Social Security Disability: Reviews of Beneficiaries' Disability
Status Require Continued Attention to Improve Service Delivery
(24-JUL-03, GAO-03-1027T).
The Social Security Administration (SSA) has had difficulty in
conducting timely reviews of beneficiaries' cases to ensure they
are still eligible for disability benefits. SSA has been taking
steps to improve the cost-effectiveness of its review process.
SSA has linked the review process to eligibility for a new
benefit that provides return-to-work services. This testimony
looks at SSA's ability to stay current with future reviews,
identifies potential improvements to the review process, and
assesses the review process--return-to-work link.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-1027T
ACCNO: A07649
TITLE: Social Security Disability: Reviews of Beneficiaries'
Disability Status Require Continued Attention to Improve Service
Delivery
DATE: 07/24/2003
SUBJECT: Beneficiaries
Cost effectiveness analysis
Disability benefits
Eligibility criteria
Eligibility determinations
Federal social security programs
Workfare
Social Security Disability Insurance
Program
Supplemental Security Income Program
******************************************************************
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GAO-03-1027T
Testimony Before the Subcommittee on Social Security, Committee on Ways
and Means, House of Representatives
United States General Accounting Office
GAO For Release on Delivery Expected at 10: 00 a. m. EDT Thursday, July
24, 2003 SOCIAL SECURITY
DISABILITY Reviews of Beneficiaries* Disability Status Require Continued
Attention to Improve Service Delivery
Statement of Robert E. Robertson, Director Education, Workforce, and
Income Security Issues
GAO- 03- 1027T
SSA will likely face a backlog of about 200,000 continuing disability
review (CDR) cases by the end of fiscal year 2003. SSA officials attribute
the pending backlog to its decision to reduce the number of cases reviewed
as a result of the delay in obtaining fiscal year 2003 funding. In
addition, the pending backlog resulted from putting more emphasis on
initial applications over CDRs. To ensure CDRs receive adequate attention,
SSA has requested some fiscal year 2004 funds be *earmarked* for these
reviews. Given SSA*s ability to eliminate its previous CDR backlog using
targeted funds, this maneuver could help SSA. Over the next 5 years, SSA
has estimated that 8.5 million CDRs, costing about $4 billion, are needed
to stay current. If SSA
generates another backlog, cost savings and program integrity may be
compromised by paying benefits to disability beneficiaries who are no
longer eligible to receive them. SSA is not making the best use of
available information when conducting its
CDRs, leaving opportunities for improvement. First, SSA*s decisions on the
timing of CDRs are not based on systematic analysis of available
information. Second, SSA*s process for determining which CDR method to
use is not always based on the best available information. For example,
SSA requires an in- depth review for all beneficiaries who, upon entering
the program, are expected to medically improve even if current information
on certain of those beneficiaries indicates that improvement is unlikely
and that the review would be better handled through a shorter, less
expensive method. Third, SSA has not fully pursued medical treatment data
available from the Medicare and Medicaid programs despite their potential
to improve SSA*s decisions regarding which review method to use. Fourth,
SSA*s CDRs continue to be hampered by missing or incomplete information on
beneficiaries* case history. SSA delays the provision of new return- to-
work benefits to beneficiaries
expected to medically improve based on the assumption that such
beneficiaries are least likely to need them. However, according to SSA
data, about 94 percent of such beneficiaries are not found to have
medically improved upon completion of a disability review. As a result,
some individuals who might benefit from return- to- work services are
initially denied access to them. SSA is reviewing this policy and while
doing so, will need to consider how to best balance its financial
stewardship and return- to- work goals. The Social Security Administration
(SSA) has had difficulty in
conducting timely reviews of beneficiaries* cases to ensure they are still
eligible for disability benefits. SSA has been taking steps to improve the
costeffectiveness of its review process. SSA has linked the review process
to eligibility for a new benefit that provides return- to- work services.
This testimony looks at SSA*s ability to stay current with future reviews,
identifies potential improvements to the review process, and assesses the
review
process* return- to- work link.
www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 1027T. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact Robert E. Robertson at (202) 512- 7215 or RobertsonR@
gao. gov. Highlights of GAO- 03- 1027T, testimony
before the Chairman, Subcommittee on Social Security, Committee on Ways
and Means, House of Representatives
July 2003
SOCIAL SECURITY DISABILITY
Reviews of Beneficiaries* Disability Status Require Continued Attention to
Improve Service Delivery
Page 1 GAO- 03- 1027T Mr. Chairman and Members of the Subcommittee: I am
pleased to be here today to discuss SSA*s continuing disability review
(CDR) process. The Disability Insurance (DI) and Supplemental Security
Income (SSI) programs are the largest federal income programs for disabled
individuals, paying about $86 billion to about 10 million disabled
beneficiaries in 2002. These programs have been growing in recent years
and are poised to grow further as the baby boom generation ages. To help
ensure that only eligible beneficiaries remain on the rolls, the Social
Security Administration (SSA) is required by law to conduct CDRs for all
DI beneficiaries and some SSI disability recipients to determine whether
they continue to meet the disability requirements of the law. In addition,
to assist beneficiaries who want to return to work and leave the
disability
rolls, SSA began implementing the Ticket to Work and Self- Sufficiency
Program in 2002. Under this program, beneficiaries are issued a *ticket,*
or voucher, which they can use to obtain vocational rehabilitation,
employment, or other return- to- work services from an approved provider
of their choice.
Both the CDR process and the ticket program are key aspects of SSA*s
effort to improve its service to the public. SSA*s Fiscal Year 2004
Service Delivery Budget Plan highlights the importance of CDRs in
achieving the agency*s program stewardship objective of improving payment
accuracy in its disability programs. In particular, the plan discusses the
costeffectiveness
of CDRs and the need to keep current with the CDR workload. The plan also
notes SSA*s efforts to fully implement the ticket to work program in order
to achieve its objective of increasing the number
of people with disabilities who obtain employment. My testimony today
focuses on the results of our recently completed review of SSA*s CDR
process and of the relationship of this process to determinations of
beneficiary eligibility for assistance under the ticket program. (In a
report issued today, 1 we discuss the results of our review in greater
detail and provide several recommendations to the Commissioner of SSA for
improving CDR cost- effectiveness.) More specifically, this testimony
discusses: (1) the impact that expiration of targeted funding for CDR
processing could have on SSA*s ability to remain current with the
1 U. S. General Accounting Office, Social Security Disability: Reviews of
Beneficiaries* Disability Status Require Continued Attention to Achieve
Timeliness and CostEffectiveness,
GAO- 03- 662 (Washington, D. C.: July 24, 2003).
Page 2 GAO- 03- 1027T CDR caseload, and the level of funding that would be
needed over the next 5 years to keep the workload current; (2)
opportunities that exist for SSA to improve the cost- effectiveness of the
CDR process; and (3) whether
SSA*s rationale for delaying return- to- work and vocational services
under the ticket program for beneficiaries who are expected to medically
improve is supported by program experience. To examine these issues, we
reviewed SSA documents, including the agency*s budget request and
estimates of the cost and savings from conducting CDRs. Also, we surveyed
52 Disability Determination Services (DDS) 2 directors to assess the
potential effect of the expiration of CDR- targeted funding on DDS
operations. Moreover, we analyzed SSA data on CDR outcomes, reviewed SSA-
contracted studies of the CDR process, examined legislation, regulations,
and SSA policy guidance related to CDRs and the ticket program, and
interviewed SSA officials.
In summary, with the expiration of CDR- targeted funds at the end of
fiscal year 2002, SSA is at risk of generating another CDR backlog. As of
March 2003, SSA was on track to complete about 200,000 less CDRs than
needed to keep its workload current. The expected shortfall is
attributable to several factors, including SSA*s decision to reduce the
number of CDRs it processed pending fiscal year 2003 funding decisions.
Based on SSA*s cost and workload projections, it would cost a total of
about $4 billion or more over the next 5 years to complete its CDR
workload. Other factors that could affect SSA*s ability to keep current
with its CDR workload include DDS staffing difficulties and the lower
priority given to CDRs relative to initial claims. If another large CDR
backlog is generated, SSA is at risk of foregoing cost savings and
compromising the integrity of its disability programs.
While SSA has taken a number of actions over the past decade to
significantly improve the cost- effectiveness of the CDR process,
opportunities remain for SSA to better use information in deciding when
beneficiaries should undergo a CDR and which method to use in conducting a
CDR* a mailed- out questionnaire (* mailer*) or a full medical review. For
example, SSA has not fully studied and pursued the use of medical
treatment data on beneficiaries available from the Medicare and Medicaid
programs despite the potential of these data to improve SSA*s
decisions regarding whether to use a mailer or full medical review to 2
SSA contracts with state DDS agencies to determine whether applicants are
disabled.
Page 3 GAO- 03- 1027T complete a CDR. Also, SSA continues to be hampered
in its CDR decisions by missing or incomplete information on
beneficiaries* case history.
In addition, SSA*s rationale for delaying issuance of a ticket to
beneficiaries expected to medically improve, based on the premise that
they will regain their capacity to return to work without SSA assistance,
is not well- supported by program experience. As a result, some
beneficiaries who might otherwise benefit from potentially valuable
return- to- work assistance have to wait up to 3 years to access services
through the ticket program. As SSA reexamines this policy, it will need to
consider alternatives that better balance the agency*s program stewardship
and return- to- work goals.
The DI and SSI programs are the two largest federal programs providing
cash assistance to people with disabilities. 3 In addition to cash
assistance, DI beneficiaries receive Medicare coverage after they have
received cash benefits for 24 months, and in most cases, receipt of cash
benefits makes SSI beneficiaries eligible for Medicaid benefits. In 2002,
SSA paid about $60 billion to 5.5 million disabled workers. 4 In addition,
about 5.5 million people with disabilities received about $26 billion in
federal SSI cash benefits. 5 At the time beneficiaries enter the DI or SSI
programs, DDSs determine
when beneficiaries will be due for CDRs on the basis of their potential
for medical improvement. Based on SSA regulations, DDSs classify
individuals into one of three medical improvement categories, called
*diary categories*: *medical improvement expected* (MIE), *medical
3 The DI and SSI programs use the same statutory definition of disability.
To meet the definition of disability under these programs, an individual
must have a medically determinable physical or mental impairment that (1)
has lasted or is expected to last at least 1 year or to result in death
and (2) prevents the individual from engaging in substantial gainful
activity (SGA). Individuals are considered to be engaged in SGA if they
have countable earnings above a certain dollar level. For 2003, SSA
considers countable
earnings above $800 a month to be substantial gainful activity for persons
who are not blind and above $1,330 a month for persons who are blind.
4 Included among these 5.5 million beneficiaries are about 1.2 million
beneficiaries who were dually eligible for SSI benefits because of the low
level of their income and resources. In 2002, the DI program also paid
about $6 billion in cash benefits to about 1.7 million spouses and
children of disabled workers. 5 About 3.9 million of these individuals
were working age adults aged 18 to 64. Background
CDR Process
Page 4 GAO- 03- 1027T improvement possible* (MIP), or *medical improvement
not expected* (MINE). Based on the diary categories, DDSs select a *diary
date* for each
beneficiary, which is the date that the beneficiary is scheduled to have a
CDR. The diary date is generally within 6 to 18 months if the beneficiary
is classified as MIE; 6 once every 3 years if classified as MIP; and once
every 5 to 7 years if classified as MINE. Upon completion of a CDR, DDSs
reassess
the medical improvement potential of beneficiaries who remain eligible for
benefits to determine the most appropriate medical improvement category
and time frame for conducting the next CDR. Beneficiaries classified as
MIE are not eligible to receive Ticket to Work services until either the
completion of their first CDR, or until they have received benefits for 3
years.
While SSA uses diary categories to determine the timing of CDRs, it has
developed another method, called profiling, to determine the most
costeffective method of conducting a CDR. Profiling involves the
application of statistical formulas that use data on beneficiary
characteristics contained in SSA*s computerized records* such as age,
impairment type, length of time on disability rolls, previous CDR
activity, and reported earnings* to predict the likelihood of medical
improvement and, therefore, of benefit cessation. Through its profiling
formulas, SSA assigns a *score* to beneficiaries indicating whether there
is a high, medium, or low likelihood of medical improvement. In general,
beneficiaries with a high score are referred for full medical reviews* an
in- depth assessment of a beneficiaries* medical and vocational status*
while beneficiaries with lower scores are, at least initially, sent a
questionnaire, known as a *mailer.* 7 The mailer consists of a short list
of questions asking beneficiaries to report information on their medical
conditions, treatments, and work activities. If beneficiaries* responses
to a mailer indicate possible improvement in medical condition or
vocational status, SSA may refer these individuals for a full medical
review. However, in most cases, SSA decides that a full medical review is
not warranted and that benefits should be continued.
6 Although SSA*s policy guidance indicates that CDRs for MIE beneficiaries
should generally be scheduled at intervals of 6 to 18 months, the guidance
provides DDS personnel with flexibility to establish a diary date for any
time period between 6 and 36 months.
7 While SSA uses mailers primarily for beneficiaries with low profile
scores, the agency has recently expanded its use of mailers to some
beneficiaries with medium and high profile scores.
Page 5 GAO- 03- 1027T In contrast to mailers, full medical reviews are
labor intensive and expensive. These reviews generally involve an
interview of beneficiaries at
SSA field offices, a review of beneficiaries* medical records by DDS
personnel, and, if necessary, medical or psychological examinations with
consulting physicians outside the DDS. 8 As of fiscal year 1996, about 4.3
million CDRs were due or overdue. In
response, the Congress, in the Contract with America Advancement Act of
1996 (Pub. L. No. 104- 121), authorized a total of about $4.1 billion to
fund a 7- year plan to eliminate the CDR backlog. In addition, the
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(Pub. L. No. 104- 193) required SSA to conduct CDRs on several beneficiary
groups,
such as low birth weight babies and authorized an additional $250 million
for CDRs in fiscal years 1997 and 1998. The actual amount appropriated
during the 7- year period, about $3.68 billion, was less than the amount
authorized in 1996.
SSA reported to the Congress in its fiscal year 2000 CDR report that in
that year, the agency became current with the backlog of CDRs for all DI
beneficiaries. SSA officials indicated to us that although they are in the
midst of preparing the final statistics for its fiscal year 2002 CDR
report, it became current with the backlog of CDRs for all SSI
beneficiaries by the end of fiscal year 2002.
Since first implementing the profiling and mailer processes in the early
1990s, SSA has continued its efforts to improve the cost- effectiveness of
the CDR process. Most notably, SSA has refined the statistical formulas
used in profiling to identify which method* mailer or full medical review*
should be used to conduct the CDR. According to SSA officials and studies
of the profiling process, these improvements have led to some
beneficiaries receiving a mailer who otherwise would have received a full
medical review, thereby allowing SSA to reduce the overall cost of the CDR
process. Conversely, by improving SSA*s ability to identify beneficiaries
who are likely to medically improve, these refinements have also helped
the agency better ensure that it is conducting full medical
8 SSA field offices perform the initial processing of CDRs to determine if
beneficiaries meet nonmedical requirements. They then transfer the cases
to DDSs for medical determinations. CDR Backlog
CDR Cost- Effectiveness
Page 6 GAO- 03- 1027T reviews* and ceasing benefits* when appropriate. 9
In addition to improvements in its profiling process, SSA has also
implemented other
CDR process improvements such as introducing an automated review of
mailers.
In the midst of its first year following the cessation of CDR- targeted
funds, SSA appears to be developing another CDR backlog. By the end of
fiscal year 2003, on the basis of SSA*s current projections, the agency
will likely face a backlog of 200,000 CDRs. SSA attributes the mounting
backlog to the management decisions it made at the beginning of the fiscal
year during budget deliberations, as well as the need to process a larger
than expected workload of initial disability applications. SSA has
estimated that it will need a total of about $4 billion to process its
projected CDR workload over the next 5 years, although an updated
estimate, expected to be available later this year, will likely show a
higher cost as the disability
rolls continue to expand. Aside from funding issues, DDSs reported that
challenges associated with processing initial disability applications and
maintaining enough disability examiners could jeopardize their ability to
stay current with the CDR workload over the next few years. If another
large CDR backlog is generated, SSA is at risk of foregoing cost- savings,
thereby compromising the integrity of its disability programs.
At the end of March 2003* six months after the expiration of separate
authorized CDR funding* SSA was on a pace to generate a CDR backlog by the
end of the current fiscal year. In its fiscal year 2003 budget
justification, SSA indicated that it needed to process about 1.38 million
CDRs during fiscal year 2003 to stay current with its CDR workload. Yet,
SSA expects to process a total of 1.18 million CDRs, if not more, by the
end of the fiscal year. 10 By the end of March 2003* the midpoint of the
fiscal year* SSA had processed about 539,000 CDRs. To reach the 1.18
9 According to SSA*s study of its profiling model, the agency*s recent
improvements in statistical profiling have resulted in hundreds of
millions of dollars in annual savings from being better able to identify
and cease the benefits of individuals who have a relatively high
likelihood of medical improvement.
10 On May 14, 2003, SSA released its revised final performance plan for
fiscal year 2003. The plan projects that SSA will process 1,129,000 CDRs
during fiscal year 2003. SSA also expects to process an additional 20,000
CDRs initiated for reasons other than maturation of the scheduled diary
date (e. g., a third party reports that the individual may no longer be
disabled). End of Targeted
Funding and Other Issues Could Contribute to Another Backlog, Threatening
Cost Savings
CDR Backlog Likely to Reemerge
Page 7 GAO- 03- 1027T million end- year revised total, SSA will need to
process CDRs during the second half of the fiscal year at a pace similar
to that achieved during the
first 6 months of the fiscal year. 11 Nevertheless, while it appears that
SSA should be able to achieve this outcome, by the end of fiscal year
2003, it will have accumulated a backlog of 200,000 CDRs. However,
according to SSA officials, most of the backlogged claims will consist of
SSI adult
CDRs, which lead to lower long- term savings than DI CDRs and do not have
the same stringent statutory requirements that apply to DI CDRs.
SSA officials attributed the delay in obtaining a fiscal year 2003 budget
as the main factor in hampering their ability to conduct all of the
planned CDRs for the fiscal year. 12 Because of concerns that the fiscal
year 2003 appropriations would not support CDR activity at the fiscal year
2002 level, SSA reduced the number of CDRs it sent to DDS officials for
processing as well as froze DDS hiring and overtime pay. SSA officials
recognize that a hiring freeze can have a longer- term impact because it
disrupts the normal replacement of disability examiners lost through
attrition. SSA officials explained that disability examiners generally do
not increase overall productivity when first hired and could, in fact,
initially decrease productivity because experienced examiners may devote
some of their time to training these new examiners. SSA officials noted
that it generally takes 1 to 2 years before disability examiners become
proficient.
SSA*s management strategy to cut back on the number of CDRs it processed
during the delays in the fiscal year 2003 budget process reflects the
agency*s higher priority for processing of initial applications for
disability benefits. Specifically, while SSA cut back on the number of
CDRs, no similar action was reported with DI and SSI initial eligibility
decision making. SSA officials indicated that the application rate for
disability benefits increased during the beginning months of fiscal year
2003, further affecting its ability to stay current with CDRs. SSA
officials told us that although SSA sets a goal to process all CDRs and
initial applications, initial eligibility decisions are given highest
priority due to political pressure for getting disability benefits to
people in a timely
11 SSA indicated that 710,000 CDRs had been processed nearing the end of
April 2003. This year- to- date completion rate positions SSA to complete
all 1. 18 million CDRs. 12 The federal government had operated under a
series of continuing resolutions from the beginning of the fiscal year
through February 20, 2003. A continuing resolution is legislation
that may be enacted to provide budget authority for agencies to continue
in operation when the Congress and the President have not completed action
on appropriations by the beginning of the fiscal year.
Page 8 GAO- 03- 1027T manner. DDSs, likewise, place a greater priority on
processing initial applications. Three- fourths (75 percent) of directors
said processing initial
disability claims were a top priority relative to CDRs, whereas far fewer
directors (23 percent) said that processing initial claims and CDRs were
equal priorities.
SSA has recently proposed an approach to avoid this competition between
CDRs and initial claims. In SSA*s fiscal year 2004 budget request, the
Commissioner requested that almost $1.5 billion be earmarked for three
activities that could provide a return on investment* CDRs, SSI
nondisability redeterminations, 13 and overpayment workloads. While we did
not review the sufficiency of the level of this request, the earmarking of
funds for activities such as CDRs could help SSA keep current with these
activities. For example, if the number of initial applications for
disability benefits continues to increase over the next several years,
holding apart the necessary funds for CDRs could be a prudent measure.
SSA has indicated in its annual CDR reports, as well as in its performance
and accountability report, that its ability to complete all CDRs as they
become due in the future is dependent upon adequate funding. In 2000, SSA
estimated that a total of about $4 billion was needed to process the CDR
workload during the 5- year period between fiscal year 2004 and 2008 (see
table 1). SSA based these *rough estimates* on cost and workload
projections available at that time. SSA expects to release updated
workload and cost projections in the summer of 2003. The updated numbers
for the fiscal year 2004 to 2008 period will likely be higher than the
past estimate for this time period because of the recent growth in the
disability rolls.
13 To determine whether beneficiaries remain financially eligible for SSI
benefits after the initial assessment, SSA conducts nondisability
redeterminations to verify eligibility factors such as income, resources,
and living arrangements. Beneficiaries are reviewed at least once every 6
years, but reviews may be more frequent if SSA determines that changes in
eligibility are likely.
Page 9 GAO- 03- 1027T Table 1: Estimated CDR Activities, Fiscal Year 2004-
08 Fiscal year
CDRs to be processed during year (in thousands) CDR expenses
(dollars in millions) Cessations a (in thousands)
2004 1,637 $716 61 2005 1,682 $729 59 2006 1,632 $787 61 2007 1,769 $896
65 2008 1,793 $857 62 Source: SSA*s Office of the Chief Actuary, May 2000
estimates. a Estimated ultimate cessations after all appeals.
Several of the issues that have contributed to the pending fiscal year
2003 CDR backlog will also appear, in the views of DDS directors, in the
future. First, nearly all directors expect the number of initial
disability claims to exceed those in the past. Most DDS directors have a
strategy in place to deal with this rising initial claims workload, but
still expect increased initial claims to negatively affect their ability
to process their CDR workload (see table 2). Second, most directors expect
to experience difficulties in maintaining an adequate level of staffing,
caused by many examiners leaving and difficulties finding replacements.
Most DDSs who anticipate facing these staffing challenges reported that
they have strategies in place to manage them. Nevertheless, nearly all
believe that these staffing issues will negatively impact their ability to
stay current with their expected CDR workloads. DDS Directors Expressed
Concerns about Their Ability to Meet Future CDR Workload
Page 10 GAO- 03- 1027T Table 2: DDS Directors* Reported Likelihood, If
Any, of Experiencing an Event That Jeopardizes Meeting CDR Workload During
Fiscal Year 2004 and 2005
Numbers in percent
Event Not at all likely Somewhat
likely Very likely
Higher number of initial disability claims than in past (n= 51) 2 35 63
State budget shortfalls causing constraints (e. g., personnel
restrictions) (n= 49) 25 29 47
Difficulties hiring disability examiners (n= 51) 28 31 41 High turnover of
disability examiners due to reasons other than retirement (n= 51) 35 51 14
Large number of disability examiner retirements (n= 51) 39 39 22
Source: GAO survey of DDS directors, February 2003.
To the extent that funding, staffing, and other issues limit SSA*s ability
to process its CDR workload, the full realization of CDR cost savings
could be in jeopardy. SSA maintains that the return on investment from CDR
activities is high. In fact, SSA*s most recent annual CDR report to the
Congress summarizes its average CDR cost- effectiveness during fiscal year
1996 to 2000 at about $11 returned for every $1 spent on CDRs. 14 SSA has
noted, however, that such rates of return are unlikely to be maintained
because as SSA works down the backlog and beneficiaries come up for their
second and third CDRs, the agency does not expect as many cessations and,
therefore, the cost- benefit ratio could decline. Nevertheless, since the
Congress* provision of dedicated CDR funding
starting in fiscal year 1996, SSA has reported completing millions of CDRs
14 SSA calculated its annual cost- effectiveness ratios by dividing the
estimated present value of total lifetime benefits saved with respect to
CDR cessations (including Old Age, Survivors, and Disability Insurance,
SSI, Medicare, and Medicaid savings) by the dollar amount spent on
periodic CDRs in a given year. SSA points out that the ratios should be
considered an approximation because, for example, costs do not include the
costs of appeals processed after the end of a given year. However, SSA
officials also noted that the administrative costs for CDRs in a given
year include the costs of appeals of CDR cessations in prior years which
are processed in that year. Cost Savings and Program
Integrity Could Be Jeopardized If CDR Backlog Grows Again
Page 11 GAO- 03- 1027T that will lead to long- term savings ranging from
about $2 billion to $5.2 billion. 15 In addition to a favorable return on
investment, SSA*s CDR activities help protect DI and SSI program
integrity. Keeping current with the CDR
workload can help build and retain public confidence that only qualified
individuals are receiving disability benefits. In addition, it helps
protect the programs* fiscal integrity and allows SSA to meet its
financial stewardship responsibilities. To the extent the agency falls
behind in conducting CDRs, a CDR backlog undermines these positive
outcomes.
While SSA has taken a number of actions over the past decade to
significantly improve the cost- effectiveness of the CDR process,
opportunities remain for SSA to better use program information in CDR
decision making. While DDS personnel study available information on
beneficiaries to decide when they should undergo a CDR, they do not
conduct a systematic analysis of this information. As a result, CDRs may
not be conducted at the optimal time. Also, SSA*s process for determining
what method to use for a CDR* mailer or full medical review* is not always
based on the best information available. In addition, SSA has not fully
studied and pursued the use of medical treatment data on beneficiaries
available from the Medicare and Medicaid programs despite
the potential of these data to improve SSA*s selection of the most
appropriate CDR method. Finally, SSA continues to be hampered in its CDR
decisions by missing or incomplete information on beneficiaries* case
history, which may prevent SSA from ceasing benefits for some individuals
who no longer meet eligibility standards.
15 Although we did not independently verify these savings estimates, we
discussed how SSA made its calculations and believe its approach is
reasonable. To estimate long- term savings, SSA calculated the value of
the reduction in both cash and medical insurance coverage that otherwise
would have been provided to individuals whose benefits were ceased
following the completion of a CDR. SSA factored in the effect of appealed
cases: SSA did not count savings from those beneficiaries who were
initially found ineligible for continued benefits but whose cessations
were later successfully appealed. Moreover, SSA officials told us that
to estimate savings over 10 years, they took into account the likelihood
that some individuals whose benefits were ceased through a CDR would
likely have left the disability rolls through death, retirement, and other
reasons pertaining to eligibility. Further Opportunities
Exist for SSA to Improve CDR CostEffectiveness
Page 12 GAO- 03- 1027T While DDS personnel review available information on
beneficiaries to establish a diary date indicating when beneficiaries
should undergo a CDR,
they do not conduct a systematic analysis of this information. Diary
decisions are inherently complex because DDS personnel must assess a
beneficiary*s likelihood of medical improvement and how such medical
improvement will affect that person*s ability to work. Based on these
judgments, beneficiaries are placed in a diary category indicating either
that medical improvement is *expected,* *possible,* or *not expected.* DDS
personnel then assign a diary date that corresponds with the diary
category; the more likely a beneficiary is to medically improve, the
earlier the diary date.
Although SSA has established guidance for DDS personnel on diary date
decisions, SSA officials told us that, ultimately, such decisions are
difficult to make and are based on the judgment of the DDS staff. An SSA
contracted study of the diary process found that this process is often
subjective and that the setting of diary categories and dates is *almost
an afterthought* once the case file is developed and a disability
determination has been made. SSA*s study identified shortcomings in the
diary date process. For example, most beneficiaries assigned to the diary
category indicating they are expected to medically improve are not found
to have improved when a CDR is conducted. Our analysis of SSA data
indicates
that between 1998 and 2002, only about 5 percent of beneficiaries in the
MIE category 16 were found to have medically improved to the point of
being able to work again.
SSA*s diary process study indicated that diary predictions of medical
improvement could be substantially improved through the use of statistical
modeling techniques similar to those used in the CDR profiling process
that SSA uses to determine whether a mailer or a full medical review is
needed. The study noted that this systematic, quantitative approach to
assigning diary categories and dates would likely enhance disability
program efficiency by reducing the number of CDRs that do not result in
benefit cessation. 17 Another benefit derived from a more systematic
approach to diary categorization, according to SSA*s study, is
16 This figure includes all MIE beneficiaries* those who have already
undergone a CDR as well as those who have not yet had a CDR. 17 The study
recommended that DDSs continue to assign diary categories because this
process is useful for indicating the severity of an impairment. The
statistical formula would then factor in this DDS diary category in
developing an ultimate diary determination. Decisions on Timing of
CDRs Are Not Based on Systematic Analysis of Available Information
Page 13 GAO- 03- 1027T improved integrity of the diary process resulting
from more timely CDRs and from actual medical improvement rates that more
closely correlate
with the diary categories that SSA assigns to beneficiaries. For example,
SSA*s study indicates that the actual medical improvement rate for
beneficiaries assigned to the MIE diary category would increase to about
29 percent under this improved process.
SSA officials told us that, in response to the diary study
recommendations, the agency has begun to revise its diary process to
introduce a more systematic approach to selecting a CDR date. In
particular, SSA is developing a process that will use beneficiary data
collected at the time of benefit application, such as impairment type and
age, in a statistical formula to help determine when a CDR should be
conducted. While this change is likely to result in some improvements in
the timing of CDRs, the fundamental diary categorization process used by
DDSs will remain the same. Despite the study*s findings and
recommendations, SSA officials told us that they will not replace SSA*s
current process for assigning diary categories with a statistical process
because of what they believe would be significant costs involved in
changing this system across DDSs. However, SSA*s study acknowledged the
potential cost of implementing a new process in DDSs, and instead
recommended that a revised diary process be centrally administered in
order to avoid such high costs. The officials also said that such
fundamental changes in the diary process would require a change in
regulations.
SSA*s process for determining what method to use for a CDR is not always
based on the best information available. In the 1990s, SSA introduced a
system that develops a *profile score* for each beneficiary, which
indicates the beneficiary*s likelihood for medical improvement based on a
statistical analysis of beneficiary data. The purpose of the profile score
is to allow SSA to determine whether it is more cost- effective to send a
mailer or to conduct a full medical review. SSA*s own contracted studies
indicate that profiling results provide the best available indication of
whether a beneficiary is likely to medically improve. Nevertheless, for
some beneficiaries, SSA continues to use the diary category that was
judgmentally assigned by DDS personnel as the basis for their decision
about whether to send a mailer or conduct a full medical review.
SSA requires a full medical review for all beneficiaries whose diary
category indicates that medical improvement is expected (MIE) and who
SSA*s Process for
Determining CDR Method Not Always Based on Best Information Available
Page 14 GAO- 03- 1027T have not yet undergone a CDR. 18 This is the case
even when the profile score indicates that improvement is unlikely. In
fiscal year 2002, about 14 percent of beneficiaries in the MIE diary
category were assigned to the
*low* profile category, which indicates that medical improvement is not
likely. SSA officials acknowledged that their policy requiring full
medical reviews for all beneficiaries in this diary category departs from
their usual practice of using mailers for beneficiaries in the low profile
category, but they believe that this policy is reasonable given that these
beneficiaries are more likely to medically improve than those assigned to
other diary categories. However, SSA*s data from 1998 to 2002 shows that
most beneficiaries in this category* about 94 percent* do not medically
improve to the point of being able to work.
For other CDR cases, SSA may require that a mailer be sent even when the
profile score indicates that conducting a full medical review would be
most cost- effective. Specifically, SSA*s policy is to send a mailer to
all beneficiaries who were assigned a diary category that indicates
medical improvement is not expected (MINE), 19 even if the profile score
indicates a relatively high likelihood of medical improvement. 20 Whether
or not these
beneficiaries subsequently receive a full medical review will be based on
the results of their mailer. SSA officials said that MINE beneficiaries
with a high profile score are more likely to receive a full medical review
based on their mailer responses because SSA conducts a more stringent
review of their mailer responses. 21 However, it is not clear that sending
mailers to beneficiaries in the high profile category is the most cost-
effective
18 SSA applies a different process for MIE beneficiaries who have
undergone one or more CDRs. These beneficiaries may receive a mailer if
their CDR profile score indicates that they have a low likelihood of
medical improvement. However, most beneficiaries assigned to the MIE
category have not yet undergone a CDR; in fiscal year 2002, about 88
percent of all beneficiaries in this diary category had not had a CDR.
When referring to MIE beneficiaries in the remainder of our discussion in
this section, we are describing only those beneficiaries who have not yet
had a CDR.
19 SSA officials told us that while it is their intention to do mailers
for all MINE beneficiaries, they may be unable in some years to send
mailers to all of these beneficiaries if their overall funding for mailers
is insufficient.
20 In addition to sending mailers to high profile beneficiaries in the
MINE diary category, SSA has recently begun to send mailers to some high
profile beneficiaries in the MIP diary category.
21 SSA also sends mailers to medium profile beneficiaries in the MINE
diary category. However, SSA has some evidence from its profiling studies
indicating that issuing mailers to medium profile beneficiaries is likely
to be cost- effective. No similar evidence exists regarding high profile
beneficiaries.
Page 15 GAO- 03- 1027T approach. SSA studies of the mailer process have
indicated that, while this process is effective, it does not provide the
same assurance as full medical reviews that medical improvement will be
identified. As a result, the use of
mailers for beneficiaries whose profile scores indicate a high likelihood
of improvement could result in SSA identifying fewer benefit cessations.
22 SSA has not fully studied and pursued the use of medical treatment data
on beneficiaries available from the Medicare and Medicaid programs despite
the potential of these data to improve SSA*s decisions regarding whether
to use a mailer or full medical review to complete a CDR. In 2000, an SSA
contracted study found that the use of Medicare data from the
Center for Medicare and Medicaid Services (CMS)* such as data on hospital
admissions and medical treatments* resulted in a significant improvement
in SSA*s ability to assess potential medical improvement through CDR
profiling. Based on these results, SSA, in fiscal year 2003, implemented a
process that uses CMS Medicare data in CDR profiling to determine if DI
beneficiaries who are initially identified as candidates to receive a full
medical review should instead receive mailers. 23 SSA expects that this
will result in administrative savings due to the reduced number of
full medical reviews the agency must conduct. SSA has also initiated a
study to assess whether CMS Medicaid data can be used in the same way to
decide if SSI beneficiaries, scheduled to receive full medical reviews,
could instead be sent mailers.
But SSA*s efforts to obtain and use CMS Medicare or Medicaid data are
incomplete because the data will only be used to reclassify full medical
reviews to mailers but not to reclassify mailers to full medical reviews.
SSA officials told us that they have no plans to pursue this additional
use of the data because they believe their current profiling system is
sufficient for identifying beneficiaries who have a low likelihood of
medical improvement. While they agreed that the CMS data could potentially
be 22 Although a relatively small proportion of beneficiaries have their
benefits ceased based
on a CDR, the savings from these benefit cessations are substantial, as
noted earlier in this testimony. 23 SSA is using CMS Medicare data to
reassess the prospects of medical improvement for beneficiaries who, based
on their initial CDR profiling results, are considered to have a high or
medium likelihood of medical improvement. Typically, SSA would conduct
full medical reviews for these beneficiaries. However, SSA*s reassessment
may indicate that some of these beneficiaries instead have a low
likelihood of medical improvement and
therefore should receive mailers. SSA Has Not Fully Studied
and Pursued the Use of Medical Treatment Data from Medicare and Medicaid
Page 16 GAO- 03- 1027T useful for reclassifying mailers to full medical
reviews, they noted that they would need to first study this particular
use of the data and would
need to develop another interagency agreement with CMS to authorize and
obtain data for this purpose. Also, they said that any action to
reclassify mailers to full medical reviews would require SSA to publish a
Federal Register notice describing this action.
SSA could potentially achieve substantial program savings from conducting
additional full medical reviews in cases where CMS data indicate that
beneficiaries originally identified as mailer candidates have a relatively
high likelihood of medical improvement. Using CMS Medicare
data for this purpose would be consistent with the results of an SSA study
that recommended that these data be used whenever it improves the agency*s
ability to accurately predict medical improvement. For example, the study
noted that the CMS data would be useful for enhancing SSA*s profiling of
beneficiaries with mental impairments, including those with a low
likelihood of medical improvement for whom SSA would usually send a
mailer. To the extent that CMS data improves SSA*s ability to identify
beneficiaries for full medical review, the program savings from reduced
lifetime benefit payments to those beneficiaries whose benefits are ceased
could easily exceed any increased administrative costs resulting from
additional full medical reviews. SSA continues to be hampered in its CDR
decisions by missing or incomplete information on beneficiaries* case
history, which may prevent SSA from ceasing benefits for some individuals
who no longer qualify for
benefits. To cease benefits based on a CDR, SSA must determine if the
beneficiary has improved by comparing information about the beneficiary*s
current condition to information from the agency*s previous decision
regarding the beneficiary*s medical condition. This previous decision and
the evidence supporting it are recorded by SSA and maintained in case
folders that are usually stored in SSA records storage facilities.
However, in conducting CDRs, DDSs sometimes have difficulty retrieving the
case folders or the key medical evidence that is maintained in these
folders.
Without the information contained in case folders, DDSs cannot establish a
comparison and, therefore, cannot determine if medical improvement has
occurred. As a result, SSA is legally required to keep the beneficiary on
the disability rolls even though the beneficiary may have been judged to
no longer qualify for benefits had the DDS been able to establish a
comparison. SSA*s inability to cease benefits in cases where folders are
missing or incomplete could result in a substantial cost to the federal
Missing or Incomplete
Case Folders May Result in Fewer Benefit Cessations
Page 17 GAO- 03- 1027T government arising from continued payments of
benefits* cash and medical* to people who no longer meet eligibility
standards. 24 Our discussions with SSA officials, survey of DDSs, and
review of SSA
studies indicate that missing or incomplete folders present an obstacle to
effective processing of CDRs. However, evidence on the extent of this
problem is mixed. In responding to our survey on CDRs, about 72 percent of
DDSs informed us that missing or incomplete information from case folders
negatively impacted the quality or timing of CDR decisions to a moderate
or great extent. Recent SSA studies have also identified problems with
missing or incomplete case folders. For example, a study contracted by SSA
identified problems with disability case folder management, such as
misrouted or missing folders, and recommended that SSA *analyze the
reasons for missing folders and provide recommendations for process and
systems improvements.*
SSA headquarters officials we spoke with said that SSA has examined the
incidence of missing or incomplete case folders and found that the problem
is not as significant as claimed by DDSs. For example, in fiscal year
2000, SSA investigated allegations of substantial numbers of missing case
folders in two DDSs. SSA officials told us that they were able to locate
many of the folders that had been reported as missing. The officials
attribute the discrepancy between their findings and the allegations of
DDSs, in part, to staff shortages and workload pressures at field offices,
which result in a failure of these offices to take further steps to look
for folders. However, our survey of DDSs indicates that regardless of
SSA*s ability to locate many case folders upon further investigation, DDSs
are still having difficulty obtaining the information they need to make
CDR decisions.
In a 2002 memorandum to SSA*s Inspector General, the SSA Commissioner
acknowledged that missing or incomplete case folders are a problem in the
CDR process, but noted that the problem had been overstated. The
memorandum cited data indicating a lost folder rate of about 0.5 percent
for DI CDRs and about 3 percent for SSI CDRs. 25 The Commissioner also
said that SSA had taken a number of actions in recent years to reduce the
24 Missing or incomplete case folders may also result in additional
administrative costs to the extent that SSA and DDS personnel spend time
attempting to locate or reconstruct missing information. 25 Data are based
on CDRs conducted from 1997 to 2001.
Page 18 GAO- 03- 1027T incidence of lost folders, such as issuance of
additional guidance and training on this issue. In addition, the
Commissioner noted that the agency was committed to building a system of
electronic folders 26 that will
*virtually eliminate the incidences of lost folders.* While electronic
folders may be a key initiative in resolving SSA*s problems with missing
or incomplete case folders, SSA does not plan to fully implement this
system until mid- 2005. 27 In addition, these electronic folders will be
established only for new disability cases; cases established prior to
implementation of electronic folders will remain in a paper format.
Therefore, problems in handling these older case folders will likely
continue.
SSA*s rationale for postponing issuance of a ticket to beneficiaries
expected to medically improve* those who are assigned an MIE diary
category* is not well- supported by program experience. In issuing
regulations implementing the ticket act, SSA decided to postpone issuance
of tickets to MIE beneficiaries who have not yet had a CDR based on the
premise that these beneficiaries could be expected to regain their
capacity to work without SSA assistance. 28 However, our analysis of SSA
data indicates that the vast majority of MIE beneficiaries in the DI and
SSI programs* about 94 percent* are not found to have medically improved
upon completion of a CDR. As a result, some beneficiaries who might
otherwise benefit from potentially valuable return- to- work assistance
must wait up to 3 years to access services through the ticket program. 29
26 SSA is currently developing a Disability Electronic Folder (EF) which,
when completed,
will be the repository of all information used in the disability process
and should eventually replace the paper folders. As a result, processing
components should not have to rely on a paper folder to take adjudicative
actions. The EF is planned to be linked to all existing and
future systems that support the disability case process. Information will
be captured electronically during the case intake process and transmitted
to the EF. Documentation and forms received from external sources (e. g.,
claimants, medical providers, third parties, etc.) will be converted to an
electronic format (e. g., scanning and imaging) and added to
the EF. Electronic documents received from medical providers will be
indexed and added to the EF.
27 SSA plans to begin rollout of electronic disability folders in January
2004 and plans to achieve national implementation over an 18- month
period. 28 The Ticket to Work Act gave the SSA Commissioner authority to
determine which disabled beneficiaries would be eligible to participate in
the ticket program. 29 SSA*s policy on ticket eligibility states that any
MIE beneficiary who has been on the
disability rolls for at least 3 years will be eligible for a ticket, even
if they have not yet had a CDR. SSA*s Rationale for
Postponing Return- toWork Services to Some Beneficiaries Is Not Well-
Supported by Program Experience
Page 19 GAO- 03- 1027T Some disability advocacy groups and SSA*s own
Ticket to Work and Work Incentives Advisory Panel have questioned SSA*s
policy of delaying the
issuance of tickets to MIE beneficiaries. In particular, they have
commented that delaying tickets to all MIE beneficiaries when only a small
proportion of these beneficiaries return to work underscores the inherent
weakness of relying upon the MIE category as a basis for granting access
to ticket services. In our prior work examining DI and SSI returnto- work
policies, we noted that delays in the provision of vocational
rehabilitation services can diminish the effectiveness of such return-
towork efforts. 30 Delaying services to some disability beneficiaries,
therefore, undermines SSA*s recent efforts to increase its emphasis on
helping these beneficiaries return to work.
SSA officials told us that they are examining the current policy of
issuing tickets to MIE beneficiaries to identify possible alternatives but
they are not sure when this assessment will be completed. 31 However, they
noted that their policy of limiting ticket issuance reflects congressional
interests
in striking an appropriate balance between program stewardship and
encouraging return to work. Moreover, they explained that reversing the
current policy would be costly. SSA*s actuaries have estimated that
issuing tickets to all MIE beneficiaries would cost an additional $822
million over 10 years because the ticket law prohibits SSA from conducting
CDRs on beneficiaries who are using a ticket. Therefore, SSA would
continue to pay DI and SSI benefits to some beneficiaries who might have
otherwise had their benefits terminated.
The drawbacks of SSA*s current policy of postponing issuance of tickets to
MIE beneficiaries and the potential costs associated with an alternative
policy that would allow immediate issuance of tickets to these
beneficiaries highlights the need for SSA, as part of its policy
reexamination, to consider other policy alternatives that might better
balance the agency*s program stewardship and return- to- work objectives.
While we did not conduct an in- depth assessment of potential alternatives
30 U. S. General Accounting Office, SSA Disability: Program Redesign
Necessary to Encourage Return to Work, GAO/ HEHS- 96- 62 (Washington, D.
C.: Apr. 24, 1996). 31 In May 2003, SSA announced in the Federal Register
(Social Security Administration: Semiannual Regulatory Agenda, 68 Fed.
Reg. 31,240, May 27, 2003) that its long- term plans include a proposal to
revise its rules to allow the immediate issuance of tickets to MIE
beneficiaries. However, SSA*s Associate Commissioner responsible for
reviewing the ticket
policy for MIEs told us that SSA has not made a final decision regarding
any changes to the current policy and that the agency*s review has not
been completed.
Page 20 GAO- 03- 1027T to SSA*s current policy, 32 our review of the CDR
program and ticket provisions indicate that other options may exist that
would achieve a
better balance among SSA*s program objectives. For example, SSA could
develop a better means of identifying beneficiaries who are expected to
medically improve. Earlier in this testimony, we noted that an
SSAcontracted study of the diary process recommended implementation of an
improved system that, among other things, would better identify MIE
beneficiaries through statistical modeling of diary decisions. One effect
of such improved identification, according to the study, would be to
substantially reduce the proportion of beneficiaries with an MIE diary
category. For instance, the study found that although SSA, over the past
decade, has assigned the MIE diary category to about 9 percent of DI
beneficiaries, a statistically- based diary process would result in about
3 percent of DI beneficiaries being assigned to the MIE category. This
would potentially minimize the number of beneficiaries initially denied
tickets and may also provide more assurance, within and outside SSA, that
such beneficiaries can truly be expected to improve.
SSA might also consider an option that provides for the issuance of
tickets to all MIE beneficiaries while allowing CDRs to be conducted as
scheduled for these beneficiaries. This policy would require a legislative
change because, as we noted earlier, the Ticket to Work Act currently
prohibits
SSA from conducting a CDR while a person is using a ticket. 33 While the
ticket program*s prohibition on CDRs for ticket users was intended to
remove a potential disincentive for beneficiaries to return to work, MIE
beneficiaries currently get neither a ticket nor protection from a CDR. A
policy allowing CDRs to be conducted on these beneficiaries while they use
a ticket would at least give these beneficiaries immediate access to
return- to- work services offered under the ticket program. In addition,
SSA will still be able to achieve the cost savings that are derived from
CDRs for
beneficiaries that it considers most likely to medically improve. CDRs are
a vital component of SSA*s efforts to strengthen the integrity of its
disability programs, an objective that will only increase in importance as
the disability rolls continue to grow in the years ahead. As such, it is
32 Given the recent implementation of the ticket program, insufficient
data were available during the period of our review to conduct the
analysis necessary to fully evaluate such options.
33 However, the prohibition on CDRs for all other ticket users could
remain in effect. Conclusions
Page 21 GAO- 03- 1027T important that SSA pursue and implement initiatives
to prevent the recurrence of CDR backlogs. SSA*s recent proposal for
targeted funding of program activities, including CDRs, that provide a
return on investment as
well as efforts to further improve the cost- effectiveness of the CDR
process could positively contribute to SSA*s efforts to improve service
delivery. As SSA pursues such initiatives, it should also examine options
for better balancing its need to conduct CDRs with its responsibility for
providing return- to- work assistance under the ticket to work program to
beneficiaries who are expected to medically improve.
Mr. Chairman, this concludes my prepared statement. I will be happy to
respond to any questions you or other Members of the Subcommittee may
have.
For information regarding this testimony, please contact Robert E.
Robertson, Director, or Shelia Drake, Assistant Director, Education,
Workforce, and Income Security at (202) 512- 7215. Individuals making
contributions to this testimony include Brett S. Fallavollita, Mark
Trapani, Melinda L. Cordero, and Corinna A. Nicolaou. GAO Contacts and
Staff Acknowledgments
(130296)
*** End of document. ***