[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                   SOCIAL SECURITY'S PAYMENT ACCURACY

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

                             JOINT HEARING

                               before the

                       SUBCOMMITTEE ON OVERSIGHT

                                  and

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

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

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 14, 2011

                               __________

                           Serial No. 112-OS5

                               __________

         Printed for the use of the Committee on Ways and Means















                  U.S. GOVERNMENT PRINTING OFFICE
70-885                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001







                      COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                      SAM JOHNSON, Texas, Chairman

KEVIN BRADY, Texas                   XAVIER BECERRA, California
PAT TIBERI, Ohio                     LLOYD DOGGETT, Texas
AARON SCHOCK, Illinois               SHELLEY BERKLEY, Nevada
RICK BERG, North Dakota              FORTNEY PETE STARK, California
ADRIAN SMITH, Nebraska
KENNY MARCHANT, New York

                                 ______

                       SUBCOMMITTEE ON OVERSIGHT

             CHARLES W. BOUSTANY, JR., Louisiana, Chairman

DIANE BLACK, Tennessee               JOHN LEWIS, Georgia
AARON SCHOCK, Illinois               XAVIER BECERRA, California
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
KENNY MARCHANT, New York             JIM MCDERMOTT, Washington
TOM REED, New York
ERIK PAULSON, Minnesota

                       Jon Traub, Staff Director

                  Janice Mays, Minority Staff Director











                            C O N T E N T S

                               __________
                                                                   Page

Advisory of June 14, 2011, announcing the hearing................     2

                               WITNESSES

Honorable Carolyn Colvin, Deputy Commissioner, Social Security 
  Administration.................................................     9
Honorable Patrick P. O'Carroll Jr., Inspector General, Social 
  Security Administration........................................    21
Dan Bertoni, Director, Education, Workforce, and Income Security 
  Issues, U.S. Government Accountability Office..................    29
Ann P. Robert, Deputy Director, Bureau of Disability 
  Determination Services, Illinois Department of Human Services, 
  on behalf of the National Council of Disability Determination 
  Directors......................................................    53
Joseph Dirago, President, National Council of Social Security 
  Management Associations........................................    63

                       SUBMISSIONS FOR THE RECORD

Social Security Administration...................................    93
Government Accountability Office.................................    99
National Council Of Disability Determination Directors...........   101
Huntington's Disease Society of America (HDSA)...................   103

 
                   SOCIAL SECURITY'S PAYMENT ACCURACY

                              ----------                              


                         TUESDAY, JUNE 14, 2011

     U.S. House of Representatives,        
               Committee on Ways and Means,        
                         Subcommittee on Oversight,        
                                             joint with    
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The subcommittees met, pursuant to call, at 2:40 p.m., in 
Room 1100, Longworth House Office Building, the Honorable 
Charles Boustany [chairman of the Subcommittee on Oversight] 
presiding.
    [The advisory of the hearing follows:]

HEARING ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

  Chairmen Boustany and Johnson Announce Hearing on Social Security's 
                            Payment Accuracy

June 14, 2011

    House Ways and Means Oversight Subcommittee Chairman Charles 
Boustany, Jr., MD (R-LA) and Social Security Subcommittee Chairman Sam 
Johnson (R-TX) today announced that the Subcommittees on Oversight and 
Social Security will hold a hearing on the accuracy of payments made by 
the Social Security Administration (SSA). The hearing will take place 
on Tuesday, June 14, 2010, in 1100 Longworth House Office Building, 
beginning at 2:00 P.M.
      
    In view of the limited time available to hear from witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing. A list of invited 
witnesses will follow.
      

BACKGROUND:

      
    According to the President's fiscal year 2012 Budget request, next 
year the SSA is expected to distribute nearly $820 billion in benefits 
to over 60 million people. These benefits will be paid primarily 
through three major programs administered by the SSA: the Social 
Security Old-Age and Survivors' Insurance (OASI) program, which will 
distribute $620 billion to 45 million retired workers and their 
spouses, dependents, and survivors; the Social Security Disability 
Insurance (DI) program, which will distribute $135 billion to nearly 11 
million beneficiaries unable to work due to disability and their 
eligible spouses and children; and the Supplemental Security Income 
(SSI) program, which will distribute nearly $50 billion to over 8 
million low-income people who are aged, blind, or disabled.
      
    One out of four American households receives some income from 
Social Security, and distribution of such significant sums of taxpayer 
dollars means that even a very low overpayment rate can result in a 
substantial loss to the taxpayer and the Social Security program. 
According to the latest available data, in FY 2009 overpayments 
included $841 million in the OASI program, $1.7 billion in the DI 
program, and $4.0 billion in the means-tested SSI program. Without 
action, these error costs will grow significantly as benefit costs for 
Social Security alone are projected to increase nearly 70 percent over 
the next ten years.
      
    For the five-year period ending fiscal year 2009, errors involving 
the determination of ``substantial gainful activity,'' essentially 
whether earnings are high enough to end eligibility for DI benefits, 
account for the majority of overpayment errors, nearly $1 billion 
annually, or 36 percent of total retirement, survivors, and disability 
program error dollars. Of these error dollars, 64 percent resulted from 
beneficiaries' failure to report their work activity. The other 36 
percent were associated with the SSA's failure to schedule a work 
continuing disability review (CDR) after the beneficiary notified the 
SSA that they returned to work. Once a beneficiary notifies the SSA of 
their earnings, it may be months or years before the SSA sends an 
overpayment notice to the beneficiary, demanding repayment of sometimes 
tens of thousands of dollars of accrued overpayments.
      
    Other program integrity reviews generate significant long-term 
savings for taxpayers and are critical to ensuring that only those 
eligible continue to receive benefit payments. Medical CDRs are 
periodic reviews conducted to ensure recipients are still disabled 
according to Agency rules. In FY 2009, these reviews have generated 
$12.50 in savings for every dollar invested. Despite their substantial 
savings, the frequency of these reviews is declining. The number of 
completed medical CDRs fell 65% between FY 2004 and FY 2008, with a 
backlog of more than 1.5 million medical CDRs at the end of FY 2010. 
The SSA Office of Inspector General (OIG) estimates that this backlog 
may lead to as much as $1.1 billion in overpayments in 2011 alone.
      
    SSI program integrity work has followed a similar pattern, with 
funding levels and redeterminations peaking in 2003, falling through 
2007, and then beginning to rise again in 2008. These periodic reviews 
of non-medical SSI eligibility factors are used to determine if a 
recipient remains eligible for the program and yield $7 in program 
savings for every dollar spent. The use of SSI redeterminations has 
decreased by more than 60% between FY 2003 and FY 2008, resulting in 
$3.3 billion in lost program savings in FYs 2008 and 2009, according to 
the SSA OIG.
      
    In announcing the hearing, Chairman Boustany said, ``Whether 
through error or outright fraud, overpayments across the government are 
a substantial problem costing taxpayers tens of billions of dollars 
each year. The Oversight Subcommittee is reviewing these overpayments 
in a series of hearings, taking a closer look to identify how 
overpayments occur and funding solutions to better protect taxpayer 
dollars and program beneficiaries.''
      
    In announcing the hearing, Chairman Johnson said, ``We are facing a 
debt crisis because Washington spends too much and wastes too much. 
Payments that are wrong due to fraud or poor management at Social 
Security are unacceptable. Americans whose hard earned wages support 
these programs want, need and deserve better.''
      

FOCUS OF THE HEARING:

      
    The Subcommittees will examine the SSA's efforts to improve payment 
accuracy for the OASI, DI, and SSI programs, including the backlogs 
associated with these efforts and how these backlogs might be reduced 
to better protect taxpayer dollars.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``Hearings.'' Select the hearing for which you would like to submit, 
and click on the link entitled, ``Click here to provide a submission 
for the record.'' Once you have followed the online instructions, 
submit all requested information. ATTACH your submission as a Word 
document, in compliance with the formatting requirements listed below, 
by the close of business on Tuesday, June 28, 2011. Finally, please 
note that due to the change in House mail policy, the U.S. Capitol 
Police will refuse sealed-package deliveries to all House Office 
Buildings. For questions, or if you encounter technical problems, 
please call (202) 225-1721 or (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item 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. All submissions and supplementary materials must be provided in 
Word format and MUST NOT exceed a total of 10 pages, including 
attachments. Witnesses and submitters are advised that the Committee 
relies 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. All submissions must include a list of all clients, persons and/
or organizations on whose behalf the witness appears. A supplemental 
sheet must accompany each submission listing the name, company, 
address, telephone, and fax numbers of each witness.
      
    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.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://www.waysandmeans.house.gov/.

                                 

    Chairman BOUSTANY. This hearing will come to order. Good 
afternoon. I am pleased to welcome everyone to this afternoon's 
joint hearing on payment accuracy in programs administered by 
the Social Security Administration. As with past subcommittee 
oversight hearings on Medicare fraud and refundable tax 
credits, today's hearing is aimed at better understanding 
improper payments in Social Security programs and how taxpayer 
dollars might be better protected.
    Next year alone, the Social Security Administration is 
tasked with the enormous responsibility of distributing nearly 
$820 billion to over 60 million beneficiaries. With the 
staggering size and complexity of these programs Social 
Security is particularly vulnerable to erroneous payments, 
fraud, and management challenges.
    We are here today to explore these challenges and consider 
what might be done to correct them and better protect both 
beneficiaries and taxpayers.
    By any standard, the scope of these problems is 
considerable. Social Security issued at least $8 billion in 
improper payments in fiscal year 2010. According to GAO and the 
Social Security inspector general, this number does not capture 
the full extent of overpayments.
    Regardless of whether a payment occurs because of simple 
error or outright fraud, improper payments harm Social Security 
programs in the long term, jeopardizing benefits for those who 
may need them in the future. They also cost taxpayers billions 
of dollars each year. With publicly held Federal debt set to 
eclipse GDP in the coming years, we can no longer ignore 
billions of dollars in overpayments, regardless of how they 
occur. While the numbers involved with wasteful Social Security 
spending might be overwhelming, the solutions that would reduce 
them are no mystery.
    Today we will be discussing proven methods for reducing 
improper payments, such as continuing disability reviews and 
redeterminations which can save the taxpayer as much as $15 for 
every dollar spent. We will also be discussing how these cost-
saving activities are on the decline, falling as much as 65 
percent in recent years, billions of dollars in overpayments 
that might have otherwise been prevented.
    There is much that needs to be done to reduce improper 
payments and better protect taxpayer dollars. Social Security 
should build on past successes, with data exchanges using 
information the government and beneficiaries already have to 
make payments more accurate. And they need not only to get this 
information in a timely fashion, they need to put it to use 
more quickly than they have in the past.
    Too often the agency is not responsive to beneficiaries. 
Many of us have heard reports from our constituents about the 
agency waiting months or years to send out overpayment notices 
which can lead to tens of thousands of dollars in additional 
overpayments and underpayments. In other cases, beneficiaries 
may inform the agency of a change in their income or medical 
status, and years go by without action by Social Security. This 
has to change.
    I look forward to hearing from the witnesses today about 
how these problems may occur and what might be done to prevent 
them. With these programs, like others, every dollar spent on 
an improper payment is a dollar that does not go to a 
legitimate beneficiary, and each one further weakens the 
program. And with the Social Security program heading towards 
insolvency, a time when we could just kick this can down the 
road is past, if there ever was one at all.
    As the Ways and Means Subcommittees on Oversight and Social 
Security, we have an obligation to Social Security 
beneficiaries and taxpayers to understand the size of the 
problem and what might be done to improve it.
    I hope today's hearing will cast new light on these issues, 
and I thank our guests for joining us for the support and 
discussion.
    Before I yield to the ranking member of the Subcommittee on 
Oversight, Mr. Lewis, I ask unanimous consent that all members' 
written statements be included in the record. Without 
objection, so ordered.
    Chairman BOUSTANY. And now I yield to Mr. Lewis, the 
ranking member of the Oversight Subcommittee.
    Mr. LEWIS. I thank the chairman for holding this hearing 
today. We both agree that improper payments should not happen. 
However, we disagree on how to fix the problem. I believe that 
we need to fund the agency. Republican budget cuts harm 
beneficiaries, harm taxpayers, and harm the Social Security 
Trust Fund. We will see this clearly today. The Republicans' 
failure to fund the agency will cost taxpayers more than $200 
million in improper payments this year alone. Some now seem 
surprised, they seem very surprised, and are here asking the 
agency, ``What went wrong? What more needs to be done?''
    We and the witnesses all know the answer to these 
questions. The agency needs more funding, more money, more 
staffing, more resources. It is that simple. The President's 
request for next year, if funded, will save taxpayers $9 
billion in improper payments over the next decade and up to $58 
billion in the long run. We do not need a hearing to learn 
this. Therefore, I believe there must be something more. Why 
are we having this hearing?
    I again, and I have said at each hearing we have held, that 
am troubled. I remain concerned by the path of this committee.
    I continue to ask, ``Who is next? Who else is on your 
list?'' We started this year with seniors and proposals to end 
Medicare. The committee then moved to teachers and their 
pension, and then to women's health and the uninsured. Last 
month the targets were middle-class working families and the 
unemployed. Now we have come back to the seniors and added 
severely disabled adults and severely disabled children in very 
poor families. I am concerned about the people being added to 
this list.
    Today we are witnessing a self-fulfilling prophecy. 
Republican budget cuts are being used to put the Social 
Security Administration in a very bad light. The truth is that 
the agency's overpayment rate is extremely low. This agency 
provides vital payments to over 60 million Americans and 
families. One out of four households depends on these programs, 
including my friend, your neighbor, and the grandparents who 
live up the street. I ask that we all are mindful not to cast 
these Americans in a bad light.
    I want to thank each and every one of the witnesses for 
being here today. Also I thank the employees of the Social 
Security Administration for their dedication and for their hard 
and good work each and every day.
    Mr. Chairman, with that I want to thank you and I yield 
back my time.
    Chairman BOUSTANY. I thank the gentleman.
    Chairman BOUSTANY. I now yield to Mr. Johnson, the chairman 
of the Social Security Subcommittee.
    Chairman JOHNSON. Thank you. Welcome, you guys.
    The American people have been told by the trustees for 
Social Security and Medicare that these programs are headed 
toward insolvency. So when they hear Social Security is owed 
billions due to wrongful payments. Americans want, need and 
deserve answers. In fiscal year 2009, overpayments totaled $6.5 
billion for the retirement, disability, and supplemental 
security income, or SSI program, with most in the SSI program. 
Worse, these numbers do not reflect lost savings resulting from 
Social Security falling behind on eligibility reviews.
    These reviews fall into three broad categories: first, so-
called SSI determinations or a periodic review of nondisability 
eligibility factors such as income and assets. Social Security 
reduced the number of redeterminations by more than 60 percent 
between fiscal year 2003 and 2008, resulting in $3.3 billion in 
lost program savings in fiscal years 2008 and 2009 according to 
the Social Security's inspector general, who is out there.
    The second category is work continuing disability reviews, 
known as work CDRs, where Social Security checks to see if one 
is making too much to remain on disability. Should someone 
receiving disability benefits make over $1,000 per month, 
referred to as a substantial, gainful activity, they may no 
longer qualify. And for the 5-year period ending 2009, wage 
errors in the Social Security disability insurance program 
counted for nearly $1 billion annually, or about a third of the 
total retirement and disability program overpayment error 
dollars. Of these errors, two-thirds resulted from a 
beneficiary's failure to report their work activity. The other 
third were associated with Social Security's failure to timely 
complete a work CDR after they were told by beneficiaries that 
they had returned to work. As a result it can take months or 
years before Social Security sends a notice demanding repayment 
of sometimes tens of thousands of dollars of accrued 
overpayments. That is kind of crazy.
    As we will hear today, if Social Security had better data-
matching capability and completed more reviews of earnings 
sooner, payment errors could be resolved more quickly or never 
happen in the first place.
    Lastly, Social Security has fallen behind reviewing the 
medical status of those receiving disability benefits. In 
fiscal year 2010, Social Security had a backlog of 1\1/2\ 
million medical CDRs. When these reviews aren't done on time, 
people who no longer qualify will continue to receive benefits 
that they don't deserve. Also, these reviews not only provide 
savings to Social Security, they also provide savings to 
Medicare and Medicaid. In fact, here is how much we stand to 
save if they are done on time. For every dollar invested in a 
medical CDR, $12 in savings is returned to these programs. The 
return on each dollar invested in a work CDR is $15. Reviewing 
the asset and income levels of SSI recipients returns $7 for 
each dollar spent. In the name of fiscal responsibility that is 
time and money well spent.
    However, these savings won't be achieved if Social Security 
isn't committed, as it should be, to protecting taxpayer 
dollars. Recently the President and the Congress were able to 
reach a bipartisan agreement on this year's funding for Social 
Security's operations. I hope as we seek to achieve a similar 
bipartisan result, we will also work together to ensure that 
Social Security does all it can to fight waste, fraud, and 
abuse. The American taxpayers who foot the bill deserve nothing 
less.
    Our witnesses today include those on the front lines of 
case processing, who represent managers of the State disability 
determination services and managers of the local Social 
Security offices. We will also hear from the Social Security 
inspector general about important work they do in their special 
investigative units fighting fraud. We do need answers and I am 
counting on all our witnesses to help provide them.
    Thank you, Mr. Chairman.
    Chairman BOUSTANY. I thank the gentleman.
    Chairman BOUSTANY. Mr. Becerra.
    Mr. BECERRA. Mr. Chairman, thank you for holding this 
hearing. Social Security is a sacred compact between Americans 
of all generations. It ensures that billions of retirees, 
disabled workers, and children can live a life of dignity.
    This year 155 million workers will contribute more than 
$690 billion in taxes to Social Security, and nearly 56 million 
Americans will collect their earned Social Security benefits. 
Social Security has never once failed to pay earned benefits on 
time and in full, even through 13 recessions, including the 
Bush recession we are recently going through. That is a track 
record that most would die for and it is the reason Social 
Security has the support and trust of the American people.
    Some of my colleagues have suggested that Americans' hard-
earned tax contributions to Social Security are not real and 
that Social Security is broke. That suggests a fundamental 
misunderstanding and misrepresentation of Social Security. The 
U.S. Treasury bonds in Social Security's Trust Fund are real, 
and the trust fund is $2.7 trillion strong. Yet some insist on 
misleading the public about it to support their proposals to 
cut guaranteed benefits and take trillions of dollars out of 
the trust fund for private accounts. I dare anyone, Mr. 
Chairman, who is willing to take this challenge to find a 
better all-in-one retirement, disability, and life insurance 
plan in the private marketplace that can match Social Security.
    The most immediate dangers to Social Security are the 
reckless cuts to its operating budget that put at risk its 
ability to deliver earned benefits on time in the right amount.
    Mr. Chairman, we need to hold an oversight hearing on 
Social Security budget. It is long overdue. The nearly $1 
billion cut to Social Security's already lean but efficient 
operating budget cuts into the bone. Social Security's costs of 
operation are already less than 1 percent of its total budget.
    Today's hearing topic, preventing improper payments to 
safeguard the Social Security Trust Fund, is important; but my 
colleagues seem to be ignoring the elephant in the room: You 
get what you pay for. And the current budget driven by 
Republicans in the House does not fully pay for the Social 
Security Administration's efforts to prevent errors.
    The Social Security Administration already has a very low 
overpayment rate, three-tenths of 1 percent for Social 
Security, and about 8 percent for the more complex SSI program. 
In 2009 SSA saved $12.50 for every dollar it invested in 
continuing disability reviews, which prevent payments to people 
who are no longer eligible for benefits. Social Security's 
actuary has estimated that if we simply funded the program over 
the next 4 years, as the Social Security Administration has 
proposed, the American taxpayer and Social Security would save 
$58 billion.
    But the Republican budget for fiscal year 2011 froze Social 
Security's funding for program integrity. And the House 
Republican fiscal year 2012 budget would cut the Social 
Security Administration's operating budget a total of some $10 
billion over the next decade. That is penny-wise and pound-
foolish. These budget cuts, like privatization schemes, put 
Social Security's Trust Fund and the tax contributions of 
millions of current and future beneficiaries in jeopardy. They 
also handcuff Social Security in its efforts to protect the 
trust fund and Americans' contributions by detecting and 
preventing overpayments, the very stated purpose of today's 
hearing.
    Mr. Chairman, let me once again publicly request that this 
Committee on Ways and Means, through its subcommittee of 
jurisdiction, perform its constitutional duty of oversight over 
the budget of Social Security. Rather than just nibble around 
the edges, let us let the sun shine on every aspect of Social 
Security's budget so that all Americans witness for themselves 
what is going on with Social Security's funding.
    Mr. Chairman, thank you and I look forward to hearing the 
witnesses. I yield back the balance of my time.
    Chairman BOUSTANY. I thank the gentleman.
    Chairman BOUSTANY. Now I would like to welcome our 
witnesses. And thank you for being patient. We had a series of 
votes that got us off to a late start.
    First we have Ms. Carolyn Colvin, Deputy Commissioner for 
the Social Security Administration. Welcome.
    We have Mr. Patrick O'Carroll who is the Inspector General 
for the Social Security Administration. Mr. O'Carroll, welcome.
    Mr. Dan Bertoni is Director for Education, Workforce, and 
Income Security Issues at the Government Accountability Office. 
Welcome, sir.
    Ms. Ann Robert, who is the Deputy Director for the Bureau 
of Disability Determination Services for the Illinois 
Department of Human Services, and is here today on behalf of 
the National Council of Disability Determination Directors, 
welcome.
    And Mr. Joseph, is it Dirago or Dirago?
    Mr. DIRAGO. Dirago.
    Chairman BOUSTANY. Dirago, who is President of the National 
Council of Social Security Management Associations.
    I want to thank you all for being with us today. We look 
forward to your testimony. You will each have 5 minutes to 
present your testimony, which is our customary approach, with 
your full written testimony submitted for the record.
    Ms. Colvin, you may begin.

STATEMENT OF THE HONORABLE CAROLYN COLVIN, DEPUTY COMMISSIONER, 
        SOCIAL SECURITY ADMINISTRATION, WASHINGTON, D.C.

    Ms. COLVIN. Thank you. Chairman Johnson, Chairman Boustany, 
Ranking Member Becerra, Ranking Member Lewis and Members of the 
Subcommittees, thank you for inviting me to discuss our efforts 
to ensure the accuracy of our benefit payments. I am SSA's 
deputy commissioner and the agency accountable official for 
improper payments.
    We pay nearly $60 billion in benefits to almost 60 million 
people each month. We are committed to making those payments 
timely and accurately. Minimizing improper payments is so 
important that we made preserving the public's trust in our 
programs one of our four strategic goals.
    We have worked hard to improve our payment accuracy, but we 
cannot maintain our recent success without adequate resources 
that will allow us to do the work for which we are responsible. 
Our complex programs require knowledgeable and experienced 
employees to analyze cases, make decisions, and implement 
changes.
    The same employees who conduct our program integrity 
initiatives also make determinations on SSI, retirement, and 
disability applications and handle a wide variety of other 
responsibilities.
    Our employees are our best defense against improper 
payments, and all of the SSI discussed today depends on having 
an adequate number of well-trained staff to keep up with our 
work, which has surged in the last few years and continues to 
increase.
    We have been innovative and proactive in adopting 
strategies to allow us to meet the challenges we face. Our 
information technology resources have been critical to our 
success. For example, in fiscal year 2010, we reduced the time 
it takes to get a hearing decision to the lowest point in 5 
years. Currently the average wait for a hearing decision is 
below 1 year for the first time since 2003. We kept pending 
initial disability claims significantly below our goal, and 
achieved the lowest average speed of answer and busy rates on 
our 800 number since we began keeping statistics nearly a 
decade ago.
    We increased the accuracy of our SSI payments in fiscal 
year 2009 and fiscal year 2010. We continue to increase on-line 
claims with nearly 40 percent of retirement claims and about 31 
percent of disability claims currently filed on line through 
our highly regarded Internet site. I am happy to report that in 
fiscal year 2010, 99.6 percent of our OASDI payments were free 
of overpayments.
    The supplemental security income, or SSI, program is more 
complex, and our overpayment accuracy rate for the program 
reflects that complexity. Still, with the increase in SSI 
redeterminations we have improved. In fiscal year 2008 our SSI 
overpayment accuracy rate was 89.7 percent. In fiscal year 2009 
we raised it to 91.6 percent. And we continue this positive 
trend in fiscal year 2010 by increasing it to 93.3 percent, the 
highest it has been since 2005.
    Our most valuable tools to maintain the integrity of our 
programs are continuing disability reviews, or CDRs, and SSI 
redeterminations. We estimate that every dollar invested in 
CDRs yields at least $10 in lifetime program savings, including 
savings accruing to Medicare and Medicaid. Every dollar spent 
on SSI redeterminations yields more than $7 in program savings 
over 10 years, including savings accruing to Medicaid.
    We use technology to help us prevent and detect improper 
payments. For example, unreported financial accounts and wages 
are the major causes of improper payments in the SSI program. 
Therefore, we have developed a process called access to 
financial institutions, or AFI, to electronically identify 
financial accounts of SSI applicants and recipients. We plan to 
complete AFI rollout to all States by the end of this month. 
After 2013 when AFI is fully implemented, we project that AFI 
could yield a $20 return for every dollar invested.
    We also made the SSI wage reporting process more efficient 
and user friendly by implementing an automated system to report 
wages over the telephone. This system automatically updates our 
records, which increases accuracy and saves beneficiaries and 
our employees time.
    Before I close, I want to mention our hard-working, 
dedicated employees who are the real key to maintaining the 
American public's trust in our program. Our employees continue 
to provide exemplary service and increase their productivity 
despite record-setting increases in our workloads.
    Equally important to our success is adequate and sustained 
funding to carry out our vitally important program integrity 
work. We have proven that when you invest in us we produce 
results.
    We appreciate your past support for our agency and our 
programs and look forward to your continued support. I am happy 
to answer any questions you have. Thank you.
    Chairman BOUSTANY. Thank you, Commission Colvin.
    [The prepared statement of Ms. Colvin follows:]




    Chairman BOUSTANY. Mr. O'Carroll, you may proceed.

STATEMENT OF THE HONORABLE PATRICK P. O'CARROLL, JR., INSPECTOR 
   GENERAL, SOCIAL SECURITY ADMINISTRATION, WASHINGTON, D.C.

    Mr. O'CARROLL. Good afternoon, Chairman Boustany, Chairman 
Johnson, Ranking Member Lewis, Ranking Member Becerra and 
members of both subcommittees. Thank you for the invitation to 
testify today.
    SSA administers about $60 billion in benefits to almost 60 
million beneficiaries every month. Payment accuracy is of 
paramount importance to the agency. SSA and agencies across 
government have increased efforts to reduce improper payments, 
particularly since Congress passed the Improper Payments 
Elimination and Recovery Act, or IPERA.
    With a history of identifying SSA's improper payments 
through audits and investigations, my office was asked by the 
IG community to assume a leadership role with OMB and the 
Treasury Department on implementing IPERA and the President's 
Executive Order.
    For fiscal year 2009, SSA estimated improper payments 
totaling $8 billion. The agency estimated overpayments of $2.6 
billion for its Retirement, Survivors and Disability Insurance 
program, and $600 million in underpayments. Its SSI program had 
an estimated $4 billion in overpayments and $800 million in 
underpayments.
    SSA seeks to improve payment accuracy in both programs. The 
agency set up plans to commit nearly $800 million towards 
program integrity this year, with an emphasis on tools such as 
continuing disability reviews, or CDRs, and SSI 
redeterminations.
    SSA considers overpayments unavoidable if the law requires 
the payments to be made. In other words, the agency does not 
consider improper any payments it makes to a beneficiary who 
would have been ineligible if SSA had conducted a CDR when it 
came due. However, we believe these payments should be part of 
the discussion about SSA's payment accuracy, because these 
payments should not have been made and cannot be recouped.
    SSA projects a backlog of about 1.4 million medical CDRs at 
the end of fiscal year 2011. Our audit work has found the 
agency would have avoided paying hundreds of millions of 
dollars to ineligible beneficiaries if CDRs and SSI 
redeterminations were conducted when they were due. SSA must 
utilize any and all tools that can prevent payment errors 
before they occur.
    My office for years has encouraged SSA to use data matching 
to protect agency funds. To reduce SSI overpayments, OIG 
recommended that SSA obtain a beneficiary's bank account 
information and access other private databases rather than rely 
on self-reporting. In recent years SSA implemented the Access 
to Financial Institutions project which allows the agency to 
check an applicant or recipient's bank account to verify 
resources.
    We have also made other data-matching recommendations to 
SSA involving potential matches of beneficiary information to 
marital status, workers compensation and vehicle ownership 
records. We are also pursuing an exemption from the Computer 
Matching and Privacy Protection Act to facilitate the OIG's 
work in this area.
    Our support for stewardship activities has never wavered. 
IPERA allows an IG to use a percentage of money collected from 
recovery of audits of the IG's agency. Unfortunately, SSA has 
determined that benefit overpayments from its trust fund in the 
SSI program are not covered under IPERA. The provision only 
applies to audits of SSA's administrative budget, which 
represents only 1 percent of the total budget. Therefore, we 
continue to pursue the establishment of self-supporting fund 
for integrity initiatives, such as our Cooperative Disability 
Investigations program, and CDRs and redeterminations.
    In conclusion, SSA has made strides to comply with the 
request to report its improper payments, identify causes, and 
allocate resources to prevent future errors. We encourage the 
agency to commit to stewardship activities to prevent improper 
and unnecessary payments.
    My office will continue to work with your subcommittees and 
SSA in these and future efforts to improve payment accuracy in 
SSA's benefit programs. Thank you again for the invitation to 
testify today and I will be happy to answer questions.
    Chairman BOUSTANY. Thank you, Mr. O'Carroll.
    [The prepared statement of Mr. O'Carroll follows:]




    Chairman BOUSTANY. Mr. Bertoni, you may proceed.

 STATEMENT OF DAN BERTONI, DIRECTOR, EDUCATION, WORKFORCE, AND 
INCOME SECURITY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, 
                        WASHINGTON, D.C.

    Mr. BERTONI. Mr. Chairman, ranking members, Members of the 
Subcommittees, good afternoon. I am pleased to discuss our work 
on overpayments in SSA's disability insurance program, which 
paid over $120 billion in benefits last year. The program has 
grown substantially in recent years and is poised for further 
growth as the baby-boom generation ages and places additional 
strain on the DI Trust Fund. Thus it is important that SSA 
maintain a robust process to detect and recover program 
overpayments.
    My testimony summarizes our ongoing work and focuses on the 
extent to which SSA makes and ultimately recovers work-related 
overpayments and program policies and vulnerabilities that may 
contribute to overpayments.
    In summary, DI program overpayment detections grew from 
about $860 million in 2001 to about $1.4 million last year. Our 
review and SSA's own estimates suggest that most overpayments 
are due to unreported earnings that exceed program limits. If 
beneficiaries return to work and do not notify SSA, 
overpayments can accrue, and in 49 of 60 randomly selected 
cases we reviewed there was no indication that beneficiaries 
had reported work and earnings as required.
    While SSA recovered over $800 million in overpayments last 
year, repayment by beneficiaries can take decades, and total 
outstanding debt carried on SSA's books currently exceeds $5 
billion. Despite its policy to request full repayment within 36 
months SSA lacked agency-wide performance goals for timely debt 
recovery, and does not require supervisory review and approval 
of repayment plans exceeding 3 years. Our case file review 
shows that such plans frequently exceeded 20 years, with one 
plan extending over 200 years to recover a $27,000 overpayment.
    We also found that for repayment plans extending beyond 
2049 SSA's tracking system does not reflect the total balance 
due the agency, and as the years pass this underreporting will 
likely become more significant.
    Work continuing disability reviews, or work CDRs, are a 
primary tool for SSA to identify work activity and earnings. 
However, it relies on IRS earnings data that can be more than a 
year old when received and matched against SSA's rolls, 
allowing overpayments to accrue for extended periods. Managers 
and staff at all four processing centers cited aged data as a 
major obstacle to limiting the occurrence and size of 
overpayments. Moreover, in the cases we reviewed, earnings data 
was already between 6 and 26 months old when received by SSA.
    In prior work we have recommended that SSA seek more timely 
data sources, such as the National Directory of New Hires, or 
NDNH, which includes quarterly wage information and is used by 
several Federal programs to detect and prevent overpayments. 
Despite acknowledging a potential positive return by using the 
directory, SSA does not use it for large-scale data-matching 
with its DI beneficiary rolls due to concerns about the 
potential workloads it could generate.
    Beyond earnings time limit issues, we found that work CDRs 
are not initiated by SSA staff for many months after receiving 
the initial IRS alert. In the 60 cases we reviewed the median 
time they were pending development after the alert was received 
was 7 months, with one case lingering more than 15 months. For 
about a third of all cases, individuals were overpaid an 
additional 18 months or more due to delays in starting the work 
CDR.
    SSA officials told us the staff shortages and competing 
workloads, such as initial claims and medical CDRs, are among 
the factors delaying work CDR processing. We also found that 
SSA lacks formal performance goals for days work CDR cases on 
pending development or days taken to process them, although it 
has established similar goals for the medical CDR process. In 
the absence of such goals, cases can go unworked for extended 
periods, and we found considerable variation in processing 
times at the four centers visited, ranging from 82 days to 
nearly 1,000 days and resulting in combined overpayments of 
over $1 million.
    Within the last year SSA has begun to better track work CDR 
completions, prioritize IRS alerts with a greater likelihood of 
larger overpayments and improved processing center procedures 
for initiating and completing CDRs. While these and other 
initiatives represent positive steps, it is too early to assess 
what impact it may ultimately have on overpayment detection and 
recovery.
    Mr. Chairman, that concludes my statement. I am happy to 
answer any questions that you or other Members of the 
Committees may have.
    Chairman BOUSTANY. Thank you, Mr. Bertoni.
    [The prepared statement of Mr. Bertoni follows:]




    Chairman BOUSTANY. Ms. Robert, you may proceed.

    STATEMENT OF ANN P. ROBERT, DEPUTY DIRECTOR, BUREAU OF 
DISABILITY DETERMINATION SERVICES, ILLINOIS DEPARTMENT OF HUMAN 
   SERVICES, ON BEHALF OF THE NATIONAL COUNCIL OF DISABILITY 
         DETERMINATION DIRECTORS, SPRINGFIELD, ILLINOIS

    Ms. ROBERT. Chairman Boustany, Chairman Johnson, Ranking 
Member Lewis, Ranking Member Becerra, my name is Ann Robert and 
I am pleased to be here today to testify about the role of the 
DDSs relative to SSA's payment accuracy. I am here to testify 
on behalf of the National Council of Disability Determination 
Directors, which is a professional association consisting of 
the managers and the directors of the Disability Determination 
Services located in each State, also in the District of 
Columbia and Puerto Rico.
    The DDSs are State agencies that are 100 percent federally 
funded by SSA. They employ 14,500 full-time State employees and 
they process over 4.3 million disability claims under the 
Social Security Act annually. The DDSs partner with Social 
Security to provide public service to individuals applying for 
disability. DDSs recognize the benefits of program integrity 
and assist SSA with this program integrity by adjudicating the 
continuing disability reviews. The purpose of the continuing 
disability review is to determine whether or not an individual 
continues to be eligible for benefits. This is a very complex 
process, and in the DDS can be a multiphase process. SSA 
estimates that every dollar spent will generate $10 in lifetime 
savings. This is a cost-effective workload and certainly has a 
significant return on investment.
    Fiscal year to date, DDS has had accuracy of its workload 
of 98 percent. But this workload cannot be done without 
sufficient staff in the DDS. From the beginning of fiscal year 
2011 to present, the DDSs nationally have an attrition rate of 
12.8 percent in their disability examiners and an overall staff 
attrition rate of 10.3 percent. SSA imposed a hiring freeze in 
early fiscal year 2011. The attrition of trained examiners and 
the inability to hire will severely limit the ability of the 
DDSs to process initial cases, reconsideration cases, to work 
additional CDRs, and will result in significant backlogs 
nationally.
    We thank you for the increased funding that you provided in 
the past for the initial--for the escalated initial case 
workload. Funding of the CDR work, however, was not sufficient 
and the backlog continues to grow. Funding the various 
workloads to provide a balance of program service and 
stewardship is challenging at best, and more difficult in these 
economic times. DDS staff are to be commended on their 
dedication to public service and their hard work. These staff 
remain flexible and committed to all workloads, working 
diligently to meet all SSA workload targets.
    One example was when SSA was funded by Congress in 1996 for 
a 7-year plan to eliminate the CDR backlog. At that time SSA 
authorized the DDSs to hire, and they did so. The 7-year plan 
allowed for an incremental increase in the CDRs, so that plan 
and the ability to hire allowed the DDSs to complete that 
workload. SSA, with the assistance of the DDSs, successfully 
completed that plan.
    The CDR process begins with SSA. SSA determines the number 
of CDR cases to be worked by the DDS each year. And those cases 
that require a full medical review are sent to the DDS. 
Although case adjudication is a complex task, the CDR review 
requires a side-by-side analysis of the prior allowance with 
the current medical evidence typically, in most DDSs, requiring 
the expertise of a senior examiner. If medical improvement is 
documented along with the beneficiary's ability to work, the 
CDR will be ceased.
    If the beneficiary appeals, that CDR will come back to the 
DDS for a second review. If that case is not reversed, the CDR 
can come back to the DDS a third time to a disability hearing 
officer who will conduct a face-to-face hearing.
    The increasing complexity of the disability program 
criteria require approximately 12 to 18 months for an initial 
examiner to become productive and independent. Attrition at the 
DDS is critical in 11 DDSs experiencing more than 20 percent 
attrition rate with their examiners since the beginning of 
fiscal year 2011.
    SSA and DDS need sufficient funding for hiring to balance 
workloads, to provide public service and stewardship. Without 
such funds the DDSs will be unable to maintain the current 
level of accuracy and production for all workloads. Those most 
vulnerable will suffer.
    DDS has recognized Commissioner Astrue for his leadership 
during these unprecedented times and commits to work with SSA 
on a plan that can accomplish all those workloads.
    Thank you again for the opportunity to present testimony, 
and I would be happy to answer any questions.
    Chairman BOUSTANY. Thank you, Ms. Robert.
    [The prepared statement of Ms. Robert follows:]




    Chairman BOUSTANY. Mr. Dirago, you may proceed.

  STATEMENT OF JOSEPH DIRAGO, PRESIDENT, NATIONAL COUNCIL OF 
   SOCIAL SECURITY MANAGEMENT ASSOCIATIONS, WASHINGTON, D.C.

    Mr. DIRAGO. Chairmen Boustany and Johnson, Ranking Members 
Lewis and Becerra, and Members of the Subcommittees, I am Joe 
Dirago, the President of the National Council Social Security 
Management Associations, NCSSMA, and the District Manager of 
the Social Security office in Newburgh, New York. I appreciate 
this opportunity to speak on behalf of 3,400 Social Security 
managers in field offices and teleservice centers around the 
country.
    NCSSMA shares the concerns expressed about improving SSA's 
payment accuracy. It is fitting that this hearing is held on 
Flag Day, a symbol of our country's vigilance and perseverance. 
Social Security has persevered as the safety net of America for 
76 years. We ask that Congress be vigilant about ensuring that 
this great program remain strong to address its stewardship 
responsibilities and maintain service levels vital to millions 
of Americans.
    Appropriations for SSA are an excellent investment and 
return on taxpayer dollars. With the additional funding 
provided by Congress in recent years, significant progress was 
made with program integrity initiatives which yield $7 to 
$12.50 in savings for every dollar invested.
    Despite workload increases, our 2011 appropriation was 
below the 2010 level. This has resulted in a hiring freeze, a 
drastic reduction of overtime hours, and postponements of 
efficiency improvements. Public service repercussions are being 
felt throughout offices as they experience tremendous pressure 
to process growing workloads with diminished resources.
    A California manager says: We handle close to 2,000 
visitors a week. Recent retirement losses are affecting the 
service we provide and we cannot interview the public fast 
enough. As field office employees are responsible for 
interviewing the public, answering the telephones, processing 
claims, and working critical program integrity cases, service 
is eroding.
    An Alabama manager says: Waiting times and backlogs are 
increasing and we do not have sufficient staff to reverse the 
trend. Unless we can hire, the backlogs will continue to grow 
and service to the public will deteriorate. Most of SSA has 
been under a hiring freeze, and this will result in the loss of 
over 3,500 employees in 2011. Because attrition is not even, 
some offices are becoming severely understaffed.
    A Kansas manager says: My office has lost seven employees 
in the last 6 months, with no replacements. I have 16 
individuals on staff eligible for retirement. The thought of a 
2-year hiring freeze is terrifying and additional losses would 
be devastating. We have a highly skilled but aging workforce, 
with 23 percent of our employees eligible to retire today. 
Because it takes about 2 years to train a new hire, significant 
concerns exist about the loss of institutional knowledge.
    Increased workloads, coupled with staffing reductions, are 
not a formula for payment accuracy. Employees are forced to 
work at an accelerated rate which compromises quality. There is 
little time for training, mentoring, and quality reviews, which 
translates to payment errors.
    NCSSMA supports investments to ensure accurate payments, 
but SSA's capacity is directly impacted by its funding levels. 
Fewer SSI redeterminations and medical CDRs were completed from 
2006 to 2008 due to inadequate funding. Increased 
appropriations in 2009 and 2010 allowed us to process 
substantially more program integrity workloads, yielding about 
$6 billion in savings each year. Program integrity activities 
included in the 2012 budget request would yield over $9 billion 
in savings by completing 2.6 million SSI redeterminations and 
592,000 medical CDRs.
    We sincerely appreciate your interest in the vital services 
Social Security provides, and we certainly recognize the 
difficult budget environment. However, Social Security touches 
the lives of nearly every American family and sufficient 
resources are necessary. NCSSMA respectfully requests your 
support of full funding of the President's 2012 SSA budget on 
behalf of our agency and the American public that we serve.
    We also request your support for dedicated funding to 
improve payment accuracy. This will allow SSA to process its 
core workloads, accomplish program integrity initiative, and 
save taxpayer dollars.
    Thank you for the opportunity to testify at this hearing 
and for consideration of our recommendations.
    Chairman BOUSTANY. Thank you, Mr. Dirago.
    [The prepared statement of Mr. Dirago follows:]




    Chairman BOUSTANY. Now we will proceed with questions, and 
I will begin.
    Mr. O'Carroll, in your testimony you said--this was in your 
written testimony--Federal agencies reported $125 billion in 
improper payments during fiscal year 2010 alone. And just to 
put that number in perspective that is $4,000 every second, 
nearly $15 million every hour. And the Office of Inspector 
General has estimated that Social Security overpaid $8 billion 
in fiscal year 2009. But this number does not include a host of 
other overpayments.
    Can you provide more detail on these other overpayments to 
give us a better sense of the scale of this problem?
    Mr. O'CARROLL. Yes, Chairman. What we are using is that SSA 
has reported about a 3.2 percent overpayment rate. And that 
includes overpayments that are avoidable and unavoidable.
    What we are saying is SSA should consider both the 
avoidable ones and the unavoidable. Unavoidable ones occur when 
SSA doesn't conduct a CDR when scheduled, that amount of money 
keeps building, as is the backlog on CDRs right now.
    And we believe that if you start including that amount, it 
will bring the rate up from 3.2 percent up to as high as 5.2 
percent. When you have to make payments at a certain time, when 
a check goes out, and then we find out or SSA finds out later 
that the person was deceased and that amount of money went out, 
we believe, whether it was by law that it went out or by 
accident, it is still money that should be recouped.
    Chairman BOUSTANY. I thank you. At the end of fiscal year 
2010, Social Security was owed over $15 billion because of past 
benefit overpayments. How does this relate to the agency's 
reporting of $8 billion in improper payments, and how old is 
most of that debt?
    Mr. O'Carroll, do you want to start with that?
    Mr. O'CARROLL. Yes, Mr. Chairman. SSA every year is either 
unable to collect debt or writes it off, and that is a big 
portion of the debt. That written-off debt happens every year, 
and that is cumulative. And what we are saying is that when you 
take the written-off debt, plus the debt from overpayments and 
you add it together, that is where you are getting up into the 
double digits in terms of overpayments.
    Chairman BOUSTANY. Ms. Colvin, would you comment on that?
    Ms. COLVIN. By law there are some situations where we do 
not consider a payment and overpayment. For instance, if 
someone appeals a decision, during the time that they are 
waiting for that decision to be resolved, they may be 
accumulating an overpayment if that appeal is found in our 
favor versus the beneficiary's. So that amount of money that 
will have accumulated would not be considered overpayment under 
the law. However, we still would be notifying the individual of 
the overpayment and we would make collection attempts.
    There are also other situations where if we apply the 
retirement earnings test and we anticipate that an individual 
will be earning a certain amount of money and therefore their 
benefit is based on that amount, and then at the end of the 
year we find that the person made more money than we 
anticipated, so part of that might have been overpayment, 
again, by law, that is not considered to be an improper 
payment, but we do attempt to make the collection.
    Chairman BOUSTANY. Right, I understand what the law says. 
What we are trying to get at is the magnitude of the problem, 
given the situation with solvency issues going forward with 
Social Security, and that is why I am directing the question 
along those lines. Of the outstanding debt, how much does 
Social Security write off each year?
    Ms. COLVIN. The amount is about--I am sorry, just a minute.
    Chairman BOUSTANY. Mr. O'Carroll, do you want to comment?
    Mr. O'CARROLL. I believe $980 million is the write-off 
every year, just shy of $1 billion. Is that what your figures 
were showing?
    Ms. COLVIN. Yes. It is a small amount compared to the 
amount that we collect. The amount that we write off is 
generally a result of an individual not being able to make the 
payment, and it is a very small percentage. I was trying to get 
the exact dollar amount, and I will provide it to you a little 
bit later.
    Chairman BOUSTANY. I thank you. I will now yield to the 
ranking member, Mr. Lewis.
    Mr. LEWIS. Thank you very much, Mr. Chairman. Let me thank 
each of the witnesses who testified.
    Ms. Colvin, this seems like a very simple issue before us. 
Let me make sure that I am not missing something. In 2008 and 
2009, for every $1 we spent making sure that people receiving a 
disability benefit are still disabled, we saved $12.50; is that 
right?
    Ms. COLVIN. Our data reflects that for every $1 that we 
spend on CDRs we are returning $10 for every $1.
    Mr. LEWIS. So I am in the neighborhood?
    Ms. COLVIN. Yes. And for the redeterminations in the SSI 
program, it is $7 for every $1 spent over a 10-year period.
    But we also have a number of tools that we have been able 
to develop that will allow us to address some of the improper 
payments. The AFI system that I mentioned in my testimony that 
would allow us to be able to verify financial accounts that 
have been identified for SSI recipients or detect accounts that 
have not been reported, we estimate that when that system is 
fully rolled out in 2013 there will be a $20 return for every 
$1 invested. So we believe that the investment in program 
integrity work is a good investment and that it is very cost-
effective.
    Mr. LEWIS. Now, if we cut the budget further, like the 
Republicans plan to do, Social Security will do a full 
disability review; is that right?
    Ms. COLVIN. That is correct.
    Mr. LEWIS. Can you explain what is right about that?
    Ms. COLVIN. Well, the same people that do initial claims 
and other responsible workloads, or workloads that we have 
responsibility for, are the same people that do the CDRs and 
the redeterminations. So whenever there is a reduction in the 
funds that we receive, that means that we have got to balance 
those workloads further.
    So if you just look at the $1 billion cut that we have had 
for 2011, we have had a freeze on for the entire funding 
period. And when you have that freeze and you are losing senior 
people--and as one of the speakers indicated it is the seasoned 
examiners that do the redeterminations of the CDRs--as you are 
losing them, then you are going to--and do not have the ability 
to replace them, that is going to impact the number of CDRs 
that we are going to be able to do.
    We are budgeted for CDRs this year. We have in fact, if I 
look at the numbers, we are looking at doing 329,000 medical 
CDRs in 2011. With full funding in 2012, which would be what 
the President's budget would provide, we would look to do 
492,000 medical CDRs. So we will be able to do more with more 
funding. Just as we did the 329,000 medical CDRs that we will 
be doing in 2011, if we get less funds that means we will do 
less than that amount. So the resources that we receive tie 
directly into the number of CDRs that we guess that we are able 
to do.
    Mr. LEWIS. So if I understand this correctly, cutting the 
budget will mean more payments will be made to people who 
should not receive them; am I right?
    Ms. COLVIN. That is correct.
    Mr. LEWIS. Well, this all seems very simple to me. If you 
do not want improper payments, do not cut the budget. Am I 
missing something?
    Ms. COLVIN. No, I don't think that you are. The most 
effective tool that we have for addressing overpayments is our 
CDRs. When we do CDRs we are able to identify incorrect 
payments. As was mentioned before, the largest or the major 
contributing factor to overpayments in CDRs are unreported 
wages. And if we have not in fact joined the CDRs, then we are 
in fact going to have individuals--I am sorry, our SGA, the 
substantial gainful activity. If we are not doing those CDRs we 
are not going to identify that people are in fact being paid 
that are not entitled to the benefits; or if we do the medical 
CDRs, if we don't do those we are not going to identify that 
the people who now are able to return to work because their 
disability would allow them to do substantial gainful activity. 
So we are going to have people on the rolls who should not be 
on the rolls.
    It has been demonstrated that the more redets we do, the 
higher our accuracy rate is. The more CDRs that we do, the 
fewer improper payments we have.
    Mr. LEWIS. Ms. Colvin, Republican budget cuts harm 
beneficiaries. There are tens of millions of people who depend 
on your agency and a million more waiting for benefits. Who are 
these people? In your experience are they honest people? What 
type of disability do these people have? Who are the programs 
designed to help?
    Ms. COLVIN. I think you know that our programs are very 
complex. We find that these are people who may not have 
reported their earnings because it is a very difficult program 
to understand, and they may in fact not have reported it 
timely. There are other situations where the timing----
    Chairman BOUSTANY. The gentleman's time is up. If you could 
wrap up your answer on this.
    Ms. COLVIN. I would say that these are not fraudulent 
cases, these are improper payments. And there is a difference 
between fraud and improper payments.
    Mr. LEWIS. Thank you. Thank you, Mr. Chairman.
    Chairman BOUSTANY. I thank the gentleman. The chair now 
recognizes the chairman of the Social Security Subcommittee, 
Mr. Johnson.
    Chairman JOHNSON. Thank you, Mr. Chairman.
    Mr. O'Carroll, I think cooperative disability investigation 
units are the key to reducing fraud in the Social Security 
program; would you agree?
    Mr. O'CARROLL. Yes, Mr. Chairman.
    Chairman JOHNSON. And it is better to catch potential 
payments on the front end rather than paying them and trying to 
chase bad payments afterwards.
    Can you tell us how these units operate, the success your 
office has had for the prosecution and fraud perpetration, and 
how these units might be better used to prevent improper Social 
Security payments?
    Mr. O'CARROLL. Yes, Mr. Chairman. We are very proud of our 
CDI program. It is sort of a hybrid in that we have DDS 
employees, we have State employees, we have SSA employees, we 
have IG investigators and we have State investigators, and we 
work in conjunction with DDSs so that when there is suspected 
fraud at the applicant level, it is brought to our attention, 
we review it, we use databases to determine whether or not the 
person has resources, whether or not the person is showing any 
work activity or other issues, and then we do surveillance.
    And what we are finding with this initiative is we are able 
to prevent the funds or the benefits from being awarded, so 
there is no need to recapture lost money; it is just stopping 
payments at the front end. It is also a very good deterrent. We 
have CDI Units in a number of cities, some of which are 
represented by the members of this committee. And at the 
moment, we are at 23 CDI units in 21 States. And our return on 
investment on them is anywhere from about $12 to $14 to $1. It 
is rather inexpensive to set it up, but the deterrent factor is 
dramatic.
    And we have got the word out, because we have seen videos 
on YouTube and other places saying, ``Don't commit fraud 
against Social Security or one of the fraud investigative units 
will catch you.'' So it is working quite well.
    Chairman JOHNSON. Are we implementing technology as much as 
we can? It seems to me we got too many people with their finger 
in the pie.
    Mr. O'CARROLL. I think the solution to the problems we are 
talking about today is technology. What we are finding is that, 
when you or I walk into a store, pretty much the vendor knows 
everything about us when we are doing that transaction. We, 
with our government recources, should have that same type of 
information and we should be using that in our decisions, 
whether somebody does show gainful activity, whether somebody 
is working when they are not, and what their resources are.
    We found, as an example, by using just regular databases to 
verify property owned by people that are receiving SSI 
benefits, that we are able to identify that they have 
resources, they have property, et cetera.
    And we found, by using just that database, there is about 
an $8 to $1 return on investment there. So I am thinking in the 
long range with SSA, there has got to be a lot more technology 
put into place.
    Chairman JOHNSON. Yes, I agree. You have made a number of 
recommendations that would help reduce the total amount of 
overpayments over the past 5 years. The monetary impact of 
those recommendations total over $9 billion.
    Would you tell us what a few examples of those 
recommendations are and why they haven't been implemented?
    Mr. O'CARROLL. Our biggest job, Mr. Chairman, is make sure 
SSA strikes a balance between service and stewardship. So a lot 
of our audit work deals with the number of CDRs, whether the 
CDR backlog is increasing, whether they are conducting the 
right proportion of CDRs for 18 year olds, and adults. We are 
constantly watching that balance, and we are identifying where 
money could be saved.
    On the other side of it with our investigations, we are 
taking a look at those who are taking advantage of the 
helpless, in terms of bad rep payees that are supposedly 
watching out for the benefits of those in their care. We are 
taking a look at those that are defrauding the programs and 
claiming that they are disabled when they are not. So we have a 
very good record there.
    Chairman JOHNSON. Yeah, you do.
    Ms. Colvin, how does the Social Security Administration 
decide whether to implement one of the inspector general's 
recommendations or not? Nine billion dollars is a lot of money 
to be left on the table.
    Ms. COLVIN. The overriding factor relative to whether or 
not we implement a recommendation would be a resource issue. 
However, we have implemented a number of major technology 
systems which have been very effective in helping us to detect 
and prevent improper payments. I mentioned the automated 
financial--the financial system, the AFI, the access to 
financial institutions.
    Ms. COLVIN. We also have the SSI Wage Telephone Reporting 
project, which allows individuals to call in and report their 
wages. We have a number of different tools that have been 
developed over the years, and we are continuing to look at ways 
of automating even more of what we do. But clearly it is a 
balance between the resources to do direct services----
    Chairman JOHNSON. Well, you are listening to the IG when he 
talks to you, right?
    Ms. COLVIN. Oh, yes, I think that many of the 
recommendations have been very valid recommendations.
    Chairman JOHNSON. Thank you.
    Chairman BOUSTANY. I thank the gentleman.
    The chair now recognizes the ranking member of the Social 
Security Subcommittee Mr. Becerra.
    Mr. BECERRA. Thank you, Mr. Chairman, and thank you to all 
of you for your testimony.
    It seems to me this is boiling down to an issue of 
resources. Does anyone here claim that in your work or in your 
investigations, employees at the Social Security Administration 
who are conducting these redeterminations or these disability 
reviews are lazy? Does anyone claim that they are--these 
employees are incompetent? Would anybody here raise their hand 
and say that they are overworked and have a massive caseload to 
work with on these disability reviews? Okay.
    So it is resources. So it is what you put in helps 
determine what you get out. And, Mr. Chairman, I have a couple 
of charts I am hoping that we can put up on the screens. One is 
a budget for medical continuing disability reviews, and the 
second will be one for SSI income reviews. If I could get those 
up in a second, or right now, if we could put them up.
    It seems to me that if we make the investments we need to 
let these reviews go forward, we are not just doing right by 
Americans who paid into the system so they could collect on 
their benefits, but we are also saving the taxpayers money.
    Commissioner Colvin, let me ask you this. My understanding 
is that the chief actuary for Social Security has said that if 
we make the modest investments in these review programs that 
you have in place, these integrity review programs, that over 
the course of 10 years, you could save the taxpayers somewhere 
around $58 billion. Is that still accurate?
    Ms. COLVIN. Well, clearly, from the data that we have 
already provided, we have demonstrated that an investment in 
program integrity activities returns significant dollars to the 
taxpayers. The challenge for us is having adequate and 
sustained funding, because the same people who do the CDRs and 
the redets also do the initial claims.
    Mr. BECERRA. So let me have you take a look at the chart, 
that--I don't know if you could see the charts on the screen, 
it might be difficult for you to see, but essentially what it 
shows that in years when we budgeted money for medical 
continuing disability reviews, the CDRs, your employees 
performed at pretty high rates. And the moment you saw funding 
for the review program drop, so did the number of reviews you 
could do.
    And so input in, output out. And if you don't have the 
resources, folks who were already overworked are going to have 
a hard time producing the results, which it is not just a 
matter of producing the results on these reviews, it is not 
saving the taxpayer money the way we know can if we do these 
reviews. So we give people what they deserve, but no more than 
what they deserve.
    Let me ask another question. Mr. O'Carroll, I know that you 
have mentioned that there is some $8 billion or so in 
overpayments. If I were to say to you there are $300 billion in 
overpayments in Social Security, I suspect that you would be 
here every day telling us we have got to do something, right?
    Mr. O'CARROLL. Correct.
    Mr. BECERRA. I am going to ask for another chart to be put 
up called--that I have labeled ``Social Security Overpayment 
Rate Versus Major Weapons Systems Cost Overrun Rates.'' I don't 
know if you can see this.
    Mr. O'CARROLL. I am not the IG at Defense, Mr. Becerra.
    Mr. BECERRA. Yes, I know you are not the IG of Defense, but 
what we are being told is that some $300 billion in a Pentagon 
budget of some $700 billion is being spent on cost overruns and 
programs that have been over the years costing us far more than 
we have had or than we thought we would have to spend.
    Now, if you take a look to the far left of that chart, you 
see the overpayments from the Social Security Administration, 
their retirement survivor benefits portion and the Social 
Security disability portion. And to the right you see Army, 
Navy and Air Force and their cost overruns. Now, again, you are 
not the IG for DOD, but I would think that if we are going to 
spend this much time trying to help you figure out what we can 
do to reduce the overpayments in Social Security, that we would 
want to spend some time taking a look at DOD when we see the 
massive amount in cost overruns that we see daily at Department 
of Defense.
    Mr. O'CARROLL. The best way to answer that, Mr. Becerra, is 
that it's important to look at the overpayments across 
government. When you are looking at Defense, you should also 
look at all the other departments. Quite frankly, we do reach a 
level at SSA that it is of concern, and that is why we are 
paying so much attention to improper payments. I think 
everybody is in agreement there.
    Mr. BECERRA. And I think everyone agrees we should be doing 
that. But I hope that what we do is go after the big fish and 
not just after the little fish, because if we recall, most of 
these programs that we are talking about under Social Security 
are for folks who are elderly or are disabled.
    Mr. Chairman, the final point I will make is this. We have 
heard that if you invest a dollar in these program integrity 
initiatives with SSA, you save $12.50. If I were to ask you how 
much money would you have today if you invested a dollar today, 
at the very beginning of Google's public offering how much 
would you have, the answer would be $5.
    So if you think Google is a good bet, so is investing in 
SSA's program integrity initiatives.
    I yield back.
    Chairman BOUSTANY. I thank the gentleman.
    Certainly we have no jurisdiction over defense spending, 
but I hope the appropriate committee is doing vigorous 
oversight as these subcommittees are doing. So I thank the 
gentleman.
    The chair now recognizes Mr. Buchanan for questions.
    Mr. BUCHANAN. Yes. I would like to thank the chairman for 
convening these hearings, and I would like to thank all of our 
witnesses for being here today. I represent one of the most 
heavy senior districts. We have 300,000 seniors 55 and older 
and 200,000 65 and older, so this is an extremely important 
issue to my constituents, and I know that it is a big issue. We 
want to do all we can to eliminate waste, fraud and abuse so 
that we can focus on eliminating backlogs in the system.
    This is a general question for the witnesses, anybody who 
would like to respond. Is there a particular region in the 
United States with unusual high rate of fraud and abuse, and if 
there is, or if you have identified a certain region or two, 
what are we doing about targeting fraud in that general region?
    Ms. Colvin, do you have an answer?
    Ms. COLVIN. I don't believe that I can answer that question 
relative to a specific region. I would be happy to research 
that and provide an answer for the record.
    Mr. BUCHANAN. Mr. O'Carroll.
    Mr. O'CARROLL. Yes, sir. We have one of the largest fraud 
or antifraud hotlines in government, and we receive about 
150,000 calls a year in relation to fraud. We monitor it very 
carefully. We look at trend analysis. We are constantly 
watching what areas are reporting potential fraud. But it is 
not an easy answer in terms of saying that, any one area is 
worse than any other. It has a lot to do with the demographics 
and also how the U.S. Attorney's Offices prioritize 
prosecutions, et cetera.
    But I think we have got a fairly good handle on where the 
fraud is against SSA. We dedicate as many resources as we can 
in the Office of Inspector General to be out in the field, and 
we are constantly going to SSA's offices, meeting with them, 
asking for trends in their area, and giving them advice on 
antifraud initiatives.
    Mr. BUCHANAN. Part of the reason I asked the question is 
in--for example, in Florida, in Medicare, Miami and Dade 
Counties, for example, seems to be much higher than the balance 
of the State, it is my understanding, someone mentioned to me.
    So, Mr. Bertoni, do you have any comments on that?
    Mr. BERTONI. On an engagement-specific basis we may 
identify areas that look to be areas where there is more fraud, 
waste or abuse. But, again, it is not fraud until somebody 
has--there has been a conviction. From time to time, depending 
on the job we are doing, though, we may go down to certain 
areas where there are hard concentrations of individuals in a 
particular program.
    We do spend a considerable amount of time in Florida, in 
Texas, in New York, in California, but it is not specifically 
because we are chasing fraud and abuse, but it is where much of 
the use is.
    Mr. BUCHANAN. Ms. Robert, do you have anything to add to 
that, any thoughts on that, about certain parts of the country 
is more challenging than others in terms of fraud and abuse?
    Ms. ROBERT. No, we don't have any information on that. I 
think Mr. O'Carroll mentioned earlier the CDI units, those are 
located in 21 States, and certainly our efforts to try to 
address fraud and abuse.
    Mr. BUCHANAN. Ms. Colvin, let me ask you, it is my 
understanding that the Social Security Administration has been 
growing their on-line system for new retirees in terms of new 
applications. Do you believe the on-line electronic system will 
help us reduce fraud, or do you think it will open us up for 
more fraud?
    Ms. COLVIN. I believe that on-line services are important. 
It is what the public expects. I don't believe that if we do it 
correctly, that there would be any greater emphasis of fraud 
than we would have without the on-line. In fact, I think that 
probably at times it would demonstrate that we probably would 
have less, but I don't enough data to be able to tell you the 
answer to that.
    Mr. BUCHANAN. Mr. Dirago, one quick question. My district, 
as I mentioned, is one of the oldest districts. As you can 
imagine, I get a lot of seniors that come into our offices. We 
have two offices in our region. And in terms of the help line, 
the feedback that I got in preparing for this today, we still 
have a lot of people that are confused. They feel like there is 
a lot of misinformation. What are we doing to try to fix some 
of these problems for seniors?
    Mr. DIRAGO. You are referring to the national 800 number?
    Mr. BUCHANAN. Yes.
    Mr. DIRAGO. That really wouldn't be our area of expertise. 
Perhaps Ms. Colvin could answer. I am representing managers and 
TSC managers, and, you know, that is not an area of expertise 
that I would have.
    Mr. BUCHANAN. Ms. Colvin, generally it is--the help line 
that seniors can call in terms of filing as a new senior for 
Social Security, there seems to be a lot of confusion with 
that. I didn't know if you were doing anything to improve the 
system.
    Ms. COLVIN. Well, we will certainly look at----
    Mr. BUCHANAN. The help desk, I guess you would call it.
    Ms. COLVIN. I will certainly look at the concern you have 
raised. I am not aware that there are issues of misinformation, 
et cetera. But we will certainly go back and take a look at 
that and give you an answer for the record.
    Mr. BUCHANAN. Okay. What I will do is I will get you the 
feedback that we are getting to your office, and maybe you can 
respond back. Thank you, and I thank the witnesses.
    I yield back, Mr. Chairman.
    Chairman BOUSTANY. The chair now recognizes Mr. Smith for 
questioning.
    Mr. SMITH. Thank you, Mr. Chairman, and to our panel. Mr. 
Bertoni, just for clarification you said that overpayments tend 
to be increasing, they are on the rise; is that accurate?
    Mr. BERTONI. In the work CDR area, yes.
    Mr. SMITH. And that policies and procedures are kind of 
contributing to that; is that accurate?
    Mr. BERTONI. That is correct. Essentially our view is that 
not only are there internal management and operational issues 
that could be addressed with the agency, but certainly that the 
feeds in, that the data that the agency is relying on to do 
these work CDRs, the IRS wage management is coming in already, 
could be up to 2 years old, so they are basically working with 
overpayment situations that are fairly extended.
    And to the extent that they are not working, the claims, 
once they land in the agency, that additional time also is 
factored into the overpayment period. At the end of the day, 
individuals could get a letter indicating they will have a 
$30,000 overpayment, which is unfair to them and certainly 
unfair to the taxpayers should this debt ultimately be written 
off.
    Mr. SMITH. Right. And so, in a general view did you 
estimate in terms of what might be innocent or, you know, an 
innocent mistake and what may not be?
    Mr. BERTONI. No, we really did not isolate that. We just 
know that there are a substantial number of overpayments in 
this program, that the outstanding debt is in excess of $5 
billion, and that much of that debt is being written off, about 
$460 million last year and over the last 10 years about 4 
billion.
    So we don't know specifically what the reasons are for 
that, but oftentimes it is mistakes on the agency's part. 
Individuals don't understand the reporting requirements and/or 
employers are just simply not reporting timely. There is a 
myriad of reasons.
    Mr. SMITH. Mr. O'Carroll, could you elaborate perhaps on 
that?
    Mr. O'CARROLL. Yes, Mr. Smith. What we are finding with the 
work CDRs in most cases is that it is identified that the 
person is working. It has to be--the CDR has to be conducted to 
determine whether or not their gainful activity exceeds what is 
allowed. And what we found, which goes with the chart that was 
shown, is that when there is a lot of attention given towards 
doing CDRs, it reduces the backlog, and it will keep SSA 
current, so you are not seeing the 1- and 2-year backlogs that 
Mr. Bertoni is talking about.
    So what we are saying is that right now SSA is doing a good 
job on the work CDRs, but they are still not doing enough CDRs 
to reduce the backlog. So the incoming number of work reports 
are not being addressed on a regular basis. Although, as I 
said, they are doing a much better job than they did in the 
past, they have to do twice as many work CDRs now to start 
cutting into the backlog, dropping the backlog down so that 
type of debt can be whittled down.
    Does that answer your question?
    Mr. SMITH. Thank you.
    Ms. Colvin.
    Ms. COLVIN. I would just like to say that the whole area 
around work and substantial gainful activity is very complex, 
and many of the recipients do not understand those rules. The 
cases are also very difficult to work.
    We have a number of legislative proposals that are 
contained in the President's 2012 budget which are designed to 
address some of those problems. One is the Work Incentives 
Simplification Pilot that I know the Commission has talked to a 
number of you about, which would simplify the rules around 
work, which we think would substantially reduce the number of 
overpayments due to work.
    There are also a number of proposals that relate to data 
sharing, being able to share data with States and local 
jurisdictions and private insurers who handle workmen's 
compensation so that we can properly do the offsets that often 
result in errors; as well as other data sharing around other 
government pensions where we would have to do an offset.
    So we think the program is just very complex, and that if 
it were simplified, and so we do urge you to support those 
proposals that are contained in the President's budget.
    But as Mr. O'Carroll had said, the more we can do CDRs, 
including work CDRs, the less overpayments we have, because we 
catch them early, and we will then be able to address them.
    Mr. SMITH. Thank you. I yield back.
    Chairman BOUSTANY. I thank the gentleman.
    The chair now recognizes Dr. McDermott.
    Mr. MCDERMOTT. Thank you, Mr. Chairman.
    We seem to have another example here of the difference 
between the Democrats and the Republicans. As most of you know, 
there are 43 million people living in poverty in this country. 
And in the programs we are talking about here, Social Security 
Disability, we have had 10.2 million people, and we have got 
9.1--in Social Security.
    These are people at the bottom of the economic ladder. They 
are there because they don't have anything else. They have 
either been disabled at work and they are getting something, or 
they don't even qualify for Social Security and so they are 
getting SSI. And it strikes me that what we have here is a 
perfect example of what happened at Katrina.
    Now, Democrats believe that the government is supposed to 
solve a problem, and that you work to keep trying to make it 
work better, and that ultimately, when a problem comes like 
Katrina, you go out and you get in your FEMA and you drive down 
and you fix it.
    But the Republicans don't believe that the government's job 
is to fix this kind of stuff. They don't believe in a social 
safety net. They basically believe these people ought to get by 
on their own or somehow go out and find themselves a job or 
whatever. They have never met most of the kinds of folks who 
are here. I have worked with these people in my professional 
life before I came here. And when you get in the FEMA car run 
by Republicans, you get what you got in New Orleans. This 
country looked like a Third World country. It looked like about 
2 inches above 80 in our response to that hurricane.
    Now, this is exactly the same thing. When Clinton came in, 
there was additional money put in and for more CDRs, and the 
level of waste and fraud and abuse went down, and as soon as 
Mr. Bush came in, they whacked off that additional money, and 
the numbers started going up. That is exactly what the chart 
that Mr. Becerra put before us showed.
    And then Mr. Obama came in, and we put more money in, and 
the numbers started going down. And now we have the Ryan ruin 
budget, and the numbers are going to go up because they are 
pulling money out of the CDRs.
    You are dealing with 20 million people who are living under 
the poverty level and are supposed to report monthly if their 
income went up or down $25. And if they are up $5 over the 
limit, they are ineligible for a payment. Now, these are 
widows, these are the injured, severely disabled who can't go 
to work.
    Is there any way, Mr Dirago, you can see that we can fix 
this without putting additional money in this budget into more 
CDR coverage?
    Mr. DIRAGO. Well, I really feel it is a resource issue in 
terms of the amount of work we are able to accomplish, on 
program integrity issues like the medical CDRs and the work 
CDRs. It is a product of having the staff in the offices in 
order to do it, and right now with the staffing losses, we are 
seeing a potential loss of 3,500 people in the agency, so our 
offices are extremely overextended, and there is little time to 
address these workloads.
    So we do the best we can with what we have, but when 
addressing to payment accuracy, it does come down to resources. 
People need to be trained properly. There needs to be mentors 
for new hires that come into the offices so they can do the 
work accurately. They need the time to do the work.
    Mr. MCDERMOTT. How long does it train--how long does it 
take for somebody to become truly competent in evaluating these 
disability files that are 2 and 3 inches thick?
    Mr. DIRAGO. Well, in terms of the field office level--and I 
can't respond in terms of the DDS--but in terms of the field 
offices and getting a claims representative to the point where 
they are competent, they come in and go through an initial 4-
month training period where it is 40 hours a week just 
dedicated to learning the job. There is no graduate course in 
Social Security Administration. People have to be trained for 
40 hours a week for 4 months. After that, they come out of the 
training pool, they know the basics to handle simple, routine 
applications, not complex things like program integrity 
workloads. So they get mentored, there is a proficiency process 
in the agency in terms of bringing them up to speed, and it 
probably takes about 2 years for a claims representative to be 
skilled and knowledgeable to handle these kinds of things.
    Mr. MCDERMOTT. What is the program the President put in his 
budget for the work incentive program that you are talking 
about?
    Ms. COLVIN. It will allow us to simplify the process so 
that the reporting requirements will not be as rigid, and 
individuals would not be automatically removed because they had 
some earnings.
    So we think that the simpler the program is, the easier it 
will be for the beneficiaries to understand what they need to 
do.
    And I do want to emphasize that when we have money for 
CDRs, accuracy rates--and particularly SSI redeterminations, 
the accuracy rate goes up. There is a chart that the staff has 
that shows that there is a direct correlation between the 
number of redeterminations that are done and the accuracy rate.
    And so as we have had to cut back on doing CDRs and 
redeterminations because of our budget losses, our accuracy 
rates are going to go down. And whenever we have a reduction in 
our funds, we are looking at not only reducing direct services 
with people walking in the front door, but we are also looking 
at reducing program integrity work.
    Chairman BOUSTANY. The gentleman's time has expired.
    Mr. Marchant.
    Mr. MARCHANT. Thank you, Mr. Chairman.
    In recent newspaper articles, the Wall Street Journal, for 
instance, has focused on some administrative courts that are 
approving 95, 96, 97 percent of all disability applicants for 
disability insurance, and there are some areas in Puerto Rico 
that the recipients are a disproportionate percentage of those 
that applied.
    Do you find, Mr. O'Carroll--do you find any correlation 
between areas where there is a very high rate of approval of 
disputed cases and fraud follow-up?
    Mr. O'CARROLL. Mr. Marchant, we are bedeviled by the recent 
publicity that has come out on Puerto Rico. We have been 
watching approval rates, and we have been watching the number 
of people coming on in Puerto Rico for a while, but we really 
didn't address it sufficiently.
    So right now we are working very closely with SSA, and we 
are taking a look at the quality of the claims in terms of the 
people coming onto the rolls there. And what we are trying to 
provide, which I think you are getting at--what we are trying 
to do is send a message out there that you just don't apply to 
SSA and get approved automatically, that you have to actually 
be disabled to receive benefits.
    So we are trying to provide more oversight of what is going 
on in Puerto Rico. And then you have mentioned the situation in 
West Virginia, where we are also taking a look. We are trying 
to take a look to see if there is any really nexus in terms of 
the high amount of people that are coming on, is that something 
that just happened in that region? Is it very common that most 
people are approved? We are looking very closely at that. We 
are working very closely with SSA's disability adjudication and 
review staff to take a look at that.
    We are working very hard on it. We have a presence here. We 
are conducting investigations in Puerto Rico and West Virginia. 
We have got a lot of resources on it, but I don't have a real 
answer for you yet. I can assure you that we are looking across 
the country to see if there are spikes like that, though.
    Mr. MARCHANT. Well, my constituents are regularly--when 
they watch TV, they are regularly given the opportunity to call 
the number of an attorney that can assist them in getting on 
disability. As far as widows, it looks like it is not the 
widows that are participating in fraud, it is the people that 
are claiming to be disabled and that are not disabled. In fact, 
it looks like the claims are 10 times the amount of fraud among 
the group that are claiming to be disabled.
    And my constituents are beginning to make the connection 
between a dollar stolen from the Social Security Administration 
is a dollar stolen from their future security of their pension, 
and they are beginning to make these correlations. So the 
public is behind you. I would urge you to keep up the good 
work.
    Is there a way, in a disability case, where you have an 
attorney involved, and in many instances there are, you know, 
$10,000. It is not uncommon for a case to have a cash award of 
10- or 12- or $14,000, and many times there are 3-, 4-, $5,000 
of that goes to the attorney. If you later find out that that 
was a fraudulent case and you try to make a recovery, do you 
have recourse against just the recipient and applicant, or do 
you have resource against the attorney as well?
    Mr. O'CARROLL. We have recourse against them in that we can 
assess a civil monetary penalty. If you lie to Social Security, 
and we can show that you lied, and it is not prosecuted, we can 
pursue you civilly, usually for $5,000 per false statement. So 
we have been using that.
    I have to assure you that we want to make sure that the 
right people get the right amount of money, and those that are 
defrauding Social Security get caught. And what we are trying 
to find is any systemic issue where, as an example, some 
facilitator is trying to get claims approved by using false 
evidence, or false information or boilerplate information. We 
are looking into that. We have made arrests in the past, and we 
will make more in the future, because what we are trying to do 
is save that $1 of government money for everybody in the 
future.
    Mr. MARCHANT. Thank you.
    Chairman BOUSTANY. I thank the gentleman.
    Mr. Paulsen, you are recognized.
    Mr. PAULSEN. Thank you, Mr. Chairman.
    I want to go back and focus a little bit of discussion or 
attention regarding matching databases in order to determine 
the accuracy of SSA's determinations of SSI's recipients' real 
property resources. And, Ms. Colvin and Mr. O'Carroll, I think 
you can comment on this. There are many factors that affect a 
supplemental security income recipient's eligibility for the 
program, including their ownership of real property. In one 
study I know the inspector general estimated that about 300,000 
recipients were paid more than $2.2 billion that they might not 
have been entitled to because of unreported real property. Is 
this information, real property ownership, is it not readily 
available to Social Security, and if not, why not?
    Ms. COLVIN. Information is available relative to real 
estate or real property ownership, and we are right now in the 
process of looking at what is necessary to begin to do that 
data matching, and we believe that the return on investment 
there would be positive.
    Mr. PAULSEN. Mr. O'Carroll, can you follow up on that?
    Mr. O'CARROLL. Yes, Mr. Paulson. As we found in that audit, 
as you noticed, SSA does have in field offices access to 
databases where they can verify resources such as real 
property. The purpose of our report is to highlight that, so 
that when a person is approved for benefits, the next step 
should be to take a look to see if that person has resources 
out there.
    One of our current initiatives is an effort to obtain and 
use more financial intelligence. We are using that ourselves 
and are trying to identify fraud against Social Security. We 
are going to different vendors on the market with different 
types of information. For example, when people file a claim 
with SSA, we could tell if the IP address that they are using 
has been known for fraud in the past.
    And we are going to try to use those best practices that we 
are coming up with, and financial intelligence, to share that 
with SSA so that they see if they are being defrauded by people 
who have resources but aren't telling them about it.
    Mr. PAULSEN. And those best practices, when you pass them 
on, or you expect to pass them on, and you get that financial 
intelligence, does that become a resource issue for the 
Department, I mean, to undergo utilizing that information?
    Mr. O'CARROLL. Well, what we are hoping to do is to see if 
there are going to be cost savings. Something that I never 
mentioned before is that the dollars that are saved through our 
accounting efforts and under the Improper Payment Elimination 
and Recovery Act, in some agencies those funds are going back 
to the agency to be used towards other antifraud initiatives. 
Unfortunately, with SSA, since most of the money is from the 
trust fund, we are not seeing any access to recovered funds, 
and that might be something that could be changed with the 
Improper Payments Elimination and Recovery Act so that we could 
get some of our audit savings money back to use for more 
financial intelligence projects like this.
    Mr. PAULSEN. Ms. Colvin, let me do a follow-up, too, 
because I know there was another study that was done back just 
a couple of years ago with the inspector general, but in order 
to receive SSI payments, a recipient can't be out of the 
country for more that than a certain number of days, right? It 
is like 30 consecutive days. And one study, I think, found that 
something like a quarter billion in benefits went overseas, 
right, so the people were out longer than they were supposed 
to. How does the agency track whether beneficiaries are 
actually here in the United States or they have actually gone 
abroad?
    Ms. COLVIN. That is a very complex area that we are delving 
into now to determine what type of special data sharing we 
can--there are matching agreements we can enter into to be able 
to address that issue. In most situations, they are supposed to 
identify that every 30 days if they are out of the country, 
they have to be back in the country. That is an area that 
certainly has some risk, and so we will be constantly looking 
at what data is out there that we can match to be able to 
ensure where those individuals are. We have to be very careful 
about targeting individuals just because they are out of the 
country, but we think there are some ways to begin to look at 
that and address it a little bit more.
    Mr. PAULSEN. So, Ms. Colvin, do you feel that you are 
working on that kind of data-sharing arrangement, for instance, 
with Homeland Security, for instance, to actually make some 
progress on this area right now? Is that something----
    Ms. COLVIN. I don't know what we are doing with Homeland 
Security specifically, but I will tell you that we have about 
1,500 data-sharing agreements. We are always looking at 
additional records that we might be able to match with.
    You asked if that is a resource issue. To some degree it 
is, but we think that the return on investment would be 
sufficient that we would want to pursue those kinds of things 
where we would see a value to the agency. So we are going to be 
looking at additional reports that we--or additional data-
sharing agreements that we could enter into.
    Chairman BOUSTANY. I thank the gentleman.
    The chair now recognizes Mr. Brady, who has been waiting 
patiently.
    Mr. BRADY. Thank you, Mr. Chairman. Just a couple of 
thoughts.
    Our district is in Hurricane Alley, both Hurricane Rita, 
Hurricane Ike. It has been 2 years since Hurricane Ike 
devastated our region, 2 years since Congress passed 
legislation authorizing disaster recovery, and we are still 
waiting to get the money for our communities. I would not be 
holding any parades for the Obama administration on disaster 
recovery, unfortunately.
    Secondly, if we are talking about wasted money, the $820 
billion wasted in the stimulus, spent, and today we have fewer 
Americans working today than when the stimulus began. In fact, 
all those shovel-ready projects, we actually have 70,000 fewer 
construction workers today since we spent all that money. There 
is plenty of waste and fraud and abuse throughout this whole 
government system, and we shouldn't hesitate to go after every 
dollar of this, which leads to another point.
    I was interested in Mr. Becerra's chart, but I did note 
2003 to 2008 there was zero dollars dedicated to continuing--
medical continuing disability reviews, yet during several of 
those years, 3 of them, they performed more reviews than they 
do today. It seems Social Security performs reviews when they 
choose to, regardless of the dedicated funding. It really goes 
back to the point that Mr. Bertoni and Inspector General 
O'Carroll made, which is a lot of the key systems are not in 
place to use these dollars well.
    In fact, looking at the medical, the continuing disability 
reviews, it is one thing that 64 percent of the wasted dollars 
occurred because the beneficiaries didn't tell us about their 
work activity, but more than a third came after they told us 
they received income and Social Security did not act.
    Mr. Bertoni made the point that there is a real key issue 
with the utilization of current automation and the need for 
better supervision. So, Ms. Colvin, I would ask you, in 2004, 
GAO recommended you use the National Directory of New Hires, 
which the agency uses for SSI cases, to alert the agency to 
wages earned by those receiving benefits with an estimated 
return of 40 percent on each dollar invested. So the question 
is why have you not yet implemented that idea?
    Ms. COLVIN. The information that I have is that we, in 
fact, did do a study in 2010 relative to new hires. And as you 
correctly indicate, we do use it for SSI, but we have found it 
to be less effective for Title II. We find that the information 
comes in quarterly; we need to have it monthly.
    There has been an analysis done on that, and so we have not 
found that utilization of the new hire data will provide the 
type of return that you have. I would be happy to provide you 
with what our review and analysis has determined.
    Mr. BRADY. Thank you.
    Just so I heard you right, 6 years after the GAO 
recommended you use this national directory, rather than 
implement it, you did a study last year and decided that 
theoretically it might not work, but you have never implemented 
it to see that it does?
    Ms. COLVIN. We use the new hire data for SSI, we do not use 
it for Title II.
    Mr. BRADY. Right, even though that was recommended in 2004?
    Ms. COLVIN. Well, I believe that the agency's analysis of 
that differs from the analysis that was provided by the Office 
of Inspector General.
    Mr. BRADY. Six years after its recommendation was made and 
no actual implementation occurred.
    I would also ask you this. The amount of days it takes SSA 
to process the earnings and overpayments is not acceptable by 
anyone, particularly when the individual self-reports. They 
have told us they get the money.
    GAO contends that you have no agencywide performance goals, 
and you lack a good supervisory control. So why should Congress 
appropriate more funds for CDRs when you are lacking basic 
management controls?
    Ms. COLVIN. The money that Congress appropriates are for 
the medical CDRs specifically, and we have always, to my 
understanding, been able to do the number of CDRs for which we 
are budgeted. As I mentioned before, work CDRs are very 
complex. Normally we have had some challenges in that area, I 
would be first to admit as the accountable official for 
improper payments that is an area that I am looking at.
    We very recently have given directions that we would like 
to see that those work CDRs are done within 30 days of the time 
that the individual reports that they are returning to work.
    So this is an area that does need attention, and it is an 
area that we are challenged. And so I agree it needs more----
    Mr. BRADY. I do think it needs a great deal more work. 
There is bipartisan support for this. This is a leaky bucket, 
and before we pour more money into it, we probably need to fix 
those holes and make sure we are actually getting the bang for 
the buck and have the right management tools in place to use 
these dollars.
    I yield back.
    Chairman BOUSTANY. I thank the gentleman.
    I want to thank all of our witnesses for being here today 
and for your testimony. Please be advised that Members may have 
some written questions that they submit to you. Those questions 
and answers would be part of this hearing record.
    Chairman BOUSTANY. Thank you for being here, and this 
hearing is now adjourned.
    [Whereupon, at 4:37 p.m., the subcommittees were 
adjourned.]
    [Questions for the Record follow:]





                                 
