electronic        electronic folder      Complete procurement     interface with          on rollout schedule
 folder            interface.              of IBM AS/400           electronic folder.      and strategy
 interface        Installed AS/400         upgrades.                                      Complete changes to
                   hardware.              Complete IBM install                             New York and Nebraska
                  Provided core AS/400     upgrades.                                       legacy systems to
                   training.              Complete AS/400                                  interface with
                  Drafted training         training.                                       electronic folder
                   strategy.              Install print servers.
                                          Complete software
                                           changes to support
                                           electronic folder
                                           interface.
                                          Conduct process
                                           evaluation.
----------------------------------------------------------------------------------------------------------------
Hearings and      Documented business     Complete post-demo      CPMS stand-alone        Complete development
 appeals Case      process description.    requirements.           software without        of CPMS management
 Processing       Developed software      Conduct system           management              information
 Management        development plan.       validation.             information             functionality
 System (CPMS)    Developed pre-          Conduct integration      functionality and      Roll out CPMS software
                   demorequirements.       and environmental       prepared to interface   to hearings and
                  Drafted training         testing.                with electronic         appeals sites
                   strategy.              Establish CPMS           folder.                 starting in March
                                           software for pilot.                             2004
                                          Conduct pilot training                          Conduct training
                                          Conduct pilot.........                          Install DMA
                                          Begin pilot evaluation                           infrastructure
                                          Begin to address any
                                           pilot issues.
                                          Finalize training
                                           strategy.
----------------------------------------------------------------------------------------------------------------
a SSA reported that Disability Internet form i454 (Continuing Disability Review) is being revised and will not
  be available by January 2004.
Source: GAO analysis of SSA AeDib project documentation.

    As the table reflects, SSA's electronic disability claims process 
hinges on accomplishing numerous critical tasks by the end of January 
2004. In discussing the overall progress of the initiative, SSA 
officials in the Offices of Systems and Disability Programs acknowledge 
that the agency will be severely challenged to accomplish all of the 
tasks planned for completion by the end of January. Nonetheless, they 
believe that SSA will meet the targeted project completion dates, 
stating that the agency has conducted the necessary analyses to ensure 
that the accelerated schedule can accommodate the project's scope.

RISKS IN DEVELOPING THE ELECTRONIC DISABILITY SYSTEM INCREASE AeDib's 
        OVERALL VULNERABILITY
    Beyond meeting an ambitious project implementation schedule, SSA 
must ensure that the system it delivers successfully meets key business 
and technical requirements for reliably exchanging data among 
disability processing components and is protected from errors and 
vulnerabilities that can disrupt service. Accomplishing this 
necessitates that SSA conduct complete and thorough testing to provide 
reasonable assurance that systems perform as intended. These include 
tests and evaluations of pilot projects to obtain data on a system's 
functional performance and end-to-end tests to ensure that the 
interrelated systems will operate together effectively. In addition, 
the success of the system will depend on the agency identifying and 
mitigating critical project risks.
    SSA plans to rely on pilot tests and evaluations to help guide 
business and technical decisions about the electronic disability 
folder, including critical decisions regarding the document management 
technology. For example, SSA stated that the Document Management 
Architecture pilots will be used to test electronic folder interface 
requirements and DDS site configurations for AeDib national 
implementation. In addition, the pilots are expected to test the 
business process and work flow associated with incorporating the 
Document Management Architecture. SSA has stated that this information 
is crucial for determining whether the technology selected for the 
Document Management Architecture will adequately support the electronic 
folder.
    However, SSA may not be able to make timely and fully informed 
decisions about the system based on the pilot test results. The pilot 
tests were to begin this month, and some of the test results upon which 
decisions are to be based are not expected to be available until the 
end of December at the earliest,[5] leaving little time to 
incorporate the results into the system that is to be implemented by 
late January. Further, even when completed, the pilot tests will 
provide only limited information about the electronic folder's 
functionality. SSA stated that they will not test certain essential 
aspects of the folder usage, such as the DDS's disability determination 
function. Thus, whether SSA will have timely and complete information 
needed to make decisions that are essential to developing and 
implementing the electronic disability folder is questionable.
---------------------------------------------------------------------------
    \[5]\ SSA plans to conduct the pilot tests at three state DDS 
sites--North Carolina, Illinois, and California--beginning this month. 
It plans to complete the tests in December.
---------------------------------------------------------------------------
    In addition, given the technological complexity of the AeDib 
project, the need for end-to-end testing is substantial. Our prior work 
has noted the need for such testing to ensure that interrelated systems 
that collectively support a core business area or function will work as 
intended in a true operational environment.[6] End-to-end 
testing evaluates both the functionality and performance of all systems 
components, enhancing an organization's ability to trust the system's 
reliability. SSA's development and use of new electronic tools to 
integrate an electronic folder with its own and DDS legacy systems, 
along with Web-based applications and the new Document Management 
Architecture, elevates the importance of ensuring that all parts will 
work together as intended.
---------------------------------------------------------------------------
    \[6]\ U.S. General Accounting Office, Year 2000 Computing Crisis: 
FAA Is Making Progress But Important Challenges Remain, GAO/T-AIMD/
RCED-99-118 (Washington, D.C.: March 15, 1999).
---------------------------------------------------------------------------
    However, the agency currently has not completed a test and 
evaluation strategy to conduct end-to-end testing to demonstrate, 
before deployment, that these systems will operate together 
successfully. They added that conducting end-to-end testing would 
require delaying system implementation to allow the time needed for a 
claim to be tested as it moved through all of the disability 
components--a process that could take up to 6 months to complete. 
However, determining that all AeDib components can correctly process 
disability claims when integrated is vital to SSA's knowing whether the 
electronic disability system can perform as intended.
    Compounding AeDib's vulnerability is that SSA has not yet 
undertaken a comprehensive assessment of project risks to identify 
facts and circumstances that increase the probability of failing to 
meet project commitments, and taking steps to prevent this from 
occurring. Best practices and federal guidance [7] advocate 
risk management. To be effective, risk management activities should be 
(1) based on documented policies and procedures and (2) executed 
according to a written plan that provides for identifying and 
prioritizing risks, developing and implementing appropriate risk 
mitigation strategies, and tracking and reporting on progress in 
implementing the strategies. By doing so, potential problems can be 
avoided before they manifest themselves into cost, schedule and 
performance shortfalls.
---------------------------------------------------------------------------
    \[7]\ See, for example, Software Acquisition Capability Maturity 
Model SM (CMU/SEI-99-TR-002, April 1999); OMB Circular A-130 
(November 30, 2000).
---------------------------------------------------------------------------
    SSA has developed a risk management plan to guide the 
identification and mitigation of risks, and based on that plan, has 
developed a high-level risk assessment of program and project risks. 
The high-level assessment, which SSA issued last February, identified 
35 risks that the agency described as general in nature and addressing 
only overall program management issues related to the project's costs, 
schedule, and hardware and software. For example, one of the high-level 
risks stated that the overall availability of the Document Management 
Architecture might not meet service-level commitments. The related 
mitigation strategy stated that the agency should continue to 
investigate various approaches to ensure the system's availability.
    SSA has acknowledged the potential for greater risks given the 
electronic case processing and technological capability required for 
AeDib. Further, in response to our inquiries, its officials stated that 
the agency would conduct and document a comprehensive assessment of 
project risks by June 30 of this year. The officials added that AeDib 
project managers would be given ultimate responsibility for ensuring 
that appropriate risk-mitigation strategies existed and that SSA had 
tasked a contractor to work with the managers to identify specific 
risks associated with each system component. However, at this time, SSA 
is still without a comprehensive assessment of risks that could affect 
the project. Until it has a sound analysis and mitigation strategy for 
AeDib, SSA will not be in a position to cost-effectively plan for and 
prevent circumstances that could impede a successful project outcome.

UNRESOLVED STAKEHOLDER CONCERNS COULD UNDERMINE AeDib's SUCCESS
    Integral to AeDib's success are disability process stakeholders 
that SSA relies on to fulfill the program's mission, including state 
disability determination officials and medical providers. As primary 
partners in the disability determination process, stakeholders can 
offer valuable and much-needed insight regarding existing work 
processes and information technology needs, and their stake and 
participation in the systems development initiative is essential for 
ensuring its acceptance and use. In assessing lessons learned from 
SSA's earlier attempt to implement the failed Reengineered Disability 
System, Booz-Allen and Hamilton recommended that SSA at all times keep 
key stakeholders involved in its process to develop an electronic 
disability processing capability.
    SSA disability program and systems officials told us that the 
agency has involved its various stakeholders in developing AeDib. They 
stated that the agency has entered into memorandums of understanding 
for data sharing with state DDSs, established work groups comprising 
DDS representatives to obtain advice on development activities, and 
included these stakeholders in steering committee meetings to keep them 
informed of the project's status. In addition, SSA stated, it has met 
with representatives of major medical professional associations to seek 
their support for SSA's requests for releases of medical evidence.
    However, officials that we contacted in nine of the ten DDS offices 
stated that their concerns were not adequately heard and considered in 
the decision-making process for the development of AeDib, despite the 
critical and extensive role that states play in making disability 
determinations. Because of this limited involvement, the National 
Council of Disability Determination Directors, which represents the 
DDSs, stated that they were concerned that SSA may be pursuing an 
automated disability strategy that could negatively affect business 
operations by creating delays in the ability to make decisions on 
disability cases. The DDS representatives stated that SSA has not 
articulated a clear and cohesive vision of how the disability 
components will work to achieve the AeDib goal and that decisions about 
AeDib were being made without considering their perspectives. They 
explained, for example, that SSA's decision to use a scanning and 
imaging vendor to whom medical providers would have to submit evidence 
would introduce an additional step into the disability process, and 
might result in DDSs' not being able to effectively manage the critical 
information that they need to make disability determinations. Further, 
they have questions about how in the disability process evidence will 
be electronically stored, noting that SSA has proposed, but not yet 
decided among, three possible scenarios for establishing repositories 
to house medical evidence.
    Last March, the National Council of Disability Determination 
Directors made three suggestions to SSA aimed at allowing the DDSs to 
have greater responsibility for this aspect of the disability business 
process. Among their proposals was that DDSs (1) be allowed to manage 
the contractors who will be responsible for scanning and imaging all 
records received from medical providers; (2) have the choice of 
receiving electronic medical evidence at a repository maintained at 
their sites rather than at remote, centralized locations; and (3) be 
allowed to test the possibility of scanning records after, rather than 
before, the DDS adjudicates a claim. According to the council, this 
latter approach would ensure that the DDSs could make timely and 
accurate disability determinations, while also allowing SSA the time to 
perfect the electronic business process and transition to the initial 
case process. As of last week, however, SSA had not responded. For its 
part, SSA stated that it is reviewing, but has not yet taken a position 
on, the council's proposals.
    SSA's consultation with the medical community (physicians and other 
sources of medical evidence used to evaluate disability claims) also 
has been limited. These stakeholders are critical, as they represent 
the basic source of most of the information that states use to evaluate 
an individual's disability. One of the key savings that SSA anticipates 
from AeDib is based on physicians and other medical sources 
electronically transmitting or faxing medical evidence that is now 
mailed to the DDSs. SSA has estimated that as much as 30 percent of all 
medical evidence could be faxed or electronically received from these 
providers, with the majority of it being faxed. In speaking with 
American Health Information Management Association officials in Georgia 
and Wisconsin, however, they expressed concern about the possibility 
that SSA will want medical providers to fax evidence. They cited the 
voluminous nature of much of the medical evidence that they send to the 
DDSs, and believe that faxing it would be too costly and not secure.
    Our review to date has not assessed the validity of the concerns 
expressed by the stakeholders, or SSA's responses to them. Nonetheless, 
as long as such concerns exist, SSA must be diligent in pursuing a 
mutually agreed-upon understanding with its stakeholders about its 
vision and plan of action being pursued. SSA's success in implementing 
AeDib depends heavily on resolving all outstanding issues and concerns 
that could affect the use and, ultimately, the outcome of the intended 
electronic capability. Without stakeholders' full and effective 
involvement in AeDib's planning and development, SSA cannot be assured 
that the system will satisfy critical disability process requirements 
and be used as intended to achieve desired processing efficiencies and 
improved delivery of services to beneficiaries.
    To summarize, Mr. Chairman, in moving toward an electronic 
disability process, SSA has undertaken a positive and very necessary 
endeavor. Having the means to more effectively and efficiently provide 
disability benefits and services is essential to meeting the needs of a 
rapidly aging and disabled population, and we applaud the 
Commissioner's determination and proactive pursuit of this service-
delivery enhancement.
    Nonetheless, SSA's accelerated strategy may involve risks of 
delivering a system that will not sufficiently address its needs. The 
execution of critical pilot tests that are not scheduled for completion 
until December or later, coupled with the lack of planned end-to-end 
testing and a comprehensive assessment of risks, may prevent SSA from 
delivering an information technology capability based on sound and 
informed decision making. Moreover, uncertainties about the successful 
outcome of this project are exacerbated by concerns that key 
stakeholders in the disability process continue to have. Given the 
importance of this project to SSA's future service-delivery capability, 
it is essential that the agency satisfy itself that AeDib will perform 
as intended with minimal risk before it is deployed nationwide. We will 
continue to monitor SSA's progress on this initiative as part of our 
ongoing review.
    This concludes my statement. I would be happy to respond to any 
questions that you or other members of the Subcommittee may have at 
this time.

GAO CONTACTS AND STAFF ACKNOWLEDGMENTS
    For information regarding this testimony, please contact Linda D. 
Koontz, Director, or Valerie Melvin, Assistant Director, Information 
Management Issues at (202) 512-6240. Other individuals making key 
contributions to this testimony include Michael Alexander, Tonia D. 
Brown, Derrick Dicoi, and Mary J. Dorsey.

                                 

    Chairman SHAW. Thank you. Ms. Prokop.

    STATEMENT OF SUSAN PROKOP, ASSOCIATE ADVOCACY DIRECTOR, 
   PARALYZED VETERANS OF AMERICA, CO-CHAIR, WORK INCENTIVES 
  IMPLEMENTATION TASK FORCE, AND MEMBER, SOCIAL SECURITY TASK 
        FORCE, CONSORTIUM FOR CITIZENS WITH DISABILITIES

    Ms. PROKOP. Chairman Shaw, Mr. Matsui in absentia, Members 
of the Subcommittee, for the Social Security Task Force and 
Task Force on Work Incentives Implementation of the Consortium 
for Citizens with Disabilities, I thank you for this 
opportunity to testify on the SSA's Service Delivery Budget 
Plan. To meet current and future beneficiary needs, we urge 
commitment of resources and personnel to resolve the waiting 
times and make the claims process work better for people with 
disabilities. The Commissioner's Service Delivery Budget Plan 
shows her commitment to resolving the major issues in service 
delivery. We urge your support for the Service Delivery Plan 
budget. Adequate staffing levels are critical for SSA to 
address the increasing responsibilities it will confront in the 
coming decades. For some time, the Social Security Task Force 
has voiced concern over long-term down sizing of the SSA 
workforce which has been reduced by more than 20 percent from 
1985 levels. As important as sufficient number of staff are for 
proper service delivery, equally important is the need for 
adequately trained staff. Regrettably, field staff are not 
always familiar with SSA's operational and management 
information systems innovations. When field offices fail to use 
the tools at their disposal to advise and assist beneficiaries, 
it is the beneficiaries that ultimately suffer.
    You have heard from us many times on the continuing 
problems of overpayments to Title II and Title XVI 
beneficiaries. Overpayments represent a significant barrier to 
beneficiaries' ability to take advantage of SSA's work 
incentives. A major improvement in service delivery would be 
for SSA to establish a reliable, timely method of collecting 
and recording information about a worker's earnings. We 
appreciate the inclusion in H.R. 743 of a requirement that SSA 
provide a receipt to the beneficiary whenever a change in 
earnings or work status is reported. To avoid overpayments 
altogether, we are further encouraged by the agency's other 
efforts to improve recording of earnings reports. We support 
removing SSA's administrative budget, like its program budget, 
from any overall limits in discretionary spending. Your 
Subcommittee has had a longstanding interest in this issue and 
understands the many benefits that would derive from such a 
move. With regard to the disability backlog and process 
changes, we urge commitment of resources and personnel to 
resolve the exorbitant waiting times and make the claims 
process work better for people with disabilities. Mr. Pomeroy 
used the term unconscionable, and we agree that it is 
unconscionable that thousands of vulnerable people should have 
to wait on average 3 years for the agency to make a final 
decision on their benefits. We strongly support efforts to 
reduce unnecessary delays for claimants and to make the process 
more efficient so long as any changes do not effect the 
fairness of the process to determine a claimant's entitlement 
to benefits.
    Since any changes to this process will have a major effect 
on people with disabilities, the Commissioner should engage in 
extensive discussions with disability community advocates in 
order to ensure that goals are achieved without unintended 
harmful consequences. We commend Commissioner Barnhart for her 
strong commitment to improving the technology used in the 
disability determination process. Many problems can be 
addressed with improved technology, such as her initiatives for 
an electronic disability folder, the AeDib, digital recording 
of hearings and video teleconferencing of hearings. Finally, I 
would just like to add a word of thanks for the Commissioner's 
comments about the employment networks and pay stubs. I think 
that will be a major help to encouraging providers to come into 
the Ticket to Work Program. I would also echo the GAO's 
comments about CDRs and medical improvement expected (MIE), and 
the denial of tickets to people in that status, that is 
something we have been interested in for a long time. On behalf 
of the Consortium for Citizens with Disabilities Task Forces on 
Social Security, and Work Incentive's Implementation, I thank 
the Chairman and the Members of the Subcommittee for the 
opportunity to testify. Look forward to any questions you may 
have. Thank you.
    [The prepared statement of Ms. Prokop follows:]

   Statement of Susan Prokop, Associate Advocacy Director, Paralyzed 
  Veterans of America, Co-Chair, Work Incentives Implementation Task 
Force, and Member, Social Security Task Force, Consortium for Citizens 
                           with Disabilities

    Chairman Shaw, Representative Matsui, and Members of the 
Subcommittee, I thank you for this opportunity to testify regarding the 
Social Security Administration's Service Delivery Budget Plan.
    I am an Associate Advocacy Director at Paralyzed Veterans of 
America. I am testifying here today in my role as a co-chair of the 
Work Incentives Implementation Task Force and a member of the Social 
Security Task Force of the Consortium for Citizens with Disabilities. 
CCD is a working coalition of national consumer, advocacy, provider, 
and professional organizations working together with and on behalf of 
the 54 million children and adults with disabilities and their families 
living in the United States. The CCD Social Security and Work 
Incentives Implementation Task Forces focus on disability policy issues 
in the Title XVI Supplemental Security Income program and the Title II 
disability programs.

                 PROVIDE SSA WITH ADEQUATE RESOURCES TO
                     MEET CURRENT AND FUTURE NEEDS

    We urge commitment of resources and personnel to resolve the 
waiting times and make the process work better for people with 
disabilities. SSA must be provided with the resources to fully meet its 
administrative responsibilities. To improve delays, better develop 
cases, and implement technological advances, SSA requires adequate 
staffing and resources. The Commissioner's Service Delivery Budget Plan 
shows her commitment to resolving the major issues in service delivery. 
We urge your support for the budget for the service delivery plan.
    We are concerned about SSA's readiness to deal with the impending 
increase in its workload. SSA workloads are projected to begin 
increasing rapidly within the next decade as the baby boom generation 
begins to reach its peak disability years just prior to reaching early 
retirement age beginning in 2008. In addition, the SSA workforce is 
also aging and will begin to lose significant numbers of staff, 
including senior and leadership staff.  About 3,000 employees are 
expected to retire per year from 2007 through 2009. SSA is also taking 
on new or more complex responsibilities such as providing increased 
rehabilitation and employment services for people with disabilities, 
completing and maintaining an appropriate schedule of continuing 
disability reviews and other eligibility reviews, and new approaches to 
prevent fraud and abuse. In addition, the new efforts to assist people 
with disabilities to go to work, through the Ticket to Work and Work 
Incentives Improvement Act of 1999 (TTWWIIA), require new and expanded 
approaches for SSA interaction with beneficiaries.
    Adequate staffing levels are critical for these and other efforts 
to be successful, especially given the coming disability and retirement 
years of baby boomers. Despite these increasing responsibilities, SSA 
staff has been reduced by more than 20 percent from 1985 levels. The 
CCD Social Security Task Force has voiced concern for some time over 
the continued long-term downsizing of the SSA workforce.
    As important sufficient numbers of staff are for proper service 
delivery, equally important is the need for adequately trained staff. 
Our task forces have been made aware that, while SSA may be making 
strides toward improving operations, including improvements to their 
management information systems, it seems that staffers in the field are 
not familiar with long awaited improvements such as the Modernized 
Return to Work (MRTW) program. The MRTW effectively ties together a 
number of SSA databases to allow accurate information regarding a 
beneficiary's record, including paid work activity following receipt of 
benefits. Use of this automated system is essential for effective 
benefits planning since Benefits Planning Assistance and Outreach 
(BPAO) counselors rely on the information of a Benefits Planning Query 
(BPQY) when advising beneficiaries about their options for returning to 
work. However, according to several reports, some SSA offices do not 
use the BPQY. Instead, they may enter the information about the 
person's work history manually, a process that results in considerable 
delay and contributes significantly to unnecessary overpayments.
    The committee has heard from us many times on the continuing 
problem of overpayments to beneficiaries in both Title II and Title 
XVI. Overpayments represent a major barrier to beneficiaries' ability 
to take advantage of TWWIIA. Chronic overpayments to beneficiaries 
result from significant delays in, and sometimes complete failure of, 
SSA personnel recording earnings reports for working beneficiaries. 
Part of the problem may be that SSA workers do not get any credit for 
these tasks in their work evaluations. In addition, there is not a 
well-defined process for beneficiaries to use in reporting earnings. 
Even when beneficiaries are conscientious in reporting their earnings, 
overpayments still occur over significant periods of time. When that 
happens, beneficiaries are not equipped to know whether the benefit 
amount they are receiving is correct or whether SSA has made an error 
or failed to record earnings. Over time, overpayments build and it is 
not unusual for beneficiaries to be told by SSA to pay back tens of 
thousands of dollars. Beneficiaries are so fearful of overpayments and 
the inadequate notices from SSA that go with them that the Ticket 
program and other work incentives could fail.
    A major improvement in service delivery would be for SSA to 
establish a reliable, efficient, beneficiary-friendly method of 
collecting and recording, in a timely manner, information regarding a 
worker's earnings.  In addition, SSA must adjust benefits in a timely 
manner. CCD has further recommended that Congress require SSA to 
forgive overpayments if the beneficiary is not notified within a 
reasonable period of time. We appreciate the inclusion in the Social 
Security Protection Act of 2003, H.R. 743, of a requirement that SSA 
provide a receipt to the beneficiary whenever a change in earnings or 
work status is reported. This could go a long way in helping to resolve 
some of the problems with earnings reports. We understand that SSA has 
begun other efforts to improve recording of beneficiary earnings 
reports. We are encouraged by this and urge continued dedication of 
resources to resolve this problem.
    We support removing SSA's administrative budget, like its program 
budget, from any overall limits in discretionary spending. Your 
Committee has had a long-standing interest in this issue. Removal of 
the limitation on administrative expenses (LAE) from the limit set on 
discretionary spending through the budget process would remove SSA from 
competition with other health, education, and human needs programs for 
limited funds. It would allow for growth that is necessary to meet the 
needs of the coming baby-boomer retirement years (including the 
retirement of SSA and state DDS personnel); continue the efforts to 
improve the processing time for initial applications and appeals; 
continue the efforts to ensure integrity in the program through CDRs 
and other redeterminations; and allow for replacement of staff in a 
timely manner to allow for adequate training and mentoring.

                 DISABILITY BACKLOG AND PROCESS CHANGES

    The backlog of cases waiting for ALJ and Appeals Council decisions 
is unacceptably long. People with severe disabilities who by definition 
have limited earnings from work are often forced to wait years for a 
final decision from the time of application through the final Appeals 
Council decision. This is damaging not only to the individual with a 
disability and his/her family, but also to the public perception of and 
integrity of the program.
    Bringing the waiting times down in these two areas must be a high 
priority. We urge commitment of resources and personnel to resolve the 
exorbitant waiting times and make the process work better for people 
with disabilities. First, SSA must be provided with the resources to 
fully meet its administrative responsibilities. As noted earlier in 
this testimony, this requires that SSA's Limitation on Administrative 
Expenses budget authority be removed from the domestic discretionary 
spending category.
    Recently, a number of proposals to change the disability 
determination process have been put forward and we await announcement 
of the Commissioner's plan for change. We strongly support efforts to 
reduce unnecessary delays for claimants and to make the process more 
efficient, so long as they do not affect the fairness of the process to 
determine a claimant's entitlement to benefits. While the need to issue 
decisions more expeditiously is well documented, this is not the only 
consideration. Any proposals for change must balance efforts to improve 
the process with ensuring fairness and protecting the rights of people 
with disabilities.
    In addition, since any changes to the disability determination 
process are likely to have a major effect on people with disabilities, 
we believe that the Commissioner should engage in extensive discussions 
with representatives of people with disabilities in order to ensure 
that goals are achieved without unintended harmful consequences. The 
CCD Task Forces are willing to work with the Commissioner toward this 
end.
    In previous testimony before this Subcommittee, we have described 
the following features as part of ensuring a full and fair process:

    1.  The right to a full and fair hearing before an Administrative 
Law Judge. The key aspect of the adjudication process for a claimant is 
the right to a full and fair hearing by an Administrative Law Judge 
(ALJ), who is an independent decision-maker, providing impartial fact-
finding and adjudication. The ALJ asks questions of and takes testimony 
from the claimant, may develop evidence when necessary, and applies the 
law and agency policy to the facts of the case. Claimants have the 
right to present new evidence in person to the ALJ and to receive a 
decision from the ALJ that is based on all available evidence. This 
should be preserved.
    2.  Keeping the record open for new evidence. Many recent proposals 
to change the disability determination process recommend that the 
record be closed to new evidence either after the DDS decision or, at 
least, after the ALJ level. In the past, both Congress and SSA have 
recognized that such proposals are neither beneficial to claimants nor 
administratively efficient for the agency.
         We strongly support the submission of evidence as early as 
possible. The benefit is obvious: the earlier a claim is adequately 
developed, the sooner it can be approved and the sooner payment can 
begin. However, there are a number of reasons why closing the record is 
not beneficial to claimants including: (1) possible worsening of the 
medical condition which forms the basis of the claim; (2) the fact that 
the ability to submit evidence is not always in the claimant's or 
representative's control, e.g., providers delay sending evidence; and 
(3) the need to keep the process informal. Early submission of evidence 
also is necessary under current law, which limits the ability to submit 
evidence and have it considered at the Appeals Council (must be ``new 
and material'' and relate to pre-ALJ decision period) and federal court 
(record closed; remand possible if evidence ``new and material'' and 
``good cause'' for failure to submit earlier).
         Filing a new application is not a viable option because it 
does not improve the process and may in fact severely jeopardize, if 
not permanently foreclose, eligibility for benefits. A claimant should 
not be required to file a new application merely to have new evidence 
considered where it is relevant to the prior claim. If such a rule were 
established, SSA would need to handle more applications, unnecessarily 
clogging the front end of the process.
    3.  Representing the agency at the ALJ level. We do not support 
efforts to have SSA represented at the ALJ hearing because past 
experience shows that it does not result in better decision-making and 
reducing delays, but instead injects an adversarial element and a level 
of formality and technicality in a system meant to be informal and 
nonadversarial. In the 1980's, SSA tested, and abandoned, a pilot 
project to have the agency represented. It was terminated following 
Congressional criticism and a judicial finding that it was 
unconstitutional and violated the Social Security Act. In the end, the 
pilot did not enhance the integrity of the administrative process.
    4.  Retain review by the Appeals Council. We oppose the elimination 
of a claimant's right to request review by the Appeals Council. The 
Appeals Council currently provides relief to nearly one-fourth of the 
claimants who request review of ALJ denials, either through outright 
reversal or remand back to the ALJ. Review by the Appeals Council, when 
it is able to operate properly and in a timely manner, provides 
claimants, and SSA, with effective review of ALJ decisions. Given the 
low percentage of appeals to federal court, it appears that claimants 
largely accept decisions by the Appeals Council as the final 
adjudication of their claims. As a result, the Appeals Council acts as 
the initial screen for ALJ denials, a position for which the district 
courts are not equipped, given their other responsibilities.
    5.  Access to judicial review in the federal court system. We 
believe that both individual claimants and the system as a whole 
benefit from the federal courts deciding Social Security cases. Over 
the years, the federal courts have played a critical role in protecting 
the rights of claimants. The system is well-served by regular, and not 
specialized, federal judges who hear a wide variety of federal cases 
and have a broad background against which to measure the reasonableness 
of SSA's practices.

    We urge Commissioner Barnhart to take these concerns into account 
in efforts to reduce the backlog in disability cases. In our experience 
with the Social Security Administration, we have learned that there is 
great value in working together to address problems and concerns before 
they reach crisis proportions. We have continued this approach with SSA 
under Commissioner Barnhart's leadership and hope that she will be 
willing to discuss proposals for change with the disability community 
before they are implemented.
    Technological improvements. Commissioner Barnhart has made a strong 
commitment to improve the technology used in the disability 
determination process. We fully support the Commissioner in this 
effort, as we believe that much of the delay in the system could be 
rectified with improved technology. Several initiatives have been 
announced recently that could not only reduce delays, but also provide 
better service to the public and not require fundamental changes to the 
process, e.g., the electronic disability folder, ``eDIB''; digital 
recording of hearings; and video teleconferencing of hearings.

              GAO'S DESIGNATION OF THE DISABILITY PROGRAMS
                     AS ``HIGH RISK'' IS MISPLACED

    Earlier this year, the General Accounting Office designated the 
Social Security disability programs as ``high risk,'' in part, based on 
the agency's reliance on ``outdated'' disability criteria. In an August 
2002 report on the disability program, the GAO faults SSA for not 
automatically evaluating individuals applying for benefits under 
corrected conditions, leading to its ``belief that the programs 
themselves have not been fully updated to reflect scientific advances, 
because interventions that could enhance individuals' productive 
capacities are not, by design, factored into the disability decision-
making process.''
    While medical and technological advances are making it increasingly 
possible for some individuals, despite severe disabilities, to be 
successful in the work place, we should be very cautious when 
contemplating any changes to disability criteria, whether statutory or 
regulatory, based on such advances. Medical and technological advances 
have had a powerful impact on the lives of some fortunately placed 
individuals with disabilities and, recognizing this, Congress worked 
with the disability community to develop policies and reduce barriers 
to employment for persons with disabilities. We thank you, Chairman 
Shaw, Mr. Matsui, and all the Members of the Subcommittee for your 
leadership in passing the landmark Ticket-to-Work and Work Incentives 
Improvement Act of 1999. However, these medical and technological 
advances are clearly not universally or uniformly available to all who 
need them.
    Therefore, it would be wrong to base eligibility for disability 
benefits using the assumption that medical or technological advances 
would be available to mitigate the functional impact of a disability. 
In fact, many of the services and supports people with significant 
disabilities need to work, such as personal assistances services, 
prescription medications, or durable medical equipment, are available 
to them only through Medicare and Medicaid. As you know, a primary way 
people with disabilities access Medicare and Medicaid is through the 
Title II and SSI disability programs.
    Obviously, it is impossible at this time to ensure that all the 
technology, medications, and support services necessary are available 
to all people with every type of disability. Until that point comes, we 
have several recommendations.
    First, as mentioned above, when considering any changes in 
disability eligibility criteria, whether to the statutory definition, 
the five-step disability determination process, or the listings, 
Congress and the Social Security Administration should not assume that 
mitigating supports are available.
    Second, the definition of substantial gainful activity (SGA) must 
be addressed. Granted the SGA level is now indexed for inflation. 
However, the base, now $800 per month, should be re-examined in 
relation to what it defines: substantial gainful activity. If $800 per 
month is all a person is able to earn, we find it hard to call that 
amount either ``substantial'' or ``gainful.''  In this economy, you 
cannot pay rent or utilities and buy food for a month at that level of 
earnings. The issue may lie with the implementation of the SGA 
standard, rather than the concept of SGA. Further, there is a different 
SGA level for non-blind persons with disabilities than for blind 
individuals. We support raising the SGA level for non-blind disabled 
individuals to the same level as for those who are blind.
    Finally, the federal disability programs were created assuming that 
people with disabilities would remain unable to work throughout their 
lives. This static view of disability meant that little thought was 
given to what might happen if people returned to work after receiving 
benefits. Consequently, in Title II disability programs, the same 
requirements must be met to stay on the program as it took to qualify. 
This has the perverse effect of forcing people to diminish their work.
    For example, under the Title II disability rules a person can earn 
only $800 a month. Earning even one dollar above that amount (after the 
nine-month trial work period) means a person loses every dime of their 
disability cash assistance. For example, a person could have a monthly 
Title II disability benefit of $700 and a monthly paycheck of $791. But 
if they receive a two dollar and fifty cent a week raise, fifty extra 
cents a day or ten dollars a month, they lose all of their $700 monthly 
SSDI check. Clearly, it is not a very attractive trade-off. This policy 
is known in the disability community as the cash-cliff.
    A far more reasonable approach to earnings is found in the SSI 
program where a person loses one dollar in benefits for every two 
dollars they earn. The latest data from SSA indicate that from 1987 to 
2001 the number of working SSI beneficiaries doubled. It should come as 
no surprise that while one-fifth of working SSI beneficiaries earn 
above the SGA level, there is hardly anyone in the DI program going 
over the SGA. This is in spite of the fact that SSI beneficiaries 
typically have weaker employment records, are typically less well 
educated, and are far poorer than their DI counterparts. The SSDI 
policy appears to encourage individuals to work but penalize them for 
advancing to a point where they could financially consider moving off 
of SSDI. Additionally disconcerting are SSI asset restrictions, 
creating circumstances where work is rewarded but accumulation of even 
a small amount of savings is penalized. This is a policy that appears 
to ensure that people on SSI will remain an economic underclass.
    We have long advocated for a sliding scale cash benefit offset for 
beneficiaries in the Title II disability programs who work and 
loosening restrictions on assets for working people with disabilities 
on SSI. We again urge Congress to remove these barriers to work. We 
recognize that SSA is required to study a benefit offset in Title II. 
Until such a policy is enacted, a disconnect will remain between the 
definition of disability and desire of beneficiaries to work to their 
fullest potential.
                                 ______
                                 
    On behalf of the CCD Task Forces on Social Security and Work 
Incentives Implementation, I thank the Chairman and the Members of the 
Subcommittee for the opportunity to testify and I look forward to any 
questions you may have.

ON BEHALF OF:

American Congress of Community Supports and Employment Services
American Council of the Blind
American Network of Community Options and Resources
American Psychiatric Association
Goodwill Industries Inc.
International Association of Psychosocial Rehabilitation Services
National Association of Developmental Disabilities Councils
National Association of Protection and Advocacy Systems
National Law Center on Homelessness and Poverty
National Multiple Sclerosis Society
National Organization of Social Security Claimants' Representatives
NISH
Paralyzed Veterans of America
The Arc of the United States
Title II Community AIDS National Network
United Cerebral Palsy

                                 

    Chairman SHAW. Thank you. I would like to direct the 
question here to Mr. Robertson and Ms. Koontz with regard to 
the cause of delays experienced by disability applicants. Now, 
we have heard an awful lot about the lack of electronic files 
to move these things along. That, obviously, is being addressed 
by the Commissioner. We look forward to some great results. How 
hard or overworked or underworked are the administrative law 
judges that are hearing these cases? Are they working shorter 
days or longer days than they should? Is there a problem with 
regard to the workload undertaken by the judges?
    Mr. ROBERTSON. Well, I will try to field that question. 
Basically, there is a big problem with processing claims at 
hearing offices. We talked earlier this morning about some 
relief in terms of hiring additional administrative law judges 
to help mitigate some of those processing problems. So, while 
that is a problem, hopefully, there are some actions to address 
it.
    Chairman SHAW. Yet you haven't answered my question.
    Mr. ROBERTSON. Oh, I will try again.
    Chairman SHAW. My question is, are the judges overworked or 
not working hard enough?
    Mr. ROBERTSON. I can't answer that question.
    Chairman SHAW. Ms. Koontz, can you address that? That is 
something that I think we ought to really find out about. Are 
we utilizing the assets that we have to the full extent? 
Because the judges have a great deal of latitude as to setting 
the pace of their workload. I think this is something that we 
should look at and see if some of the problems in the 
disability insurance program are because SSA is underutilizing 
some of these assets, human assets, that we have in the line. 
Mr. Robertson, you mentioned, you said something, and I hope I 
misunderstood you. Did you say that it takes 3 years for 
somebody--yeah, 3 years to get in the Ticket to Work Program?
    Mr. ROBERTSON. This goes back----
    Chairman SHAW. What in God's name is wrong with that? That 
is a great program. If somebody has a job offer and they want 
to go to work, they have got to wait 3 years? The job is gone.
    Mr. ROBERTSON. This goes back to the point that we were 
discussing earlier about the MIEs. The people that are put in 
the category of MIE are deferred Tickets to Work. The rationale 
being that those people would be expected to improve on their 
own without the ticket assistance. The problem is that many of 
those people, upward of 95 percent of them, actually don't 
improve by the first CDR. As a result, you have this big group 
of people who don't have access to the ticket that could help 
them get back to work. The 3-year period basically is a 
combination of scheduling and conducting the CDR. The people in 
the MIE category are scheduled for a CDR, I believe within an 
18-month timeframe; then there is the time to actually conduct 
the CDR.
    Chairman SHAW. What is the process here? I am disabled. I 
am unable to pursue my general line of work, but I do find a 
niche where I think I might be able to succeed. Congress passed 
the Ticket to Work so somebody could go ahead and venture out 
into the workforce, knowing that they had that safety net that 
if it didn't work out, they could come back into the program 
without a long delay and that certain benefits would continue 
even as they were trying to work. We passed the bill mainly for 
the most courageous people who are on SSI that really want to 
do something and get out and make something of themselves. Now, 
that person comes in, regardless of whether medical improvement 
is expected, we just want to be able to say, okay fine, you can 
go. If it doesn't work out, come on back, and we will put you 
back on the program. Now, is that taking 3 years?
    Mr. ROBERTSON. Yes, that can take 3 years.
    Chairman SHAW. Why in God's name would we take 3 years to 
tell somebody they can work? I think this Committee needs to 
have a hearing on that, because one of the proudest 
accomplishments that I think we have had on this Subcommittee 
since I have been Chairman, is the Ticket to Work. It can't 
possibly work if there is a 3-year delay in hiring.
    Mr. ROBERTSON. If I can just elaborate on that a little bit 
to give you some of the circumstances that make this a little 
more complicated than we have been talking about. Number one, 
we are talking about one of three groups of people. We are 
talking about those who are classified as MIE. Those people, as 
I said earlier, aren't given a ticket or are delayed given a 
ticket under the assumption that they will improve without 
assistance and get back into the workforce. As I said, there is 
a problem with categorizing those people because there is a 
large number of people, large percentage of those people, who 
actually don't improve. Some people have said the way you solve 
that problem and get the ticket to them quickly, is to just say 
okay give everybody a ticket--give all those people in that 
category a ticket. Here's the slight rub with doing that: If 
you are actively working on a ticket, you can't have a CDR. So, 
basically, there is a program integrity problem if you did it 
that way--gave everybody a ticket in the MIE category. There 
are some other options that possibly could be used that would, 
as you are indicating, get tickets to people earlier and get 
tickets to the right people earlier. That would be a couple 
things. Number one, if you were better able to categorize 
MIEs--and we would be pushing a better categorization through 
the use of a more analytical, quantitative analysis of a 
person's condition at the time they come into the program--if 
you better categorize those people initially, you basically 
increase the number of people who are not in the MIE category 
and they would have access to tickets. Things would be better 
for them. That is one part of the potential action you could 
take. The other thing you could do, either in addition or in 
combination with this would be to--and this would probably 
require a law change--in essence say, okay, we are going to 
give the people in MIE category tickets, but we are not going 
to exempt them from CDRs. So, those are a couple of the options 
that might better get tickets to a larger number of people more 
quickly. I should note that SSA is taking a hard look at this 
policy right now to see what it can do to address the problems 
that we have been talking about.
    Chairman SHAW. Well, I think for the Ticket to Work Program 
to be really successful or to accomplish its full potential, we 
have got to develop a better way of doing this. You know, go 
into a grocery store and you have an express line if you have 
10 or less items. Well, if somebody has fewer complications, 
why can't we have an express line so that they can get into the 
Ticket to Work Program and into the workforce. I would guess 
that most people who want to get into the Ticket to Work 
already have a pretty good idea of where they are going to go 
to work. If 3 years passes, nobody can project whether that job 
is even going to be there.
    Mr. ROBERTSON. Right. I agree. I want to make sure that I 
emphasize the up to 3-year waiting period. We are talking about 
some people in the MIE category, not the other categories. 
Okay?
    Chairman SHAW. What about the other categories?
    Mr. ROBERTSON. I am sure it is much shorter than that. I 
don't know what the time is.
    Chairman SHAW. How short. Does anybody know?
    Mr. ROBERTSON. Immediate access.
    Chairman SHAW. So, what I am talking about is already in 
place?
    Mr. ROBERTSON. For the non-MIEs.
    Chairman SHAW. All right. Fine. Mr. Pomeroy.
    Mr. POMEROY. Goes to show what a good idea it was anyway, 
Mr. Chairman. I am interested in this AeDib Initiative. 
Technology has significantly increased productivity in our 
country, it has made wonderful changes. Same time, there has 
been an awful lot of money spent, expensive consultants hired, 
elaborate systems built that at the end of the day didn't work. 
The thing has got to be field tested and demonstrated what 
works in real life, as opposed to some kind of academic 
technological success that really isn't of value to the people 
using the system if we are making a net contribution to this 
thing. Ms. Koontz, your testimony seems to indicate it is a 
well-intentioned effort, it is moving along, but a lot of 
questions as to actual viability have yet to be answered. Is 
that the essence of what you are telling us?
    Ms. KOONTZ. I think that would be correct. The questions 
about viability will be answered by things like the upcoming 
pilot test that they are doing of the technology that supports 
the electronic folder. That is very important. Our caution 
there is that there be enough time to incorporate those results 
into the system that they plan to deploy over an 18-month 
period to the various offices across the country. In addition, 
we make a point also about end-to-end testing.
    Mr. POMEROY. Do you think on that point--and I certainly 
don't fault the administration of SSA, I mean they have got 
some ambitious goals, and we are asking them to have ambitious 
goals in terms of improving service delivery, this is a major 
strategy to do it--do you think that they are presuming success 
in the pilots without just running the pilot demonstrations and 
then calmly evaluating it before--without a presumption almost 
of success and ultimate implementation system wide?
    Ms. KOONTZ. I don't think I am in a position to presume to 
know what their assumptions are about going forward.
    Mr. POMEROY. As you speak about short timeframes, it would 
almost give that impression anyway.
    Ms. KOONTZ. It may, but I don't think we are trying to make 
that definite a statement about that particular effort. I think 
our concern is that SSA stick with the proven kinds of 
techniques that we know from our past work, are most likely to 
result in success.
    Mr. POMEROY. What are they?
    Ms. KOONTZ. Based on our work so far, that would be the 
pilot testing. It is a good technique. They need to make sure 
that the results are incorporated into the system. They do not 
plan to do end-to-end testing, which is to say, how do the 
various components, when you put them together, work? This is 
very important in terms of knowing whether the system is going 
to work. We would like to see that happen before deployment is 
started.
    Mr. POMEROY. End-to-end testing presently is not part of 
what?
    Ms. KOONTZ. Is not currently planned.
    Mr. POMEROY. Now, what will they--what part of end-to-end 
testing are they leaving off?
    Ms. KOONTZ. My understanding is they are testing the 
individual components, which is good, but a test to put the 
components together and see if they operate together 
effectively, that part is not yet planned.
    Mr. POMEROY. Would it significantly delay the process to 
put that part together? Is the other end not quite developed 
yet?
    Ms. KOONTZ. What SSA has told us is that, first of all, 
their final testing strategy is not yet in place. They haven't 
finalized that. On the other hand, they did note to us that 
they said end-to-end testing would delay implementation by, I 
think, 6 months in order to see a case go through the whole 
system, in order to do that test. That is where we stand right 
now, based on our ongoing work.
    Mr. POMEROY. I wish we had the Commissioner still at the 
table, we could have a little back and forth on their 
rationale. I don't have enough to presume that that is an 
inappropriate conclusion. I don't know enough to presume it is 
an inappropriate conclusion, but obviously, this does lend 
weight to the thought that maybe the timeline for 
implementation is a little shorter than it ought to be to fully 
evaluate this new technology. End-to-end would seem to me to be 
an obvious--an essential component of the testing strategy. We 
certainly don't want something that somewhere along the line 
falls short of producing a conclusion on a file and ultimate 
resolution. That is not going to work. On the other hand, they 
may have perfectly legitimate rationale for why timelines 
within the system won't allow end-to-end without a delay that 
really isn't related to underlying system performance. Well, I 
am going to--I will pursue this with SSA. I am pleased to hear 
that it is in formative stages. Maybe if we prod them in this 
way, unless they have very good reasons not to do end-to-end. 
Thank you, Mr. Chairman. I yield back.
    Chairman SHAW. Mr. Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman. Ms. Koontz, let me 
follow up with that a bit. In your report, you also mentioned 
that you heard back from some State representatives, who deal 
with disability claims--that they had not been sufficiently 
consulted by SSA in the process of establishing this electronic 
processing system for the disability claims. To your knowledge 
has that been resolved, that lack of participation or notice to 
the regional State representatives?
    Ms. KOONTZ. My understanding is that this condition still 
exists but, when we did talk about SSA officials yesterday, 
they indicated that they were going to do more to talk 
particularly to the State DDS officials and provide them 
additional details on how AeDib is supposed to operate in the 
future.
    Mr. BECERRA. Commissioner Barnhart seemed very optimistic 
about the system, and I hope she is right because it would help 
us process the claims. Do you believe that SSA has taken 
sufficient notice from GAO and its report that indeed it should 
try to resolve this issue of trying to provide additional input 
or notice to the State representatives? Also, on the issue of 
having some end testing in place to try to check to see if this 
is actually going to be a system that works--do you get that 
sense that they picked up on that and are responding to your 
concerns?
    Ms. KOONTZ. We had the discussion, one of many discussions, 
just yesterday with SSA officials in preparation for the 
hearing. They would probably tell you that they don't think 
that the concerns of the DDS State officials are as great a 
problem as we think that it is. We think it is quite 
significant. On the other hand, they were also saying, well, 
yes, we are going to do more to communicate with the State, the 
State people, and we are going to try to articulate a better 
overall vision of what we are going to do and provide more 
detail. So, in that sense, I would have to say that I think 
they are responsive to the concern at this point.
    Mr. BECERRA. They have at least been put on notice. We 
don't want to have to come back here, and say we told you so. 
Certainly, GAO doesn't want to come back and say that. So, you 
will have continued discussions with them on this?
    Ms. KOONTZ. Yes, on this and a number of other issues.
    Mr. BECERRA. Ms. Prokop, a couple quick questions. Speaking 
on behalf of the disability community, or as an advocate for 
the disability community, give me a sense if your level--if you 
are satisfied by the level of inclusion by the advocacy 
organizations within the SSA's reform process? Have you been 
included enough, do you feel like you all have been able to 
participate and give your input into this reform process under 
way by the Administration?
    Ms. PROKOP. We have generally found Social Security among 
the more welcoming of agencies for disability community input 
in a variety of facets. So, I think my colleagues on the task 
force would generally agree with that impression that I have.
    Mr. BECERRA. If there are any areas that you would like to 
provide more input, this is a great chance to let us know so we 
can advocate on your behalf, as well as to work with SSA, to 
make sure that your input is taken by the SSA.
    Ms. PROKOP. Well, I think one of the things I know that a 
number of my colleagues on the Social Security Task Force would 
probably want me to emphasize, and it is outlined in our 
statement, is the fairness of the disability claims process. We 
have outlined, in our written statement, a number of steps that 
we believe are important to ensuring fairness of that process 
with regards to administrative law judges and keeping the 
record open. I would certainly hope that the Subcommittee would 
key into some of those pieces that we think are important.
    Mr. BECERRA. You had a chance to talk to the SSA about 
those concerns that you have had?
    Ms. PROKOP. I believe that we have, yes.
    Mr. BECERRA. Those are ongoing discussions? I suspect that 
they have heard--this is something you have expressed in the 
past, so it is not something new. So, hopefully, you will 
continue to have that dialog with SSA on that particular point. 
Let me ask you with regard to one of those concerns that you 
mentioned in your written testimony, the adjudication process. 
There is some talk of perhaps instituting a preliminary 
adjudication process that would be outside of a part from the 
regular process involving administrative law judges. So, that 
you could have a preliminary decision that wouldn't be issued 
by an administrative law judge but by someone who would 
obviously be trained to be able to cast some decisions. This 
would probably help us try to move certain cases along that 
seem fairly clear one way or the other. Your thoughts ongoing 
in a direction of providing some type of preliminary 
adjudication without an administrative law judge performing 
that adjudication.
    Ms. PROKOP. Well, I would defer to some of my task force 
colleagues who are a little more familiar with the legal 
processes of the whole disability claims determination process. 
I do know there is a strong interest among members of our task 
force in making sure that there is as much information at the 
up front part of the process as opposed to having to draw out 
the whole claims process. If the claimants know what it is they 
are supposed to provide the adjudicators at the outset, and are 
given time to collect that information and get it in at the 
beginning, it seems to us to make the process a lot shorter and 
a lot easier and a lot fairer. If there are particular details 
about this issue that I am missing, I would like to take that 
back to my colleagues who have a greater handle on details 
about this process and perhaps we can supply that for the 
record.
    Mr. BECERRA. Let me ask that you do so. In fact, on any of 
the points that you raised because there were some important 
points that is you raised in your written testimony that, 
obviously in 5 minutes, you couldn't elaborate on within 5 
minutes of oral testimony. If you do provide us with some 
guidance, especially on your concerns with regard to some of 
these potential reforms, especially in regards to, for example 
the adjudication processing expanded to include a non-
administrative law judge setting. An administrative law judge--
some will say sometimes these judges aren't adequately trained, 
don't make great decisions. At least we know they have gone 
through enough training to be adjudicators. I know there is 
always that concern expressed in trying to accelerate the 
process that sometimes we put in place systems and individuals 
who aren't equipped to handle some of these claims. You are 
making perhaps not life and death decisions, but close to it on 
occasion. I know that someone would not want to find that they 
have received short shrift of their claim by someone who wasn't 
fully trained to adjudicate these things. I would be interested 
to hear your thoughts. Because we do have to try to find a way 
to accelerate the process to remove the backlog. If you don't 
mind having some of the advocacy groups respond in writing to 
some of the concerns that you outlined generally in your 
statement.
    Ms. PROKOP. We would be happy to do that.
    Mr. BECERRA. Thank you all for your testimony.
    Chairman SHAW. I thank these witnesses, too. We very much 
appreciate your taking the time to come up and to share your 
knowledge with this Committee. It is important that as the 
Committee of jurisdiction we stay in close touch with what is 
happening. I want to plan, after the break, hearings on several 
things. I think we need to take a closer look at the Ticket to 
Work Program to be sure that the program is working the way 
that we want it to. I also want to look into the workload that 
judges have--how hard they are working. I am sure that we will 
probably find that there are some who are very aggressive and 
working very hard, and some who aren't carrying their load. Yet 
that will be for a future hearing to determine. It is important 
that we see that the system we have is working and that it is 
accomplishing what the Congress intended it to do. Our 
constituents expect that for the money that they pay in, not 
voluntarily but by law, into the Social Security system, the 
program will work. Thank you very much, and thanks to the 
Members for being here. We are adjourned.
    [Whereupon, at 11:44 a.m., the hearing was adjourned.]
    [Questions submitted from Chairman Shaw to the Honorable 
Barnhart, Mr. Robertson, Ms. Koontz, and Ms. Prokop, and their 
responses follow:]

 Questions from Chairman E. Clay Shaw, Jr. to the Honorable Jo Anne B. 
                                Barnhart

    Question: To meet the objectives in the Service Delivery Budget 
Plan, productivity at the Social Security Administration (SSA) must 
improve an average of 2 percent each year. The Service Delivery Budget 
Plan calls the productivity goals ``optimistic.'' Can you explain why 
the productivity goal is optimistic and how the agency will improve 
productivity by an average of 2 percent or more a year?

    Answer: The Social Security Administration's (SSA) Service Delivery 
Budget (SDB) Plan includes initiatives that are expected to produce 
workyear savings, enabling us to process work more efficiently. The 
workyear savings mean increased productivity--i.e., the same level of 
work processed with fewer workyears. From Fiscal Year (FY) 2004 through 
FY 2008, the period covered by SSA's multi-year SDB Plan, our goal is 
to achieve an average of at least 2 percent per year improvement in 
productivity. Workyear savings are budgeted for specific automation 
initiatives and other process changes, and activities are underway 
throughout the Agency that will add savings and help us reach our 
productivity improvement goal.
    Although SSA realized an impressive 5-percent increase in 
productivity in FY 2002, largely through the efforts of its dedicated 
employees, we cannot expect that experience to continue every year. In 
FY 2001, productivity decreased when compared to FY 2000. It is 
unrealistic to expect productivity improvement to continue at the FY 
2002 rate--it is more reasonable to assume that over time, we will have 
a modest annual increase in productivity with some increases and 
decreases depending on specific workloads processed and initiatives 
implemented. Although we consider an annual average of 2 percent per 
year sustainable, systems changes and other enhancements are critical 
factors in making this happen.
    In recent years, SSA has achieved substantial productivity gains 
from automation. While further advances in automation are key to SSA's 
productivity improvement goal of 2 percent per year highlighted in our 
SDB Plan, actual productivity improvements will depend on how quickly 
we can achieve efficiencies. Additional workyears also can be needed 
for training and other startup costs associated with implementation of 
new initiatives.
    Systems enhancements to our Title II and Title XVI programs will 
produce savings over the course of the SDB Plan. A major Agency 
initiative in the SDB Plan is the Accelerated Electronic Disability 
Process (AeDib), which will move all components involved in disability 
claims adjudication and review to an electronic business process 
through use of an electronic disability folder. We will begin national 
rollout of AeDib in January 2004 in the Atlanta Region, which includes 
the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North 
Carolina, South Carolina, and Tennessee. This project is a major factor 
in making the disability process more efficient and faster and 
contributes to our savings estimates for FY 2005 through FY 2008.
    The FY 2004 budget provides employees with the support needed to 
continue their efforts through improvements in automation and other 
investments that will enable them to process increasing workloads more 
efficiently.

    Question: For fiscal year 2003, the SSA expects to save 334 work 
years by increasing automation of the toll-free 800 telephone service. 
Then, between 2004 and 2008, the agency expects to save another 1,935 
hours by automating the phone line, an additional 387 hours per year. 
With all of this automation will it be possible to reach a live SSA 
employee by phone in 2009?

    Answer: Although a significant number of calls to the 800-number 
are completely automated, agent service will remain available for all 
callers to SSA's toll-free national 800-number.
    The annual workyear savings displayed in the SDB Plan for this 
initiative represent savings in each fiscal year as compared to FY 2001 
experience. Total annual savings for this 800-number automation 
initiative (387 workyears) are expected to be fully realized in FY 
2004. In FY 2003, the initiative already will have achieved savings of 
334 workyears when compared to FY 2001. For FY 2004, we estimate that 
an additional 53 workyears of savings would be realized over FY 2003 
experience, for a total of 387 workyears. We expect to maintain this 
level of annual workyear savings for 800-number automation for FY 2005 
through FY 2008. There are no additional savings over FY 2001 
experience beyond FY 2004.
    These savings represent improvements to the process.  For example, 
major savings were achieved with the move to next available agent 
technology. This new call routing technology treats all incoming calls 
as a single queue, routing them directly to agents not currently 
handling a call, rather than to separate queues at each teleservice 
center. Further, it enables callers to request a Spanish speaking 
agent, making efficient use of SSA's Spanish language capabilities 
nationwide.
    Continuing efforts to increase automation services and improve on 
our current processes will make it easier for callers to reach a live 
agent. Our public surveys indicate that many callers prefer using 
automation and are satisfied with the service. Certain simple, high 
volume workloads (e.g., requests for Social Security number 
applications, replacement Medicare cards, and so forth.) are ideally 
suited for automation and do not require handling by an agent. Having 
these issues handled by automation will free up agents to answer calls 
from individuals who either need or prefer to speak to an agent.

    Question: Other aggressive productivity improvements include 1,850 
hours in work year savings (from fiscal year 2003 to fiscal year 2008) 
by redesign of Title II. Can you explain in greater detail how the 
redesign will improve productivity?

    Answer: Title II Redesign is an ongoing automation initiative with 
periodicnew software releases that eliminate or reduce manual efforts 
required to process work. The initiative focuses on retiring older 
software program systems in the Processing Centers that require 
extensive manual work on postentitlement actions.
    The annual workyear savings displayed in the SDB Plan for this 
initiative represent savings in each fiscal year as compared to FY 2001 
experience. Total annual savings for this initiative (407 workyears) 
are expected to be fully realized in FY 2005. In FY 2003, the 
initiative will have achieved savings of 36 workyears when compared to 
FY 2001. For FY 2004 and FY 2005, we projected that additional 
incremental savings would be realized to achieve full year savings of 
407 workyears on an annual basis by FY 2005. We expect to maintain this 
level of productivity attributable to Title II Redesign for FY 2006 
through FY 2008.
    The FY 2004 Title II Redesign plan includes automation enhancements 
on activities such as:

      Replacing older software systems that generate manual 
actions with automated processes;
      Automating calculations, release of payments, and notices 
for about 25,000 Benefit Rate Increase actions;
      Automating calculations, release of payments and notices, 
and recording fees collected for about 180,000 attorney fee actions 
annually;
      Automating the release of approximately 60,000 Spanish 
language notices regarding special payments; and,
      Enhancing software to allow more Workers' Compensation 
actions to be processed in field offices while simultaneously reducing 
the amount of time it takes to process those actions.

    The following provides additional technical detail about this 
initiative:
    Title II Redesign is a multi-stage, multi-year initiative that is 
an umbrella for a variety of enhancements to Title II Claims and Post 
Entitlement workload processing. Title II Redesign provides a 
standardized input format for all Agency transactions. This will lead 
to ``one stop shopping'' at the beneficiary's first point of contact 
with the Agency. Title II Redesign allows for increased automation and 
online processing. This decreases the number of exceptions or actions 
that require additional work by staff. In addition, multiple 
transactions are now processed in the same day. Title II Redesign 
expands automation by reducing manual tasks, eliminates redundant data 
entry, and improves the quality of data stored in SSA master records. 
It is through these improvements that the Agency realizes improved 
productivity.
    Specific examples of efficiencies and productivity improvements 
achieved through Redesign to date include:

      Workers' compensation reports are processed in field 
offices utilizing improved front-end systems that eliminate the need 
for most Processing Center actions. This allows the Field Offices to 
complete processing at the first point of contact.
      Processing efficiencies were increased and have resulted 
in 99.52 percent of actions updating to the Master Beneficiary Record.

    Redesign releases to be implemented in FY2004 will provide 
productivity improvements in work associated with student reports, many 
reported status changes, and most termination and suspension events. 
Enhancements to the online processes, including online editing, will 
result in more work completed in the field in less time, with less 
service delivery delays, and fewer exceptions to be worked in the 
processing centers. By continuing the Agency investment in the Redesign 
process, more efficient and productive whole case processing will be 
achieved. We will also enhance month-to-month accounting and provide 
for a more centralized accounting functionality for our business 
processes.

    Question: If these productivity gains fail to materialize, what 
will be the impact on the agency's operations?

    Answer: Achieving the productivity savings reflected in the SDB 
Plan is vital to the success of this multi-year plan. If gains from 
SSA's productivity initiatives fail to materialize, the Agency would 
require additional workyear resources to process the budgeted 
workloads.
    However, we are committed to achieving the productivity gains 
reflected in our SDB Plan. With adequate resources, including funding 
in FY 2004 at the level requested in the President's budget, we fully 
expect we will be able to achieve our productivity goals.

    Question: A solid quality management system should produce the 
comprehensive program information that policy makers need to guide 
disability policy and procedures and to ensure accuracy and consistency 
in all levels of decisionmaking. Inconsistency of decisions among 
decisionmakers has been highlighted as a key challenge facing the 
agency. You have been exploring ways to implement a new quality 
management system. Can you tell us about the status of this system and 
your plans for the future?

    Answer: The Disability Insurance program is our major program 
challenge, both in terms of the volume of work that we handle each year 
and the challenge to make the right decisions in a timely manner. Major 
changes are underway to improve the overall efficiency of the 
disability program, even as we expect our workloads to grow 
significantly over the coming years. A critical piece in improving the 
way we do business is ensuring that our quality process is aligned with 
our new business process.
    In April 2002, I formed the Quality Management Workgroup under the 
leadership of one of SSA's Senior Managers to stress the importance of 
quality throughout the organization. The group was tasked with 
developing a proposal on what quality should look like for each of the 
Agency's business processes, i.e., claims, post-entitlement actions, 
informing the public, enumeration, earnings and all support activities. 
To ensure that the emphasis on quality continued, I made this group a 
permanent staff under the leadership of the Chief Strategic Officer.
    The initial task of this staff was to define the elements of 
quality for the Agency. The Agency-level definition of quality in SSA 
means providing service that meets the needs of the people, balancing 
accuracy, timeliness, productivity, cost and service. The Quality 
Management staff works with the components to ensure that these 
elements of quality are integrated into our policies, processes, and 
systems.
    Additionally, to keep our employees focused on quality and to share 
operational workload practices, the Quality Matters report is published 
regularly on the SSA Intranet and made available to the approximately 
80,000 SSA/DDS employees. For example, the May edition of the report 
was a special edition that highlighted the Agency's efforts in the 
disability area and featured information about the Accelerated 
Electronic Disability process, efficiencies in obtaining medical 
evidence, the Ticket to Work Program, and so forth.
    To further address systemic quality issues, I have engaged an 
independent contractor to review the entire quality process, beginning 
with the Disability Insurance program. The contractor will examine what 
we do now and develop practical recommendations for improvements. A key 
factor in this effort is securing input from SSA and DDS employees on 
how the current quality process works. Beginning August 19, selected 
employees across the nation are completing a survey to provide 
valuable, first-hand information on the disability process. These 
responses will be used to help the independent contractor document our 
current process and develop short and long-term recommendations. These 
recommendations for improvements, coupled with the program changes that 
we are developing, are expected to result in improved quality service 
to our citizens and increased stewardship of the disability program.

    Question: At a recent Subcommittee hearing, the U.S. General 
Accounting Office (GAO) demonstrated how some of its agents were able 
to obtain Social Security numbers (SSNs) for a child under age 1 using 
fraudulent documents. The GAO proved that failure to verify birth 
certificates for these babies with the appropriate state or local 
agency is a serious vulnerability in the SSN issuance process. Have you 
re-evaluated this policy? If yes, what have you concluded?

    Answer: Over 90 percent of all original SSNs are issued via the 
Enumeration at Birth (EaB) program in which parents of newborns elect 
to receive an SSN for their newborn as part of the birth registration 
process. Information is sent directly from the hospital to the State 
Bureau of Vital Records and then to SSA. The EaB process is highly 
secure. For those who elect not to utilize EaB, and who are over the 
age of 1 at the time of application for a SSN, we verify the birth 
certificate presented in support of the application with the custodian 
of the record.
    We have not yet instituted a similar policy of collateral 
verification for children under age 1 because we have been concerned 
about the significant disadvantages that will be experienced by 
citizens; such a policy could result in long delays in SSN issuance. 
Some State agencies require as many as 19 weeks after birth before they 
are able to record a birth and before they would be in a position to 
verify a birth certificate. The ability to file income tax forms on a 
timely basis may be impacted if parents are not able to obtain an SSN 
for a young child in a timely fashion.
    However, in part because of the issues raised by GAO, we are 
working in partnership with the National Association for Public Health 
Statistics and Information Systems (NAPHSIS) to study the potential for 
fraud in this population, and to determine the best way to address it. 
We will evaluate the results of the study to determine whether a change 
in policy is warranted.

    Question: The GAO also said that according to current procedures, 
the agency could issue up to 52 replacement Social Security cards per 
year to individuals. Also, they said the evidence requirements for U.S. 
citizens seeking replacement SSN cards were less stringent--they could 
use documents like church membership cards or health insurance cards to 
obtain a replacement card. Are you planning to address these issues? 
How?

    Answer: SSA shares concerns about the issuance of replacement SSN 
cards. It is currently possible to issue up to 52 replacement cards to 
an individual annually because systems controls allow the issuance of 
an SSN card after 7 days of a previous request. However, our data 
indicate that most people request three or fewer SSN replacement cards 
per year. During a recent sampling of replacement SSN cards issued 
during a 1 year period, we found that only about 1.5 percent of all 
replacement cards were issued to people who requested 3 or more cards, 
and less than 0.3 of 1 percent of replacement cards were issued to 
people who requested more than three cards.
    We are looking into setting limits on the number of replacement 
cards an individual can get per year, and in a lifetime, to help close 
this potential opportunity for SSN misuse, and would be interested in 
your reaction to this idea.
    Regarding concerns about the evidence requirements for citizens 
requesting replacement cards, SSA applies the same standards for 
evidence of identity for individuals (citizens or noncitizens) seeking 
replacement cards as it does for individuals seeking original SSNs. We 
require that, in order to be used as evidence of identity, the document 
must have been established at a later time and for a different purpose 
than the birth record and be of recent issuance to establish the 
individual's continued existence. Furthermore, SSA interviewers ask 
applicants to provide documents that show the person's name and 
biographical information that the reviewer can compare with the data on 
the Application for a Social Security Card-Form SS-5 (e.g., the 
person's name, as well as age, date of birth, or parents' names) and/or 
physical information that the reviewer can compare with the applicant 
(e.g., physical description, photographic identification).

    Question: The GAO recently demonstrated how some of its agents were 
able to obtain driver's licenses using the SSNs of deceased 
individuals, even in states that verify SSNs with the Social Security 
Administration by sending a ``batch'' of SSNs to the agency 
electronically. The GAO said that while the SSA verifies whether a SSN 
belongs to a dead person if the state uses the agency's online 
verification system, it does not if the state uses the ``batch'' 
system. Furthermore, the GAO reported that there is a backlog of states 
wanting to use the online SSN verification system, and some states were 
told to scale back their use because they were overloading the system. 
What are you doing to address these issues?

    Answer: We agree that unrestricted death information should be 
provided as part of batch SSN verification, and we are reviewing this 
change; however, we must prioritize this request in our systems 
development plans before any work can be scheduled and completed.
    The backlog of States wishing to use the online system has been 
addressed. In April 2003, AAMVA and SSA implemented an improved process 
for managing and responding to online verification requests. Three new 
States have been added to the online verification system since that 
date, and six more States are in various stages of testing with AAMVA 
and SSA. Additional States have signed agreements with SSA that will 
permit them to begin the online verification process. Prior to the 
improvement, we were processing 15,000 to 20,000 transactions a day. 
Currently, we are processing 30,000 to 40,000 verification requests a 
day from the States. Approximately 93 percent of all of those 
transactions are verified by SSA in less than 1 second. AAMVA has 
renewed its efforts with the States to educate them about the 
improvements and to assist them in accessing this service.
    Concerning the success of agents obtaining a false driver's 
license, we are investigating the sequence of events with the GAO test 
cases. It may be that the State employee simply did not attempt to use 
the service. If the undercover GAO agent left the MVA office with a 
Drivers License, the batch routine interface may not be an issue, as 
the driver license personnel would not have received the verification 
response prior to issuing the license.

    Question: While there is still much room for progress, your 
commitment to tightening controls on SSN issuance is clear--for 
example, the pilot projects to prevent fraud in issuance of SSNs to 
non-citizens and the verification of birth records for individuals over 
age 1. However, is your commitment to insuring the integrity of SSNs 
getting through to field staff? The GAO reported that field offices are 
not always following procedure in visually examining documents to 
determine if they are genuine or fake, especially with respect to 
immigration documents. Could you explain why this is happening and what 
you are doing to ensure your commitment to SSN integrity reaches all 
levels of the agency?

    Answer: We appreciate the House Social Security Subcommittee 
acknowledging SSA's commitment to increasing the security aspects of 
our Social Security number workload. In the last 2 years, SSA has taken 
the following steps to improve the accuracy of the non-citizen 
enumeration workload:

      Collateral (third party) verification of all applications 
for new or replacement Social Security cards by non citizens.
      Development of a software program that interfaces with 
the Department of Homeland Security (DHS) Systematic Alien Verification 
Entitlement System (SAVE) to monitor the accuracy of documents 
submitted by non citizens.
      Distribution of information prepared by DHS which assists 
SSA field office employees in recognizing counterfeit documents.
      Quality reviews and/or training on the SSN workload 
conducted by all SSA regional offices for SSA field office employees.

    SSA field office employees visually inspect documents for 
counterfeit detection and have been instructed to use all methods 
available to them to determine if documents that have been submitted as 
evidence are valid. This includes using the black light. In the case of 
immigration documents, field office employees are instructed to query 
the DHS' SAVE system. If the documents cannot be verified using the 
automated process, they must send a paper verification request to DHS. 
Use of the black light in these situations could possibly identify rare 
instances of an applicant who has illegally obtained a valid document, 
assumed another person's identity, and then pasted on his/her own 
picture on the document. We will remind our employees of the need to do 
a visual black light inspection of the documents as well as verifying 
them with the issuing agency.
    However, we believe the integrity of the assignment of an SSN is 
much more enhanced by our field office employees not merely relying on 
visual inspection of a document to determine whether it is fraudulent, 
but by verification of the document with the issuing agency.

    Question: You have mentioned that because of the reduced resource 
levels for fiscal year 2003, the agency had to cut back on the number 
of continuing disability reviews that it will conduct this year. These 
reviews are important, as they ensure only those who continue to be 
disabled stay on the rolls and also generate trust fund savings--$9 for 
every $1 invested. According to the GAO, this decision will result in a 
backlog of about 200,000 reviews by the end of the fiscal year. If the 
agency receives the President's budget request, will you be able to 
eliminate this backlog? In the budget request, the President asked for 
``earmarked'' funds for these reviews. Why is this earmarking 
important? Is there a need for us to address this legislatively, as we 
have in the past?

    Answer: In FY 2003, SSA is focusing on keeping up with claims 
workloads so that the number of disability claims pending does not 
grow. We began this year under a continuing resolution and operated for 
4 months at last year's level. In addition, we are absorbing an across-
the-board rescission of .65 percent and a higher-than-budgeted pay 
raise. Consequently, we will not be able to process all Continuing 
Disability Reviews (CDRs) necessary to remain current. Nevertheless, we 
continue to process as many CDRs as possible after keeping up with 
initial claims receipts.
    SSA's plans call for sufficient resources in future budget requests 
to become current with CDR workloads. The FY 2004 President's budget 
request, which was developed before final congressional action on FY 
2003 appropriations, enables SSA to remain current with CDRs that come 
due during FY 2004. We anticipate that the backlog from FY 2003 will be 
fully eliminated in FY 2005, provided that we receive adequate funding.
    The discretionary funding cap adjustments for CDRs authorized by 
Congress for fiscal years 1996 through 2002 were crucial to realizing 
currency for both the Title II and Title XVI disability review programs 
at the close of FY 2002.
    The President's budget proposed to extend the Budget Enforcement 
Act controls that expired in 2002, and requested that Congress impose 
statutory caps on discretionary spending for FY 2004 and FY 2005. In 
addition, the President's budget supports a cap adjustment of $1.446 
billion in FY 2004 and $1.473 in FY 2005 for SSA program integrity 
activities, including CDRs. This cap adjustment would ensure adequate 
funding for fiscal years 2004 and 2005 to maintain currency with CDRs 
and process other cost-effective program integrity work, thereby 
enabling SSA to meet both its stewardship responsibilities and overall 
service demands.
    As you know, Congress addressed discretionary spending caps in its 
FY 2004 budget resolution. The President's cap adjustment proposal for 
SSA was not included. Therefore, SSA's primary concern for FY 2004 is 
receiving full funding of the President's budget request, which is 
vital to our ability to meet our responsibilities for both service and 
stewardship.
    When final data are available, we believe the fiscal year 2003 
continuing disability reviews (CDR) backlog will be less than the 
200,000 cited by GAO, due to SSA's efforts to keep the CDR workload as 
current as possible. If the Agency receives the President's budget 
request, it will greatly enhance our ability to address this backlog. 
Based on the data now available, we plan to be current in FY 2005, but 
we will use available resources to achieve CDR currency as quickly as 
possible.
    Earmarking funds to do CDRs would enable SSA and the disability 
determination services to process the necessary CDRs each fiscal year 
so CDR currency can again be met as soon as possible and continue to be 
met each year thereafter. However, designating CDR funding without 
providing sufficient funding to process all SSA workloads, causes 
workload backlogs in other areas. For example, SSA had ``designated CDR 
funding'' for several years and it allowed SSA to alleviate a large 
backlog of CDRs and achieve currency. At the same time, SSA was not 
provided enough funding to process all of its other workloads and 
initial disability claims pendings increased from just under 400,000 at 
the end of FY 1997 to over 592,000 at the end of FY 2002.

    Question: GAO testified on their findings regarding the agency's 
continuing disability review process. They suggest the process could be 
improved by potentially pursuing Medicare and Medicaid treatment data. 
Do you plan on taking further steps to streamline and improve the 
process?

    Answer: SSA currently is using Medicare data to identify Title II 
beneficiaries to receive a CDR mailer, rather than a full medical 
review. And, SSA is studying the use of Medicaid data to identify more 
Title XVI recipients who could receive a CDR mailer, rather than a full 
medical review.
    In a recent GAO Report (GAO-03-662) ``Social Security Disability 
Review of Beneficiaries Disability Status Require Continuing Attention 
to Achieve Timeliness and Cost-Effectiveness'' (Audit #12002037), GAO 
recommended that SSA should study the use of Medicare and Medicaid data 
for the purpose of deciding whether to use a full medical review in 
conducting a CDR for beneficiaries who would otherwise receive a CDR 
mailer. If this is found to be cost effective, GAO said SSA should 
incorporate Medicare and Medicaid data into its CDR process for this 
purpose. SSA agrees with this recommendation and plans to conduct a 
feasibility study to determine whether Medicare and Medicaid data can 
be useful to change the status of those CDR cases identified for the 
CDR mailer process to full medical reviews.

    Question: The bipartisan Social Security Advisory Board and other 
non-government surveys have found that the public does not always 
understand the services that the agency offers, the benefits it 
provides, or the financing of the system. As the population ages and 
baby boomers begin retiring, more and more people will have a vested 
interest in understanding the program, including the requirements for 
certain benefits. I understand that the Agency has taken steps to 
improve the public's understanding of the program, and increasing the 
public's understanding is among one of the agency's strategic 
objectives. What specifically has the agency done to increase the 
public's understanding of the program, has it been successful, and what 
are the future plans?

    Answer: Social Security considers educating the American public 
about the current program, its benefits and financing, including the 
financial challenges it faces in the future, to be one of the core 
missions of the Agency. As a result, we undertake many activities to 
accomplish this task. For example:

      Each year, approximately 140 million workers receive 
their own Social Security Statement. In addition to providing a 
worker's earnings record, and estimates of future benefits, the 
Statement explains the financial problems the program faces in the 
future. The language is very specific, explaining that unless there is 
action to address the Social Security shortfall ``by 2042, there will 
be enough money to pay only about 73 cents for each dollar of scheduled 
benefits.''
      Social Security's website (socialsecurity.gov) contains a 
wealth of information about the current program and its future. In 
April 2003 we completed a redesign of the website in order to make it 
more user-friendly and accessible to the public. The redesign was 
developed with the input and assistance of focus and advocacy groups 
and is 508 compliant. In FY 2003, SSA received 30.1 million visits to 
the website. Of the 30.1 million visits, 14.4 million reviewed the 
``frequently asked questions,'' 5.4 million used the ``field office 
locator'' function, and 2.2 million made use of the ``SSA Benefit 
Planner.'' In addition to these activities the public also made use of 
the website's Benefit Eligibility Screening Tool and the Internet 
Social Security Benefit Application. The public also used the website 
to forward SSA email inquiries, request Social Security Statements, 
Medicare Replacement Cards, Replacement 1099s, Benefit Verifications 
and subscribed to SSA's ENews monthly newsletter.
      Social Security produces over 100 publications, including 
brochures and fact sheets, that describe the benefits available, 
financing and services available. These products are available through 
our network of field offices, through our national toll-free telephone 
number and through our website.
      Through a network of local offices across the country, 
Social Security employs the skills of 1,300 field office managers, and 
over 100 full-time public affairs specialists to educate Americans on 
the Social Security program. Each year, working in their local 
communities, these professionals deliver thousands of speeches, write 
numerous newspaper articles, and participate in countless radio and 
television interviews where they discuss all aspects of Social 
Security, including benefits provided through the program, financing 
and services we provide.
      Our Office of External Affairs works closely with other 
Federal, State, and local government agencies, as well as organizations 
in the private sector, to educate them on the benefits, available 
services and financing issues so they, in turn, can share that 
information with their members and colleagues.

    We also have periodic surveys, conducted by the Gallup 
Organization, that measure the effectiveness of our efforts to 
strengthen public understanding of Social Security. Based on the 
results of those surveys, our informational products and services are 
designed to ensure that our educational initiatives are reaching the 
right audiences.

                                 

  Questions from Chairman E. Clay Shaw, Jr. to Mr. Robert E. Robertson

    Question: For the fiscal year 2004 budget, the President requested 
that almost $1.5 billion be earmarked for continuing disability 
reviews, Supplemental Security Income non-disability redeterminations, 
and overpayment workloads. However, neither the House nor the Senate 
earmarks these funds in the appropriations bills. What is the 
consequence of disregarding the President's request to earmark these 
funds? Is it possible that the backlogs for Continuing Disability 
Reviews will increase next year if the funds are not earmarked?

    Answer: Without targeted funding for continuing disability reviews 
(CDR), SSA is more likely to develop a CDR backlog. We noted in our 
testimony that, as of the end of March 2003--only 6 months after the 
expiration of the separate authorized CDR funding that had allowed SSA 
to eliminate its previous backlog--SSA was already on pace to generate 
another CDR backlog. We also noted that targeted funding for CDRs could 
increase SSA's chances of staying current with the CDR workload because 
this workload would not have to compete internally for funding with the 
initial determination workload. More specifically, our work indicated 
that both SSA and DDSs assign a higher priority to the processing of 
initial eligibility decisions than to the completion of CDRs. 
Therefore, if the number of initial applications for disability 
benefits continues to increase, as SSA projects, SSA is likely to shift 
discretionary funds from CDRs to initial determinations, which could 
result in an increasing CDR backlog.

    Question: In your testimony you state that the SSA has not fully 
studied and pursued the use of medical treatment data on beneficiaries 
available from the Medicare and Medicaid programs. How easy would it be 
for SSA to access medical data from the Center for Medicare and 
Medicaid Services? Does accessing the data raise issues of medical 
privacy?

    Answer: SSA has already demonstrated its ability to obtain medical 
treatment data from the Center for Medicare and Medicaid Services 
(CMS), albeit, for a limited purpose. In addition, during our review, 
SSA officials did not indicate that there would be any unusual 
obstacles or issues--including medical privacy issues--preventing them 
from establishing or expanding their access to and use of CMS Medicare 
and Medicaid medical treatment data for purposes of improved CDR 
profiling. As we stated in our testimony, SSA has already implemented a 
process that uses Medicare data from CMS to improve the accuracy of its 
CDR profiling process. However, as we also noted, SSA had chosen to 
limit its use of Medicare data. Specifically, SSA is using Medicare 
data to determine if DI beneficiaries who are initially identified as 
candidates to receive a full medical review should instead receive 
mailers. In addition, SSA had initiated a study to assess whether CMS 
Medicaid data could be used in the same way to decide if SSI 
beneficiaries, scheduled to receive full medical reviews, could instead 
be sent mailers. But SSA had not studied or pursued any efforts to use 
CMS Medicare or Medicaid data to reclassify mailers to full medical 
reviews, despite the potential usefulness of using the data for this 
purpose. We believe accessing additional medical treatment data from 
CMS would be feasible and would not be prohibited by medical privacy 
issues. In fact, SSA agreed with our recommendation (in our report, 
Social Security Disability: Reviews of Beneficiaries' Disability Status 
Require Continued Attention to Achieve Timeliness and Cost-
Effectiveness, GAO-03-662, July 24, 2003) that the agency study the 
more comprehensive use of these data for CDR profiling and, if found to 
be cost-effective, incorporate such data into its CDR process.

                                 

     Questions from Chairman E. Clay Shaw, Jr. to Ms. Linda Koontz

    Question: The Social Security Administration (SSA) has indicated 
that the agency could potentially save $1 billion, at an estimated cost 
of approximately $900 million, by implementing an electronic disability 
folder. In your opinion, does the $900 million cost of this project 
appear to be a reasonable estimate? Is the $1 billion in savings a 
reasonable estimate? Is there a possibility that the cost of the 
project could balloon?

    Answer: Our work to date on SSA's February 2003 cost-benefit 
analysis raises concerns that SSA may have underestimated its 
accelerated electronic disability (AeDib) system costs. For example, 
the cost-benefit analysis did not fully consider the costs associated 
with certain critical information technology infrastructure elements 
supporting the nationwide rollout, such as scanning and imaging by the 
outsourced vendor, telecommunications, disaster recovery, and on-site 
retention and destruction of source documents, such as medical records. 
Because SSA has not yet fully estimated these costs, we are unclear 
about their magnitude.
    We are also concerned that the corresponding benefits cited in 
SSA's cost-benefit analysis may be overstated. Specifically, our review 
found that certain assumptions used in the analysis could be too 
optimistic. For example, SSA estimated benefits based on an assumption 
that state Disability Determination Services (DDS) would receive 30 
percent of all medical evidence in electronic form by 2004. However, 
state DDS officials with whom we spoke contend that their offices 
currently receive about 11 percent or less of medical evidence 
electronically, and disagree with the 30-percent assumption.
    As to whether the costs of AeDib could balloon, the possibility of 
cost increases exists for any project the size and magnitude of AeDib. 
As mentioned previously, the existing estimates do not include certain 
costs, such as some costs for outsourced scanning and imaging and the 
cost of disaster recovery. Including these could add to SSA's overall 
cost estimate. Our work analyzing the costs and benefits of AeDib is 
ongoing; the final results will be included in our report to be issued 
to you later this year.

    Question: According to your testimony, the SSA has developed a risk 
management plan, but is still without a comprehensive assessment of 
risk that could affect the electronic disability folder. Can you 
explain the difference between a risk management plan and a 
comprehensive assessment of risks? How does their risk management plan 
fall short of what GAO recommends? Why is this plan so important?

    Answer: A risk management plan provides guidance to project 
management teams and requires them to proactively identify facts and 
circumstances that could increase the probability of failing to meet 
project commitments, and take steps to prevent this from 
occurring.[1] A comprehensive assessment of risks, which is 
completed according to the risk management plan, is the process of 
identifying risks with a high probability and cost of failure, and 
developing strategies for mitigating those risks.[2]
---------------------------------------------------------------------------
    \[1]\ U.S. General Accounting Office, Information Technology: 
Greater Use of Best Practices Can Reduce Risks in Acquiring Defense 
Health Care System, GAO-02-345 (Washington, D.C.: September 26, 2002).
    \[2]\ Social Security Administration, SSA AeDib Risk Management 
Plan, Version 2.01 (Baltimore, MD, January 21, 2003).
---------------------------------------------------------------------------
    Based on our work to date, we do not have concerns about SSA's risk 
management plan, which was developed in accordance with our own and 
Office of Management and Budget (OMB) guidance. However, as mentioned 
in our testimony, we were concerned that SSA had not completed a 
subsequent comprehensive risk assessment. SSA officials agreed with the 
need for a comprehensive risk assessment, and since our testimony, the 
agency has provided us with detailed risk assessments for four of the 
five AeDib projects--the Electronic Disability Collect System, the 
Document Management Architecture, a DDS systems migration and 
electronic folder interface, and Internet disability applications. SSA 
has not yet provided us with a timeframe for completing the remaining 
risk assessment for its Hearings and Appeals case processing management 
system.
    A risk management plan is an essential tool used to guide the 
development of a comprehensive assessment of risks and mitigation 
strategies. A comprehensive risk assessment is equally critical. Both 
tools can help SSA avoid potential problems before they manifest 
themselves in cost, schedule, and performance shortfalls.

    Question: The GAO has identified a number of areas where the SSA 
could improve. For instance, the agency needs to develop risk 
assessment tools and could take additional measures to involve key 
stakeholders in the systems development process. Is there any 
indication that the SSA is acting on your recommendations?

    Answer: SSA has acknowledged our concerns relative to the areas of 
improvement we identified in our testimony, and has taken some action 
to address them. However, more work remains to fully address these 
issues.
    Specifically, we expressed the need for SSA to perform a 
comprehensive risk assessment to identify project risks and establish 
mitigation strategies for them. As noted in our response to question 2, 
SSA recently provided us with detailed risk assessments for four of the 
five AeDib projects, but has not yet provided a detailed assessment of 
risks for its remaining project.
    We also commented on the need for SSA to perform end-to-end testing 
prior to implementation, to ensure that the system it is developing 
will perform as intended. To date, SSA has not yet finalized its test 
and evaluation strategy. Therefore, it is unclear whether SSA intends 
to include end-to-end testing.
    Finally, we commented on the need for SSA to resolve stakeholder 
concerns to ensure program acceptance and use, and take additional 
steps to consult with the medical community. SSA acknowledged the 
importance of ensuring sound relations with stakeholders and the need 
to take additional actions, where necessary, to ensure that all 
stakeholder concerns have been adequately addressed. SSA also stated 
that additional steps would be taken to keep stakeholders involved in 
the initiative, and that plans were being made for a meeting with state 
DDS representatives to discuss the AeDib Initiative. However, SSA has 
not yet provided us with a copy of its communications plan for dealing 
with stakeholder issues, including its plans for consultation with the 
medical community.
    As part of our ongoing work, we will continue to monitor SSA's 
progress in addressing these issues.

    Question: The SSA has worked 11 years now to implement an 
electronic disability folder. The automation project started in 1992 as 
the Modernized Disability System (later renamed the Reengineered 
Disability System). After this project failed in 1999, the SSA 
immediately began work on the accelerated electronic disability 
initiative. Why is this project so difficult for the agency to 
complete? Has the SSA learned from its mistakes along the way?

    Answer: Software development is one of the riskiest areas of 
systems development.[3] We have reported that SSA's software 
development efforts have been problematic and plagued with delays 
because SSA has not consistently followed sound practices in developing 
systems designed to automate its disability claims process; thus, it 
has experienced numerous software development problems over the past 11 
years. For example, in September 1996 we reported that software 
development problems had delayed the scheduled implementation of the 
Reengineered Disability System (RDS) by more than 2 
years.[4] An assessment of the development activity revealed 
a number of factors as having contributed to that delay, including (1) 
using programmers with insufficient experience, (2) using software 
development tools that did not perform effectively, and (3) 
establishing initial software development schedules that were too 
optimistic. We reported again, in June 1998, that SSA had encountered 
performance problems during its RDS pilot tests.[5] In 
response to these performance problems, SSA delayed its plans for 
expanding the pilot to other offices, and obtained a contractor to 
independently evaluate and recommend options for proceeding with the 
initiative.
---------------------------------------------------------------------------
    \[3]\ U.S. General Accounting Office, Social Security 
Administration: Information Technology Challenges Facing the 
Commissioner, GAO/T-AIMD-98-109 (Washington, D.C.: March 12, 1998).
    \[4]\ U.S. General Accounting Office, Social Security 
Administration: Effective Leadership Needed to Meet Daunting 
Challenges, GAO/HEHS-96-196 (Washington, D.C.: September 12, 1996).
    \[5]\ U.S. General Accounting Office, Social Security 
Administration: Technical and Performance Challenges Threaten Progress 
of Modernization, GAO/AIMD-98-136 (Washington, D.C.: June 19, 1998).
---------------------------------------------------------------------------
    SSA's contractor reported that RDS software had defects that would 
diminish the case-processing rate at DDS sites, and that SSA had not 
been timely in addressing software defects. For example, 90 software 
problems identified by SSA staff remained unresolved for more than 120 
days. As a result, the contractor recommended that SSA discontinue the 
RDS initiative and focus on an alternative solution involving the use 
of an electronic folder to replace the paper-based case folder in the 
disability determination process.
    In another example, we reported in August 2001 on weaknesses 
regarding SSA's adherence to key software development procedures for 
several projects, including its electronic disability 
system.[6] We noted that SSA did not consistently adhere to 
its software development procedures in the areas of requirements 
management, software project planning, software quality assurance, and 
software configuration management.
---------------------------------------------------------------------------
    \[6]\ U.S. General Accounting Office, Information Technology 
Management: Social Security Administration Practices Can Be Improved, 
GAO-01-961 (Washington, D.C.: August 21, 2001).
---------------------------------------------------------------------------
    In our ongoing review, we have found that SSA has taken important 
steps to mitigate past software development problems. It has generally 
addressed its contractor's recommendations aimed at automating its 
disability claims process, and has generally been applying key software 
process improvement practices to its development of AeDib projects, 
such as developing plans to manage the projects, tracking and 
overseeing the initiatives to measure progress, performing quality 
assurance reviews to determine that the project is complying with its 
policies and procedures, and performing configuration management 
activities. While continually applying these software development 
practices is no guarantee of AeDib success, these practices 
nevertheless should improve SSA's capability to develop high-quality 
software in support of AeDib, thereby avoiding mistakes experienced in 
the past.

Agency Comments and Our Evaluation
    The Commissioner of Social Security's provided comments on a draft 
of this correspondence, which are reproduced in full as the attachment. 
In her comments, the Commissioner offered clarifications to our 
responses to questions 1 through 3.
    Regarding question 1, the Commissioner said that we were incorrect 
in stating that SSA's cost-benefit analysis had not considered all 
costs of certain critical IT infrastructure elements supporting the 
nationwide AeDib rollout, and that, in fact, SSA had included the costs 
of scanning and imaging by the outside vendor in its estimates.
    We have revised our response to clarify that SSA's cost-benefit 
analysis considered some, but not all, of the key cost elements that 
could affect the initiative. SSA's February 2003 cost-benefit analysis 
noted, for example, that the agency had not considered as part of its 
scanning and imaging functions, the keying in of indexing information 
(for case folder identification) by the outsourced scanning vendor, 
although this is deemed critical to the implementation of SSA's 
document management capability. Further, during our review, SSA 
officials told us that certain costs associated with the scanning and 
imaging functions were not expected to be identified until the agency 
performed its pilot tests (now ongoing) for its document management 
architecture.
    The Commissioner added that other AeDib-related costs associated 
with telecommunications, disaster recovery, and on-site retention and 
destruction of source documents should more appropriately be accounted 
for as part of the agency's ongoing operations, and therefore were 
covered in the agency's regular infrastructure costs, rather than the 
AeDib cost estimates. However, we disagree. OMB guidance states that 
cost-benefit analyses should include comprehensive estimates of all 
direct and indirect costs associated with a project.[7] As 
such, a sound cost-benefit analysis for AeDib will depend on SSA's 
fully considering the project-related costs for these critical elements 
supporting the development, operation, and maintenance of the 
electronic disability system.
---------------------------------------------------------------------------
    \[7]\ Office of Management and Budget Circular No. A-94 Revised 
(Transmittal Memo No. 64), Guidelines and Discount Rates for Benefit-
Cost Analysis of Federal Programs, October 29, 1992.
---------------------------------------------------------------------------
    Further, the Commissioner expressed concern about the example that 
we provided in noting that SSA's estimate of AeDib benefits could be 
overstated. Based on our interviews with SSA and state DDS 
representatives, our response highlighted the possibility that AeDib 
benefits could be overstated because of differences in SSA's and the 
DDSs' assumptions about the extent that medical evidence may be 
received electronically. We are continuing to assess SSA's cost-benefit 
analysis as part of our ongoing review.
    In commenting on our response to question 2, the Commissioner 
stated that SSA had expected to receive draft risk assessments by June 
30, 2003, and either planned to or already had shared some of its risk 
assessments with us. We have revised our response to reflect that SSA 
recently provided us with detailed risk assessments for four of the 
five AeDib projects.
    Finally, regarding question 3, the Commissioner stated that SSA had 
provided us with information concerning stakeholder issues and the 
agency's plans for consulting with the medical community. She further 
noted that outreach to the medical community was occurring. We are 
encouraged that SSA is taking steps to ensure productive communications 
with its key stakeholders and the medical community, and look forward 
to reviewing documented evidence of the agency's actions. To date, 
however, we have not received the additional information on SSA's plans 
for addressing stakeholder issues or consulting with the medical 
community, that the Commissioner mentions in her letter.

                                 ______
                                 
    In responding to these questions, we relied on past work and our 
ongoing review of SSA's efforts to automate its disability claims 
process. We discussed our assessment of the cost-benefit analysis with 
SSA's Office of Disability Programs, Office of Systems, and Office of 
the Chief Information Officer, and with the supporting contractor and 
key stakeholders. We reviewed and analyzed the most recent agency 
documents associated with SSA's risk management efforts. We also 
discussed with officials in the Office of Disability Programs SSA's 
efforts to develop a strategy for resolving stakeholder concerns, as 
well as a more aggressive approach for consultation with the medical 
community. Finally, we reviewed and analyzed SSA's software process 
improvement documentation, as well as past assessments of the agency's 
failed attempts to automate its disability claims process to determine 
lessons learned, and whether SSA is avoiding past software development 
problems. We conducted our work in accordance with generally accepted 
government auditing standards, during August 2003.

                                 

                                     Social Security Administration
                                          Baltimore, Maryland 21235
                                                  September 3, 2003
Ms. Linda D. Koontz
Director, Information Management Issues
United States General Accounting Office
441 G Street N.W.
Washington, D.C. 20548

    Dear Ms. Koontz:

    This responds to your letter dated August 27, 2003, requesting our 
comments on your proposed correspondence entitled Social Security 
Administration: Subcommittee Questions Concerning Efforts to Automate 
the Disability Claims Process (GAO-03-1113R). I appreciate the 
opportunity to review and comment on the correspondence before it is 
issued. We have the following comments and clarifications on your 
proposed responses to questions 1 through 3.

Question 1
    In your draft note to Congressman Shaw you indicate that in the 
February 2003 cost-benefit analysis (CBA) the Social Security 
Administration (SSA) ``. . . did not consider all costs of certain 
critical information technology infrastructure elements supporting the 
nationwide rollout, such as scanning and imaging by the outsource 
vendor, telecommunications, disaster recovery and on-site retention and 
destruction of source documents, such as medical records.'' This 
statement is incorrect, since we did in fact include the costs of 
scanning and imaging by the outsource vendor in the estimated costs for 
the accelerated electronic disability system (AeDib). Pages 8 and 9 of 
the CBA (Version 3.1 dated February 3, 2003) list these costs among the 
significant cost impacts for AeDib, with a pie chart showing outsource 
scanning costs as 14 percent of the total life cycle costs. We consider 
the other costs to be part of our ongoing operations, rather than 
specifically related to AeDib, and these costs are more appropriately 
covered in our regular infrastructure costs.
    Your draft response also indicates that the benefits of AeDib may 
have been overestimated because the State Disability Determination 
Services (DDS) you contacted disagree with the estimate that 30 percent 
of all medical evidence will be received in electronic form by 2004. 
During the fall of 2002, we held several discussions with the DDS 
Systems Committee and the National Council of Disability Determination 
Directors leadership relative to business process and technological 
issues. One of the central topics of these discussions was how to 
gather information that would assist in building the electronic medical 
evidence (EME) estimates. We derived the 30 percent estimate based on 
these discussions and information received from the DDS community. This 
is a national estimate for fiscal year 2004, and we would expect that 
this level would vary from location to location. Included in the 30 
percent estimate is medical evidence received through both direct 
electronic submissions as well as through fax submittals.

Question 2
    As stated in your draft note, we have provided the comprehensive 
risk assessments for two of the five parts of AeDib. We had advised 
General Accounting Office (GAO) staff that we were to receive the draft 
risk assessments from our contractor by June 30, 2003. We then needed 
to conduct an internal review of these documents. We shared two 
additional risk assessments with you on August 28, 2003. The last one 
will be sent after we complete our internal review.

Question 3
    Our comments on Question 2 also apply to the response to Question 
3. Additionally, we recently provided GAO staff with information 
regarding stakeholder issues and our plans for consultation with the 
medical community. Our senior executive leadership meets weekly to 
address AeDib issues, including those raised by all entities, internal 
as well as external.
    Additionally, our outreach to the medical community is handled 
through our public affairs and professional relations personnel in the 
DDSs and in SSA's central office, Regional Offices, and Field Offices. 
The issues of EME and processing disability claims in an electronic 
environment are being institutionalized throughout SSA. They have been 
a part of, and will continue to be included in, our contacts and 
communication vehicles that are already in place, including 
communication plans. Furthermore, I have undertaken special efforts to 
communicate with the major medical associations by holding and 
personally chairing a series of meetings to address their issues. In 
addition, my staff has had a series of productive meetings with staff 
at the Department of Health and Human Services on these issues.
    If I may be of further assistance, please do not hesitate to 
contact me or have your staff contact Mr. Robert M. Wilson, Deputy 
Commissioner for Legislation and Congressional Affairs, at (202) 358-
6030.
            Sincerely,
                                                Jo Anne B. Barnhart
                                                       Commissioner

                                 

     Questions from Chairman E. Clay Shaw, Jr. to Ms. Susan Prokop

    Question: The Social Security Administration (SSA) often delays or 
fails to record earnings reports from Disability Insurance and 
Supplemental Security Income beneficiaries. When the SSA finally does 
record the earnings and adjust the benefit checks accordingly, the 
beneficiary often owes hundreds of dollars from the overpayments, even 
though he or she properly reported the earnings long ago. The fear that 
SSA will not adjust the benefit checks correctly and on time prevents 
many individuals from participating in the Ticket to Work Program. Has 
this problem improved at all in the last year? What steps should the 
SSA take to correct this problem? What other barriers are stopping 
individuals from participating in the Ticket to Work Program?

    Answer: You and your colleagues on the subcommittee long ago 
identified the issue of posting of earnings reports and overpayments as 
a significant barrier for beneficiaries wishing to return to the 
workforce. The Consortium for Citizens with Disabilities (CCD) Task 
Forces on Social Security and Work Incentives Implementation were 
pleased to support HR 743 which contains provisions requiring SSA to 
issue a receipt when a beneficiary reports a change in status or 
earnings. At the very least, this would give a beneficiary documented 
proof that he or she attempted to provide SSA with timely information 
about changes in his or her earnings status. We hope that the Senate 
might act on this legislation as soon as possible to advance the many 
positive reforms contained in that measure.
    Mention was made at a recent vocational rehabilitation agency (VRA) 
training conference on the Ticket that many state VR agencies use 
unemployment insurance data from the Department of Labor to confirm 
beneficiary employment and earnings. VRAs are able to obtain this data 
without expecting the beneficiaries to report to them. Why cannot SSA 
gain access to that information for purposes of wage data reporting 
without imposing that responsibility on the beneficiary? This may not 
end completely the problem of overpayments but it might be faster than 
the current system which relies on overburdened SSA staff to enter the 
earnings reports by hand.
    In the final Ticket rule, SSA says that statutory requirements 
force the agency to collect overpayments from beneficiaries because 
they cannot pay both an employment network (EN) and a beneficiary. Once 
again, this seems to place the burden solely on the beneficiary and may 
pit the beneficiary against the provider. Once an employment network 
reports to MAXIMUS that a beneficiary has reached the substantial 
gainful activity (SGA) level, that action is supposed to serve as 
notice to SSA to stop benefits payments and pay the EN. SSA ought to be 
able to configure its data management systems to avoid paying 
inordinate amounts of benefits once this benchmark has been reached. 
Perhaps employment networks could arrange to escrow beneficiary 
benefits payments once the beneficiary reaches SGA so that, when SSA 
requests payback of the benefits, the funds will be awaiting return.
    Finally, benefits planning organizations, protection and advocacy 
agencies and other groups from which beneficiaries seek information 
about the Ticket should be more explicit about the need for 
beneficiaries to escrow any money received from SSA after they go above 
SGA. Beneficiaries should be able to prepare if they know from the 
outset that SSA will be slow in terminating their benefits but will 
come back later to collect the overpayments from them.
    With regard to other barriers stopping individuals from 
participating in the Ticket--the ``cash cliff' remains a significant 
impediment to returning to work for those on SSDI. We regret that SSA 
has yet to institute the pilot study of a 1-for-2 offset in SSDI as 
mandated by P.L. 106-170.
    Another difficulty beneficiaries may face in using the Ticket is 
the lack of choice in vocational rehabilitation provider. Almost 90 
percent of Tickets assigned as of July 2003 have been assigned to state 
VRAs. Part of this may stem from beneficiaries' familiarity with the VR 
system and the fact that many assignments were from beneficiaries 
already in the VR ``pipeline'' when the Ticket became effective in 
their states. However, numerous reports and conferences have documented 
the reluctance of many providers to participate in the Ticket due to 
concerns over the administrative burdens of the program, the employment 
network payment system that makes it impractical to serve those with 
significant disabilities and misgivings over competing with state 
agencies with whom they hold contracts. This undermines a central tenet 
of the Ticket program--choice in vocational rehabilitation provider. 
Furthermore, as mandated by law, many VR agencies have had to adopt 
limits on the beneficiaries they can serve due to vastly inadequate 
resources and increased demand. While most SSDI and SSI recipients will 
meet VR ``order of selection'' policies, some states have had to adopt 
such restrictive eligibility criteria that some Social Security 
beneficiaries do not qualify for services. If the VR agency is the only 
Ticket provider in such states, beneficiaries are frozen out of a 
chance to use their Ticket. Obviously, questions about the VR program 
fall under the jurisdiction of another committee. However, it might be 
informative for your Subcommittee and the Subcommittee on 21st Century 
Competitiveness to hold a joint hearing on Ticket-VR issues.

    Question: Can you provide us with suggestions for research or pilot 
programs the SSA could undertake to identify weaknesses in the 
disability programs that may need legislative or policy changes?

    Answer: As noted previously, SSA should move forward with the 1-
for-2 pilot since the cash cliff is a serious weakness in the SSDI 
program. It might also be useful to look at asset tests and limits in 
SSI that undermine peoples' ability to go to work and acquire savings 
for the future. Another emerging concern is the upper age limit 
contained in P.L. 106-170 that could result in working people with 
disabilities losing their Medicaid buy-in eligibility when they reach 
age 65. As the Social Security normal retirement age continues to 
increase to 67, policymakers should be reviewing how this may affect 
those taking advantage of the Ticket to Work and Work Incentives 
Improvement Act (TTVVWIIA).
    It is increasingly evident that numerous Federal disability 
programs across a multiplicity of agencies affect beneficiaries' 
ability to work in a variety of ways. Income limits for programs under 
the Department of Housing and Urban Development may penalize working 
people with disabilities. There is ongoing confusion about the ability 
of childhood disability beneficiaries or DACs to take advantage of 
TTVWVIIA without severing ties to their critically needed DAC benefits. 
Veterans' vocational rehabilitation programs are unable to serve 
veterans on SSDI with a Ticket, thereby limiting choice of provider to 
those beneficiaries. The General Accounting Office (GAO) should be 
asked to examine Federal disability programs and how their policies 
pertaining to income, assets and other eligibility criteria affect 
Social Security disability beneficiaries who want to work.

    Question: We all know that the SSA has made numerous attempts at 
instituting and streamlining the disability claims and determination 
processes, and yet none have really been that successful. Can you 
provide your thoughts on what the SSA needs to do to devise and 
implement a successful program, so that our constituents can get 
through this process in a reasonable amount of time?

    Answer: Many recent proposals to change the disability claims 
process have focused on the back end of the process, without addressing 
necessary changes to the front end. We believe that significant 
improvements would be accomplished if better development of evidence 
occurred earlier in the process.
    The key to a successful disability determination process is having 
an adequate documentation base and properly evaluating the 
documentation that is obtained. Unless claims are better developed at 
earlier levels, the procedural changes will not improve the disability 
determination process. Unfortunately, very often the files of denied 
claimants show that inadequate development was done at the initial and 
reconsideration levels. Until this lack of evidentiary development is 
addressed, the correct decision on the claim cannot be made. Claimants 
are denied not because the evidence establishes that the person is not 
disabled, but because the limited evidence gathered cannot establish 
that the person is disabled.
    A properly developed file is usually before the administrative law 
judge because the claimant's representative has obtained evidence or 
because the administrative law judge has developed it. Not 
surprisingly, different evidentiary records at different levels can 
easily produce different results on the issue of disability. To address 
this, the agency needs to emphasize the full development of the record 
at the beginning of the claim.
    We support full development of the record at the beginning of the 
claim so that the correct decision can be made at the earliest point 
possible. Claimants should be encouraged to submit evidence as early as 
possible. However, the fact that early submission of evidence does not 
occur more frequently is usually due to reasons beyond the claimant's 
control.
    Our recommendations to improve the development process include the 
following:

      SSA should explain to the claimant, at the beginning of 
the process, what evidence is important and necessary.
      DDSs need to obtain necessary and relevant evidence. 
Representatives often are able to obtain better medical information 
because they use letters and forms that ask questions relevant to the 
disability determination process. DDS forms usually ask for general 
medical information (diagnoses, findings, and so forth.) without 
tailoring questions to the Social Security disability standard. The 
same effort should be made with nonphysician sources (e.g., therapists, 
social workers) who see the claimant more frequently than the treating 
doctor and have a more thorough knowledge of the limitations caused by 
the claimant's impairments.
      Improve treatment source response rates to requests for 
records, including more appropriate reimbursement rates for medical 
records and reports.
      Provide better explanations to medical providers, in 
particular treating sources, about the disability standard and ask for 
evidence relevant to the standard.

    We commend the Commissioner for moving forward to develop the 
electronic disability folder, ``eDIB,'' as soon as practicable in light 
of available resources. This would reduce delay caused by moving and 
handing-off folders, allowing for immediate access by whichever 
component of SSA or DDS is working on the claim. The electronic folder 
also would reduce the occurrence of files that are lost or difficult to 
locate, a problem that leads to delays at all levels.
    While strongly supporting development of eDIB, we urge the 
Commissioner to ensure that the electronic folder contains complete 
copies of the paper records, rather than summaries or otherwise reduced 
copies, and that claimants are able to submit evidence in any format, 
including paper records.
    We also support other technological improvements by the 
Commissioner including digital recording of hearings and the use of 
video teleconferencing at administrative law judge hearings.
    Another initiative that already has proven to reduce delays is 
elimination of the reconsideration level. Over the past few years, SSA 
has been testing elimination of the reconsideration level in ten 
``prototype states'' [AL, AK, CA, CO, LA, MI, MO, NH, NY, PA]. Until 
last year, the testing also included a pre-initial decision interview, 
known as a ``claimant conference.'' Preliminary results of the testing 
showed that claims were awarded earlier in the process; that accuracy 
was comparable to non-prototype cases; and that denied claims move to 
the next level sooner. While elimination of the reconsideration level 
was scheduled to be implemented nationwide in 2002, SSA deferred taking 
action pending further analysis.
    We advocate the value of providing claimants with a face-to-face 
meeting with the decisionmaker before the initial decision is made. 
When the Commissioner announced that the conference would be 
eliminated, she stated that SSA would encourage early and ongoing 
contacts with claimants during the development process. As discussed 
above, these are goals that we strongly endorse. Many claimants' 
representatives and others would like to participate earlier in the 
process since they are able to assist the disability examiners in 
obtaining medical evidence and focusing the issues.
    Over the last few years, claimants' representatives have raised 
numerous, critical concerns about the current state of affairs in 
hearing offices around the country.
    Specific recommendations were presented to SSA in 2002 which 
representatives believe would make the hearing process more efficient, 
including: (1) creating the same claims folder earlier in the process; 
(2) reinstating senior attorney authority to issue decisions in certain 
cases (discussed more fully below in response to question 4); (3) 
identifying a ``point'' person who is available to ensure that the case 
is ready for hearing; (4) a better mechanism for review of requests for 
on-the-record decisions; (5) single requests for information; and (6) 
advance notice of hearings so that submission of evidence can be 
targeted.
    Last year, the Commissioner announced an initial series of 
initiatives to improve the hearings and appeals process. We are 
generally supportive of these initiatives so long as they do not impair 
the claimant's right to a full and fair hearing. These initiatives 
include: early screening and analysis of cases, including possible on-
the-record decisions; short form favorable decisions; bench decisions; 
expansion of videoconference hearings; and digital recording of 
hearings.

    Question: Please comment on including some kind of preliminary, 
non-administrative law judge adjudication in the disability appeals 
process.

    Answer: As discussed in my written statement, we strongly believe 
that claimants for disability benefits should retain the right to a de 
novo hearing before an administrative law judge. This right is central 
to the fairness of the adjudication process, since it guarantees the 
opportunity for a full and fair administrative hearing by an 
independent decisionmaker who provides impartial fact-finding and 
adjudication, free from agency coercion or influence.
    However, we support the use of non-administrative law judges in one 
decisionmaking situation that could assist administrative law judges: 
when a fully favorable decision can be issued, without the need for a 
hearing, i.e., an ``on the record'' decision.
    There is precedent for this limited use of non-administrative law 
judge decisionmakers at the hearing level. In the nineties, as an 
initiative to reduce the backlog of cases at hearings offices, OHA 
senior staff attorneys were given the authority to issue fully 
favorable decisions in cases that could be decided without a hearing. 
At the time, this program was well-received by claimants' advocates 
because it offered an opportunity to present a case and obtain a 
favorable result in an efficient and prompt manner.
    This program did not impair the claimant's right to a hearing 
before an administrative law judge. Procedurally, notice of the wholly 
favorable decision was sent to the claimant who, if he or she made the 
request, could still proceed with a hearing before an administrative 
law judge. If the senior staff attorney could not issue a wholly 
favorable decision on the record, the case was sent to the 
administrative law judge who then held a hearing.
    Of most importance, thousands of claimants benefited from this 
program. While the program existed, it helped to reduce the backlog by 
issuing approximately 200,000 decisions. Unfortunately, the initiative 
was phased out in 2000.

                                 

    [Submissions for the record follow:]

  Statement of Theresa Klubertanz, National Association of Disability 
                     Examiners, Madison, Wisconsin

    Chairman Shaw, Representative Matsui, 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 Service Delivery Budget Plan. We 
appreciate the Subcommittee's vigilant oversight of the Social Security 
program and your willingness to obtain input from our Association and 
others with expertise, experience, and understanding of the issues 
facing the Social Security and Supplemental Security Income (SSI) 
disability programs.
    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 
Social Security Field Offices, SSA Headquarters, OHA offices or in the 
private sector, are deeply concerned about the integrity and efficiency 
of the Social Security and SSI disability programs. Simply stated, we 
believe that those who are entitled to disability benefits under the 
law should receive them; those who are not, should not. We also believe 
decisions should be reached in a timely, efficient and equitable 
manner. The Commissioners' Strategic Plan, with its emphasis on 
service, stewardship, solvency and staff, provides an excellent 
blueprint for achieving those goals.

SERVICE
    NADE's Proposal for a New Disability Process (a copy of which has 
been shared with the Subcommittee previously and is included again with 
this testimony) supports SSA's Strategic Goal to ``make the right 
decision as early in the disability process as possible.'' The DDSs, 
through their initial and reconsideration decisions, constitute the 
first two levels in the disability claims process. SSA's statistics 
show that the allowance and denial accuracy rates for the DDSs far 
exceed 90%. It is clear, then, that in the vast majority of cases, the 
DDSs are making the ``right'' decision and are making that decision 
very early in the process. Sometimes, however, the ``right'' decision 
is ``No.'' Many witnesses who have appeared before this Subcommittee 
have attempted to mislead the public into believing that, unless a 
claim is allowed, it is not the ``right'' decision. This is not true 
and it is not fair to the thousands of DDS employees throughout the 
country who struggle daily to ensure that the decisions they make on 
each claim is the ``right'' decision. It must be acknowledged that some 
claims are filed for disability benefits that have no merit and many 
others are filed by individuals who do have significant physical and/or 
mental impairments but nevertheless do not meet Social Security's 
strict definition of disability. For these cases, the ``right'' 
decision is to deny the claim. For those individuals who do have severe 
physical and/or mental impairments that meet Social Security's strict 
definition of disability, it is important that these claims be allowed 
as early in the process as possible. The statistical data show that the 
DDSs make the ``right'' decision in the vast majority of claims and 
they make these decisions very early in the process.
    Because there are several appeal levels, however, and because the 
record remains open throughout the appeals process, each subsequent 
disability adjudicative component is presented with a different case 
and the ``right'' decision for that case may be different than for the 
original case or even the case at the previous appeal level. Thus, the 
decision made by each adjudicative component can still be ``accurate'' 
even though it may reverse a previous component's decision. NADE's plan 
for a new disability claims process proposes to close the record after 
the DDS reconsideration decision and limit subsequent appeals to 
matters of law. This would not adversely affect claimants or restrict 
their appeal rights but would instead significantly shorten the appeals 
process while ensuring that the DDS decision was made in compliance 
with the law and regulations set forth in the statutes. The NADE 
proposal also reduces the amount of time claimants must wait for a 
``final'' decision and significantly reduces the administrative costs 
connected with the tremendously long appeals process.
    In order to make the right decision as early in the process as 
possible SSA must ensure that the DDSs have sufficient resources, 
including staffing and funding. We agree with the General Accounting 
Office that ``SSA's goal of achieving an electronic disability claims 
process represents an important, positive direction toward more 
efficient delivery of disability payments. . . .'' However, while 
technology can be expected to reduce hand-offs, eliminate mail time and 
provide other efficiencies, technology cannot stem the dramatic growth 
in workloads. Neither can technology replace the highly skilled and 
trained adjudicator who evaluates the claim and determines an 
individual's medical eligibility for disability benefits in accordance 
with federal rules and regulations. We agree with the Commissioner 
that, ``The attributes of service that define quality include accuracy, 
productivity, cost, timeliness and service satisfaction.'' However, 
accuracy must never be sacrificed to productivity, cost or timeliness. 
It is not fair to the claimant who is erroneously denied benefits and 
it is not fair to the taxpayer who must pay the costs associated with 
an erroneous decision to allow benefits.
    There is continued concern that the disability program is not fair. 
Disability applicants allowed under Title II are required to complete a 
five month waiting period before being eligible for benefit payments 
while disability applicants allowed under Title XVI are not. 
Underpinning the entire disability program is the need for public 
confidence in the process. A program that was designed to offer 
compassionate support to American citizens at the time when it is most 
needed has come to be perceived as offering only frustration and 
emotional distress to people and families who are already hurting. 
Claimants who file for benefits under Title II, and whose claims are 
allowed, are not eligible for monthly payments for five full months 
after the onset of the disabling impairment. During this interval, many 
claimants and their families are seriously affected economically and 
emotionally. NADE continues to believe that Congress should act to 
eliminate, or at least reduce, this five-month waiting period.
    Hand-in-hand with the elimination of the five month waiting period, 
consideration needs to be given to elimination of the twenty-four (24) 
month Medicare waiting period. Two disability groups currently do not 
have to serve this waiting period--those with chronic renal diseases 
and those with amyotrophic lateral sclerosis (ALS), commonly known as 
Lou Gehrig's Disease. This is inherently unfair. Most SSDI 
beneficiaries have serious health problems, low incomes and limited 
access to health insurance. Eliminating the Medicare waiting period 
would address the insurance needs of a high-risk, high-need population 
and provide financial relief and access to health care services at a 
time when health care needs are especially pressing and few 
alternatives exist. Technological improvements in health care and early 
intervention of needed medical services could provide increased 
rehabilitation successes and greater employment opportunities for 
people with disabilities. NADE believes that the twenty-four (24) month 
Medicare waiting period should be eliminated for all Title II 
disability beneficiaries.
    Another area undermining public confidence in the program and 
causing inherent unfairness is SSA's continued reliance on a grossly 
outdated Dictionary of Occupational Titles (DOT) and the requirement to 
develop a claimant's vocational history for the 15 year period 
preceding the onset of their disability. These two factors are 
increasingly unfair as they do not acknowledge the rapidly changing 
technology present in most occupational fields today and this reduces 
the ability of the DDSs to render decisions that accurately reflect 
current vocational practices.

STEWARDSHIP
    Continuing Disability Reviews (CDRs) are not only cost effective, 
saving approximately $9 for each $1 invested, they play an important 
role in any return to work incentive. An individual who knows his or 
her claim will be reviewed at the appropriate time is more likely to 
explore vocational options. Unfortunately, with the increase in initial 
claims and the loss of targeted funds specifically designated to handle 
this workload, CDRs are likely to be delayed. For that reason, NADE 
strongly supports SSA's FY'04 budget request for earmarked funds to be 
used for CDRs, SSI nondisability redeterminations and overpayment 
workloads.
    NADE believes that the role of federal quality assurance reviews is 
to provide clear, consistent and nationally uniform feedback on 
interpreting federal disability law. For that reason we have long 
advocated equal reviews of allowed and denied claims at all levels in 
the adjudication process. We are concerned that SSA's FY 2004 Budget 
Request proposes to extend the pre-effectuation review provisions to 
SSI adult disability and blindness cases. We do not feel that increased 
review of DDS allowances, without a corresponding increased review of 
appealed claims, represents an effective use of scarce resources. We 
question the statement that, ``Pre-effectuation review yields 
significant ongoing program savings, well in excess of the resources 
required to conduct the reviews.'' We are not aware of any recent study 
that evaluated the end result of claims appealed to the Administrative 
Law Judge level that were initially allowed by the DDS but later denied 
after the claim was returned by the federal quality review component. 
Anecdotal evidence suggests that many of these claims are eventually 
allowed during the appeals process. We believe that the resources 
required to provide for increased pre-effectuation reviews would be 
better spent at the beginning of the process by ensuring that quality 
information, necessary to make the correct decision, is obtained from 
the initial interview and throughout the disability decision-making 
process.
    There is an enormous backlog of cases that involve SSI 
beneficiaries who have sufficient work credits to qualify for benefits 
under the SSDI program. To ensure fair and equitable treatment for 
these individuals and to ensure that they receive all benefits due to 
them, special funding should be earmarked for both the SSA Field 
Offices and the State DDSs in order to complete the processing of this 
special disability workload. Failure to do so will delay the decisions 
to these individuals even more than currently is the case.

SOLVENCY
    Many of the ideas and issues we have presented in this testimony 
would strengthen the solvency of the trust funds managed by the Social 
Security Administration. Ensuring an ongoing CDR process and 
implementing the proposal NADE submitted for a new disability claims 
process would, we believe, aid tremendously in the effort to strengthen 
the solvency of the trust fund managed by SSA, safeguard those funds 
and ensure their distribution only to those who actually qualify to 
receive them under federal law.
    NADE firmly believes that an enhanced, ongoing and joint training 
program for all components could ensure consistency of decisions 
between adjudicative components and also ensure the decisional accuracy 
of those decisions. SSA's Inspector General declared in previous 
testimony before this Subcommittee that the well trained disability 
examiner is SSA's most effective tool in combating fraud and abuse, 
thereby strengthening the solvency of the trust funds.
    NADE supports the need for a Social Security Court to bring 
consistency and uniformity to the disability program. Current 
disability policy is fragmented and applied differently across the 
country due to differing Court decisions in different court 
jurisdictions throughout the country. To maintain solvency, a Social 
Security Court is needed to ensure national uniformity in the 
application and administration of the complex rules and regulations 
required in disability decision making.
    NADE supports greater efforts and stronger initiatives that are 
designed to return beneficiaries to the workforce when their disabling 
condition has improved. Vocational rehabilitation and employment 
services should be readily available to claimants and comprehensive, 
affordable health care coverage is needed to allow disability 
beneficiaries to receive needed medical services to enhance their 
vocational profile to return to work.
    NADE supports strengthening SSA's efforts to combat fraud and we 
support expansion of the Cooperative Disability Investigation (CDI) 
units that have proven to have a positive and very significant 
financial impact on the disability program.

STAFF
    NADE strongly supports the Commissioner's goal ``To strategically 
manage and align staff to support SSA's mission.'' The state DDSs must 
have the necessary resources to hire and retain highly skilled, highly 
performing, and highly motivated staff. This will be a major challenge. 
Disability examiners must have a thorough understanding of the medical, 
vocational and administrative/technical issues involved in disability 
evaluation and be flexible in adapting to ever changing rules and 
regulations and changes in business processes. It is widely 
acknowledged that it takes at least two years for a disability examiner 
to become proficient in the performance of their job duties. However, 
the learning and training cannot stop there. On-going job training and 
job enrichment opportunities are needed to ensure that disability 
examiners maintain the highly skilled work set needed for this 
increasingly complex disability evaluation process. Unfortunately, a 
vast number of the disability examiners in the DDSs now have less than 
two years of experience. This lack of experience and insufficient, 
ongoing professional training can severely erode the ability of many 
examiners to stay abreast of changing technology and development 
practices. This can have a tremendous impact on the public's confidence 
in the ability of SSA to render fair and timely decisions.
    NADE has long supported the ``One SSA'' concept and we welcome the 
President's Management Agenda Human Capital initiative to ``Promote a 
knowledge-sharing culture, openness, and continuous learning and 
improvement.'' Working together to strengthen the federal-state 
partnership, SSA's Field Offices, Central Office, Regional Offices and 
the DDSs can manage the growing disability workload and meet the goals 
of the President's Management Agenda and the Government Performance and 
Results Act.

SUMMARY
    Maintaining program integrity and ensuring public confidence is a 
vital part of effective public administration and a major factor in 
determining the public's view of its government. Ensuring that the 
right decision is made as early in the process as possible is a noble 
goal but one that can only be attained if we recognize that the 
``right'' decision can be either ``yes'' or ``no'' and will also 
require adequate staffing at all levels of the adjudicative process and 
an examination of the complex rules and regulations under which the 
adjudicative components operate. The incidence and prevalence of 
disability is currently projected to grow significantly and the Social 
Security Administration must provide more direction in the development 
of pragmatic policies that improve public service, enhance its 
stewardship role, strengthen the solvency of its public trust and 
provide for staffing that can make such policies enforceable. SSA must 
recognize that more direct guidance is needed from its top levels of 
management and SSA should be given the congressional support necessary 
to make the appropriate changes that will recommit the Agency to its 
primary purposes of stewardship and service. To truly improve service 
and stewardship, NADE supports the removal of SSA's administrative 
budget from the domestic discretionary spending caps. Congress would 
continue to retain oversight authority but SSA would not have to 
compete with other programs for limited funds that restrict SSA's 
ability to meet the increasing needs for its services. SSA touches the 
lives of over 95 percent of the American public in some fashion and it 
is critically important that the American public can rely on the 
quality of service and the accuracy of decisions provided by the Social 
Security Administration.

                                 ______
                                 
            NADE Proposal for New Disability Claims Process

    1.  Intake of new disability claims at the Social Security Field 
Office would not be significantly altered from the current practice 
with the following exceptions:

      a. Greater emphasis would be placed on the inclusion of detailed 
observations from the claims representative.
      b. The claimant would be provided with a clear explanation of the 
definition of disability by the claims representative. The definition 
would also appear on the signed application.
      c. SSA's web site should clearly indicate that this is a complex 
process that would be better served if the claimant filed the 
application in person at the Field Office.
      d. Quality review of the Field Office product would be added to 
demonstrate SSA's commitment to build quality into the finished product 
from the very beginning of the claims process.
      e. SSA's outreach activities would combine education with public 
relations. The Agency's PR campaign would remind potential claimants of 
the definition of disability with the same degree of enthusiasm as the 
Agency's efforts to encourage the filing of claims.
      f. Greater emphasis would be placed on claimant responsibility.

    2.  DDS receipts the new claim and assigns the claim to a 
disability examiner. The Disability Examiners initiates contact with 
the claimant to:

      a. The Disability Examiner will verify alleged impairments, medical 
sources and other information contained on the SSA-3368.
      b. The Disability Examiner will provide a clear explanation of the 
process and determine if additional information will be needed.
      c. The Disability Examiner will inform the claimant of any need to 
complete additional forms, such as Activities of Daily Living 
questionnaires.

    3.  Expand the Single Decision Maker (SDM) concept to:

      a. Include more claim types
      b. Allow more disability examiners to become
      c. SDMs Standardize national training program for all components of 
the disability process
      d. Establish uniform criteria for becoming SDMs
      e. Standardize performance expectations for all components of the 
disability process

    4.  If the initial claim is denied by the DDS, the denial decision 
will include an appeal request with the denial notice that the claimant 
may complete and return to the DDS.

      a. The requirement for a clear written explanation of the initial 
denial will remain a major part of the adjudicative process.
      b. Process Unification rulings should be reexamined and, if 
necessary, modified to clarify how the initial disability examiners 
should address credibility and other issues.
      c. Claimant responsibility will be increased in the new process

    5.  The denied claim will be housed in the DDS for the duration of 
the period of time the claimant has to file an appeal. During this 
period of time, claims could be electronically imaged (with adequate 
resources--this would further the electronic file concept).

    6.  The appeal of the initial denial will be presented to the DDS. 
Upon receipt of the request for an appeal, the claim will be assigned 
to a new disability examiner. Under this proposal:

      a. This appeal step would include sufficient personal contact to 
satisfy the need for due process.
      b. The appeal decision, if denied, would include a Medical 
Consultant's signature.
      c. The decision would include findings of fact.
      d. There would be a provision to include an automatic remand to DDS 
on appeals for denials based on failure to cooperate.

    7.  The record should be closed at the conclusion of this appeal 
(including allowing sufficient time for explanatory process before the 
record closes).

    8.  Appeal to the Administrative Law Judge must be restricted to 
questions of law rather than de novo review of the claim.

      a. The DDS decision needs to have a representative included in the 
hearing to defend the decision.
      b. There must be an opportunity to remand to DDS but such remand 
procedures must be carefully monitored to prevent abuse and remands 
should only occur for the purpose of correcting obvious errors.

    9.  There needs to be a Social Security Court to serve as the 
appeal from OHA decisions.

      a. The Social Security Court will serve as the final level of 
appeal.
      b. The Social Security Court will provide quality review of ALJ 
decision.
      c. The Appeals Council would be eliminated, limiting the total 
number of appeal steps within SSA to three. Appeals beyond the ALJ 
level would be presented to the Social Security Court.
      d. The Social Security court would be restricted to rendering only a 
legal decision based on the application of the law.

    This proposal is submitted to SSA following the unanimous vote of 
NADE's Board of Directors on February 23, 2002 to endorse this design 
for a new disability claims process.

                                 ______
                                 
     Explanation of New Disability Claims Process Proposed by NADE

    NADE considered various alternatives to the current disability 
claims process before deciding on this process as representing the hope 
for a claims process that truly provided good customer service while 
protecting the trust funds against abuse. It was our intent to develop 
a vision for what the total program should look like and not just the 
DDS piece of the puzzle. We believe in the concept of ``One SSA'' and 
our proposal is submitted based on the belief that all components 
within the disability program should be united in the commitment to 
providing good customer service at an affordable price. Quality 
claimant service and lowered administrative costs should dictate the 
structure of the new disability program.
    The critical elements identified in the NADE proposal are:

      The expansion of the Single Decision Maker concept to all 
DDSs and expanding the class of claims for which the SDM is able to 
provide the decision without medical or psychological consultant input. 
Continuing Disability Review cases (CDR's) and some childhood and 
mental cases can easily be processed by SDMs.
      More early contact with the claimant by the DDS to 
explain the process and to make the process more customer friendly. The 
Disability Examiner is able to obtain all necessary information while 
clarifying allegations, work history, and treatment sources. The 
claimant is educated about the process so they know what to expect.
      Housing the initial claim folder on denied claims in the 
DDS pending receipt of an appeal of that denial. This will effectively 
eliminate significant shipping costs incurred in transporting claims 
from the DDS to the Field Office and then back to the DDS. Costs of 
storage in the DDSs would be significantly less than the postal fees 
incurred by SSA in the current process. Housing the claims at the DDS 
instead of the Field Offices could save as much as $20 per claim in 
shipping costs. It will also reduce processing time by eliminating a 
hand-off.
      Closing the record after the appeal decision is rendered. 
NADE believes that closing the record prior to any subsequent ALJ 
hearing is critical to generating consistency, providing good customer 
service, restoring public confidence and reducing the costs of the 
disability program. Without it, there will continue to be two programs, 
one primarily medical and one primarily legal, with two completely 
different outcomes. We are unclear as to the degree of personal contact 
that would be required to satisfy the due process requirement at this 
appeal level and would defer to SSA the decision as to how much contact 
is needed and how the requirement could be met. Is a face-to-face 
hearing necessary or can a phone interview suffice? Even the former, 
conducted in the DDS, would be substantially less costly than the 
current hearing before the ALJ. The DDS hearing would allow the 
claimant to receive a much more timely hearing than the current process 
allows. NADE also believes that the role of attorneys and other 
claimant representatives would be significantly diminished as the 
opportunity for reversal of the DDS decision would be lowered 
substantially. The DDS hearing would be an informal hearing, lessening 
the impact attorneys have at this level.
      NADE believes that the current 60 day period granted to 
claimants to file an appeal should be reexamined in light of modern 
communication and greater ability of claimants to file appeals more 
quickly. Reducing the time allowed to file an appeal would produce cost 
savings to the program and aid the claimant in obtaining a final 
decision much more quickly.

    The additional costs incurred by the DDSs in this new process would 
be paid for from monies reallocated from OHA and from the cost savings 
created by less folder movement between the DDSs and the Field Offices. 
Political decisions will have to be made to reallocate these funds and 
these decisions will not be popular. Because of turf guarding by the 
various components within SSA and a general unwillingness to accept 
change, NADE believes that the victim in past efforts to develop a 
comprehensive disability claims process has been the claimant. The 
question must be asked, ``Who do we serve, ourselves or the claimant?''
    NADE envisions a claims process that would reinforce the medical 
decision made by the DDS and limit the OHA legal decision to addressing 
only points of law. NADE believes this proposal would produce a high 
level of consistency for the disability decisions rendered by the DDSs 
while significantly reducing the opportunities for OHA to reverse DDS 
decisions. This would help restore public confidence in the system, 
provide good service to the claimant and reflect good stewardship since 
the entire process should prove to be less costly than prototype or the 
traditional process. The decision as to whether a claimant is disabled 
would rightfully remain primarily a medically based decision. Claimants 
who appeal the DDS decision to an ALJ would be entitled to hire legal 
counsel if they wish. SSA would have an official representative at any 
such hearing to define the merits of the DDS decision. Unless the law 
was incorrectly applied, the DDS decision would be affirmed. Any appeal 
of the ALJ decision would be made to the Social Security Court and 
either side could appeal.
    The proposal is predicated on the assumption that sufficient 
staffing and resources would be made available to the DDSs. It is also 
predicated on the need for SSA to clearly define the elements that will 
satisfy the process unification initiatives. It is critical that SSA 
should provide clarification of what steps must be followed and provide 
the funds necessary or modify these rulings in accordance with 
practical experience.
    The current prototype experiment was begun in ten states nearly 
four (4) years ago. Although this process has since been modified and 
the claimant conference portion of this experiment abandoned, it still 
continues in force for those states affected. Clearly, an exit strategy 
for those states involved in this experiment must be developed quickly 
and a new disability claims process put into place nationwide that will 
avoid the ongoing necessity of SSA having to operate two distinctly 
different disability programs. Significant training and reallocation of 
resources will be needed. Therefore, it is imperative that decisions 
are made as soon as possible as to what course of action is deemed 
acceptable.
    Thank you.

                                 

 Statement of Witold Skwierczynski, American Federation of Government 
 Employees, Social Security General Committee, and National Council of 
         Social Security Administration Field Operations Locals

    Chairman Shaw, Ranking Member Matsui, and members of the Social 
Security Subcommittee, I respectfully submit this statement regarding 
Social Security's Service Delivery Budget and the challenges the Agency 
faces to improve the disability claims process, further implement the 
Ticket to Work Program, protect the integrity of the Trust Fund, and 
combat Social Security number misuse. As a representative of AFGE 
Social Security General Committee and President of the National Council 
of SSA Field Operations Locals, I speak on behalf of approximately 
50,000 Social Security Administration (SSA) employees in over 1300 
facilities. These employees work in Field Offices, Offices of Hearings 
& Appeals, Program Service Centers, Teleservice Centers, Regional 
Offices of Quality Assurance, and other facilities throughout the 
country where retirement and disability benefit applications and appeal 
requests are received, processed, and reviewed.
    SSA employees are absolutely dedicated to providing the highest 
quality of service to the public in a compassionate manner. The 
employees AFGE represents are committed to serving in an Agency 
responsive to the workers and beneficiaries of our communities. While 
SSA's workloads continue to increase steadily, human resources in the 
Agency have been facing a crisis for many years. This is the result of 
severe downsizing within the Agency. Staff loses have been 
disproportionately higher in positions that provide direct public 
service. The proposed Service Delivery Budget for FY 04 incorporates 
1,000 new immediate hires for field offices, payment centers, 
teleservice centers and hearings offices and represents an 8% 
administrative increase. These additional positions will be utilized 
almost exclusively to process the Special Title II Disability 
workloads. AFGE is certainly supportive of this increase; however, far 
greater resources are required in order for SSA's workers to meet the 
challenges that face the Agency.

Improving the DI and SSI Disability Claims Process:
    The Agency Strategic Plan and Service Delivery Budget call for an 
elimination of the current tremendous disability backlogs and 
conversion to an electronic disability folder (EDCS). SSA is also 
preparing additional recommendations to improve the timeliness and 
accuracy of the disability process. In the past, observers such as the 
SSA Advisory Board were critical of the uneven allowance rate, which 
depend on a claimant's state of residence. Profit motivated companies 
have become an increasing problem in SSA. These companies have taken 
over some claims taking functions that have traditionally been viewed 
as inherently governmental. Such transfer of work has often resulted in 
poor service and occasionally in outright fraud and criminal activity.
    Solving these problems is a daunting task. A multifaceted response 
is required. Certainly Congress must supply adequate budgetary 
resources to enable SSA to process the anticipated increases in 
disability workloads.
    However, during the Disability Redesign initiative of 1994-2001, at 
a cost in excess of $100 million, the single pilot which was most 
successful in improving the process by reducing processing times, 
providing greater customer satisfaction and maintaining quality was the 
Disability Claims Manager (DCM) pilot, a three-year test which measured 
the capability of one person to adjudicate both the technical and 
medical factors of entitlement. The Agency dismantled the project in 
June 2001. On behalf of AFGE, I have previously submitted both oral and 
written testimony highlighting the significant reductions in processing 
time and increases in claimant satisfaction with the DCM process as 
documented in SSA's DCM evaluation. The DCM was designed as a test of 
one stop service for SSA disability claimants. The current bifurcated 
process requires a decision on technical entitlement factors by an SSA 
employee and the medical decision certification by each states' 
disability determination service (DDS). This procedure is cumbersome 
and guarantees delays due to constant hand-offs. The DCM combined the 
split decision-making process by successfully cross-training state and 
federal employees, so that one employee could render both decisions. 
This eliminates superfluous hand-offs.
    The DCM pilot was the essence of good government. The processing 
time was cut by one-half, from 120 days to 62 days for an initial 
disability claim, solving the biggest problem for SSA in initial 
disability claims. The public was extremely satisfied as were the 
employees at 83%. Productivity improved and the cost was neutral. 
Although SSA contended in its final report that the DCM was too 
expensive, the data indicated that during the last few months of the 
DCM test, the cost was equal to the current process.
    The House Ways and Means Subcommittee has repeatedly urged SSA to 
take steps to streamline the disability process. Claimants suffer from 
unnecessary delays due to bureaucratic obstacles in processing their 
earned disability benefits. Every claimant is faced with an average 4-
month initial claims process despite the proven success of the DCM 
pilot showing that initial disability claims can be processed in 2 
months when the process is consolidated. The first step to reforming 
the disability claims process is the resurrection of the DCM.
    The House Ways and Means Subcommittee should insist that SSA resume 
the DCM as the first step to streamline the disability claims process. 
The Subcommittee should also examine and convert any legal barriers to 
making the DCM the universal methodology for processing initial 
disability claims. I strongly urge the Subcommittee, Congress and the 
Administration to reconsider an incremental approach toward phasing in 
the DCM concept in SSA. Rather than appropriate funds such as the $24 
million that SSA is spending on contractors who will attempt to obtain 
disability applications from the homeless, Congress and SSA should be 
appropriating sufficient resources to reestablish the DCM position and, 
consequently, solve the initial disability claims problems for the 
homeless and all other disability applicants

Electronic Disability Folder (EDCS):
    While the concept of instituting an electronic medical folder may 
produce benefits to accuracy and timeliness at some future point, this 
comes at a huge immediate cost to both employees in field offices and 
in overall service to the public. The technology and the EDCS program 
are not at a point where its use is viable to employees, yet employees 
are mandated to enter even totally completed paper ``self-help'' 
medical forms into the EDCS program.
    AFGE recently conducted an extensive survey of employees using this 
system, and found that 62% of the respondents said the process added 45 
minutes or longer to the interview, 75% of respondents thought 
claimants were waiting longer in reception and 80% of respondents said 
appointments were frequently or sometimes delayed or missed because of 
EDCS. 75% of employees are missing contractually guaranteed breaks and/
or lunches due to the extremely long interviews. Increased backlogs of 
work were reported universally in mostly post-entitlement areas, such 
as SSI redeterminations, medical and work CDRs, overpayments, and 
workers' compensation calculations, as well as returning phone calls to 
the public. Additionally, workers in field offices estimated that 20%-
40% more staff was needed in offices solely because of the EDCS 
process. AFGE urges that SSA take a step back from the implementation 
pace and improve the end user viability of the EDCS program.

Furthering Implementation of the Ticket to Work Program:
    AFGE has repeatedly stated that, in order to comply with the 
legislative mandate of providing accessible and responsive work 
incentives specialists and to provide complete, accurate and timely 
service to the disabled beneficiary trying to return to work, a 
dedicated employee is needed to service each office. The success of 
TWWIIA is dependent on this.
    To be most effective this specialist should be locally based in the 
community field office environment and able to work with and develop 
relationships with local organizations and groups. This person should 
also be a single point of contact for the public. The program will not 
work if Disability beneficiaries are shuttled between multiple 
employees and multiple Agencies in their efforts to return to work. We 
have seen this successful model in the Employment Support 
Representative (ESR). SSA's own pilot evaluation of the ESR concludes 
that it is the successful model that provides disability beneficiaries 
with the comprehensive services necessary to provide them with the 
opportunity to return to the workforce. We have thoroughly highlighted 
in our prior statements the successes of the ESR in providing service 
to the community, to the beneficiaries, to their fellow office staffs, 
and in processing the work issue CDRs. We have addressed the potential 
to save hundreds of millions of Trust Fund dollars by processing cases 
timely and avoiding large overpayments.
    The Agency has decided to discontinue the successful ESR pilot, and 
to implement an Area Work Incentives Coordinator position (AWIC). These 
AWICs, essentially one serving each of 52 Area offices, would be 
dedicated to coordinating outreach activities with advocacy groups, 
overseeing Ticket to Work functions and workloads, and overseeing 
Return to Work (RTW) workloads in many offices through out the service 
area. While this is an acknowledgement on the part of the Agency of the 
need to focus some measure of importance on RTW activities, it is the 
Union's understanding that the AWICs would not interface with claimants 
nor work on their cases, except in rare situations. Therefore, it is 
AFGE's view that this position is not a work incentives specialist as 
intended by the requirement in Section 121 of the Ticket legislation. 
The legislation mandates that SSA establish an accessible and 
responsive corps of work incentives specialists. The specialists are 
supposed to be accessible and responsive to the beneficiaries. Even if 
AWICs were given more responsibilities dealing directly with disability 
beneficiaries, the few positions that SSA is willing to allocate to 
this effort does not address Congress' legislative mandate that SSA 
establish work incentive specialists who can promote the Ticket to Work 
program to the community and assist and encourage disability 
beneficiaries' efforts to return to the labor force.
    Another key piece of SSA's strategy to improve service in return to 
work issues is to utilize Work Incentives Liaisons (WILs) at the field 
office level. There are currently more than 1200 employees designated 
as WILs. To date, the WILs encumber a wide variety of bargaining unit 
and non-bargaining unit positions. The WIL duties are a collateral 
designation, and WILs in many offices are not the employees who 
actually process the work issue CDRs, work reports, posting of wages, 
Plans for Achieving Self Support, and other work incentives functions.
    The Agency plans to change the WIL to make it a uniform GS 12 
Technical Expert (TE) performing these duties, instead of using a 
variety of different positions. However, because of the severe resource 
shortages in offices, the lack of prioritization of this workload, and 
absent workload adjustments, AFGE believes this will not lead to 
improvement in addressing RTW workloads or in serving as a work 
incentives specialist for the public. TEs are already the 
responsibility of processing ``difficult claims''. Adding return to 
work responsibilities to TEs only exacerbates SSA's ability to process 
such work. It will not assist in achieving the goal of establishing a 
core of work incentive specialists.
    Return to Work provisions are highly specialized, requiring the 
accurate application of many complex and even seemingly contradictory 
incentives, particularly in concurrent SSDI/SSI cases. Processing these 
cases correctly and timely has a major life impact on the beneficiary, 
in addition to effecting a successful transition to work activity. 
Overpayments to beneficiaries resulting from delays in processing cases 
are not merely onerous, but can cause irreversible setbacks to 
beneficiaries. There is no coherent, clear procedure enabling claimants 
to report the correct events to the right person, absent a dedicated 
specialist, such as an ESR, who guides the beneficiary throughout the 
return to work process.
    AFGE is opposed to the Agency initiative to fund the Navigator 
position in the DOL. Available resources should be used within SSA to 
dedicate to TWWIIA mandated requirements. SSA argues that despite the 
success of the ESR, it does not have the resources to dedicate 
employees to this priority. However, SSA has found the resources to 
provide DOL with half the funding for Navigator positions. Initially 
80-100 positions will be established in DOL. SSA plans to eventually 
increase the initial allotment to 1600 Navigators. The Union believes 
the Navigator will actually create confusion for beneficiaries and 
further fragment the process of obtaining accurate, personalized 
information on return to work. This position adds no value to SSA's 
obligation to comply with the legislative mandate of providing 
accessible and responsive work incentives specialists, and, instead, 
shifts limited resources from SSA to DOL. The Subcommittee should urge 
SSA to request the necessary resources to fully fund a rollout of the 
ESR position in all SSA Field Offices.
    No employee in SSA's scheme will fulfill the Congressional intent 
of Section 121 of the ``Ticket to Work'' legislation and create the 
best opportunities for insuring that disability beneficiaries have the 
opportunity to return to work. SSA's complex approach of AWICS, WILs 
and Navigators is a prescription for confusion and failure.

Integrity of the Trust Fund:
    The Service Delivery Budget calls for spending $1.5 billion to 
process 1.6 million medical improvement continuing disability reviews. 
In processing the medical issue CDRs, SSA contends that for every 
dollar spent, seven to twelve dollars in benefits are saved. The cost 
savings are greater for ``work'' CDRs since the cost of medical 
decision-making is eliminated, and the cessation rate on work issues is 
higher. AFGE estimates cost savings approaching $30 to the Trust Fund, 
for every dollar spent. Overpayments on these backlogged work issue 
CDRs can reach hundreds of thousands of dollars for an office, and 
employees have encountered overpayments on individual records reaching 
$100,000!
    Unfortunately, the Union is unaware of any statistical data 
regarding the numbers of work CDRs processed, the number pending, and 
the cessation rate due to work activity. SSA should be required to 
maintain and produce such data.
    Allocating the resources to fund a specialist in each office is a 
perfect example of applying stewardship responsibilities effectively 
and investing resources in a high cost: benefit manner. Furthermore, 
the drain on office resources used for processing overpayments, 
waivers, and personal conferences would be greatly reduced. Full 
implementation of a work incentives specialist at the field office 
level should have a significant positive impact on the Trust Fund 
balance and consequently extend the solvency of the Fund. It would be 
foolish not to support a position that leads to this result.

Social Security Number Misuse:
    Accuracy on the part of the SSA employees processing requests for 
Social Security numbers is greater than those of the agency charged 
with safeguarding immigration records. In SSA, we process 6 million 
Social Security Number requests annually. According to SSA's OIG, less 
than 1.6% of Social Security Number requests have been issued with 
false INS documents. That figure was based on FY2000 statistics. 
However, since FY2000, SSA has implemented new systems enhancements and 
policies that require all INS documents of foreign-born applicants to 
be verified by INS before the issuance of a Social Security number. The 
Union believes that these measures have further safeguarded the privacy 
and integrity of the SSN records.
    AFGE has previously submitted testimony stating that, 
unfortunately, SSA has also implemented initiatives that we believe are 
harmful to the integrity of all SSA records leaving every American 
vulnerable to attack by terrorists, international criminals, and an 
increasing number of identity thieves.
    In May 2002, the Union became aware that the Agency implemented a 
program that allowed employers to gain access to SSN records of their 
newly hired employees via the Internet. This program has been approved 
by OMB for 630 major employers and may be soon expanding. According to 
approved procedures, SSA business partners and companies are nominated 
by SSA's Senior Financial Executive under the Deputy Commissioner 
Finance Assessment and Management, then approved by SSA's Commissioner.
    The Union believes that employer access to SSN records will result 
in misuse, fraud and abuse of individual privacy. On the issue of 
privacy, if the employer can obtain this information about an 
individual, anyone with an EIN may gain access to personal information. 
The gatekeeper of SSN records thus becomes the employer and its 
employees authorized access to ``verify'' Social Security records.
    Additionally, the Union has learned that employers are not required 
to provide the same identifying information that wage earners must 
disclose to obtain access to their own records. This information 
includes ones date of birth, place of birth and mother's maiden name. 
Thus, SSN records of someone with a similar or same name may be 
provided to the employer, making it easier for someone to use another 
person's SSN. Therefore, the employer would further compromise the 
integrity of SSN records.
    SSA has developed an alert system to determine if employers may be 
verifying an excess of SSN records. If an employer requests 
verification on more than 200 percent of the number of W-2s processed 
in the preceding tax year, an alert will be issued. The Union strongly 
believes that this ``alert'' system is a facade to provide concerned 
parties with a false sense of security of individual privacy. Although 
SSA's own reports indicate that one employer has already exceeded its 
number of employees by more than 500%, SSA has failed to conduct an 
audit.
    Furthermore, SSA has not developed or communicated a written policy 
to hold companies legally liable for misuse of employer access of SSN 
records.
    It is the Union's understanding that SSA plans to expand other 
services and/or records to employers in the future. OMB must give 
approval to SSA to expand the number of employers who can gain access 
to SSN records. We strongly believe that Congress should urge the OMB 
to rescind this program to insure integrity of SSN records and 
individual privacy.
    In June, 2002 SSA implemented a new procedure requiring 
verification of birth records for all U.S.-born applicants age 1 or 
older requesting an original Social Security number and for anyone 
requesting to change a date of birth on the Numident Record. The 
estimated yearly cost of verifying birth records for just those 
individuals seeking an original SSN is approximately $1 million. SSA's 
own managers questioned the wisdom of implementing this policy given 
the low percentage of fraudulent birth certificates presented to the 
Agency. Mandatory verification of all birth records instead of just 
those that are suspect is a gross waste of Trust Fund dollars.
    Another new initiative is lowering the mandatory in-person 
interview for an original SSN from age 18 to age 12. In addition, new 
required questions have been developed for interviewers to ask and the 
new policy states the questions are to be directed to the child, not 
the parent. AFGE questions the legal authority of the Administration in 
directly questioning children aged 12-17 on topics that they are 
unlikely to provide correct information (i.e., investments, bank 
accounts and other financial instruments which would require an SSN), 
and the value of the answers obtained from them.
    SSA has implemented an Enumeration Center as a pilot in the 
Brooklyn, NY area. SSA field office employees, SSA's OIG and INS 
employees staff this Enumeration Center. All requests for Social 
Security cards will be handled at the Enumeration Center, rather than 
an SSA field office. This means that if someone walks into a SSA field 
office to apply for a SSN, the SSA employee who normally would help the 
applicant will have to refer him or her to the Enumeration Center for 
assistance. This would include referring clients who have other 
business at an SSA field office. If an individual, for example, files a 
claim and requests a replacement Social Security card, they must go to 
both their local office and the Enumeration Center to obtain service.
    AFGE opposes the concept of Enumeration Centers. SSA's field 
offices have always been full-service facilities. The taxpayer deserves 
full-service and one stop shopping. To refer SSN applicants to an 
Enumeration Center that may be miles away, will create barriers and 
greatly inconvenience folks who rely on public transportation or have 
physical disabilities. The Union does not oppose the continuation of 
the Brooklyn Enumeration Center as a pilot. However, expansion of this 
initiative would require many SSA claimants to travel to 2 different 
sites for SSA service. This definitely constitutes poor public service.

Office Closings:
    For many years the Social Security Administration has pledged to 
provide the public with broad access to the Agency. Such access 
includes face-to-face service, telephone service, and, recently, 
Internet access. This pledge is fundamental to SSA's mission which is 
to provide the aged, disabled, survivors and the impoverished with 
convenient options to interact with the Agency. The key element to this 
pledge is to provide community-based service to the public.
    Recent developments regarding office closings bring into question 
SSA's intention to fulfill this pledge. The Agency has either closed or 
announced its intention to close a number of offices. The union 
strongly objects to this Agency policy to remove the option of face-to-
face service from thousands of SSA claimants and beneficiaries.
    Earlier this year Chicago Regional Commissioner James F. Martin 
issued a memorandum encouraging managers to review their office 
structure for the purpose of identifying candidates for 
``consolidation''. He indicates in the memorandum that previous Service 
Delivery Assessments (SDAs) have resulted in maintaining the status 
quo. However, he encourages managers to strongly consider office 
``consolidations'' in future SDAs. The only rationale that he posits 
for this change in emphasis is the cost of security guards and office 
space. Although he asserts that there is no quota for office closings, 
union officials have informed me that each Area Director in the region 
is expected to close at least one office.
    Other regions have also been actively engaged in closing offices. 
The Union has received reports from Boston, New York, and San Francisco 
regions regarding offices that have either closed or are targeted for 
closing. Some are in urban/suburban areas (e.g. Brookline MA, Euclid 
OH, and Medina OH); others are in rural areas many miles from another 
office (e.g. Iron Mountain MI and Cairo IL). Sometimes employees view 
such closings with relief since the targeted offices have suffered for 
years from SSA's failure to provide adequate staffing for these 
facilities.
    It appears that the increased emphasis to close field offices is 
not based on any service delivery assessment, but rather is an attempt 
to save money by reducing levels of service to the public. Certainly 
administrative costs are an issue to consider when analyzing the level 
of service to provide to the public. However, it is difficult to 
understand how the Agency can condone removing community based offices 
from some cities while at the same time spending $97 million for a new, 
renovated Operations Building in headquarters.
    The Agency has a sordid history regarding office closings. The 
Grace Commission report issued during the Reagan Administration 
recommended that SSA reconfigure its office structure and close all but 
430 offices. In response SSA secretly formulated plans to consider 
closing all field offices with less than 25 employees. When the Union 
learned of these plans and released them to the press, the adverse 
public reaction was so intense that SSA abandoned its office closing 
agenda. Legislation was introduced in both the House and the Senate 
that would have required a moratorium on all office closings. In 
addition, the legislation would have required stringent advance 
reporting requirements to Congress justifying every proposed office 
closing after the moratorium expired. SSA received significant 
unfavorable press coverage regarding its office closing initiatives 
until the Agency decided to abandon the effort
    Since that time SSA has reduced the staff of field offices to such 
a degree that most offices are under the 25 employee threshold. Now, it 
appears that the next Agency step is to close offices that have 
diminished in size rather than provide them with adequate staffing so 
that the employees can do their job properly. This has occurred despite 
the fact that the public continues to demand the availability of the 
face-to-face service option.
    The recently issued SSA Strategic Plan for 2003-2008 contains the 
strategic goal: To deliver high-quality, citizen centered service. This 
goal entails the continuation of SSA's traditional in-person and 
telephone service. The Plan specifically states that it is an Agency 
goal to provide a choice of ways to access service. Closing offices 
violates this strategic mandate. Such actions diminish the public's 
access to SSA services. Such actions especially adversely effect the 
vulnerable population that is the core of SSA's clientele: the aged, 
disabled, children and the impoverished.
    The Union opposes the efforts by SSA to close field offices. The 
Union urges the Subcommittee to enact legislation requiring that SSA 
place an immediate moratorium on these closings. Such legislation 
should provide that an independent Congressional study be conducted of 
all SSA plans to consolidate, close or restructure it's field office 
alignment. This study should analyze the effect that office closings 
have on the promptness and accessibility in providing SSA services to 
those citizens who choose to conduct their business face to face. The 
union, also, has serious concerns regarding the adverse impact these 
office closings have on SSA workers.

Conclusion:
    The challenges SSA faces to improve the disability claims process, 
further implement Ticket to Work Program, protect the integrity of the 
Trust Fund, and combat Social Security number misuse in light of 
resource shortages have been exacerbated as the Agency and employees 
grapple with Electronic Disability Collection System (EDCS) 
implementation and the Special Title II Disability (ST2DW) workload. 
Over two years ago, prior to the emergence of these two initiatives, 
both AFGE and the National Council of Social Security Management 
Association (NCSSMA) estimated shortages of approximately 5000 
employees in order to adequately provide public service, maintain staff 
expertise, and process work in field offices. Resource shortages are 
growing more critical every year. The employees we represent live with 
the daily stress in their offices of trying to provide good service and 
process their important workloads lacking adequate staff. This 
subcommittee should take a serious look at the actual resource 
requirements of SSA. Continuing failure to provide necessary staff will 
result in further deterioration of service to SSA's constituents.

In summary, AFGE supports the following actions:

     1.  Support the proposed 1000 FTE increase in the FY 04 
appropriations service delivery budget.
     2.  The Union in conjunction with the NCSSMA supports additional 
funding for 5000 FTEs to adequately provide public service, maintain 
staff expertise and process work in field offices.
     3.  Resurrect the Disability Claims Manager (DCM) concept and 
eliminate the legislative barriers that prevent full implementation of 
the DCM.
     4.  SSA should step back from its EDCS implementation schedule. 
SSA should analyze the FTE impact of full EDCS implementation and 
either request additional staff or shift staffing resources to field 
offices due to the increased interviewing time needed to process 
disability claims in the internet-based environment.
     5.  Congress should fully fund the nationwide rollout of the ESR 
position in all SSA field offices to insure the fulfillment of the 
Congressional intent pursuant to Section 121 of the Ticket to Work 
legislation.
     6.  SSA should be required to report to Congress periodically the 
number of Continuing Disability Reviews (CDR) processed, the number 
pending and the cessation rate due to work activity.
     7.  Congress should rescind the program that allows employer 
access to social security number (SSN) records of prospective 
employees.
     8.  Congress should prohibit mandatory verification of all birth 
records for individuals who are age 1 or older due to the cost and the 
low incidence of fraud.
     9.  SSA should rescind the mandatory face-to-face interview 
requirements for children applying for SSN between the ages of 12 
through 17.
    10.  SSA should halt any future establishment of Enumerations 
Centers, which require the public to visit multiple SSA offices rather 
than one full service office.
    11.  Congress should immediately place a moratorium on field office 
closings. Congress should require an independent study of such proposed 
closings. Such a study should assess the impact of proposed office 
closings on the promptness and accessibilities of providing face-to-
face service to the public.

    Thank you once again for the opportunity to submit this statement.

                                 

  Statement of James A. Hill, Office of Hearings and Appeals, Social 
 Security Administration, and Chapter 224, National Treasury Employees 
                                 Union

    My name is James Hill. I have been employed as an Attorney-Adviser 
by the Office of Hearings and Appeals for over 20 years. I am also the 
President of Chapter 224 of the National Treasury Employees Union 
(NTEU) that represents Attorney-Advisers and other staff members in 
approximately 110 OHA Hearing and Regional Offices across the United 
States. I thank the Subcommittee for allowing me to submit testimony 
regarding the challenges and opportunities facing Social Security 
disability programs today.
    Disability adjudication at SSA has a long and troubled history. 
Primarily as a result of the Senior Attorney Program, the crisis of the 
mid-1990s was successfully resolved. Subsequent events, including 
termination of that program and the ill-advised Hearing Process 
Improvement Plan (HPI) have created even a greater crisis. The 
situation is clearly out of hand, and SSA seems to be at a loss as how 
to regain control. Its history of prematurely implementing high profile 
but fundamentally unsound ``magic bullets'' such as Re-engineering, the 
Disability Process Redesign (DPR), the Modified Disability System, the 
Redesigned Disability System, and the Hearing Process Improvement 
initiative have all failed miserably. The newest ``Great Hope'' is the 
Accelerated E-DIB (AeDib) Initiative. While some aspects of this 
program will undoubtedly succeed, its centerpiece, the ``electronic 
folder'' represents a risk far greater than any previously undertaken.
    NTEU concurs with the testimony of Linda D. Koontz, Director, 
Information Management Issues of the Government Accounting Office. The 
risks of proceeding with full-scale implementation without adequate 
testing should be well known to SSA. The Disability Process Redesign 
and the disastrous HPI both suffered from inadequate, or in the case of 
HPI, nearly absent testing. NTEU is also concerned about SSA's 
inability to convince key stakeholders of the viability of AeDib. While 
Ms. Koontz' testimony primarily dealt with the State Agency's views, an 
even greater problem may exist at the hearing office level.
    GAO contends, and rightly so, that former SSA initiatives such as 
DPR and HPI suffered from a lack of ``buy-in'' by key stakeholders 
including SSA and OHA employees. I regret to inform you that the lack 
of ``buy-in'' by OHA employees (including managers at all levels) 
regarding the electronic folder surpasses even the level evidenced 
before the introduction of HPI.
    It is important that this Subcommittee understand the nature of 
employee skepticism. It does not emanate from a reluctance to face 
changes. It is not the result of obstructionism. It does not indicate a 
lack of desire to change or improve the process. The lack of buy-in is 
the result of a belief that the proposed initiative will not meet 
operational necessities at the site where work is actually being 
performed. Employees at OHA have frequently been subjected to programs 
designed by individuals who do not understand the details or nature of 
the work at the operational level. In short, the planned initiatives 
have been and continue to be unrealistic. Given the past record of 
highly touted but unsuccessful initiatives, it would be understandable 
that resistance to Accelerated E-DIB would be based on skepticism 
engendered by history. That is not the case. OHA employees understand 
the process improvement that could result from electronic files, but 
they are also aware of the operational difficulties for which no 
solutions have been advanced.
    On June 19, 2003, SSA presented an IVT Program designed to begin 
the training process for the introduction of AeDib. Most of the 
components of that program are relatively uncontroversial, and did not 
generate a great deal of concern. However, the prospect of the 
electronic folder raised a number of issues, and specific questions, to 
which the Agency spokespersons admitted they had no answers. 
Unfortunately, some of the questions dealt with core operational issues 
at the hearing office level. An ALJ noted that currently at the 
administrative hearing, the ALJ has a file, the Medical Expert has a 
file, the Vocational Expert has a file and the claimant and/or his/her 
representative has a file. This facilitates the consideration of 
specific medical and other evidence. How would this be done with an 
electronic folder? Would paper copies be made for each participant? 
Would each participant be provided with a personal computer or would a 
large computer screen viewable by everyone in the hearing room be 
provided? The answer was discouraging. It was clear that the question 
of how hearings would be conducted with electronic folders had not been 
seriously considered.
    Currently, decisions are drafted on personal computers. A decision 
writer asked how could that be accomplished while viewing the evidence 
simultaneously on the same computer screen. Displaying the evidence 
already involves splitting the screen into several segments leaving no 
room for the text of the decision being drafted. Would two computer 
screens be provided? The response was again discouraging. We were 
informed it was unlikely that two computers would be provided to 
decision writers. The matter of drafting decisions with the electronic 
folder has not yet been considered. The responder then noted that this 
did not seem to be a problem at the DDS test site. The responder's lack 
of understanding of the difference between the minimal and sometimes 
nearly non-existent rationale provided by DDS adjudicators and the 
formal ALJ decision which must withstand Federal Court scrutiny further 
emphasized the lack of operational knowledge of those directing the 
implementation of the electronic folder.
    The lack of answers to these questions does not engender 
confidence. The effect of the inability to adequately answer questions 
which deal with the fundamental operations in a hearing office is 
devastating. Despite the potential of the electronic folder to 
significantly improve operations, until fundamental operational 
questions are resolved, implementation is premature. Buy-in by 
employees (and managers) will not occur until those operational 
problems are actually solved.
The Backlog at OHA Hearing Offices
    The history of OHA's success or lack thereof in dealing with the 
disability caseload at the hearing office level is demonstrated by the 
following chart. The period when the backlog declined is 
contemporaneous with the Senior Attorney Program.

[GRAPHIC] [TIFF OMITTED] T3734P.001

      
    The backlog has risen to record levels leading to a decline in 
service to the public that is unconscionable. While there are a number 
of factors (many inflicted by unknowledgeable SSA officials 
implementing counterproductive initiatives) contributing to the abysmal 
performance of OHA hearing offices, the most fundamental problem at the 
OHA hearing level remains the lack of a sufficient number of 
adjudicators. SSA must quickly recognize that current initiatives are 
inadequate and move quickly to augment them by reinstituting the Senior 
Attorney Program.
    The lack of sufficient decision makers must be addressed on both a 
short term and long term basis. The answer is not hiring vast numbers 
of ALJs as was acknowledged last year by Deputy Commissioner Gerry in 
his testimony before this Subcommittee. Hiring the number of ALJs 
needed to efficiently adjudicate the entire OHA workload is cost 
prohibitive, and operationally unnecessary. Many of the cases that come 
to OHA do not require the participation of an ALJ in the adjudicatory 
process. Many cases come to OHA that with minimal evidentiary 
development demonstrate that the claimant is disabled. These cases 
could be resolved almost immediately, if the proper adjudicatory 
mechanism was available. During the disability crisis of the 1990's, 
SSA created the Senior Attorney Program to deal with these kinds of 
cases. That program produced nearly 220,000 favorable decisions while 
permitting ALJs to direct their attention to the cases that required 
ALJ adjudication. The net result was the cases pending at OHA fell from 
over 550,000 to 311,000 by the end of FY 1999. ALJs should remain the 
backbone of the OHA adjudication process, but SSA should immediately 
reinstitute the Senior Attorney Program and investigate the feasibility 
of utilizing other attorney adjudicators such as a magistrate/hearing 
officer position to assist the ALJs in adjudicating the OHA caseload.
    Last year GAO issued a report which in part emphasized the success 
of the Senior Attorney Program. The Senior Attorney Program involved 
OHA's experienced attorneys reviewing and developing cases upon their 
arrival at the hearing office and issuing fully favorable On-The-Record 
(OTR) decisions in cases that did not require a hearing. The GAO 
recommendations clearly contemplated a return to the Senior Attorney 
Program.
    However, SSA did not see fit to follow that advice. The result was 
a continued increase of the backlog at OHA hearing offices as 
demonstrated by the following chart.

[GRAPHIC] [TIFF OMITTED] T3734Q.001

      
    While recognizing the value of early screening of cases by the 
decision maker, it has instructed its ALJs to perform that role. The 
problem is that having ALJs perform the time consuming task of 
reviewing unpulled cases, significantly reduces the time ALJs can spend 
conducting hearings and deciding those cases in which a hearing is 
required. While the Senior Attorney Program produced cases in addition 
to those produced by ALJs, the current token ALJ screening program only 
redirects ALJ time. It does not increase the number of decision makers 
and will not significantly increase the total number of dispositions.
    The inefficiency of the ALJ review program can be seen in the 
monthly statistics released by OHA. During the period including 
February 2003 through June 2003 over 250,000 claimants filed appeals to 
OHA. OHA's Monthly Activity Report indicates that ALJs reviewed only 
25,713 of these files resulting in 6,474 OTR decisions. That ratio of 
OTR decision to ALJ reviews, approximately 25%, is the same ratio 
evidenced by the original Senior Attorney Program. The inefficiency of 
this program is apparent when one considers the number of OTR decisions 
made. The Senior Attorney Program produced 40,000-50,000 decisions a 
year while the annualized rate for the current token ALJ screening 
program is a mere 15,538 decisions at the cost of fewer ALJ non-OTR 
decisions.
    OHA is well aware of the relative inefficiency of the ALJ screening 
initiative. In response OHA sent a directive to hearing offices 
requiring inclusion of the screening activities done by current 
Attorney Advisers in the ALJ statistics, thereby, OHA hopes, improving 
the appearance of this inherently inefficient process. Instead of 
trying to obfuscate the facts, OHA should move aggressively to increase 
it adjudicatory capacity within the bounds of fiscal restraint.

Recommendations
    NTEU makes the following recommendations for action necessary to 
ensure that the Office of Hearings and Appeals delivers the quality of 
service demanded by the American people currently and in the future:

    1.  SSA should adopt a more reasonable timeframe for the 
introduction of the electronic folder.
    2.  SSA should involve its stakeholders more intimately in the 
design process to ensure that the electronic folder enhances the 
conduct of fundamental operational functions.
    3.  SSA should conduct extensive full process testing before the 
implementation of the electronic folder on a national basis.
    4.  All qualified OHA Attorney Advisers should be converted to 
Senior Attorney decision makers and given the authority to issue fully 
favorable on-the-record decisions. These Senior Attorney decision 
makers would review all cases coming into the hearing office as well as 
providing decision writing support for the ALJs.
    5.  SSA should establish a workgroup to examine the implementation 
of additional attorney decision makers, such as a magistrate/hearing 
officer position that would work in conjunction with the ALJs in 
adjudicating the ever-growing disability workload that faces SSA.

                                 

 Statement of the Honorable Stephanie Tubbs Jones, a Representative in 
                    Congress from the State of Ohio

    Mr. Chairman, my dear colleagues, Commissioner Jo Anne Barnhart, 
Bob Robertson, Linda Koontz and Susan Prokop, please accept my 
apologies for being absent this morning. I am currently addressing the 
House floor to express my opposition to the Chile & Singapore Free 
Trade Agreements.
    However, I will follow up with all of you to address specific 
concerns I have regarding the Social Security Administration's (SSA's) 
plan to address the outstanding backlog problems with disability claims 
processing, and the SSA's budget request.
    I'd like to commend Commissioner Barnhart and her staff for their 
hard work in developing a 5-year Service Delivery Budget Plan.
    I am pleased to see that the Commissioner's budget includes 1,300 
new positions, and I hope that these new positions are filled in a way 
that represents all Americans. I look forward to working with the 
Social Security Administration to resolve the many challenges the 
Social Security Administration faces. Again, please excuse my absence, 
and I thank you for appearing before the Social Security Subcommittee 
today.

                                  
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