    Social Security Disability: Better Planning, Management, and
    Evaluation Could Help Address Backlogs (07-DEC-07, GAO-08-40).

    For years, the Social Security Administration (SSA) has
    experienced processing delays and significant backlogs of
    disability claims. At the end of fiscal year 2006, some 1.5
    million disability claims were awaiting a decision. About 576,000
    of these claims were backlogged--exceeding the number of claims
    that should optimally be pending at year-end. In response to the
    congressional request, GAO (1) examined trends in disability
    claims backlogs and the time required for SSA to decide a claim,
    (2) identified key factors contributing to the backlogs and
    processing times, and (3) described the steps SSA is taking to
    reduce them. To address these issues, GAO analyzed SSA
    administrative data, conducted an extensive literature review,
    interviewed SSA officials as well as key program personnel, and
    conducted site visits in three SSA regions.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-08-40
        ACCNO:   A78688
      TITLE:     Social Security Disability: Better Planning, Management,
    and Evaluation Could Help Address Backlogs
         DATE:   12/07/2007
      SUBJECT:   Claims adjudicators
    	     Claims processing
    	     Claims settlement
    	     Compensation claims
    	     Data collection
    	     Data integrity
    	     Federal social security programs
    	     Program evaluation
    	     Program management
    	     Social security benefits
    	     Strategic planning
    	     Program coordination
    	     Program costs
    	     Program implementation
    	     Social Security Disability Insurance
    	     Program

    	     SSA Supplemental Security Income
    	     Program

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    GAO-08-40

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed
    in its entirety without further permission from GAO. Because this work
    may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this
    material separately.

    Report to Congressional Requesters:

    United States Government Accountability Office:

    GAO:

    December 2007:

    Social Security Disability:

    Better Planning, Management, and Evaluation Could Help Address
    Backlogs:

    SSA Disability Claims:

    GAO-08-40:

    GAO Highlights:

    Highlights of GAO-08-40, a report to congressional requesters.

    Why GAO Did This Study:

    For years, the Social Security Administration (SSA) has experienced
    processing delays and significant backlogs of disability claims. At the
    end of fiscal year 2006, some 1.5 million disability claims were
    awaiting a decision. About 576,000 of these claims were
    backlogged�exceeding the number of claims that should optimally be
    pending at year-end. In response to the congressional request, GAO (1)
    examined trends in disability claims backlogs and the time required for
    SSA to decide a claim, (2) identified key factors contributing to the
    backlogs and processing times, and (3) described the steps SSA is
    taking to reduce them.

    To address these issues, GAO analyzed SSA administrative data,
    conducted an extensive literature review, interviewed SSA officials as
    well as key program personnel, and conducted site visits in three SSA
    regions.

    What GAO Found:

    From fiscal year 1997 through 2006, backlogged disability claims in the
    Social Security Administration�s processing system doubled, reaching
    about 576,000 cases. Backlogs of varying degrees have occurred at most
    stages of the claims process. The only significant decline occurred at
    the last stage�-the Appeals Council�where fewer cases are processed. At
    the initial claims level, handled by state Disability Determination
    Services (DDS), a backlog developed in fiscal year 1998 and grew to
    about 155,000 claims in fiscal year 2006. At the hearings level,
    backlogged claims exceeded 415,000 that year and accounted for 72
    percent of the total backlog. Insufficient data prevented GAO from
    identifying trends in backlogs at the reconsideration stage. Processing
    times, meanwhile, increased with claimants generally waiting
    significantly longer�for example, an additional 95 days at the hearings
    level�for a decision.

    Figure: Total Backlogged Claims, by Level of Adjudication, Fiscal Years
    1997 to 2006.

    This figure is a shaded bar chart showing total backlogged claims, by
    level of adjudication, between fiscal year 1997 and 2006. One color
    shows initial claims, another shows hearings, and a third shows appeals
    council. The X axis represents fiscal year. The Y axis represents
    backlogged claims.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Substantial growth in the numbers of disability claims, staff losses
    and turnover, and management weaknesses have contributed to the backlog
    problem. Initial applications for benefits grew more than 20 percent
    over the period while SSA experienced losses in key personnel: claims
    examiners in the state determination offices and administrative law
    judges and support staff in the hearings offices. In addition,
    management weaknesses evidenced in a number of initiatives to address
    the backlogs have failed to remedy and sometimes contributed to the
    problem.

    In 2006, SSA introduced the Disability Service Improvement initiative
    (DSI), but suspended national rollout of it in order to concentrate on
    the hearings backlog and full implementation of SSA�s electronic case-
    processing system. DSI is still underway in the Boston region; though
    hampered by rushed implementation, poor communication, and a lack of
    financial planning, DSI has shown mixed results, and SSA has proposed
    discontinuing certain components because of cost. Thorough evaluations
    that could help inform decisions about DSI�s future have not yet been
    conducted.

    What GAO Recommends:

    GAO recommends that SSA monitor the reconsideration stage for backlogs
    and better plan, execute, and evaluate initiatives to address backlogs.

    SSA agreed in part or with the intent of GAO�s recommendations, but did
    not fully agree with some of GAO�s conclusions. SSA believed GAO did
    not sufficiently emphasize the agency�s funding needs. GAO added data
    on SSA funding levels, but continues to believe that the
    recommendations are valid.

    To view the full product, including the scope and methodology, click on
    GAO-08-40.
    For more information, contact Daniel Bertoni at (202) 512-7215 or
    bertonid@gao.gov.

    [End of section]

    Contents:

    Letter:

    Results in Brief:

    Background:

    Backlogs and Processing Times for SSA's Disability Claims Have
    Increased in the Past Decade, with a Particularly Large Backlog at the
    Hearings Level:

    Growth in Applications, Staffing Losses, and Management Weaknesses Have
    Contributed to Backlogs:

    SSA Has Introduced a New Set of Comprehensive Reforms, but Suspended
    Their Rollout to Concentrate on the Hearings Backlog and on Electronic
    Processing:

    Conclusions:

    Recommendations for Executive Action:

    Agency Comments and Our Evaluation:

    Appendix I: Objectives, Scope, and Methodology:

    Appendix II: Continuing Disability Reviews, Fiscal Years 2004 to July
    2007:

    Appendix III: Key Aspects of DSI as of August 2006:

    Appendix IV: Comments from the Social Security Administration:

    Appendix V: GAO Contact and Staff Acknowledgments:

    Related GAO Products:

    Tables:

    Table 1: SSA Annual Full Time Equivalent Employees for Fiscal Years
    1997 to 2006:

    Table 2: Social Security Administration's Limitation on Administrative
    Expenses Account for Fiscal Years 1997 to 2006:

    Table 3: Office of Federal Reviewing Official (FedRO) Claims End of
    Month Status, October 2006 to March 2007:

    Table 4: Fiscal Year 2006 Regional Data on Average Processing Times and
    Receipts:

    Figures:

    Figure 1: SSA's Disability Determination Process:

    Figure 2: SSA's Five-Step Sequential Evaluation Process for Determining
    Disability:

    Figure 3: Total Backlogged Claims, by Level of Adjudication, Fiscal
    Years 1997 to 2006:

    Figure 4: Average Claims Processing Time for DDS Initial Claims, DDS
    Reconsiderations, Hearings, and Appeals Council Decisions, in Days,
    Fiscal Years 1997 to 2006:

    Figure 5: Total SSA Disability Claims Receipts, Dispositions, and
    Backlogs, Fiscal Years 1997 to 2006:

    Figure 6: DDS Initial Claims Receipts, Dispositions, Pending, and
    Backlog, Fiscal Years 1997 to 2006:

    Figure 7: DDS Reconsideration Claims Receipts, Dispositions, and
    Pending, Fiscal Years 1997 to 2006:

    Figure 8: Initial DDS Disability Insurance Claims Processing Time, by
    Age (in Days), Fiscal Year 2006:

    Figure 9: Hearings Office Claims Receipts, Dispositions, Pending, and
    Backlog, Fiscal Years 1997 to 2006:

    Figure 10: Hearings Office Claims Processing Time, by Age (in Days),
    Fiscal Year 2006:

    Figure 11: Hearings Office Claims Processing Time, Age (in Days) as a
    Percentage within a Region, Fiscal Year 2006:

    Figure 12: Appeals Council Claims Receipts, Dispositions, Pending, and
    Backlog, Fiscal Years 1997 to 2006:

    Figure 13: Appeals Council Claims Processing Time, by Age (in Days),
    Fiscal Year 2006:

    Figure 14: Initial Claims Receipts, Reconsideration Receipts, and DDS
    Work Years, Fiscal Years 1997 to 2006:

    Figure 15: Hearings Office Claims Backlog and the Ratio of Hearings
    Office Support Staff to ALJ, Fiscal Years 1997 to 2006:

    Figure 16: Percentage of Hearings Office Claims Pending More Than 270
    Days at the End of Year and the Ratio of Hearings Office Support Staff
    per ALJ, Fiscal Years 1997 to 2005:

    Abbreviations:

    ALJ: administrative law judge:

    CDR: continuing disability review:

    DDS: Disability Determination Services:

    DI: Disability Insurance:

    DSI: Disability Service Improvement:

    eCAT: electronic Case Analysis Tool:

    FedRO: federal reviewing official:

    FIT: Findings Integrated Template:

    HOTS: Hearings Office Tracking System:

    IT: Information Technology:

    NADE: National Association of Disability Examiners:

    ODAR: Office of Disability Adjudication and Review:

    OIG: Office of Inspector General:

    OMVE: Office of Medical and Vocational Expertise:

    QDD: Quick Disability Determination:

    SSA: Social Security Administration:

    SGA: substantial gainful activity:

    SSI: Supplemental Security Income:

    United States Government Accountability Office:

    Washington, DC 20548:

    December 7, 2007:

    The Honorable Charles B. Rangel:
    Chairman:

    The Honorable Jim McCrery:
    Ranking Member:
    Committee on Ways and Means:
    House of Representatives:

    The Honorable Michael R. McNulty:
    Chairman:

    The Honorable Sam Johnson:
    Ranking Member:
    Subcommittee on Social Security Committee on Ways and Means House of
    Representatives:

    The Honorable Sander M. Levin House of Representatives:

    Each year, millions of Americans who believe that they can no longer
    work because of severe physical or mental impairments, apply for cash
    benefits through the Social Security Administration's (SSA) two
    disability programs--Disability Insurance (DI) and Supplemental
    Security Income (SSI). For more than 20 years, SSA has faced challenges
    with processing applications for benefits in a timely manner and
    overcoming significant backlogs. SSA's data show that there are
    disability applicants who wait years for their claims to be resolved at
    the final administrative appeals level, which can be a hardship. By the
    end of fiscal year 2006, SSA had made about 3.7 million disability
    claims decisions, and some 1.5 million disability claims were awaiting
    a determination. Meanwhile, new applications for benefits are expected
    to increase as the baby boomer generation enters its disability-prone
    years. Over the years, SSA has implemented many initiatives aimed at
    reducing the backlog in disability claims as well as the time it takes
    applicants to obtain a decision on their claims. In light of SSA's
    claims processing challenges, you asked us to: (1) examine the trends
    for the last several years in the disability claims backlog and the
    time required for SSA to decide a claim, (2) identify key factors that
    have contributed to the disability claims backlogs and processing
    times, and (3) describe the steps SSA is currently taking to reduce the
    backlog and claims processing times.

    To identify trends in SSI disability and DI claims, we obtained and
    analyzed data provided by SSA for fiscal years 1997 to 2006 for the
    four levels of adjudication of SSA's disability claims process--initial
    claims, reconsiderations, hearings, and final appeals to the Appeals
    Council. We received information from SSA on the number of claims
    received, the number of claims pending a decision, and other data. We
    also obtained data on average processing times. Using these data, we
    determined annual backlogs for three of the four levels of the claims
    process.[Footnote 1] We measured SSA backlogs in terms of the number of
    cases at year-end that exceeded the number of pending claims that the
    agency had deemed acceptable.[Footnote 2] We also met with
    knowledgeable SSA officials to document the reliability of SSA's data.
    We found that limitations exist with respect to hearings data for some
    years, and we have noted the limitations where these data are used.
    However, we found the data provided by SSA to be sufficiently reliable
    for our purposes.

    To identify factors that have contributed to SSA's disability claims
    backlogs and initiatives that SSA is currently undertaking to address
    them, we conducted an extensive literature review, including prior GAO
    reports, and position papers and testimonies from national advocacy
    groups. In addition, we reviewed agency documents, interviewed key SSA
    officials, and conducted site visits to 3 of the 10 SSA
    regions.[Footnote 3] During these site visits, we met with management
    and staff at the regional Office Center for Disability, the Office of
    Disability Adjudication and Review, hearings offices, and state
    Disability Determination Services (DDS). For the regions in which we
    did not conduct site visits, we conducted telephone interviews with key
    officials. We conducted our work between November 2006 and October 2007
    in accordance with generally accepted government auditing standards.
    For more information on our scope and methodology, see appendix I.

    Results in Brief:

    Over the last decade, SSA experienced a substantial increase in its
    backlog of disability claims, with a particularly severe accumulation
    of claims at the hearing level. From fiscal years 1997 through 2006,
    the total number of backlogged claims--numbers exceeding the level that
    should optimally be pending or in the pipeline at year-end---doubled.
    By the end of fiscal year 2006, the total backlog from various levels
    of the disability determination process reached about 576,000 claims.
    Over the period, backlogs of varying degrees have occurred at each
    stage of the claims process where backlogs are calculated. Only at the
    Appeals Council, the stage where generally fewer cases are processed,
    has the backlog been significantly reduced. At the initial claims level
    with the state Disability Determination Services, a backlog developed
    in fiscal year 1998 and grew rapidly for a few years before
    stabilizing. At the hearing level, although the backlog declined to
    about 12,000 claims in fiscal year 1999, it rose dramatically to over
    415,000 claims by the close of fiscal year 2006 and constituted about
    72 percent of all SSA backlogged claims that year. With regard to
    processing times over the last decade, claimants generally waited
    longer to receive a final decision. Processing times increased at the
    Disability Determination Services and more significantly for cases at
    the hearings level. In fiscal year 2006, 30 percent of claims processed
    at the hearings stage alone, took 600 days or more.

    While backlogs in processing disability claims have plagued SSA for
    many years, several factors have contributed to their increase in the
    last decade including substantial growth in initial applications, staff
    losses, and management weaknesses. Initial applications for DI and SSI
    disability benefits have grown more than 20 percent over the past 10
    years, enough to challenge an already complex adjudication process,
    while staffing at this level increased only 4 percent. This increase in
    applications has been spurred by, among other factors, the aging of the
    baby boomer generation, downturns in the economy, increased referrals
    from other benefit programs, and changes in disability eligibility
    requirements in prior years. Over the same period, SSA experienced
    losses of key personnel that included disability examiners and medical
    or psychological consultants in the DDS offices, and administrative law
    judges and support staff in the hearings offices. Finally, management
    weaknesses as evidenced by a number of initiatives that were not
    successfully implemented have limited SSA's ability to remedy the
    backlog. Several initiatives introduced by SSA in the last 10 years to
    improve processing times and eliminate backlogged claims have, because
    of their complexity and poor execution, actually added to the problem.
    For example, the "Hearings Process Improvement" initiative implemented
    in fiscal year 2000 significantly increased the days it took to
    adjudicate a hearings claim and exacerbated the backlog after the
    agency had substantially reduced it.

    In 2006, SSA introduced a new set of comprehensive reforms, but
    recently suspended national rollout to concentrate on the backlog of
    pending hearing requests and on full implementation of its electronic
    case processing system. The reforms, known as the Disability Service
    Improvement (DSI) initiative, were implemented in the Boston region,
    but with mixed results--hampered by rushed implementation, poor
    communication, and inadequate financial planning. An automated
    screening function designed to identify and expedite disability claims
    with a high probability of approval has shortened processing time for
    those cases. However, other facets of the initiative have been
    problematic, such as a new office to handle first level appeals and
    establishing a specialized office to supply medical expertise. As of
    June 2007, both offices were only half staffed. In addition, more than
    1,800 claims were awaiting a medical review, by either a physician
    specialist or a nurse case manager for more than 75 days. We also found
    that rollout of the initiative in the Boston region was rushed over a
    period of 4 months, with little advance information for those managers
    responsible for implementing it. Moreover, the initiative has, as of
    June 2007, incurred $24 million in additional administrative costs,
    although the agency had envisioned that the initiative would not
    increase SSA's existing budget. SSA recently introduced regulations
    that will, if finalized, suspend certain portions of the DSI initiative
    in Boston pending further evaluation. However, it is not clear what
    evaluations will be conducted and if accuracy of disability
    determinations will be one of the factors considered when making
    decisions about which elements of DSI to continue. The Commissioner of
    SSA also recently announced that the agency will concentrate on
    clearing out the backlog of pending claims at the hearings level where
    it is most severe and bringing SSA's electronic case processing system
    into full operation, a step that is expected to facilitate the
    processing of disability claims.

    We are making recommendations to the Commissioner of the Social
    Security Administration to fully monitor backlogs and better execute
    and evaluate initiatives to address them. In its comments on a draft of
    this report, SSA agreed either in part, or with the intent of our
    recommendations, but did not fully agree with a number of our
    conclusions. SSA agreed that the agency should track claims at the
    reconsideration stage, but believed it should use an alternative
    measure as an indicator of performance rather than the measure we
    recommended. SSA partially agreed that the agency should conduct a
    thorough evaluation of DSI before finalizing the agency's decisions on
    implementation and noted that it will continue to collect data and
    monitor outcomes to evaluate DSI. SSA agreed that the agency should
    take necessary steps to improve the likelihood of the success of future
    initiatives and believed the agency is taking steps toward this end.
    Finally, SSA expressed concern that the draft report did not
    sufficiently emphasize SSA's need for additional funding and noted that
    the success of future efforts to reduce the disability claims backlog
    will depend on adequate and timely agency funding. We have added
    additional information on SSA's funding levels for fiscal years 1997
    through 2006 and have revised the report as appropriate in response to
    SSA's comments. However, we continue to believe that our
    recommendations are valid.

    Background:

    The Social Security Administration (SSA) administers two federal
    programs under the Social Security Act that provide benefits to people
    with disabilities who are unable to work: Social Security Disability
    Insurance (DI) replaces income for those with a Social Security work
    record and provides benefits related to their prior earnings levels.
    The Supplemental Security Income (SSI) program provides cash benefits
    to the elderly and individuals with disabilities who have limited or no
    work history.[Footnote 4] In addition, to be eligible for SSI, disabled
    individuals must not have income and assets above a certain
    level.[Footnote 5]

    The process to obtain SSA disability benefits is complex. Several state
    and federal offices are involved in determining whether a claimant is
    eligible for benefits. Although SSA is responsible for the program, the
    law calls for initial determinations of disability to be made by state
    agencies--Disability Determination Services (DDS).[Footnote 6] The work
    performed at federal and state offices is federally financed and
    carried out under SSA disability program regulations, policies, and
    guidelines. The application process, which is the same for DI and SSI
    claimants, involves an initial decision and an opportunity for
    reconsideration at the state level, and up to two levels of
    administrative appeal within SSA as shown in figure 1.

    Figure 1: SSA's Disability Determination Process:

    This figure is a flowchart depicting SSA's five-step sequential
    evaluation process for determining disability.

    [See PDF for image]

    [A] In 1999, SSA eliminated the reconsideration step in 10 states
    (Alabama, Alaska, Colorado, Louisiana, Michigan, Missouri, New
    Hampshire, New York, Pennsylvania and in the Los Angeles area of
    California) as part of the Prototype initiative. In these states,
    claimants who wish to appeal their initial DDS determination must
    appeal for review before an administrative law judge. As of August
    2006, New Hampshire discontinued participation in the Prototype
    initiative due to participation in a new initiative in the Boston
    region.

    [End of figure]

    Under the current structure the process begins at a SSA field office,
    where an SSA representative determines whether a claimant meets the
    programs' non-medical eligibility criteria, such as ensuring that an
    SSI applicant does not have excess assets, or determining if a DI
    applicant has a sufficient number of work credits. If the applicant
    meets the non-medical eligibility criteria, field office personnel will
    help claimants complete their applications and obtain claimants'
    detailed medical, education, and work histories. The completeness of
    the information gathered at this time can affect accuracy and speed of
    the decision.

    SSA field office staff then forward the application and the supporting
    medical evidence to the state Disability Determination Services (DDS)
    where a disability examiner, working with medical staff, must make
    every reasonable effort to help the claimant get medical reports from
    physicians, hospitals, clinics, or other institutions where the
    claimant has received past medical treatments. The examiner may also
    ask the claimant to take a special examination called a "consultative
    examination," where physicians or other medical professionals hired by
    SSA gather more information on the claimant's condition. After
    developing the case and assembling all medical and vocational
    information for the claim, the DDS examiner in consultation with
    appropriate medical professionals determines whether the claimant meets
    the requirements of the law for being disabled. In doing so, the DDS
    examiner conducts up to a five-step, sequential evaluation that
    includes a review of the claimant's current work activity, severity of
    impairment, and vocational factors. See figure 2.

    Figure 2: SSA's Five-Step Sequential Evaluation Process for Determining
    Disability:

    This figure is a flowchart showing SSA's five-step sequential
    evaluation process for determining disability.

    [See PDF for image]

    Source: GAO analysis of SSA data; images (Art Explosion).

    [A] In 2007 the substantial gainful activity (SGA) threshold was $1,500
    per month for blind recipients and $900 per month for individuals with
    other disabilities.

    [End of figure]

    Claimants who are dissatisfied with the initial DDS determination may
    appeal and request a "reconsideration" of the claim within 60 days of
    the notice of decision. The reconsideration review is conducted by DDS
    personnel who were not involved in the original decision. If the
    reconsideration team concurs with the initial denial of benefits, the
    claimant then has 60 days from the time of this decision to appeal and
    request a hearing before an administrative law judge (ALJ).
    Administrative law judges, who are based in 140 hearing offices located
    throughout the nation, can consider new evidence and request additional
    information including medical evidence or medical and vocational expert
    testimony. A claimant who is dissatisfied with the hearings decision
    may request, within 60 days of the administrative law judge's decision,
    that the Appeals Council review the claim.

    The Appeals Council is SSA's final administrative appeals level and is
    comprised of administrative appeals judges. The Appeals Council may
    uphold, modify, or reverse the administrative law judge's action, or it
    may return the claim back to the administrative law judge for another
    hearing and issuance of a new decision. The decision of the Appeals
    Council is the Commissioner's final decision. To appeal this decision,
    the claimant must file an action in Federal Court.

    SSA measures its claims processing performance at each level of the
    process in terms of the number of claims pending each year and the time
    it takes to issue a decision. Since 1999, the agency has used a
    relative measure to determine the backlog by considering how many cases
    should optimally be pending at year-end. This relative measure is
    referred to as "target pending" and is set for each level of the
    disability process with the exception of the reconsideration level.
    SSA's target pending is 400,000 for claims at the initial stage and
    300,000 and 40,000 for the hearings and Appeals Council stages,
    respectively.[Footnote 7] The number of pending claims at year-end that
    exceed these numbers represents the backlog.

    Backlogs and Processing Times for SSA's Disability Claims Have
    Increased in the Past Decade, with a Particularly Large Backlog at the
    Hearings Level:

    Over the last decade, SSA experienced a substantial increase in its
    backlogs of disability claims with accompanying increases in processing
    times for initial claims and even greater increases for claims at the
    hearing level.[Footnote 8] From fiscal years 1997 through 2006, the
    total number of backlogged claims--the number of pending claims that
    exceed the optimal level that should be pending or in the pipeline--
    doubled, reaching some 576,000 claims. The number of backlogged claims
    grew at both the initial determination and hearings level, though most-
    -about 415,000--were backlogged at the hearings level. Meanwhile, for
    reconsideration claims, the second stage of review following an initial
    determination, the number of claims pending a decision increased about
    40 percent over fiscal year 1997 levels. Only at the Appeals Council,
    where fewer claims are processed, did SSA experience significant
    reductions in both backlogged claims and average processing times.

    Since 1997, the Total Backlog in SSA Disability Claims Has Doubled, and
    Processing Times Have Increased at Most Levels:

    Over the last decade, the total number of backlogged disability claims
    in SSA more than doubled, with the greatest accumulation of claims
    occurring among those that were awaiting a hearing. By the close of
    fiscal year 2006, a total of about 576,000 claims[Footnote 9] were
    considered backlogged by SSA's measure,[Footnote 10] which is the
    number of pending claims that exceed the number that should be
    optimally pending in any one year. The 2006 backlog represented an
    overall growth rate of over 120 percent from fiscal year 1997.

    Over the decade, backlogs of varying degree have occurred at all stages
    of the claims process where backlogs are calculated. However, since
    fiscal year 2001, these claims were concentrated most heavily at the
    hearings stage of the review process, and also at the initial
    processing level with the DDS offices. The hearings level accounted for
    the largest share of backlogged claims for 7 of the 10 years of study.
    In fiscal years 2000 and 2001, the DDS, which handles new claims,
    accounted for the largest share of the backlog. The Appeals Council,
    the last stage of appeal within SSA, had the largest backlog in fiscal
    year 1999, but dramatically reduced these numbers by 2006. See figure
    3.

    Figure 3: Total Backlogged Claims, by Level of Adjudication, Fiscal
    Years 1997 to 2006:

    This figure is a shaded bar graph showing total backlogged claims, by
    level of adjudication, fiscal years 1997 to 2006. The X axis represents
    fiscal year while the Y axis represents backlogged claims. The colors
    represent appeals council, hearings, and initial claims.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Not surprisingly, the average processing times for claims at the
    hearings and appeals levels tended to increase or decrease in concert
    with changes in the backlogs. Processing times for claims have
    increased significantly over time at the hearings level and somewhat so
    for initial determinations and reconsiderations at the DDS.[Footnote
    11] For example, processing times increased about 20 days for claims at
    both the DDS initial and reconsideration levels and about 95 days at
    the hearings level over this period.[Footnote 12] See figure 4. On the
    other hand, average processing time dramatically decreased at the
    Appeals Council. In fiscal year 2006, it took almost 140 days less to
    reach a decision at this level than in fiscal year 1997.[Footnote 13]

    Figure 4: Average Claims Processing Time for DDS Initial Claims, DDS
    Reconsiderations, Hearings, and Appeals Council Decisions, in Days,
    Fiscal Years 1997 to 2006:

    This figure is a combination line graph showing average claims
    processing time for DDS initial claims, DDS reconsiderations, hearings,
    and appeals council decisions, in days, for fiscal years 1997 to 2006.
    The X axis represents the fiscal year, and the Y axis represents the
    days. One line represents initial claims, another represents
    reconsiderations, another represents hearings, and another represents
    appeals council.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    The growth in the disability claims backlog also generally coincides
    with increases in the total number of disability claims received by the
    agency.[Footnote 14] Over the 10-year period, the agency experienced a
    21 percent increase in the number of initial claims and a somewhat
    smaller increase in the number of requests for a hearing. Despite some
    increases in the number of dispositions issued annually, the backlog of
    claims waiting to be adjudicated has continued to grow. See figure 5.

    Figure 5: Total SSA Disability Claims Receipts, Dispositions, and
    Backlogs, Fiscal Years 1997 to 2006:

    This figure is a combination line graph showing total SSA disability
    claims receipts, dispositions, and backlogs, between fiscal years 1997
    and 2006. The X axis represents fiscal year, and the Y axis represents
    number of claims. One line represents total receipts, another
    represents total dispositions, and another represents total backlogs.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Backlog at the DDS Level Grew Substantially:

    Having begun the 10-year period without a backlog, the DDS offices
    experienced a rapid growth in backlogs from 1998 through 2004.
    Subsequently they made some small gains and ended fiscal 2006 with
    about 155,000 backlogged claims. Also, over the 10-year period, the DDS
    offices saw an increase almost every year in new initial claims, which
    constituted an overall increase of 21 percent by fiscal year 2006. DDSs
    have not been able to keep pace with these rising receipts despite
    increases in dispositions and some additional staffing.[Footnote 15]
    Thus, annual receipts outpaced annual dispositions in 6 of the 10 years
    we examined. See figure 6. SSA anticipates that the number of new
    claims requiring DDS processing will continue to grow.

    The increase in the numbers of initial claims has also affected the DDS
    offices' ability to process other workloads such as continuing
    disability reviews or CDRs. We found, for example, that the DDS offices
    conducted about one-half the number of CDRs, which are evaluations
    conducted by SSA to assess beneficiaries' continued eligibility for
    benefits, in fiscal year 2006 than they did in fiscal year 2004. (See
    app. II):

    Figure 6: DDS Initial Claims Receipts, Dispositions, Pending, and
    Backlog, Fiscal Years 1997 to 2006:

    This figure is combination bar chart showing DDS initial claims
    receipts, dispositions, pending, and backlog, between fiscal years 1997
    and 2006. The X axis represents the number of DDS initial claims (in
    thousands), and the Y axis represents the fiscal year. One bar
    represents receipts, one represents dispositions, one represents
    pending, and one represents backlog.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    We were unable to determine from SSA data whether DDS offices also have
    a backlog in claims awaiting reconsideration reviews since the agency
    does not establish criteria that would allow measurement of backlogs at
    this stage of the process. However, it does track pending claims and by
    2006 these numbers had grown by 40 percent over 1997 levels--even
    though the number of claims received over this period dropped 25
    percent. This amounted to some 137,000 reconsideration claims pending
    at the end of fiscal year 2006. Contributing to this increase in
    pending claims was a reduction in the number of reconsideration
    dispositions issued--almost a third fewer than in fiscal year 1997. See
    figure 7. In fact, fewer dispositions were completed in fiscal year
    2006 than in 1990. The decline in reconsideration dispositions are
    attributed, at least in part to the initial claims workload. For
    example, a DDS official in one region we visited told us that several
    DDSs had either slowed or temporarily stopped conducting
    reconsideration reviews in order to concentrate on reviewing initial
    claims. In addition, other factors such as participation in the
    Prototype initiative, which eliminated the reconsideration stage in 10
    states, may have also contributed to the reduction in reconsideration
    dispositions.

    Figure 7: DDS Reconsideration Claims Receipts, Dispositions, and
    Pending, Fiscal Years 1997 to 2006:

    This figure is a combination bar chart showing DDS reconsideration
    claims receipts, dispositions, and pending, fiscal years 1997 to 2006.
    The X axis represents number of DDS reconsideration claims (in
    thousands. The Y axis represents fiscal year. One bar represents
    receipts, one represents dispositions, and another represents pending.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    Note: This graphic does not include backlogs. We were unable to
    calculate backlogs at the reconsideration stage because SSA has not
    established an optimal level of pending claims that would allow its
    computation.

    [End of figure]

    Regarding average processing time, it took longer on average to
    adjudicate initial and reconsideration disability claims in fiscal year
    2006 than in 1997. The average processing time at the initial level was
    89 days in fiscal year 2006, compared to 70 days in fiscal year 1997.
    Moreover, 17 percent of initial DI claims (about 230,000 claims) took
    between 121 and 180 days to adjudicate; 6 percent (about 78,000 claims)
    required over 180 days. See figure 8. At the reconsideration stage, the
    average processing time for all claims increased from 51 to 72 days.

    Figure 8: Initial DDS Disability Insurance Claims Processing Time, by
    Age (in Days), Fiscal Year 2006:

    This figure is a pie chart showing initial DDS disability insurance
    claims processing time, by age (in days), during fiscal year 2006.

    Over 180 days: 6%;
    121-180 days: 17%;
    91-120 days: 19%;
    61-90 days: 25%;
    31-60 days: 24%;
    0-30 days: 9%.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    The Largest Backlog in Disability Claims Has Been among Those Awaiting
    Hearings:

    Although backlogged claims were almost eliminated at the hearings level
    from fiscal 1997 through 1999, they grew unabated and reached over
    415,000 cases by fiscal year 2006--accounting for 72 percent of SSA's
    total disability backlog. This was more than twice the number of claims
    backlogged in fiscal year 1997. Meanwhile, the number of requests for
    hearings fluctuated considerably from year to year, and in one year,
    exceeded 1997 levels by as much as about 21 percent. On the other hand,
    the number of dispositions issued over the period declined slightly.
    See figure 9.

    Figure 9: Hearings Office Claims Receipts, Dispositions, Pending, and
    Backlog, Fiscal Years 1997 to 2006:

    This figure is a combination bar graph showing hearings office claims
    receipts, dispositions, pending and backlog, fiscal years 1997 through
    2006. The X axis represents number of claims, and the Y axis represents
    fiscal year. One bar represents receipts, one represents dispositions,
    one represents pending, and one represents backlog.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Although SSA was able to reduce average processing times at the
    hearings level in some years, by the end of fiscal year 2006, the time
    required to reach a decision had increased dramatically.[Footnote 16]
    In fiscal year 2000, SSA's average processing time was 274 days.
    However, by fiscal year 2006, this average had increased to 481 days,
    with many cases taking much longer. For example, 30 percent (about
    170,000) of the decisions issued in fiscal year 2006 took 600 days or
    more; about 2 percent (12,000) took over 1,000 days. See figure 10.
    Recently, SSA concentrated on reducing the number of cases pending over
    1,000 days. From September 2006 to the close of fiscal year 2007, SSA
    reduced the number of these cases from 63,770 to 108.

    Figure 10: Hearings Office Claims Processing Time, by Age (in Days),
    Fiscal Year 2006:

    This figure is a pie chart showing hearing office claims processing
    time, by age, (in days), during fiscal year 2006.

    Over 1,000 days: 2%;
    600-999 days: 28%;
    365-599 days: 39%;
    270-364 days: 11%;
    180-269 days: 8%;
    Under 180 days: 12%.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Lengthy processing times were particularly evident in two regions--
    namely regions 5 (Chicago) and 10 (Seattle).[Footnote 17] See figure
    11. For these regions, about half of the decisions rendered in fiscal
    year 2006, took on average between 600 and 999 days.[Footnote 18]

    Figure 11: Hearings Office Claims Processing Time, Age (in Days) as a
    Percentage within a Region, Fiscal Year 2006:

    This figure is a combination bar chart showing hearings office claims
    processing time, age (in days) as a percentage within a region, fiscal
    year 2006. The X axis represents the region, and the Y axis represents
    the percentage of hearings dispositions. Each shaded bar chart
    represents a different time frame. One represents under 180 days. One
    represents 180-269 days. One represents 270-364 days. One represents
    365-599 days. One represents 600-999 days, and one represents over
    1,000 days.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    Note: National totals include processing times for SSA's Central
    Screening Division.

    [End of figure]

    At the Appeals Council, Where Significantly Fewer Claims Are
    Adjudicated, Backlogged Disability Claims and Processing Times Were
    Dramatically Reduced:

    Between 1997 and 2006 the disability claims backlog and average
    processing time at the Appeals Council, which handles relatively fewer
    claims (less than 3 percent of all processed claims in 2006), decreased
    dramatically. By fiscal 2006, the backlog dropped from more than 74,000
    claims in 1997 to fewer than 6,000 claims--less than a tenth of the
    fiscal year 1997 backlog. Also over the period, the number of Appeals
    Council claims received declined by about 17 percent, and the number of
    dispositions issued generally increased over the number issued in
    fiscal year 1997.[Footnote 19] See figure 12.

    Figure 12: Appeals Council Claims Receipts, Dispositions, Pending, and
    Backlog, Fiscal Years 1997 to 2006:

    This figure represents the appeals council claims receipts,
    dispositions, pending, and backlog, between fiscal years 1997 to 2006.
    The X axis represents the number of claims (in thousands), and the Y
    axis represents the fiscal year. One bar represents receipts. One
    represents dispositions. One represents pending, and one represents
    backlog.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Accompanying the reduction in the Appeals Council's backlogged claims
    over the period was a dramatic 40 percent reduction in the average time
    that it took to reach a decision on a claim. In fiscal year 2006, the
    average time for the Appeals Council to process a claim was 201 days,
    down from 340 days in fiscal year 1997 and the 495 days it took in
    fiscal year 2000. While on average, it required fewer than 180 days for
    the Appeals Council to process most of the decisions in fiscal year
    2006, 16 percent of these decisions took 365 days or more. See figure
    13.

    Figure 13: Appeals Council Claims Processing Time, by Age (in Days),
    Fiscal Year 2006:

    This figure is a pie chart showing appeals council claims processing
    time, by age (in days) during fiscal year 2006.

    Over 1,000 days: 1%%;
    600-999 days: 5%;
    365-599 days: 10%;
    270-364 days: 7%;
    180-269 days: 13%;
    Under 180 days: 64%.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Growth in Applications, Staffing Losses, and Management Weaknesses Have
    Contributed to Backlogs:

    While backlogs in processing disability claims have plagued SSA for
    many years, several factors may have contributed to their increase in
    the last decade: a substantial growth in initial applications, staff
    losses, and management weaknesses. Staffing losses and turnover have
    reduced the number of experienced personnel available to process rising
    numbers of claims. Management problems have been manifested in a number
    of initiatives that were not well planned and implemented. That is,
    several initiatives introduced by SSA in the last 10 years to improve
    processing times and eliminate backlogged claims have, because of their
    complexity and poor execution, had mixed results.

    In the Past Decade, Disability Applications Increased Over 20 Percent
    while Staffing Increased 4 Percent at DDSs:

    As we noted earlier in this report, the number of initial applications
    for DI and SSI benefits increased by 21 percent overall from fiscal
    years 1997 to 2006; meanwhile, DDS staffing levels increased about 4
    percent. See figure 14. The increase in new applications can be
    attributable to a number of influences: periodic downturns in the
    economy, the aging of the baby boomer population, increased referrals
    from other programs, previous changes in program eligibility
    requirements and regulations, and increased program outreach. With
    respect to the economy, SSA officials, DDS senior managers, and prior
    work by GAO all attest to the fact that economic downturns from a
    failing industry or natural disaster can precipitate new disability
    applications.

    Figure 14: Initial Claims Receipts, Reconsideration Receipts, and DDS
    Work Years, Fiscal Years 1997 to 2006:

    This figure is a combination bar and line graph showing initial claims
    receipts, reconsideration receipts, and DDS work years, between fiscal
    years 1997 to 2006. The X axis represents the fiscal year, the left Y
    axis represents the claims receipts (in thousands), and the right Y
    axis represents DDS work years (in thousands). One bar represents
    initial claims receipts, another represents reconsideration receipts,
    and the line represents DDS work years.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Many SSA regional officials we spoke with said that increased program
    referrals from state and federal programs have also increased the
    volume of applications. Also, SSA officials and DDS senior managers
    cited a change in prior disability claims regulations that has
    effectively expanded eligibility for certain cases. Additionally,
    enhanced outreach efforts over the years have likely increased the
    filing of applications for benefits, according to senior managers we
    spoke with in two SSA regions. Officials in one region recounted one
    initiative that targeted outreach to the homeless, which increased
    applications and also added to processing times. They also attributed
    some processing delays to the time required to track homeless
    candidates and help them document their disabilities.

    SSA Has Experienced Substantial Turnover and Losses in Personnel
    throughout the Disability Claims Process:

    Over the past decade, the growth in the disability claims backlogs has
    coincided with a period of staff turnover and losses throughout the
    disability claims process. At the Disability Determination Services
    (DDS), where the initial and reconsideration decisions are made, in
    particular, there has been a high rate of turnover and attrition.

    Disability Examiners and Medical Staff for the Disability Determination
    Services. Attrition rates for DDS disability examiners, who are state
    employees, are almost double that of SSA federal staff. An interim June
    2007 report by SSA officials and DDS senior managers cited an attrition
    rate of 12.7 percent among disability examiners, which was
    significantly higher than the attrition rate of 6.8 percent among SSA
    federal staff for fiscal year 2006.[Footnote 20] In the course of our
    work and in prior reports, DDS officials have attested to the impact of
    staff losses on work flow.

    Many DDS senior managers we recently spoke with said that turnover of
    experienced disability examiners has affected productivity. In one
    state office, for example, senior managers told us they have had
    difficulty retaining experienced disability examiners and said that
    many leave after their first year of training. These senior managers
    also noted an overall attrition rate of 22.3 percent for DDS disability
    examiners who completed their first year of training from September
    1998 to January 2006. Further, about 130 of the approximately 600
    disability examiners hired during that period left or were terminated
    within the first year. DDS officials said the loss of experienced staff
    affects their ability to process disability claims workloads because it
    generally takes newly hired examiners about 2 years to become
    proficient in their role.

    These accounts of difficulty in retaining key staff are consistent with
    a 2004 GAO study, where we reported that over half of the DDS directors
    stated that claims examiner turnover had increased DDS claims
    processing times and backlogs and that the remaining examiners had to
    assume higher caseloads.[Footnote 21] Almost all of those directors
    reported that the number of examiners in their DDSs had not been
    sufficient for their workloads in at least one fiscal year between 2000
    and 2002. We also reported that many DDS directors believed that their
    examiners needed additional training.

    Finally, DDS managers and staff we spoke with said that not having
    sufficient medical and vocational experts available to review
    examiners' work also extended the time it generally takes to process
    and review an application. For example, at one location, disability
    examiners told us that it took 2 months to review some claims that
    involved mental health issues.

    Administrative Law Judges and Support Staff for Hearings. For much of
    the period under study, SSA experienced reductions in administrative
    law judges (ALJs) and support staff--decision writers, staff that
    prepare case files for review, attorneys, and claims technicians--who
    process disability claims.[Footnote 22]

    The number of ALJs available to conduct hearings fluctuated annually,
    ranging from a high of 1,087 in fiscal 1998 to a low of 919 in fiscal
    year 2001 and rebounding somewhat in 2006, to 1,018.[Footnote 23] Many
    senior SSA management staff and ALJs with whom we spoke cited the
    number of administrative law judges available to conduct hearings as a
    major contributor to backlogged claims.[Footnote 24] In May 2006, the
    Commissioner of SSA said that the agency would require no fewer than
    1,250 administrative law judges along with sufficient numbers of
    support staff to properly manage the claims currently pending at the
    hearings level. Even at these staffing levels, the Commissioner said
    the agency does not expect to immediately reduce the backlog.

    Both the number of support staff and the ratio of support staff to ALJ
    fluctuated considerably in the hearings offices between fiscal years
    1997 and 2006. Support staff levels peaked at over 5,500 in 1999 and in
    2006, bottomed out at about 4,700. While SSA senior managers and ALJs
    have recommended a staffing ratio of 5.25 support staff to
    administrative law judge for effective processing of claims, the actual
    ratio has more often been lower, ranging from a ratio 4.59 in 1997 to
    4.12 in 2006.[Footnote 25] Only in fiscal year 2001 did the ratio of
    support staff to administrative law judge meet the staffing levels
    recommended by SSA's senior management.

    The backlog decreased when the ratio of support staff to ALJs increased
    in some years, but not in others; perhaps because of other intervening
    factors such as the implementation of new initiatives and the
    elimination of others such as the Hearings Process Improvement
    initiative and the Senior Attorney program, respectively.[Footnote 26]
    See figure 15. By the close of fiscal year 2006, SSA saw the highest
    level of backlogged claims and the lowest ratio of support staff to
    ALJs over this period. As shown in figure 16, the number of pending
    cases that were older than 270 days decreased significantly when the
    support staff to ALJ ratio was higher in fiscal years 1999 through
    2001.

    Figure 15: Hearings Office Claims Backlog and the Ratio of Hearings
    Office Support Staff to ALJ, Fiscal Years 1997 to 2006:

    This figure is a combination bar and line graph showing hearings office
    claims backlog and the ratio of hearings office support staff to ALJ,
    fiscal years 1997 to 2006. The X axis represents the fiscal year, the
    left Y axis represents the number of backlogged hearings claims, and
    the right Y axis represents support staff ratio. The bars represent
    backlogs, and the line represents support staff to ALJ ratio.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    Figure 16: Percentage of Hearings Office Claims Pending More Than 270
    Days at the End of Year and the Ratio of Hearings Office Support Staff
    per ALJ, Fiscal Years 1997 to 2005:

    This figure is a combination bar and line graph showing percentage of
    hearings office claims pending more than 270 days at the end of the
    year and the ration of hearings office support staff per ALJ, fiscal
    years 1997 to 2005. The X axis represents the year, the left Y axis
    represents the support staff ratio, and the right Y axis represents the
    percentage of claims older than 270 days. The bars represent the
    support staff ratio, and the line represents the percentage of claims.

    [See PDF for image]

    Source: GAO analysis of SSA data.

    [End of figure]

    SSA experienced staffing challenges agencywide. For example, the agency
    experienced a reduction of more than 1,700 annual full time equivalent
    employees from fiscal years 1997 to 2006. See table 1.

    Table 1: SSA Annual Full Time Equivalent Employees for Fiscal Years
    1997 to 2006:

    Fiscal Year: 1997;
    Full time equivalent: 64,904.

    Fiscal Year: 1998;
    Full time equivalent: 63,621.

    Fiscal Year: 1999;
    Full time equivalent: 62,544.

    Fiscal Year: 2000;
    Full time equivalent: 61,931.

    Fiscal Year: 2001;
    Full time equivalent: 62,189.

    Fiscal Year: 2002;
    Full time equivalent: 62,563.

    Fiscal Year: 2003;
    Full time equivalent: 62,521.

    Fiscal Year: 2004;
    Full time equivalent: 63,300.

    Fiscal Year: 2005;
    Full time equivalent: 63,949.

    Fiscal Year: 2006;
    Full time equivalent: 63,131.

    Source: Data provide by SSA.

    Note: Does not include the Office of the Inspector General.

    [End of table]

    In addition to staffing levels, senior SSA officials said the overall
    performance of administrative law judges in adjudicating disability
    cases at the hearings level has a substantial impact on the time it
    takes to render a disability decision. For example, they said average
    productivity would increase if the performance of the bottom 17 percent
    of their duty ALJs--ALJs whose responsibility is to primarily review
    cases--improved.[Footnote 27] According to SSA, the average number of
    hearings processed per duty ALJ is currently around 515 per year, while
    17 percent of duty ALJs process fewer than 350 cases per year.

    Further, SSA officials told us that in the past several years, the
    agency has received appropriated amounts below the President's budget
    request. (See table 2) As a result, the agency has not had sufficient
    resources and has encountered challenges balancing its many workloads.
    In commenting on a draft of this report, SSA indicated that despite
    budget shortfalls, since 2001, through innovation, automation, and
    dedicated staff, the agency has improved productivity on average, by
    2.5 percent each year. However, according to SSA, the success of future
    efforts to reduce the disability claims backlog will depend on adequate
    and timely agency funding.

    Table 2: Social Security Administration's Limitation on Administrative
    Expenses Account for Fiscal Years 1997 to 2006:

    Dollars in millions.

    Fiscal year: 1997;
    Commissioner's Request: 6,239;
    President's Budget Request: 6,092;
    Final Appropriation: 6,407.

    Fiscal year: 1998;
    Commissioner's Request: 6,654;
    President's Budget Request: 6,522;
    Final Appropriation: 6,409.

    Fiscal year: 1999;
    Commissioner's Request: 6,640;
    President's Budget Request: 6,541;
    Final Appropriation: 6,426.

    Fiscal year: 2000;
    Commissioner's Request: 6,908;
    President's Budget Request: 6,706;
    Final Appropriation: 6,572.

    Fiscal year: 2001;
    Commissioner's Request: 7,356;
    President's Budget Request: 7,134;
    Final Appropriation: 7,124.

    Fiscal year: 2002;
    Commissioner's Request: 7,982;
    President's Budget Request: 7,574;
    Final Appropriation: 7,562.

    Fiscal year: 2003;
    Commissioner's Request: 7,974;
    President's Budget Request: 7,937;
    Final Appropriation: 7,885.

    Fiscal year: 2004;
    Commissioner's Request: 8,895;
    President's Budget Request: 8,530;
    Final Appropriation: 8,313.

    Fiscal year: 2005;
    Commissioner's Request: 9,310;
    President's Budget Request: 8,878;
    Final Appropriation: 8,733.

    Fiscal year: 2006;
    Commissioner's Request: 10,106;
    President's Budget Request: 9,403;
    Final Appropriation: 9,109.

    Source: CRS Report for Congress, Social Security Administration:
    Administrative Budget Issues; Updated October 26, 2007.

    [End of table]

    Management Weaknesses Also Contributed to Disability Case Backlogs:

    Management of the disability claims system and particularly of
    strategies initiated to remedy the backlogs may have also contributed
    to their growth in some circumstances. In the last decade, a number of
    initiatives undertaken by SSA to improve the disability process and
    remedy backlogs have faltered for a variety of reasons, including poor
    execution. Implementation of these initiatives, therefore, has often
    slowed case processing. Prior GAO work found that many of the
    initiatives the agency has undertaken since the late 1990s were poorly
    planned and implemented and yielded more losses than gains. In some
    cases, the plans were too large and too complex and fell far short of
    expectations. In addition, in 2001, the Social Security Advisory Board
    raised concerns about SSA's many proposed process changes and about the
    amount of time and resources the agency had invested in changes that
    resulted in minimal gains.

    Some initiatives had the effect of slowing processing times by reducing
    staff capacity, increasing the number of appeals, or complicating the
    decision process. Some improved the process, but were too costly and
    subsequently abandoned. This was the case for several facets of a major
    1997 initiative, known as the "Disability Process Redesign," which
    sought to streamline and expedite disability decisions for both initial
    claims and appeals.[Footnote 28] Various initiatives within this effort
    became problematic. In addition, implementation of an electronic system
    enhanced some aspects of the disability claims process, but also caused
    some delays.

    Process Unification. This initiative, which was designed to standardize
    decisions made both at the initial claims and the hearings level by
    streamlining existing regulations required disability examiners to more
    fully develop and document their decisions. Although this would require
    more time early in the process, this initiative was expected to reduce
    backlogs by decreasing the number of appeals. This initiative was only
    partially implemented and portions of it, such as the development of a
    unified policy guide for adjudicators, were later abandoned by SSA
    because of high costs and an overly-ambitious scope.

    The Prototype. This initiative was designed to ensure that all
    legitimate claims were awarded as early in the initial claims process
    as possible by eliminating the second independent review or
    reconsideration step in the disability adjudication process. Although
    designed to streamline initial processing of claims by screening for
    claims with clear eligibility, this process resulted in an increase in
    the number of appeals for a hearing by an administrative law judge.
    After introducing the process in ten states, SSA, in 2002, discontinued
    its expansion based on its high administrative costs and the increased
    number of appeals.[Footnote 29] SSA also concluded that this initiative
    would cause claimants to wait significantly longer for a final decision
    on a hearings claim.

    The Disability Claims Manager. SSA implemented this initiative in 1999
    to make the claims process more user-friendly and efficient by
    assigning a disability claims manager as the primary point of contact
    until initial decisions are made. The disability claims manager altered
    the process by which numerous employees handled discrete parts of the
    initial claim. Both SSA and DDS employees served as disability claims
    managers during the test, performing both claims representative and
    disability examiner functions. While the test showed greater customer
    satisfaction and faster processing, SSA, in June 2002, ended the
    initiative because of significant start-up and maintenance costs,
    including employee training and insufficient infrastructure to support
    the new claims process.

    The Adjudication Officer. This initiative was designed to expedite
    decision-making at the hearings level by assigning single points of
    contact to (l) provide claimants with information about the hearing and
    their rights to representation, (2) develop the record for a hearing,
    (3) issue fully favorable on-the-record decisions when supported by
    evidence, and (4) narrow issues and fully develop cases that are
    forwarded to the administrative law judge for a decision. Since this
    initiative did not meet most of its milestones for testing or
    implementation because of an overly ambitious plan that required the
    agency to move forward on many fronts simultaneously, SSA discontinued
    implementation in 1999.

    With the Disability Process Redesign Plan of 1997 largely discontinued,
    in 2000, SSA undertook new efforts to improve processing, but most of
    these changes have been troubled by protracted implementation and
    slowed claims processing.

    Electronic Disability Process. In 2000, SSA revived a prior plan to
    transform its paper-based processing system to a national, fully
    integrated electronic processing system. The initiative has several
    goals, including (1) reducing delays caused by losing paper folders
    during transfers to other offices, (2) providing more complete
    disability information on claimants, and (3) reducing keying errors as
    well as storage and mailing costs. However, SSA's decision in 2002 to
    accelerate its rollout of the electronic claims process before
    conducting end-to-end testing of the systems resulted in systemic
    instability and shutdowns at the DDS and hearings offices.[Footnote 30]
    For example, DDS managers in one SSA region we visited said as a result
    they were faced with computer shutdowns as long as a half hour each
    day, making it difficult to process cases. However, SSA regional
    officials told us that these problems are now improving.

    Also, the electronic folder system, a component of the electronic
    disability process, was implemented at the hearings offices without "e-
    pulling," a feature that was part of SSA's original vision of a mature
    electronic disability process that would automatically eliminate
    duplicate documents and organize the remaining documents. While a pilot
    of the functionality for e-pulling is scheduled for implementation in
    April 2008, technicians must still perform this activity manually.
    Staff in one region we visited said that because of system problems and
    the time required to eliminate duplicate electronic documents, and
    master the new system, it has been taking up to three times as long to
    prepare a case. Moreover, administrative law judges we spoke with in
    two SSA regions said that as a result they had experienced some delays
    because the support staff could not prepare enough claims files for
    hearings.

    Currently, new claims are generally processed in the electronic folder
    system at all stages of the process with the exception of the Appeals
    Council, where an electronic folder system is expected to be installed
    January 2008. In addition, since June 24, 2007 hearing offices have
    been able to "reactivate" the most recent closed electronic file, thus
    allowing cases remanded by the Appeals Council to remain electronic.
    Prior to June 24, 2007, any disability claim that was sent back to a
    previous level of the process for adjudication, such as claims that
    were remanded from the Appeals Council back to a hearings office, had
    to be converted and processed in paper, which caused some claims
    processing delays.

    Hearings Process Improvement. This initiative, implemented in 2000 to
    reduce the number of appeals by improving their review at the hearings
    level, reorganized staff into small groups in the hearing offices to
    screen and analyze claims before they were scheduled for a hearing with
    an ALJ. Among other things, this resulted in the promotion--without
    replacement--of some staffers who had formerly been key to assembling
    claims documents for hearings. Also, the automated systems that were
    necessary to support the full implementation of this initiative were
    never put in place. Many of the senior SSA officials we spoke with
    expressed the opinion that this initiative was responsible for dramatic
    increases in delays and processing times at the hearings level. Also,
    during a May 2002 congressional hearing, the Commissioner of SSA
    acknowledged that this initiative had created additional bottlenecks at
    the hearings level.

    Appeals Council Process Improvement. This initiative was implemented in
    2000 to improve customer service by reducing processing times and
    pending disability workloads at the Appeals Council level among other
    strategies, through increased adjudicatory capacity. It was credited
    with reducing both disability case processing times and the backlog of
    pending claims at the Appeals Council level. However, the initiative
    was hampered by automation problems and policy changes. For example, an
    inefficient and error-prone case tracking system caused process delays.
    Additionally, policy changes required that subsequent applications for
    benefits filed by claimants be kept separate from original ones. This
    resulted in two cases pending at different levels of the process, which
    complicated adjudication, requiring more time for resolution.

    In 2002, SSA introduced several short-term initiatives to reduce
    processing times and delays at the hearings level. These short-term
    initiatives included several approaches such as, bench decisions
    whereby an ALJ could issue a favorable decision based on the evidence
    when holding a hearing; use of information technology such as video
    hearings; early screening analysis to identify claims with a high
    likelihood of being granted; and use of outside contractor assistance
    for file assembly. Although many of these strategies are still
    employed, SSA discontinued the use of contractors for file assembly--in
    part because of problems with lost folders.

    SSA Has Introduced a New Set of Comprehensive Reforms, but Suspended
    Their Rollout to Concentrate on the Hearings Backlog and on Electronic
    Processing:

    In 2006, SSA introduced the Disability Service Improvement initiative
    (DSI), a comprehensive set of reforms to the disability process, which
    was initially rolled out in the Boston region with the intention of
    extending it nationally.[Footnote 31] However, DSI was hampered by
    rushed implementation, poor communication within the agency, and
    inadequate financial planning. Thus far, results of the initiative have
    been mixed. SSA recently published proposed regulations to suspend
    certain portions of the initiative operating in the Boston region that
    have cost more than anticipated. SSA has said that it will continue to
    evaluate these portions of the initiative to determine whether they
    should be reinstated. However, it is not clear whether accuracy of
    decisions will be a key consideration in addition to cost and
    timeliness when conducting these evaluations. In the meantime, SSA will
    re-focus its efforts on clearing out the hearings backlog, which has
    reached over 400,000 claims, and on increasing the functionality of the
    electronic folder system.

    Rushed Implementation of SSA's "Disability Service Improvement"
    Initiative as well as Poor Communication and Inadequate Financial
    Planning Has Produced Mixed Results:

    In March of 2006, SSA instituted a comprehensive plan to improve all
    phases of the disability claims process with fundamental changes,
    expecting to make it operational in the Boston region by August of 2006
    and in a second region, at the earliest, a year later.[Footnote 32]
    This plan, called the Disability Service Improvement initiative (DSI)
    was designed to produce correct decisions on disability claims as early
    in the application process as possible, with the expectation that DSI
    would reduce both appeals of denied claims and future backlogs. (See
    app. III for key aspects of DSI).

    By regulation, DSI began in the Boston region in August of 2006--just 4
    months after publication of the final rule describing the program.
    According to regional officials, this left insufficient time to get
    these programs up and running. Also, according to agency and regional
    officials we spoke with, problems caused by a tight schedule were
    compounded by limited communication between SSA headquarters and the
    Boston region prior to the DSI rollout. Officials from the Boston
    region said that regional staff were not party to DSI planning, which
    took place in SSA's Baltimore office, and that until the final
    regulation was published in March, the only information the officials
    received about DSI was the information that was released publicly.
    Despite multiple requests for meetings, regional officials said they
    did not meet with SSA headquarters personnel to discuss implementation
    until May 2006, less than 3 months before the program's scheduled
    rollout and they had few details on how the DSI process was intended to
    work logistically. Further, DSI implementation was complicated by the
    fact that staff were still becoming familiar with the electronic
    processing system, which had been recently implemented.

    Additionally, SSA did not provide training to offices outside the
    Boston region on how to handle claims that are filed originally in the
    Boston region under the DSI system.[Footnote 33] While examiners in non-
    DSI regions were instructed to use an electronic search system for
    guidance on DSI cases, they generally found the system to be
    inadequate. According to these officials, the search engine did not
    allow a search by words or phrases and was not effective in providing
    information to examiners on DSI or other topics.

    DSI involved several envisioned changes to improve the disability
    determination process, but several factors, including tight time frames
    and poor communication, converged to undermine the initiative,
    producing mixed results in the Boston region, which has resulted in SSA
    expediting national rollout of some portions of the initiative and
    proposing indefinite suspension of others.

    Quick Disability Determination Process. For initial claims, the DSI
    initiative added an automated screening function designed to identify
    disability claims that have a high likelihood of being approved for
    expedited processing. This process, known as the Quick Disability
    Determination (QDD) program, has been successful in fully adjudicating
    79 percent of targeted claims within 20 days or fewer with an average
    decision time of 10 days.[Footnote 34] Moreover, SSA's Office of
    Quality Performance found high accuracy rates when reviewing decisions
    made under this screening strategy. Nevertheless, Boston regional
    officials told us that the screening mechanism may not consistently
    identify claims that appear to fit SSA's established profile for
    adjudication under this process. For example, an SSA official in one
    state noted a case in which applications for disability benefits were
    submitted for two low birth-weight twins, only one of whom was
    identified as eligible under the QDD screening process, although they
    both had the same condition. According to SSA, this happened because
    the application for the twin that was not selected for QDD did not have
    a weight listed. While SSA headquarters officials have expressed
    enthusiasm about QDD, and the agency has published regulations to roll
    it out nationally, regional officials cautioned that achieving rapid
    resolution of identified claims is highly dependent on hospitals or
    other medical centers expediting the submission of patient records to
    SSA. To date, examiners in the Boston region have been successful in
    convincing doctors and hospitals to expedite evidence for QDD cases,
    but the examiners still cautioned that providers of medical evidence
    may grow less responsive to requests for expedited information as these
    requests increase.

    Office of the Federal Reviewing Official. While reconsideration
    adjudications for a denied claim have traditionally been handled by
    disability examiners at the DDS offices, the DSI initiative transferred
    such reviews to a new federal office of attorneys. These officials,
    known as Federal Reviewing Officials (FedRO), provide more extensive
    documentation of the decision to the claimant for this first level of
    appeal. Decisions by examiners from this specialized federal office
    have, as of March 2007, had accuracy rates of 97 percent.[Footnote 35]
    According to SSA, this is higher than accuracy rates for DDS
    reconsideration adjudications.[Footnote 36] Data provided by SSA on
    FedRO decisions to date also showed that these decisions had resulted
    in fewer appeals compared to standard reconsideration reviews in
    Boston.[Footnote 37] While the FedRO has only recently begun issuing
    decisions, SSA officials have noted that they have so far been well
    documented and legally consistent.

    While case documentation and accuracy appear to have improved under
    FedRO, which is staffed at half of planned capacity, pending claims
    levels and processing times have begun to increase substantially as
    more cases are decided under this process. Between November of 2006 and
    March of 2007, the number of claims pending at the FedRO increased from
    209 to over 4,000. Moreover, the average time it took to adjudicate a
    claim increased from 41 to 80 days and continued to rise to 113 days at
    the close of June 2007. Meanwhile, receipts coming into the FedRO
    office are increasingly outpacing dispositions at a rate that could
    create a new backlog. (See table 3.)

    Table 3: Office of Federal Reviewing Official (FedRO) Claims End of
    Month Status, October 2006 to March 2007:

    Pending;
    October: 55;
    November: 209;
    December: 811;
    January: 1,584;
    February: 2,775;
    March: 4,876.

    Receipts;
    October: 50;
    November: 158;
    December: 616;
    January: 827;
    February: 1,269;
    March: 2,328.

    Dispositions;
    October: 0;
    November: 4;
    December: 14;
    January: 54;
    February: 78;
    March: 226.

    Average age of pending;
    October: 12;
    November: 24;
    December: 32;
    January: 38;
    February: 46;
    March: 55.

    Source: SSA data.

    [End of table]

    In August of 2007, SSA published a proposed rule to suspend the FedRO
    review in the Boston region, citing high administrative costs and lack
    of data to perform adequate evaluation on the effectiveness of FedRO
    review as reasons for suspension. If the proposed regulation is
    finalized, claims appealed after an initial decision will be reviewed
    at the DDS under the existing reconsideration procedures. The proposed
    rule states that SSA intends to continue to process claims already
    received at the FedRO and will continue to evaluate the FedRO through
    the processing of these claims. SSA says it will make a final
    determination as to whether to reinstate the processing of claims at
    the FedRO based on this evaluation.

    Office of Medical and Vocational Expertise (OMVE). The DSI initiative
    established a specialized office to supply medical expertise. The
    Medical and Vocational Expert System commonly called the Office of
    Medical and Vocational Expertise (OMVE), is staffed with nurse case
    managers who support the FedROs. Nurse case managers at the OMVE obtain
    and collect needed medical evidence, schedule consultative exams for
    claimants with SSA-contracted physician specialists, and conduct a
    general review of each claim. The OMVE was not formed until June 2006
    and as of June 2007, this office was staffed at about half the capacity
    required to support the Boston region. This has contributed to over
    6,500 claims pending review at the OMVE with about 1,800 claims pending
    over 75 days as of June of 2007. In addition, the office has failed to
    establish sufficient numbers of contracts with specialty physicians, a
    problem that was attributed to the lack of availability and the cost of
    retaining such specialists. As a result, staff acknowledged that as of
    June 2007, claims were pending 3 weeks for psychiatric review and 5
    weeks for orthopedic review. Additionally, some agency officials told
    us they often found the nurse case-manager review unnecessarily
    duplicative of the work done by the FedRO and noted that the dual
    review was also expensive since both the FedRO and OMVE involve high
    level positions with substantial salaries. In August of 2007, SSA
    proposed using the OMVE in a more limited role to develop and manage a
    national registry of medical, psychological, and vocational experts.

    Deadline for Submission of Evidence at the Hearings Level. At the
    hearings level, the DSI initiative generally requires claimants to
    submit evidence no later than five business days before a
    hearing.[Footnote 38] In limited circumstances, the ALJ will accept
    evidence submitted at the hearing or during the five business days
    before the hearing, or after the hearing and before the hearing
    decision is issued.[Footnote 39] Submission of additional evidence at
    or immediately prior to a hearing can necessitate rescheduling the
    hearing in order for ALJs to consider new evidence. Such delays could
    postpone hearings for several months and require staff resources to
    prepare for the hearing. The official record closes once the ALJ issues
    a decision; regardless of whether it becomes the final
    decision.[Footnote 40] Officials we spoke with in the Boston region
    viewed these deadlines as positive improvements and the Commissioner of
    SSA has recently endorsed these changes. However, since very few DSI
    cases have made it to a hearing as of this date, it is difficult to say
    how these regulations will work in practice.

    New Templates for Documenting Decisions. Under DSI, initial disability
    examiners are also required to provide more extensive documentation
    describing why a claim is awarded or denied. In support of this
    requirement, SSA planned to institute the electronic Case Analysis
    Tool, (eCAT), a computer based system that guides examiners through the
    decision making process and helps them fully document their cases.
    However, SSA's Office of Systems did not have adequate time to fully
    develop and test the tool and, as of August 2006, eCAT was not as
    functional as SSA had expected. Despite, the fact eCAT was not fully
    operational, beginning in August, SSA required DDS examiners to either
    use it or another decision template, which was based on Microsoft Word,
    to document their cases. Both templates caused considerable delays in
    processing caseloads. Regional staff told us the templates were time
    consuming: the eCAT template had technical problems which caused the
    system to crash and lose information and because the Microsoft Word-
    based template was designed to address every possible disability claim,
    it required examiners to sort through an unrealistically long list of
    choices to document each element of every claim. In March 2007, the
    Commissioner of SSA discontinued the template requirement. He later
    noted in a May testimony before Congress that electronic templates
    developed for the DDSs under DSI had been discontinued because they
    were "not ready for real world use".[Footnote 41]

    Apart from the above operational problems, the Disability Service
    Improvement (DSI) initiative has also cost more than the agency
    anticipated. SSA officials told us that they had originally estimated
    that DSI would draw resources from existing programs within SSA. The
    expectation was that resources for staffing and new technology would
    come from the budgets for disability hearings and the electronic folder
    respectively and that implementation of DSI would not increase SSA's
    overall budget. However, according to SSA budget officials, partial
    rollout of the DSI initiative in the Boston region alone, had by June
    of 2007, incurred $24 million in staffing expenses above normal
    administrative costs for disability programs. Meanwhile, budget
    officials told us they had not yet estimated the cost of national
    implementation of DSI. However, they had recently estimated that fully
    staffing the Boston region--one of the smallest of SSA's ten regions--
    will require as much as $46 million. This estimate did not include the
    cost of funding new technology associated with DSI, such as eCAT.
    Recently, SSA acknowledged the costs of DSI, particularly those
    associated with the FedRO and OMVE, were higher than expected.

    SSA Has Suspended National Rollout of the DSI Initiative Pending
    Further Evaluation:

    SSA suspended further implementation of the DSI initiative beyond the
    Boston region and in August 2007, issued a proposed rule that would
    suspend the FedRO and OMVE portions of DSI. In discussing suspension of
    the national rollout, several agency officials reported to us that the
    agency would conduct an evaluation of DSI in Boston before any further
    decisions were made. According to SSA's proposed regulation, the agency
    will decide whether to reinstate the FedRO and OMVE based on an
    analysis of their performance in the processing of claims already
    received as well as alternative approaches. SSA stated that the
    evaluation will include an assessment of program and administrative
    costs and timeliness. However, one criterion not mentioned for
    evaluation in the regulation is accuracy--which, according to officials
    involved in the creation of DSI, was one of the primary goals of FedRO
    and OMVE review.

    To date, the agency has undertaken only limited assessments of other
    components of DSI even though the strategic plan for the initiative
    originally included a schedule for a detailed evaluation plan. This
    evaluation plan was never carried out, and several components of DSI
    have not yet been assessed. Those evaluations that have been conducted,
    which we reviewed, were limited in scope and covered only short time
    periods. For example, we found that SSA's evaluations of QDD cases
    examined the accuracy of decisions, but not the criteria used for their
    selection or the speed at which individuals whose claims were approved
    under the program received their benefits. In addition, SSA's
    preliminary evaluation to assess FedRO's effectiveness was inherently
    limited by the number of cases involved, as the FedRO had processed
    fewer than 350 cases during the initial period of the evaluation.

    SSA Is Concentrating on Reducing the Hearings Backlog and Improving the
    Electronic Processing System:

    SSA recently outlined a new plan that concentrates on clearing out
    backlogged cases that includes investing at a minimum, an additional
    $25 million to improve the electronic processing system. Officials we
    spoke with at SSA emphasized that the new plan is not meant to replace
    the DSI initiative but to complement it until a final decision is made
    regarding the future of DSI. They noted that a large factor in the
    decision to suspend national rollout of DSI was the cost of the
    program, especially since its implementation was diverting resources
    from addressing the hearings backlog, which they said was at critical
    levels.

    The hearings backlog reduction plan, described in an 18-page document,
    focuses on reducing the existing hearings backlog through a series of
    steps that employ some prior innovations and also new initiatives. The
    plan focuses on updating SSA's medical eligibility criteria, expediting
    cases for which eligibility is more clear-cut, improving the electronic
    processing system, and focusing heavily on clearing out the backlog at
    the hearings level through a number of targeted actions.[Footnote 42]
    We highlight several of the proposed activities below:

    Update of SSA's Medical Condition Listings. As part of the effort to
    expedite cases, the Commissioner said SSA's existing medical listings
    would be updated so that disability categories are better defined.

    Quick Disability Determination (QDD). Citing that the QDD process was
    both efficient and compassionate, the Commissioner said the DSI quick
    decision process for claimants with clear-cut cases would be continued
    and implemented nationally.

    Improvements in Hearings Office Capacity and Performance. The
    Commissioner announced that the agency will increase the numbers of
    ALJs as well as support staff and will focus on clearing out cases that
    are more than 1,000 days old. The Commissioner has also proposed
    reviving the Senior Attorney Advisor program that was in place from
    1995 to 2000 and gave Senior Attorney Adjudicators the ability to
    approve cases for claimants with clear disabilities that did not
    require a hearing. To increase the number of ALJs, the Commissioner
    plans to hire new judges, appoint ALJs from other agencies, and also re-
    hire some retirees. The backlog reduction plan also calls for remanding
    more cases back to the DDS, when appropriate, for fully favorable
    determinations. Finally, the plan calls for tightening performance
    measures for ALJs to ensure that cases are processed in a timely
    manner.

    Use of a Findings Template for Hearings Decisions. The plan mandates
    the use of a template to be used by decision writers and ALJs, when
    documenting hearings decisions. The purpose of the Findings Integrated
    Template (FIT) is to ensure that all pertinent legal requirements are
    addressed in the ALJ's decision, with the hope that this will reduce
    the number of cases that are remanded from the Appeals Council back to
    the hearings level. However, the template was not designed to analyze
    or marshal evidence and according to decision writers in one region we
    visited, FIT does not help them associate evidence with relevant
    regulations, which often is a primary source of decision writing
    errors. While officials noted that decisions written using this
    template had a lower rate of remands, overall, FIT has received mixed
    reviews from officials and staff at SSA we talked with who have used it
    for processing cases. They also noted that portions of the template
    were not always relevant to all decisions, which made it difficult to
    use. The decision writers said that an open format rather than a
    template provided more room for associating evidence for a specific
    case with a pertinent regulation.

    Temporary Service Area Realignments. The plan proposes to temporarily
    realign service areas by assigning additional service areas to hearing
    offices without backlogs and with low receipts. This is expected to
    correct caseload imbalances caused by dramatic fluctuations in receipts
    among the 141 hearing offices across SSA's geographic regions. Requests
    for hearings are to be routed by the servicing field office to the new
    hearing office rather than the original office. According to agency
    officials, this will significantly reduce mailing and computer inputs
    required under SSA's previous process, freeing valuable staff time for
    essential case preparation activities. However, agency officials told
    us that claims that are adjudicated in a region other than where they
    are filed require substantial investment for judicial travel or video
    equipment in the case of remote hearings. In addition to video
    equipment, remote hearings require the use of two rooms for the
    hearing, although SSA already faces constraints on physical space for
    hearings. Further, SSA would need to create additional permanent sites
    where the agency could leave video equipment rather than relying on
    rental of temporary sites, such as conference centers and hotel rooms,
    which the agency currently uses to conduct hearings in remote areas.
    The Commissioner is also proposing to continue with interregional case
    transfers, which are short-term reassignments of cases to other regions
    on an as needed basis if temporary service area realignments are not
    possible.

    Improve and Complete Implementation of the Electronic Processing
    System. The Commissioner has announced that SSA will dedicate $25
    million in resources from its technology reserve fund to update
    elements of the electronic folder that were not fully functional when
    the system was rolled out. The agency also plans the initial rollout of
    the electronic folder to the Appeals Council in January 2008. It also
    calls for enhancing the electronic folder by automating file assembly
    at the hearings level, allowing for electronic signatures on approved
    cases, facilitating shared access to the folder for SSA staff, and
    expanding internet support and functionality for claimants or their
    representatives. An official responsible for the information technology
    (IT) budget at SSA recounted that in the previous year the agency had
    budgeted all technology resources to the DSI initiative rather than the
    electronic folder. Referring to the electronic folder, now, as the
    "backbone" of the disability processing system, the official said the
    updates will be needed to make it fully functional and that SSA is now
    refocusing its priority on the electronic folder system. While
    electronic improvements are designed to shorten processing times, the
    National Association of Disability Examiners and staff we spoke with
    who have used the electronic system--disability examiners, decision
    writers and judges--described a mixed picture. They noted that
    transmitting and tracking cases is faster, but file reviews may
    actually take longer given that they necessitate scrolling through
    hundreds of pages of medical evidence on a computer screen.[Footnote
    43]

    Conclusions:

    SSA has long been confronted with the difficult challenge of weighing
    the nature and severity of individual disabilities for people who apply
    for benefits from two very complex programs. Adding to this challenge
    has been the substantial increase in disability applications over the
    past decade, just as the agency was experiencing increased losses in
    examiners, support staff, and administrative law judges. An overall
    loss of experienced staff combined with increasing workloads and
    resource constraints can reduce the success of any initiative aimed at
    reducing backlogs. Unfortunately, SSA also has a history of
    implementing initiatives to improve claims processing that have been
    poorly executed and therefore compounded its problems.

    While there is recognition of the severity of the disability claims
    backlog at the hearings level, it is unclear whether a similar
    situation exists at the first level of appeal--reconsiderations that
    occur at DDS offices. Without this recognition, SSA may fail to focus,
    when necessary, on any backlogs that occur at this stage and also
    understate the total backlog, which in fiscal year 2006, exceeded a
    half million claims.

    SSA's decision to "pause" the national rollout of the Disability
    Service Improvement initiative of 2006 may be appropriate given the
    fact that the hearings backlog has reached critical levels and that
    further rollout would prevent the agency from focusing on relieving the
    backlog and fully implementing a modern system of electronic
    processing. However, some features of the suspended Disability Service
    Improvement initiative could improve the disability process. SSA has
    noted that FedRO and OMVE are costly and may have to be discontinued.
    While the agency has stated it will consider cost and timeliness in its
    evaluations of these components, it is unclear whether the agency will
    assess accuracy, one of the primary goals of DSI, or attempt to
    identify aspects of the FedRO and OMVE that worked well and could be
    incorporated into the disability claims process should they not be
    reinstated. Any failure to weigh their potential through careful
    evaluation could risk additional waste in resources. Finally, the
    latest measures announced by the Commissioner to focus specifically on
    the hearings backlog also appear promising. Experience has shown,
    however, that without careful planning, execution, and evaluation even
    the best strategies can become expensive undertakings that impose
    unnecessary hardship on both claimants and agency staff.

    Recommendations for Executive Action:

    To ensure that current and future modifications to the disability
    determination process achieve the desired and optimal outcome, we
    recommend that the Commissioner of the Social Security Administration
    take the following three steps:

    * establish a "target pending" for cases in the reconsideration stage
    as the agency does for the other stages, to allow identification and
    monitoring of backlogs,

    * conduct a thorough evaluation of the Disability Service Improvement
    (DSI) initiative before deciding which elements should be implemented
    nationwide and which should be discontinued, and:

    * take needed steps to increase the likelihood that new initiatives
    will succeed through comprehensive planning to anticipate the
    challenges of implementation, by including the appropriate staff in the
    design and implementation stages, by establishing feedback mechanisms
    to track progress and problems, and by performing periodic evaluations.

    Agency Comments and Our Evaluation:

    We provided a draft of this report to the Commissioner of the Social
    Security Administration (SSA) for review and comment. In comments on a
    draft of this report, SSA agreed either in part, or with the intent of
    our recommendations, but did not fully agree with a number of our
    conclusions. Also, SSA proposed that GAO recommend that the agency
    explore ways to improve ALJ performance. Moreover, SSA expressed
    concern that the draft report did not sufficiently emphasize SSA's need
    for additional funding. In addition, SSA had specific comments
    regarding our characterization of DDS target pending levels, the
    financial impact of DSI, and the agency's efforts to address the
    backlog at the hearings level.

    Regarding our recommendation that SSA establish a "target pending" for
    the reconsideration stage of the disability process, SSA agreed that
    tracking claims pending at this stage should be part of the agency's
    routine and comprehensive monitoring of all DDS workloads. However, SSA
    did not believe that it should establish an agency target or goal for
    reconsideration claims. Rather, SSA believed the number of
    reconsideration cases over a certain age could be used as an
    alternative indicator of performance, a measure that is consistent with
    the agency's current direction of focusing on aged claims.

    While aged claims might be a useful alternative indicator of
    performance, we continue to believe that SSA should establish a target
    pending or goal for the reconsideration stage as it does for the other
    three stages--initial, hearings, and Appeals Council--of the disability
    process. Establishing and monitoring a target pending at the
    reconsideration stage would help SSA to determine when the number of
    reconsideration claims pending exceeds the optimal level that should be
    in the pipeline, indicating a backlog exists. Knowing when pending
    claims have exceeded optimal levels at any stage in the disability
    claims process will help SSA better determine where the agency needs to
    focus its attention.

    SSA partially agreed with our recommendation that the agency should
    conduct a thorough review of DSI before deciding which elements should
    be implemented nationwide and which should be discontinued. SSA noted
    that it will continue to collect data and monitor outcomes to evaluate
    DSI and is implementing parts of DSI, such as QDD, that have been shown
    to enhance the agency's ability to make timely and accurate decisions.
    SSA stated that it will continue to evaluate the effect of FedRO and
    OMVE on its administrative functions. SSA added that the agency does
    not have sufficient resources to reduce the hearings backlog and fully
    staff FedRO and OMVE and that therefore, SSA's evaluation of these two
    components will have limited reliability.

    The intent of our recommendation is to help ensure that SSA
    incorporates a strong evaluation component in the DSI initiative. To
    date, SSA has conducted only limited assessments of DSI, even though
    the agency had previously developed a detailed evaluation plan and
    indicated this plan would be used to thoroughly evaluate the
    initiative. However, the assessments that have been completed were
    limited in scope and covered short time periods. In conducting a
    thorough evaluation of DSI, SSA would have more reliable data on which
    to base its decision on which aspects should be continued,
    discontinued, or modified. Any failure to weigh the potential of DSI to
    improve the disability claims process through careful evaluation could
    risk additional waste in resources.

    SSA agreed with the intent of our recommendation to take necessary
    steps to improve the likelihood of the success of future initiatives
    and stated it has already taken steps toward this end.

    We are pleased that SSA agrees with the intent of our recommendation
    and is "moving forward with clear accountable leadership, a solid plan,
    a very inclusive executive steering committee, regular management
    information data as feedback, ongoing monitoring, and coordinated
    monthly evaluation mechanisms." We hope that the agency's success in
    implementing this recommendation is evidenced in its future
    initiatives.

    SSA proposed that we recommend that the Commissioner of SSA explore
    ways that the agency can manage the performance of unproductive ALJs.

    Our report acknowledges that variations in ALJ productivity has been a
    long-standing challenge to addressing the backlog problem. In prior
    reports, we have also recommended ways to address ALJ performance
    issues. For example, in December 1989, GAO recommended that the
    Commissioner of SSA direct the Office of Hearings and Appeals (OHA)
    (now ODAR) to conduct a study to determine the appropriate number of
    cases that ALJs should be expected to decide.[Footnote 44] In July
    1996, we noted that SSA's disability Redesign Plan did not specifically
    address how SSA would consistently define and communicate its
    management authority over ALJs.[Footnote 45] Thus, we believe that SSA
    can pursue ways to manage the performance of unproductive ALJs on its
    own initiative without another GAO recommendation.

    Regarding budget implications, SSA believed that the report should
    elaborate on the full impact of reduced funding on the disability
    claims process and highlight this point throughout the report. The
    agency stated that since 2001, the Congress has appropriated on average
    $150 million less each year than the President's budget requested and
    that the agency employed 19,000 fewer people in fiscal year 2005, than
    it did 30 years ago. In addition, SSA points out that a minimum
    increase of over $300 million each year is required to support its
    large infrastructure. Further, the agency pointed out that despite
    budget shortfalls, since 2001, with innovations, automation, and
    dedicated staff, the agency has improved productivity by on average 2.5
    percent annually. However, according to SSA, to compensate for
    insufficient funding would require an additional 10 percent increase in
    productivity annually, a feat that the agency believes is not possible.

    We have added additional information to our report on SSA's budget
    requests and the amounts appropriated over the last several years.
    However, we do not know how the differences in funding requested and
    appropriations received affected backlogs and processing times since we
    did not conduct this analysis. To conduct such an analysis would
    require a separate study that would assess such factors as staffing,
    workloads, and, as SSA points out, the effects of innovations and
    automation on case processing, steps that can improve productivity.

    Regarding DDS target pending and staffing, SSA expressed concern that
    the report draft's discussion of the DDS backlog and target pending
    does not clearly explain that the target pending cited is the optimal
    pipeline and does not reflect the DDS's annual targets as outlined in
    SSA's Annual Performance Plan, which are based on available funding and
    staffing. Further, the agency pointed out that program integrity
    requirements also limit DDSs' flexibility in determining workload
    priorities.

    We have added additional information to the report to clarify our use
    of the term, "target pending". Since we did not conduct an analysis of
    SSA's budget or how the agency used its funding, we do not believe we
    can comment on how these factors specifically impact DDSs' capacity to
    process pending claims.

    Regarding DSI, SSA provided actuarial cost estimates for the DSI
    regulation regarding the effect DSI would have on total allowances and
    benefit costs. SSA said that the draft report did not acknowledge that
    the statutory requirement that 50 percent of all DDS allowances under
    DI programs must be reviewed prior to taking any action to effectuate
    the determination, represents a major workload and added approximately
    2 weeks to average processing times.

    Our discussion of DSI costs in this report is confined to
    administrative costs incurred beyond what SSA had anticipated. While we
    do not dispute SSA's assertion regarding the effect of pre-effectuation
    reviews, this factor did not surface as a major contributor to claims
    backlogs and processing delays during the course of our work.

    Regarding the agency's efforts to address the hearings backlog, SSA
    believed that given the emphasis the report places on the exploration
    of past initiatives, the report should provide a more thorough
    exploration of the agency's current initiatives for handling the
    hearings backlog, and provided additional information on the status of
    its current initiatives. SSA also pointed out that the success of the
    agency's initiatives depends on timely and adequate agency funding.

    We believe that we have given appropriate attention to both SSA's past
    and current initiatives to address the backlog and that it would be
    more appropriate to more thoroughly explore the current initiatives
    once they are fully implemented.

    SSA's comments appear in appendix IV. SSA also provided technical
    comments, which we have incorporated as appropriate.

    As agreed with your offices, unless you publicly announce the contents
    of this report earlier, we plan no further distribution until 30 days
    from the report date. At that time, we will send copies of this report
    to relevant congressional committees, the Commissioner of the Social
    Security Administration, and other interested parties. We will make
    copies of this report available to others upon request. In addition,
    the report will be available at no charge on the GAO Web site at
    [hyperlink, http://www.gao.gov].

    If you or your staff have questions concerning this report, please
    contact me at (202) 512-7215. Contact points for our Offices of
    Congressional Relations and Public Affairs may be found on the last
    page of this report. See appendix V for a listing of key contributors
    to this report.

    Signed by:

    Daniel Bertoni:

    Director, Education, Workforce, and Income Security Issues:

    [End of section]

    Appendix I: Objectives, Scope, and Methodology:

    We were asked to examine the backlog in disability claims at the Social
    Security Administration (SSA). Specifically, we (1) examined the trends
    in the disability claims backlog and the time SSA required to decide a
    claim, (2) identified key factors that have contributed to the
    disability claims backlogs and processing times, and (3) described the
    steps SSA is currently taking to reduce the backlog and claims
    processing times. To address these objectives, we analyzed
    administrative data related to SSA's claims processing between fiscal
    years 1997 and 2006. We conducted interviews with SSA central office
    officials, including officials from the Offices of Disability and
    Income Security Programs, Disability Adjudication and Review,
    Disability Determinations, Budget, Systems, and Appellate Operations
    and the Chief Actuary; with a variety of regional SSA and state
    Disability Determination Services officials, during site visits and
    over the telephone; and with officials from the National Association of
    Disability Examiners (NADE). We also reviewed relevant documents from
    SSA and other organizations. We conducted our work from November 2006
    through October 2007 in accordance with generally accepted government
    auditing standards.

    Analysis of Administrative Data:

    To identify trends in SSA disability claims, we analyzed SSA
    administrative data for Disability Insurance (DI) and Supplemental
    Security Income (SSI) disability claims for the four levels of the
    disability determination process. We analyzed data for the time period
    of fiscal years 1997 to 2006.[Footnote 46] The data we analyzed
    included:

    New receipts: The number of new claims receipts during the fiscal year
    at each level of adjudication. These data include Disability
    Determination Services (DDS) initial claims (excluding receipts that
    resulted in non-medical denials and eliminated the need for a DDS
    determination), DDS reconsideration claims, appeals for a hearing
    before an administrative law judge (ALJ), and appeals for review by the
    Appeals Council.[Footnote 47]

    Dispositions: The number of cases in which some adjudicative action was
    taken regarding the claim for disability benefits--including an
    allowance, a denial, or a dismissal--during the fiscal year, at each
    level of adjudication.

    Pending claims: The number of claims pending a review by SSA at the end
    of the fiscal year, at each level of adjudication.

    Average processing time: The average time it took for SSA to adjudicate
    a claim and reach a decision for all cases that were decided during the
    fiscal year, at each level of adjudication.[Footnote 48]

    Target pending: SSA's estimate of the number of cases that should
    optimally be pending at year-end. SSA provided estimates of the
    targeted number of pending cases for fiscal years 1999 to 2006 for each
    level of adjudication except for the DDS reconsideration
    level.[Footnote 49] For DDS initial claims, SSA estimated the targeted
    number of pending claims was 400,000. For the hearings level, the
    targeted number of pending cases was 300,000; and for the Appeals
    Council level, the targeted number of pending cases was 40,000. SSA
    used these same estimates for each fiscal year from 1999 to 2006.

    To calculate the number of backlogged claims at the end of each fiscal
    year for each level of adjudication, we compared the targeted number of
    pending cases at that level of adjudication to the actual number of
    pending cases. If the actual number of pending cases exceeds the
    targeted number of pending cases, then the difference is the backlog.
    The total backlogged cases we present in this report equals the sum of
    backlogged cases at the DDS initial, the hearings, and the Appeals
    Council level, as no estimate of target pending cases was available for
    the reconsideration level. Also, to calculate backlogs for fiscal years
    1997 and 1998, we used the same estimates of targeted pending cases
    that were provided for fiscal years 1999 to 2006. We judged this
    approach to be reasonable because these estimates did not change
    between 1999 and 2006.

    The data we analyzed came from several sources within SSA. Data on
    receipts, dispositions, and pending claims at the initial and
    reconsideration levels came from SSA's Disability Operations Data Store
    and the system that preceded it and data on case processing times at
    the initial and reconsideration levels came from SSA's SUMS Title II
    and SUMS SSI Processing Time applications and the systems that preceded
    them. All of these databases contain data submitted by the state DDS
    agencies. Data on receipts, dispositions, pending claims, and
    processing times at the hearings level came from the Hearing Office
    Tracking System (HOTS) and from the Case Processing and Management
    System (which replaced HOTS in fiscal year 2005). Data on receipts,
    dispositions, pending claims, and processing times at the Appeals
    Council level came from the Appeals Council Automated Processing
    System. To assess the reliability of the SSA data we interviewed SSA
    officials and reviewed documents regarding the reliability of these
    data. We determined that the data were sufficiently reliable for the
    purposes of our review, although we did find some potential limitations
    with HOTS data on case processing times at the hearings level, that we
    acknowledge in the report when discussing that data.

    Site Visits and Phone Interviews with Field Staff:

    We conducted site visits to 3 of 10 SSA regions--Massachusetts (region
    1), Texas (region 6), and California (region 9)--to obtain information
    on claims processing trends, factors that have contributed to the
    backlogs, and strategies SSA uses to address backlogs. During these
    site visits, we interviewed a variety of staff from several offices:
    the regional office Center for Disability, the regional Office of
    Disability Adjudication and Review (ODAR) office, a hearing office, and
    a state DDS office. For example, at the hearings offices, we met with
    the Hearing Office Director, administrative law judges, support staff,
    and decision writers. At the DDS offices, we met with the DDS director,
    managers, disability examiners, line staff, and medical consultants
    responsible for initial disability adjudications.

    We used several criteria to select the regions for our site visits. We
    selected region 1 because it was the only region that had implemented
    the Disability Service Improvement (DSI) initiative. We selected the
    other two regions because one has had below average processing times
    for initial claims in recent years, while the other has had above
    average processing times, even though the two have had similar numbers
    of initial claims receipts. For example, in fiscal year 2006, the
    national average processing time for initial DI claims was 88.9 days.
    The processing time for initial DI claims in region 6 was 76.6 days,
    and the processing time for initial DI claims in region 9 was 104.5
    days. Also in fiscal year 2006, region 6 received about 342,000 initial
    claims and region 9 received about 297,000 initial claims. (See table 4
    for national and regional data on initial claims processing times and
    initial claims receipts.) Within each region, we selected a hearing
    office and a DDS office that were reasonably close to the regional
    offices, so we could visit all four offices within our time frames.

    Table 4: Fiscal Year 2006 Regional Data on Average Processing Times and
    Receipts:

    Nation;
    Initial DI claims average processing time (days): 88.9;
    Initial DI and SSI claims receipts: 2,507,958.

    Region 1 (Boston);
    Initial DI claims average processing time (days): 91.9;
    Initial DI and SSI claims receipts: 108,072.

    Region 2 (New York);
    Initial DI claims average processing time (days): 98.4;
    Initial DI and SSI claims receipts: 213,780.

    Region 3 (Philadelphia);
    Initial DI claims average processing time (days): 87.9;
    Initial DI and SSI claims receipts: 250,602.

    Region 4 (Atlanta);
    Initial DI claims average processing time (days): 91.5;
    Initial DI and SSI claims receipts: 588,960.

    Region 5 (Chicago);
    Initial DI claims average processing time (days): 84.9;
    Initial DI and SSI claims receipts: 449,104.

    Region 6 (Dallas);
    Initial DI claims average processing time (days): 76.6;
    Initial DI and SSI claims receipts: 341,670.

    Region 7 (Kansas City);
    Initial DI claims average processing time (days): 73.6;
    Initial DI and SSI claims receipts: 114,269.

    Region 8 (Denver);
    Initial DI claims average processing time (days): 106.0;
    Initial DI and SSI claims receipts: 54,710.

    Region 9 (San Francisco);
    Initial DI claims average processing time (days): 104.5;
    Initial DI and SSI claims receipts: 297,144.

    Region 10 (Seattle);
    Initial DI claims average processing time (days): 78.3;
    Initial DI and SSI claims receipts: 89,647.

    Source: SSA data.

    [End of table]

    In the regions where we did not conduct site visits, we conducted
    semistructured telephone interviews with officials at the regional
    office Center for Disability and the regional ODAR office. We asked all
    of the regional managers and executives we interviewed the same
    questions.

    Document Review:

    We reviewed prior reports and testimonies from GAO, SSA, and SSA's
    Inspector General on the backlog in disability claims. We also reviewed
    position papers and testimonies from a number of national disability-
    related organizations, including NADE, the Association of
    Administrative Law Judges, the National Organization of Social Security
    Claimants' Representatives, the National Council of Social Security
    Management Associations, Inc., and the Social Security Advisory Board.
    We reviewed these documents to gather information on the trends in
    claims backlogs, the factors that contribute to the backlog, and the
    effectiveness of prior strategies used by SSA to reduce the backlogs.

    [End of section]

    Appendix II: Continuing Disability Reviews, Fiscal Years 2004 to July
    2007:

    Table:

    [See PDF for image]

    Source: Data provided by SSA.

    [A] A final decision on whether the claimant will continue to receive
    Disability Insurance (DI) and Supplemental Security Income (SSI)
    disability benefits.

    [End of table]

    [End of section]

    Appendix III: Key Aspects of DSI as of August 2006:

    New feature: Quick Disability Determinations;
    Associated elements:
    * Expedited processing for certain clear-cut cases;
    * Use of a predictive model to screen for cases that have a greater
    likelihood of allowance and to act on those claims within 20 days;
    * Nationally standardized training for DDS examiners on this process;
    * Medical or psychological experts must verify that the medical
    evidence is sufficient to determine that the impairment meets the
    standards.

    New feature: Medical and Vocational Expert System;
    Associated elements:
    * A national network of medical, psychological, and vocational experts
    who will be available to assist adjudicators throughout the agency;
    * The national network will be overseen by a new Medical and Vocational
    Expert Unit;
    * All experts affiliated with the network must meet qualifications,
    which are still under development.

    New feature: Federal Reviewing Officials;
    Associated elements:
    * A cadre of federal reviewing officials--all attorneys--can affirm,
    reverse, or modify appealed DDS decisions;
    * Federal reviewing officials cannot remand cases to the DDSs for
    further review, but they can ask that the DDSs provide clarification or
    additional information for the basis of their determinations;
    * Reviewing officials may obtain new evidence and claimants can submit
    additional evidence at this stage. If necessary, the reviewing official
    may issue subpoenas for documents;
    * If a reviewing official disagrees with the DDS decision or if new
    evidence is submitted, he or she must consult with an expert in the
    expert system.

    New feature: Decision Review Board;
    Associated elements:
    * The Decision Review Board will replace the Appeals Council. It will
    be composed of individuals selected by SSA's Commissioner, and each
    member will serve a designated term;
    * The board will review both allowances and denials, and the board has
    the ability to affirm, modify, reverse, or remand ALJ decisions;
    * The board has 90 days from the date the claimant receives notice of
    board review to make its final decision. If it fails to act within that
    period, the ALJ decision remains SSA's final decision;
    * A claimant may submit a written statement to the board within 10 days
    of receiving notice that the board will review his or her case,
    explaining why he or she agrees or disagrees with the ALJ's decision.
    This statement may be no longer than 2,000 words.

    Source: GAO analysis.

    Note: While DSI does not change the structure or scope of ALJ reviews,
    the new process has several elements that affect hearings at the ALJ
    level. Namely, SSA will notify claimants at least 75 days prior to the
    hearing of the date and time for which the hearing has been scheduled.
    Additionally, claimants have to submit evidence at least 5 business
    days before the hearing date itself.

    [End of table]

    [End of section]

    Appendix IV: Comments from the Social Security Administration:

    Social Security;
    The Commissioner:
    Baltimore, MD:

    October 31, 2007:

    Dan Bertoni:
    Director, Education, Workforce, and Income Security Issues:
    U.S. Government Accountability Office:
    441 G Street, NW:
    Washington, D.C. 20548:

    Dear Mr. Bertoni:

    Thank you for the opportunity to review and comment on the Government
    Accountability Office (GAO) draft report, "Social Security Disability:
    Claims Processing Initiatives Require Better Planning, Management, and
    Evaluation" (GAO-08-40). The attached comments provide specific
    responses to the recommendations and identify technical corrections
    that should be made to enhance the accuracy of the report.

    If you have any questions, please contact Ms. Candace Skurnik,
    Director, Audit Management and Liaison Staff, at (410) 965-4636.

    Sincerely,

    Signed by:

    Enclosure:

    Comments On The Government Accountability Office (GAO) Draft Report,
    "Social Security Disability � Claims Processing Initiatives Reouire
    Better Planning, Management, And Evaluation" (GAO-08-40):

    Thank you for the opportunity to review and comment on the draft
    report. We appreciate the report's acknowledgement that the growth in
    the hearings workloads coupled with declines in funding, staffing, and
    resources were contributors to the disability claims processing delays.
    We have put a great deal of effort in establishing specific initiatives
    designed to eliminate the backlogs, and are committed to achieving
    them. One of the primary lessons learned from all of our ambitious
    plans over the past ten years is that adequate resources are critical
    to the success of any new initiative. No major new initiative, no
    matter how well its implementation is managed, can achieve expected
    results without the accompanying resources.

    Regarding the report's contents, we have a number of concerns as they
    relate to the discussion on: 1) budget implications, 2) the State
    Disability Determination Services, 3) the Disability Service
    Improvement initiative, and 4) Hearing Office capacity and performance.
    They are included in the "General Comments" section of this response.

    For the recommendations, we appreciate your efforts to identify areas
    needing attention as we work to manage this workload, however we do not
    fully agree with a number of the conclusions or proposed remedies. Our
    response to the specific recommendations provides additional
    information as to the reasons for the findings and describes
    alternative actions/measures that we have already taken or plan to take
    to effectively manage the disability claims process.

    General Comments:

    Budget Implications:

    In recognizing the difficulty caused by funding shortfalls, the report
    states "As a result, the agency has not had sufficient resources and
    has encountered challenges balancing its many workloads." We believe
    the report should elaborate on the full impact of the reduced funding,
    and this resource issue should be acknowledged and highlighted
    throughout the report. We believe the report should acknowledge �up
    front� the impact the Federal budget process and SSA's level of funding
    and resources have had on the disability backlogs. The lack of
    resources has played a significant role in the reasons for the pending
    workloads.

    Specifically, since 2001, Congress has appropriated on average about
    $150 million less each year than the President requested. As a result,
    fewer employees are available to process SSA's growing workloads. In
    fiscal year (FY) 2005, SSA had 66,000 employees�down from more than
    85,000 employees about 30 years ago�and in a few months we will drop
    below 60,000. Yet, our workloads have become more complex and the
    volume of work continues to grow every year with the aging of the baby
    boom generation. In addition, Congress has mandated new workloads
    outside of our core responsibilities, such as activities related to the
    Medicare Prescription Drug Program and verification of employee work
    eligibility for immigration purposes.

    The following chart illustrates that if SSA had received the full
    President's budget for FY 2002 through FY 2007, it would have had
    available more than the cost of processing SSA's hearings backlog.

    Figure: SSA Has Not Received the Resources Needed to Address the
    Growing Hearings Backlog:

    [See PDF for image]

    [End of figure]

    We have an effective, comprehensive plan to reduce the hearings backlog
    by 2013, but it will require that Congress provide adequate funding in
    FY 2008 and the future. Under any funding scenario currently being
    contemplated by Congress, FY 2008 will be a very difficult budget year
    for SSA and this follows FY 2007, a year in which we narrowly avoided
    employee furloughs. In FY 2008, despite the increases provided in both
    the House and the Senate bills, we expect to have less discretionary
    money to spend than in FY 2007. We will remain under a hiring freeze
    throughout FY 2008 unless we receive additional funding to drive down
    the hearings backlog. Funding below the House mark will likely delay
    the implementation of the hearings backlog reduction plan.

    We have a large infrastructure, including over 1,400 field and hearing
    offices in cities and towns across America and increases to mandatory
    costs, such as rent and employee pay and benefits, require a minimum
    administrative budget increase every year of over $300 million. With
    these mandatory cost increases and the requirement in the current House
    and Senate appropriations bills to spend $477 million on program
    integrity work in FY 2008 ($264 million in the base and $213 million
    additional funding in the program integrity cap), the amount of money
    available to the Agency to deliver service to the public and invest in
    workload processing is very limited. We believe the report should note
    that we must spend $477 million on continuing disability reviews (CDRs)
    and supplemental security income (SSI) redetermination in FY 2008 in
    order to receive the full program integrity funding. If, for example,
    we only spend $457 million 51.000 (or $20 million less) on program
    integrity work, our budget will be reduced by $20 million.
    Additionally, program integrity funding cannot be used to do other
    important work, such as reducing the disability hearings backlogs.

    We see no indication of improvement in our budget outlook for the
    immediate future. We are currently operating under a continuing
    resolution which keeps us at the FY 2007 funding level. If we have to
    operate at the FY 2007 level of funding for all of FY 2008, we will
    again be looking at potential furloughs and other unattractive options.

    We believe the report should highlight the fact that despite the budget
    shortfall, since 2001, our efforts to innovate and automate, coupled
    with the dedication of our staff, have improved productivity on average
    by 2.5 percent per year for a cumulative improvement of 13.1 percent
    through FY 2006. Given sufficient funding, we can commit to Agency-wide
    productivity improvements and achieve them. We believe that, given the
    array of services that we provide and the major workload processing
    initiatives implemented each year, incremental productivity
    improvements are sustainable with full funding.

    Despite our efforts, the productivity improvement has not been able to
    compensate for insufficient funding increases approved by Congress. As
    a result, we face significant resource challenges. If we tried to
    address the challenge of processing all our incoming work with
    productivity improvements alone, we would need to achieve approximately
    10 percent productivity improvement in addition to the 2 percent
    already planned in FY 2008, which is not possible. Additional resources
    are needed to overcome this productivity gap.

    The following charts show the disability hearings backlog if we
    maintained the status quo and information about the Federal Reviewing
    Official (FedRO).

    Figure: If We Maintain The Status Quo, The Disability Hearings Backlog:

    [See PDF for image]

    * This projection assumes FY 2008 President's Budget resource levels
    and hearings productivity in all years.

    * Resources needed for the Federal Reviewing Official organization
    would reduce the number of workyears available to process pending
    hearings.

    * The projection also assumes that hearings receipt rates would decline
    under DS] consistent with estimates prepared by SSA's Office of the
    Chief Actuary.

    * The hearings receipt levels are based on the 2007 workload
    projections.

    [End of figure]

    Figure: SSA Has Proposed To Place The FedRO On Hold While The Hearings
    Backlogs Are Addressed:

    [See PDF for image]

    * SSA anticipates receiving new requests for FedRO review through
    January 2008. With current resource constraints, SSA projects that the
    final FedRO reviews should be processed by the end of December 2009.

    * Once this work is completed, SSA will be able to redirect FedRO
    resources to help reduce the hearings backlog.

    * Public comment for the FedRO rule has just ended. If the rule is
    finalized as proposed, this is the anticipated impact.

    [End of figure]

    Disability Determination Services (DDS):

    We are very concerned that all conclusions relating to the DDS backlog
    are predicated on the assumption that 400,000 is the target pending
    level for initial claims. The 400,000 number was generated as part of a
    Service Delivery Budget in an effort to estimate an optimum pipeline
    based on available funding, staffing/workload levels, and business
    processes at a particular point in time (1997). It was never intended
    to be a targeted pending.

    The report should also emphasize that we have never communicated an
    expectation or held the DDSs accountable for reaching a targeted
    pending of 400,000. Our Annual Performance Plan, which is based on
    budgeted funding and staffing shows 2006 and 2007 pending targets of
    577,000 initial disability claims for the DDSs. If 400,000 is the
    baseline number that will be used to determine backlogs, the report
    needs to make a better distinction between that and the "targeted
    pending."

    In recent years, DDSs have been funded to maintain a pending level of
    577,000 and have met that target. In addition, almost all of these
    pending claims have been assigned to an examiner and have had some
    development done on them. Initial claims are not backlogged in the
    sense that no work has been done on them. The DDSs do an outstanding
    job of serving the public. In FY 2006, 77 percent of the initial claims
    processed were completed within 120 days and 94 percent were processed
    within 180 days. The DDSs also have done an outstanding job over the
    years of balancing workloads and processing disability claims timely
    despite the Federal budget process.

    On page 14, the report states that--over a 10-year period--the DDSs saw
    an increase almost every year in initial claims, which constituted an
    overall increase of 21 percent by FY 2006. It further states that the
    DDSs have not been able to keep pace with these rising receipts despite
    increases in dispositions and some additional staffing. Note the
    footnote at the bottom of the page�"the DDSs received an overall
    increase of about 4 percent in staff workyears over the 10-year
    period." We have two points to make regarding these statements. First,
    the fact that DDS staffing only increased by 4 percent should be
    highlighted on this page, not merely footnoted.[Footnote 51] The DDSs
    have not been sufficiently funded over this 10-year period to process
    the increase in receipts or to hire staff over their funding levels.
    Second, our appropriations over most of this 10-year period had
    discrete funding allocated to processing Continuing Disability Reviews
    (CDR). Because of this mandated work we had limited flexibility in
    determining workload priorities.

    Disability Service Improvement (DSI):

    To provide additional background information regarding the DSI
    initiative, we are providing three memoranda regarding actuarial cost
    estimates for the DSI regulations. The first two memoranda, dated July
    21 and July 13, 2005 (enclosures 1 and 2) provide the initial estimates
    for DSI on the basis of a 5-year implementation. The memorandum dated
    January 10, 2007 (enclosure 3) provides updated estimates assuming that
    DSI would be implemented over a 10-year period, with one new region
    being implemented each year. The slower implementation is the basis for
    estimates included in the current Trustees Report and the current
    budget estimates.

    The estimates in both 2005 and 2007 show that the expectation was that
    DSI would accelerate allowances for disability somewhat without having
    a significant impact on the total number of allowances from those who
    apply for benefits each month. The acceleration of allowances resulted
    in estimated cash-flow increases in program cost during the first 10
    years for the initially assumed 5-year implementation, and somewhat
    longer for the later prescribed 10-year implementation. In each case,
    the annual net effect on program cash-flow cost was estimated to reach
    essentially zero after 10 to 15 years from initial implementation.

    There is another significant disability claims workload that the report
    does not address. There is a statutory requirement that 50 percent of
    all DDS allowances under the SSDI programs must be reviewed prior to
    taking any action to effectuate the determination (section 221(c) (2)
    of the Social Security Act). This review is a major Agency workload. In
    FY 2006, we conducted pre-effectuation reviews on almost 350,000 DDS
    allowances. These reviews added approximately 2 weeks to average
    processing times.

    Improvements in Hearings Office Capacity and Performance:

    We have already taken a number of important steps to better manage our
    workloads and place resources where they can best meet the desired
    outcomes. We have formulated a plan to eliminate the backlog of cases
    at the hearing level and prevent reoccurrence. On May 23, 2007, we
    detailed this plan in testimony to the Senate Finance Committee.

    Although we recognize that the report only "highlights" the provisions
    of the backlog plan, we believe that given the emphasis the report
    places on the exploration of past initiatives a more thorough
    exploration of the current management plans for handling backlog issues
    at the hearing level is called for. The success of these initiatives
    depends on a timely and adequate Agency funding. Properly funded, these
    initiatives will reduce the amount of time members of the public wait
    for a hearing decision and will lead to a reduction in the number of
    cases pending in our hearing offices. We offer the following
    information regarding the status of those initiatives, all of which are
    designed to improve hearing procedures, increase adjudicatory capacity,
    and increase efficiency through automation and improved business
    processes.

    We began by attacking the problem of aged cases, starting with a plan
    to provide decisions to claimants who had been waiting the longest. We
    made a commitment to work down the inventory of 63,770 cases which
    would be 1,000 days old or more by the end of FY 2007. Through
    extensive oversight and improved management, only 108 of these cases
    remained on September 28, 2007. During FY 2008, we will be focusing on
    disposing of those cases which will be over 900 days old by the end of
    the fiscal year. This initiative should provide decisions to those
    claimants waiting the longest.

    To free our Administrative Law Judge (ALT) resources for the most
    difficult and complex cases, we established a plan to shift a portion
    of our fully favorable on-the-record workload to Attorney Advisors. The
    interim final rule for the Attorney Advisors was published in the
    Federal Register on August 9, 2007. Amended position descriptions have
    been written, and systems functionality to support this initiative will
    be ready November 1, 2007. These additional adjudication resources
    should be helpful in disposing of additional cases without the need for
    a hearing in FY 08 and FY 09.

    Hiring additional ALJs is an essential element in a successful plan for
    reducing the backlog. We have worked with the Office of Personnel
    Management to expedite the selection of 150 ALJs in FY 2008. Pending
    receipt of the Office of Personnel Management register expected in
    November 2007, and budget permitting, we plan to hire 150 ALJs in the
    Spring of 2008. In FY 2007, four ALJs were hired from other Agencies.
    All had prior SSA experience which mitigates the learning curve. Twelve
    intermittent (part time) Senior ALJs and four rehired annuitant (full
    time) ALJs were hired at the end of FY 2007. Seven current ALJs will
    likely be placed in the National Hearing Center (NHC).

    We have already begun to focus on the productivity of both decision
    writers and ALJs. The Chief ALJ has communicated expectations for ALJs
    to produce 500-700 decisions a year. In FY 2007, 498 ALJs produced 500
    or more decisions during the year. In 2006 that number was 488 and in
    2005 that number was 387. We are developing productivity information
    indicators that will assist in measuring improvement. Currently the
    Office of Adjudication and Review (ODAR) is utilizing the Decision
    Writer Statistical Index Report to compute and assess decision writer
    productivity. Increased monitoring of performance and productivity
    should result in additional efficiency and the adjudication of a higher
    number of cases.

    In FY 2007, we took a proactive stance in dealing with AU misconduct.
    Two reprimands and two suspension actions occurred in FY 2007.
    Currently, three termination actions and one suspension action are
    ready to be filed with the Merit System Protection Board (MSPB). Two
    additional reprimands are in the process of being drafted. At the MSPB
    level, one termination and four suspension actions are pending.

    During FY 2007, ODAR implemented a major change in its business process
    which involved transition from processing hearings using paper folders
    to processing hearings using electronic folders. Transition to the
    electronic folder not only involved training for hearing office
    employees, representatives, vocational and medical experts and hearing
    reporters, but also a learning curve associated with mastering a new
    process. It involved working in a dual environment with paper and
    electronic folders and a labor intensive certification process which
    impacted all positions in the hearing office. During FY 2008, ODAR will
    continue to focus on eliminating the backlog of paper files as well as
    continuing to streamline processes within the electronic folder
    environment.

    Over $9,000,000 was spent in FY 2007 on installations and upgrades of
    servers, video teleconferencing equipment and telecommunications
    equipment in the hearing offices and for the set up of the NHC in Falls
    Church, Virginia. These updates support electronic folder processing by
    increasing the capacity of the infrastructure underlying the electronic
    folder and other electronic services and will continue throughout FY
    2008.

    We established the NHC in October 2007 in Falls Church, Virginia, part
    of the Agency's strategy to address the backlog by increasing
    adjudicatory capacity and efficiency with a focus on an electronic
    hearings process. With electronic folder receipts becoming the largest
    part of our pending, we now have the flexibility to transfer workload
    to the NHC easily, where a centralized cadre of ALJs using video
    hearing technology will hear electronic cases from the most backlogged
    offices in the country. Support staff reported for duty on October 15,
    2007 and a solicitation for ALJs was released October 5th to all
    Federal ALJs.

    Video technology is an important part of our method for conducting
    hearings. Additional video hearing units will decrease AU travel,
    allowing for increased ALJ productivity. Currently there are 394
    hearing rooms with video hearing equipment. Video hearings expanded
    from 41,457 held in FY 2006 to 45,449 held in FY 2007. An award to
    purchase an additional 158 video units was released on September 21,
    2007 and shipping of new units will begin in the November/December
    timeframe. The addition of these units will increase the ability to
    more effectively balance workloads on a national level by using ALJ
    resources from one geographic area to assist with hearings in another
    geographic area without incurring travel time.

    As part of the plan to increase adjudicatory capacity and reduce the
    paper case backlog, we developed the Informal Remand initiative. SSA's
    Office of Quality Performance (OQP) developed profiles to identify
    cases for which a favorable decision appears likely. Those cases are
    remanded back to the DDS for review. In FY 2007 about 20,000 cases were
    remanded to the State DDSs, resulting in 8,714 fully favorable
    decisions for claimants without a hearing. In FY 2008, we will be front
    loading cases from New York, Georgia, North Carolina, Indiana, Florida,
    Michigan, Kansas and Ohio to the DDSs since these six States have the
    highest number of unworked profiled paper cases. Plans are to send
    51,000 cases to the DDSs in FY 2008.

    Another method of increasing adjudicatory capacity has come through the
    Appeals Council (AC). Some cases that come before the AC contain
    relatively minor technical deficiencies which could compromise the
    support of the decision in court, but which do not ultimately affect
    the correctness of the ultimate conclusion on entitlement to benefits.
    If the case does not require a hearing or additional development, the
    AC will consider granting the request for review to issue a new
    decision with the technical issue corrected. Doing so, where
    appropriate, should reduce overall processing time for the claimant and
    reduce the number of cases remanded to the hearing level.

    We have initiated a number of automation initiatives that will increase
    efficiency, although many will not be ready for full implementation
    until later in FY 2008. One of the most important provides for the
    completion of the electronic process through the AC. The new Appeals
    Review Processing System (ARPS) will allow the AC to process electronic
    folder cases, with first release scheduled for January 2008.

    Many of the automation improvements will enhance efficiency in the
    processes that prepare cases for hearing by the ALJ. These are critical
    given that the support staff ratios are lower than they should be. We
    have had to provide for interim measures to prepare paper cases for
    hearing, such as using volunteers from Field Offices and Teleservice
    Centers across the nation to work on folders during overtime hours and
    adopting a streamlined folder assembly process for pending paper cases
    that gets the cases to the judges more quickly. When these cases are
    finally adjudicated, they will be replaced by the electronic files
    which will require less time and effort to prepare.

    Some of the automation initiatives pending that will improve the
    hearing process are:

    * ePulling � This functionality involves development of customized
    software which has the potential to identify, classify, and sort page
    level data, re-organize the images after classification, and identify
    duplicates. A contract was awarded to eCompex in September 2007 to
    develop this software. This automation initiative will enable hearing
    offices to prepare cases for hearing in about half the time it takes
    now. Implementation is scheduled to begin in the first quarter of FY
    2009.

    * eScheduling � The eScheduling initiative envisions an automated
    calendaring function that will incorporate scheduling of experts,
    hearing sites and hearing rooms, equipment, and ALJ availability. ODAR
    is working with the Office of Systems to develop this software which
    should decrease the time it currently takes to schedule a hearing. This
    initiative is still in the planning and analysis phase.

    * Electronic Records Express (ERE) - This initiative will expand access
    to the ERE website to allow outside end-users (representative and
    expert witness community) the ability to view the electronic folder
    online and to receive notices electronically. The target date to begin
    a pilot to test functionality to allow select outside user
    representatives to view the electronic folder via the website is June
    2008. We are currently working on additional functionality to allow
    hearing offices to send notices to representatives via the website.
    Currently hearing offices currently spend much time burning CDs for
    expert witnesses, claimants and representatives at various stages of
    our process. The time spent doing this will be available for other
    tasks.

    * Electronic signature - The electronic signature will give ALJs the
    ability to sign decisions electronically and provide the HOCALJ the
    ability to sign on behalf of another ALJ in the hearing office. This
    functionality will rollout out in January 2008 and will allow ALJ
    decisions to be sent into the electronic folder and to be centrally
    printed and mailed with no hearing office support staff involvement.

    * Centralized Printing and Mailing � This initiative will provide for
    centralized, high speed, high volume printing and mailing of notices. A
    pilot in four hearing offices will begin in January 2008.

    * Shared Access to the Electronic Folder � this provides the ability to
    temporarily transfer cases for workload assistance while affording full
    electronic functionality to both the receiving and owning offices.
    Enhancements for January 2008 will include the ability to provide
    shared jurisdiction allowing temporary transfer of cases for pulling
    and decision writing, thus providing the ability to move work to where
    there are resources to perform these tasks.

    * Findings Integrated Templates (FIT) for decision writing � The
    Findings Integrated Templates (FIT) system was designed as a roadmap of
    our regulations to ensure that all pertinent legal requirements are
    addressed in the ALJ's decision. FIT was intentionally never designed
    to analyze or marshal evidence. Use of the FIT template by ALJs
    (already familiar with the case) to draft fully favorable decisions
    allows for use of decision writer resources for other more complex
    decisions. For the month of September 2007, 95 percent of all written
    decisions were written in FIT and use of FIT continues to rise. Use of
    the FIT decision writing tool should provide decisions which are
    legally sufficient and result in fewer remanded cases from the AC.

    Part of our objective to manage workloads more effectively is a plan to
    balance workloads among the regions across the nation. We are assisting
    the most heavily impacted hearing offices and preventing cases from
    aging by transferring cases electronically to sites where we have
    greater capacity. We are also working to standardize our hearing
    business process, by visiting offices to identify best practices and
    problem areas. OQP and ODAR are working together to develop an improved
    inline quality review procedure. Results of these quality assurance
    reviews will provide information for training purposes and should
    result in the production of a better quality product for our claimants.

    Our responses to the specific recommendations are provided below.

    Recommendation 1:

    The Commissioner of Social Security should establish a "target pending"
    for reconsideration stage as the agency does for the other stages, to
    allow identification and monitoring of backlogs.

    Comment:

    We agree that tracking reconsideration pendings should be a part of the
    Agency's routine and comprehensive monitoring of all DDS workloads.
    However, we do not believe this should be an Agency target/goal. As an
    alternative to a reconsideration pending goal, we could use a number or
    percentage of reconsideration cases over a certain number of days old
    as an indicator of performance. This would be consistent with the
    Agency's current direction of focusing on aged claims.

    Recommendation 2:

    The Commissioner of Social Security should conduct a thorough
    evaluation of the Disability Service Improvement (DSI) initiative
    before deciding which elements should be implemented nationwide and
    which should be discontinued.

    Comment:

    We partially agree. Although we do not concur with your specific
    recommendation as written, we agree that we should continually evaluate
    data to help guide us when implementing any nationwide initiative. We
    will continue to collect data and monitor outcomes to evaluate DSI in
    line with our commitment to outstanding service and continuous
    improvement. We are implementing the parts of DSI that data have shown
    to enhance our ability to make timely and accurate disability
    determinations. For example, based on our careful evaluation, we issued
    a final rule on September 5, 2007, extending the Quick Disability
    Determination (QDD) process nationwide. Arizona, New Jersey and North
    Dakota have started using QDD as part of a staged national roll out
    that will be completed early next year. We are conducting special
    reviews on QDD accuracy in each State as it rolls-out, and management
    information (MI) data on case selection, timeliness, and allowance
    rates will be tracked.

    Regarding the FedRO/Office of Medical and Vocational Expertise (OMVE)
    specifically, we continue to evaluate their effect on our program
    administrative functions. Our experience over the last year in the
    Boston region demonstrates that the administrative costs associated
    with FedRO and its use of OMVE to develop medical and vocational
    evidence is greater over the foreseeable future than we originally
    anticipated.

    Although we plan to suspend sending new claims to FedRO, we expect to
    have over 17,000 claims pending when the regulation goes into effect.
    This volume of pending claims will allow us to continue to collect and
    evaluate data while targeting scarce resources to the hearings process
    where hundreds of thousands of cases are now backlogged. We do not have
    sufficient resources to continue to work down the hearings backlog and
    to fully staff FedRO and OMVE. Therefore, our evaluation of these
    components will have limited reliability.

    Recommendation 3:

    The Commissioner of Social Security should take needed steps to
    increase the likelihood that new initiatives will succeed through
    comprehensive planning to anticipate the challenges of implementation,
    by including the appropriate staff in the design and implementation
    stages, establishing feedback mechanisms to track progress and
    problems, and by performing periodic evaluations.

    Comment:

    We agree with the intent of this recommendation and have already taken
    steps towards comprehensive planning in the design and implementation
    stages. Having learned from the past, we are moving forward with clear
    accountable leadership, a solid plan, a very inclusive executive
    steering committee, regular MI data as feedback, ongoing monitoring,
    and coordinated monthly evaluation mechanisms.

    For example, the NHC is a critical element of the Commissioner's plan
    to eliminate the hearings backlogs. The NHC, established in October
    2007 in Falls Church, Virginia, is designed to help address the backlog
    by increasing adjudicatory capacity and efficiency with a focus on an
    electronic hearings process. A centralized cadre of ALJs will use video
    hearing technology to hear electronic cases from the most backlogged
    offices in the country. As stated before, instead of going to full
    implementation, the Commissioner is following the recommendation of
    staff and using a staged roll-out for the NHC.

    We are suggesting that the following recommendation be added to the
    report:

    Recommendation 4:

    The Commissioner of Social Security should explore ways that the Agency
    can manage the performance of ALJs who are unproductive.

    Comment:

    GAO noted on page 46 of the report that part of the Commissioner's plan
    for improving hearing office capacity and performance includes
    tightening performance measures for ALJs to ensure cases are processed
    in a timely manner. We appreciate your comments in this regard.
    Although most SSA ALJs are dedicated, hard-working employees, data show
    that a significant number of ALJs fail to work at an acceptable level.
    While not all cases are of the same level of complexity, ALJs hear and
    decide the same mix of cases throughout the country. Yet, there is a
    cohort of ALJs whose productivity year after year is below an
    acceptable range achieved by their peers. For example, for FY 2007
    twenty-six percent of ALJs had dispositions below 400 cases per year
    while seventy-four percent of judges decided more than 400 cases. As
    the number of new applications rises, and with budget and staffing
    resources stretched to the limit, SSA must have the tools needed to
    manage the performance of ALJs just as it does with any other group of
    employees. It is unacceptable for ALJs to be free from management of
    their performance when they do not hear and decide cases within an
    acceptable range of performance.

    Limitations on the Agency's ability to manage ALJ productivity are not
    confined to issues of timeliness and quantity of dispositions. ALJs
    hold hearings pursuant to a delegation from the Commissioner, yet some
    ALJs refuse to follow properly promulgated Agency policy in deciding
    cases, often leading to legally insufficient decisions requiring remand
    by the Appeals Council or a district court. This results in further
    delays for the claimant and a further increase in backlogs. Some ALJs
    refuse to hold video hearings. Some do not schedule cases in sufficient
    numbers, and some cancel scheduled hearings for insubstantial, personal
    reasons. Yet these same ALJs assert that the qualified decisional
    independence which is the right of claimants at the de novo hearing
    somehow entitles the ALJ to exercise discretion in adhering to Agency
    policy and procedures in these unrelated areas.

    We also encounter difficulties in hiring and assigning ALJs, who are
    appointed from a register of eligibles developed by OPM pursuant to the
    Administrative Procedures Act and its own regulations. SSA employs the
    largest number of ALJs in government, and yet its need for individuals
    with experience in non-adversarial, high volume, highly automated,
    videoconference and in-person adjudications is often frustrated by OPM
    criteria better suited for employment of ALJs in regulatory agencies
    whose proceedings are small in number, involve highly complex issues of
    law and fact, and are adversarial in nature. Once hired, ALJs often do
    not want to remain in the location for which they were originally
    selected despite promises to do so. Yet current collective bargaining
    language requires ALJs the opportunity to transfer before a new ALJ can
    be assigned.

    We need the flexibility to hire ALJs with Agency-specific experience,
    to hire them quickly, to assign and transfer them to address workloads,
    and to hire them on a term basis to address peaks in workloads.

    Given the increased receipts at the hearing level, it is clear that a
    cornerstone of any plan to reduce the backlog is to increase
    adjudicatory capacity. Although hiring of additional ALJs must be part
    of this plan, the Agency believes that it would be fiscally
    irresponsible to allow some of its current ALJs to continue to perform
    at unacceptable levels. Indeed, the Agency believes that its obligation
    to serve the public in a timely manner requires that we approach the
    issues of ALJ productivity, including the performance issues discussed
    above, in the same way that we would approach similar problems with any
    other employee. SSA will continue its efforts to manage AU productivity
    with the limited tools available to do so, while at the same time
    developing plans to strengthen performance measures. Some improvements
    will likely involve legislative and regulatory changes. To this end, we
    request that you move quickly on the request by Congress to examine
    this matter in greater detail.

    [End of section]

    Appendix V: GAO Contact and Staff Acknowledgments:

    GAO Contact:

    Daniel Bertoni, Director, (202) 512-7215.

    Staff Acknowledgments:

    Shelia Drake, Assistant Director; Lucia DeMaio; Salvatore F. Sorbello;
    and Linda Stokes made significant contributions to this report. In
    addition, Daniel A. Schwimer provided legal assistance; Evan Gilman,
    Lorin Obler, and Walter Vance assisted in the assessment of the
    reliability of data; and Susan C. Bernstein and Rachael C. Valliere
    assisted in report development.

    [End of section]

    Related GAO Products:

    Disability Programs: SSA Has Taken Steps to Address Conflicting Court
    Decisions, but Needs to Manage Data Better on the Increasing Number of
    Court Remands. GAO-07-331. Washington, D.C.: April 5, 2007.

    Social Security Administration: Agency Is Positioning Itself to
    Implement Its New Disability Determination Process, but Key Facets Are
    Still in Development. GAO-06-779T. Washington, D.C.: June 15, 2006.

    Electronic Disability Claims Processing: SSA Is Proceeding with Its
    Accelerated Systems Initiative but Needs to Address Operational Issues.
    GAO-05-97. Washington, D.C.: September 23, 2005.

    Social Security Administration: More Effort Needed to Assess
    Consistency of Disability Decisions. GAO-04-656. Washington, D.C.: July
    2, 2004.

    Social Security Disability: Commissioner Proposes Strategy to Improve
    the Claims Process, but Faces Implementation Challenges. GAO-04-552T.
    Washington, D.C.: March 29, 2004.

    Electronic Disability Claims Processing: SSA Needs to Address Risks
    Associated with Its Accelerated Systems Development Strategy. GAO-04-
    466. Washington, D.C.: March 26, 2004.

    Social Security Administration: Strategic Workforce Planning Needed to
    Address Human Capital Challenges Facing the Disability Determination
    Services. GAO-04-121. Washington, D.C.: January 27, 2004.

    SSA Disability Decision Making: Additional Steps Needed to Ensure
    Accuracy and Fairness of Decisions at the Hearings Level. GAO-04-14.
    Washington, D.C.: November 12, 2003.

    Electronic Disability Claims Processing: Social Security
    Administration's Accelerated Strategy Faces Significant Risks. GAO-03-
    984T. Washington D.C.: July 24, 2003.

    Social Security Disability: Efforts to Improve Claims Process Have
    Fallen Short and Further Action is Needed. GAO-02-826T. Washington,
    D.C.: June 11, 2002:

    Social Security Disability: Disappointing Results from SSA's Efforts to
    Improve the Disability Claims Process Warrant Immediate Attention. GAO-
    02-322. Washington, D.C.: February 27, 2002.

    SSA Disability Redesign: Actions Needed to Enhance Future Progress.
    GAO/HEHS-99-25. Washington, D.C.: March 12, 1999.

    SSA Disability Redesign: Focus Needed on Initiatives Most Critical to
    Reducing Cost and Time. GAO/HEHS-97-20. Washington, D.C.: December 20,
    1996.

    SSA Disability Reengineering: Project Magnitude and Complexity Impede
    Implementation. GAO/T-HEHS-96-211. Washington, D.C.: September 12,
    1996.

    Social Security Disability: Backlog Reduction Efforts Under Way;
    Significant Challenges Remain. GAO/HEHS-96-8. Washington, D.C.: July
    11, 1996.

    [End of section]

    Footnotes:

    [1] We did not calculate backlogs for the reconsideration stage since
    SSA could not provide data that would allow us to do so.

    [2] For three of the four stages of the disability claims process, SSA
    establishes targets for the number of claims that the agency considers
    should optimally be pending a decision or in the pipeline at year-end.
    The number of claims exceeding the target is considered a backlog.

    [3] The regions we visited were Boston, San Francisco, and Dallas.
    Several criteria were used to select the regions for our site visits.
    We chose regions with comparable workloads in order to compare the
    effects of different initiatives across similar regions. For this
    comparison we considered recent data on DDS level processing times and
    claims receipts. On each site visit, we contacted a DDS, SSA's regional
    office for initial claims, its regional Office of Disability
    Adjudication and Review (ODAR), as well as a hearings office.

    [4] Throughout this report, when we refer to SSA disability claims we
    are referring to claims filed under the SSI and DI disability programs.

    [5] Eligibility for SSI is restricted to individuals who have countable
    resources, determined monthly, that do not exceed $2,000 ($3,000 for a
    couple).

    [6] The District of Columbia and Puerto Rico also have state DDS
    offices. Guam and the Virgin Islands have federal DDS offices that
    perform this function.

    [7] According to SSA, the 400,000 target pending was an estimate of an
    optimal pipeline of claims. However, this target pending level was
    never communicated to the DDSs nor were they held accountable for
    reaching this optimum pending level. Also according to SSA, in recent
    years DDSs have been funded to maintain a pending level of 577,000 and
    have met this target.

    [8] Initial claims processing times presented in our report are the
    average processing times for Disability Insurance (DI) claims only, not
    Supplemental Security Income (SSI) claims. SSA provided average
    processing times separately for the two programs. We are reporting the
    DI processing times because the number of DI cases is larger than the
    number of SSI cases, but the differences in processing times between
    the programs are minimal. See appendix I for more detail.

    [9] Backlogged claims include claims that are backlogged at the initial
    application level, the hearings level and at the Appeals Council level.
    We could not compute the number of claims backlogged at the
    reconsideration stage because SSA has not established an optimal level
    of pending claims that would allow computation of the backlog. As a
    results, references to the number of "target pending" and backlogged
    claims throughout the report do not include reconsiderations.

    [10] Agencywide numbers presented here represent the sum of all three
    levels of adjudication at SSA for which we computed backlogs: (1)
    Disability Determination Services' initial claim adjudications, (2)
    hearings' offices adjudications before an administrative law judge, and
    (3) Appeals Council reviews.

    [11] SSA's overall optimal level of pending claims was about 740,000
    claims per year in fiscal year 2006. See appendix I for further details
    on how SSA estimates the optimal number of pending cases and how we
    estimate the backlog.

    [12] Processing times analyzed in this report for the DDS did not
    account for any time before a claim reached a DDS office (such as time
    spent at an SSA field office).

    [13] From fiscal year 1997 to fiscal year 2006, processing times at the
    initial claims level increased from 70 days to 89 days and processing
    times at the reconsideration level increased from 51 to 72 days. During
    the same time period, processing times at the hearings level increased
    from 386 to 481 days.

    [14] In fiscal year 1997, the average processing time at the Appeals
    Council was 340 days; in fiscal year 2006, it decreased to 201 days.

    [15] Total includes new claims, requests for Reconsideration, Hearing,
    and Appeals Council review.

    [16] The DDSs received an overall increase of about 4 percent in staff
    work-years over the 10-year period.

    [17] SSA's Office of Inspector General (OIG) found some problems with
    the reliability of processing time data stored in the Hearing Office
    Tracking System (HOTS), which is the source of processing time data we
    report at the hearings level for fiscal years 1997 to 2004.
    Specifically, the OIG found problems including incomplete data
    (requests for hearings were not consistently entered in HOTS);
    inaccurate data (especially in hearings request dates and hearings held
    dates, which means data on claims processing are inaccurate); and a
    lack of consistent management controls (e.g., no or infrequent reviews
    of the data, lack of training for staff, unauthorized staff had access
    to the system). For example, when the OIG compared a sample of hearing
    request dates from HOTS to the dates in the original paper files, they
    found that about 13 percent of the dates in HOTS were inaccurate.
    However, in part because SSA has published HOTS data in reports
    including its Annual Statistical Supplement, we judged the data to be
    sufficiently reliable for our reporting objectives.

    [18] The Chicago region includes Minnesota, Wisconsin, Illinois,
    Indiana, Michigan, and Ohio. The Seattle region includes Washington,
    Oregon, Idaho, and Alaska.

    [19] SSA told us that insufficient numbers of ALJs and support staff,
    increased receipts, and low productivity of some ALJs were problematic
    in these regions and affected processing times.

    [20] The number of Appeals Council claims received in fiscal 1997 was
    120,540; in fiscal year 2006, it received 100,247 claims.

    [21] This report was prepared by the DDS Recruitment and Retention
    Workgroup, which was established in December 2006 to identify the DDSs'
    staffing needs in the electronic environment for use in recruiting
    nationally and maintaining a qualified DDS workforce.

    [22] GAO, Social Security Administration: Strategic Workforce Planning
    Needed to Address Human Capital Challenges Facing the Disability
    Determination Services. GAO-04-121. (Washington, D.C.: Jan. 27, 2004).

    [23] Hearings office support staff generally assist the ALJs with
    adjudicating claims, developing the claims and getting the actual
    claims ready for a hearing, and writing the decision once an ALJ
    adjudicates the claim.

    [24] The actual number of ALJs on board was slightly higher than the
    number available to conduct hearings. For example, 1,153 were on board
    in 1998 and 974 were on board in 2001.

    [25] SSA's ability to hire sufficient administrative law judges has
    been hindered in the past by a number of factors; including the length
    of time it took the Office of Personnel Management to establish a
    register of qualified ALJs that the agency could hire to fill vacant
    positions, budgetary constraints, and stays due to class action
    litigation.

    [26] The recommended staffing ratio could change as SSA implements
    planned automation initiatives that are expected to improve the hearing
    process and increase efficiency.

    [27] This program allowed senior attorneys to adjudicate claims that
    were awaiting a hearing if the evidence indicated the claim should be
    approved.

    [28] In prior reports, GAO has noted that the productivity of
    administrative law judges impacts processing times at the hearings
    level. See GAO, Social Security Disability: Backlog Reduction Efforts
    Under Way; Significant Challenges Remain, GAO/HEHS-96-87 (Washington,
    D.C.: July 11, 1996) and GAO, Social Security: Many Administrative Law
    Judges Oppose Productivity Initiative, GAO-HRD-90-15 (Washington, D.C.:
    Dec. 7, 1989).

    [29] Much of this major redesign project was undertaken to address
    GAO's recommendations to redress problems experienced when the system
    was revised in 1994, when the agency first attempted to reduce case
    backlogs.

    [30] The states where the prototype process was introduced include:
    Alabama, Alaska, California (Los Angeles area), Colorado, Louisiana,
    Michigan, Missouri, New Hampshire, New York, and Pennsylvania.

    [31] In prior reviews of the electronic folder, we recommended that SSA
    conduct end-to-end testing to evaluate the functionality and
    performance of all electronic disability system components collectively
    and that the agency not begin rollout without ensuring that all
    critical problems identified in the pilot tests had been resolved. SSA
    disagreed with both of these recommendations citing time constraints
    which it believed made the recommendations unrealistic.

    [32] The Boston region includes the states of Connecticut,
    Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont.

    [33] This reform, the Disability Service Improvement (DSI) initiative,
    was instituted by regulation in 2006. However, plans to create DSI had
    been underway since at least 2003, when the Commissioner of the Social
    Security Administration announced in a testimony before the House
    Committee on Ways and Means that SSA would undertake fundamental reform
    of the disability determination and appeals process.

    [34] A claim is a DSI claim if a person is a permanent resident in the
    Boston region at the time that he or she files a claim. This means that
    examiners in non-DSI regions can encounter DSI claims in two ways: (1)
    claimants may file in another region even if they are permanent
    residents of one of the states in the Boston region or (2) claimants
    file for disability while they are a permanent resident of Boston and
    then move to another region and direct questions about claims to the
    SSA field office in that region.

    [35] These statistics are for all cases that had been initially
    selected for QDD processing in the Boston region as of October 31,
    2006; a total of 667 cases.

    [36] Accuracy rates are based on SSA's Office of Quality Performance
    review of FedRO decisions.

    [37] According to internal evaluations which were provided to us by
    SSA, as of March 31, 2007 SSA's Office of Quality Performance had
    reviewed decisions on 259 FedRO decisions in the Boston region and
    found a decisional accuracy rate of 97 percent. According to SSA, for
    fiscal year 2007, the national accuracy rate for disability
    reconsiderations performed by the state disability determination
    offices was 91.9 percent overall, 97.5 percent for allowances, and 91
    percent for denials.

    [38] Appeals rates for the FedRO were calculated based on fewer than
    3,000 cases, which were decided by the FedRO between implementation and
    June of 2007, whereas the appeals rate for reconsideration was based on
    all reconsiderations for fiscal year 2005 in the Boston region, which
    consisted of over 26,000 cases. Limited data on FedRO appeals makes it
    difficult to determine what the average FedRO appeal rate will be.

    [39] 20 C.F.R. � 405.331(a)

    [40] 20 C.F.R. � 405.331(b) and (c).

    [41] 20 C.F.R. � 405.360. New evidence will be considered by the ALJ
    after the issuance of the decision in limited circumstances set forth
    in 20 C.F.R. � 405.373.

    [42] According to SSA, the agency has been working on streamlining and
    refining eCAT for the past 12 months and began piloting it in two DDSs
    in September 2007.

    [43] In announcing the new plan, the Commissioner stated that the most
    aggressive timeline for eliminating the backlog is 2012 but that this
    timeline depends largely on SSA's budget over the next several years.

    [44] Disability examiners said hospitals tend to send all information
    on a claimant to the DDS when the data is in electronic format,
    regardless of whether it is relevant or has been requested.

    [45] GAO, Social Security Administration: Many Administrative Law
    Judges Oppose Productivity Initiatives, GAO/HRD-90-15 (Washington,
    D.C.: Dec. 7, 1989).

    [46] GAO, Social Security Disability: Backlog Reduction Efforts
    Underway; Significant Challenges Remain, GAO/HEHS-96-87 (Washington,
    D.C.: July 11, 1996).

    [47] DDS initial and reconsideration claims data were available for the
    nation, each region, and each state. Hearings data were available for
    the nation and the regions but not for the states, because the areas of
    jurisdiction for the hearing offices do not align with state borders.
    Appeals Council data were only available for the nation, as the Appeals
    Council process is managed in one central office.

    [48] We also analyzed data on continuing disability reviews--including
    new receipts as well as dispositions and pending cases--for fiscal
    years 2004 to July 2007.

    [49] The average processing times we analyzed do not include the time
    it takes for SSA field offices to process claims, although SSA does
    track these data as well. Also, at the DDS level, the average
    processing times presented in this report are average processing times
    for DI cases only, not for DI and SSI cases combined. SSA provided
    average processing times separately for the two programs. We are
    reporting the DI processing times because the number of DI cases is
    larger than the number of SSI cases, but the differences in processing
    times between the programs are minimal.

    [50] SSA did not develop estimates of the targeted number of pending
    claims for fiscal years prior to 1999. Also, SSA has not developed
    estimates of the targeted number of pending claims at the DDS
    reconsideration level.

    [51] We note that you make the same point on page 28 of the draft, and
    there you do include the 4-percent workyear increase in the text.
    Therefore, this change would also make page 14 consistent with later
    text in the document.

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